Emphasize Transparency to Boost Sales to Gen X and Y Shoppers

(IDEX Online News) – Retailers and manufacturers courting Gen X and Y shoppers this holiday season should introduce more transparency into their product labels and identify fair trade, conflict-free and environmentally friendly practices to boost sales, says a report by tax consultants KPMG.

The focus on social issues is especially important when considering big ticket items, including jewelry, the report adds.

The survey reveals that nearly 70 percent of consumers under 30 consider social issues, such as sustainability, human rights and fair trade, before making a purchase. This outpaces the fewer than 50 percent of consumers overall who feel the same way.

According to the survey, 34 percent of consumers under 30 always or frequently consider social issues when buying everyday goods versus 41 percent when buying big ticket items.

In terms of transparency, the Dodd Frank Act is especially relevant for the jewelry industry. The act seeks to curb the funding of militias in the Democratic Republic of the Congo (DRC) and neighboring countries that commit human rights violations and often benefit financially from mines producing gold, tin, tantalum and tungsten.

The Dodd Frank Act requires companies to describe the status of their products in a new form, Form SD (specialized disclosures) as being either: DRC conflict free; Not DRC conflict free; or Undeterminable (for the first two years for large filers and four years for smaller filers). This information must be filed by May 31, 2014 (for the 2013 calendar year) and annually by May 31 thereafter.

Retailers and manufacturers are unlikely to see an immediate conflict minerals impact on consumer sales in 2013. According to the survey, only 16 percent of US-based consumers have heard of the term conflict minerals, although conflict mineral awareness was 75 percent higher among consumers under 30 than among the general population.

"Many of the regulations are accelerating trends that would take place anyway," said Jim Low, Audit Partner, KPMG. "Retailers are increasingly asking their suppliers to assess their environmental and social sustainability. Several of the leading retail and grocery chains have recently introduced ranking systems to help consumers identify sustainable products. Consumers and investors continue to increase pressure on companies to adopt more sustainable practices."

As to the emphasis on social issues for younger consumers, Low said that a lot of the campaigns around human rights and sustainability begin on college campuses. "It would fall within reason that younger people are more influenced by social issues when they shop. But a large percentage of mature consumers are also engaged in ethical consumption."

He argues that those companies who have already put their Dodd Frank Act framework in place are ahead of the competition. “Based on our survey results, companies who have a head start on this issue are in a position to quickly carve out a competitive advantage with consumers. What's more, greater supply chain transparency can help companies develop a more resilient and efficient supply chain," he said.