Nearly three in four Australian consumers now seek out companies they see as sustainable and ethical, according to new research.
The SME Pulse 2018: Strategies for Sustainable Growth study was carried out by American Express in partnership with Oxford Economics. It found that almost three-quarters (73 per cent) of shoppers look for businesses that offer “sustainable products and services”.
The research also found that this customer demand will only intensify.
Many small and medium-sized enterprises (SMEs) are capitalising on this market opportunity. In fact, 86 per cent now regard sustainable and ethical business practices as a key driver of growth and profitability.
Further, 76 per cent believe there is a growing market opportunity for providing ethical, transparent and locally sourced products.
Vice President of American Express Global Commercial Services Martin Seward said, “With Australian shoppers increasingly basing spending decisions on how ethical they perceive a business to be, and the impact that business has on the environment and society in general, sustainable business practices are no longer ‘nice’ to have – they’re essential for any size of business competing today.
“Our survey revealed that about two-thirds of SMEs (68 per cent) are concerned about intensifying competition from larger companies. So many are looking for ways to differentiate themselves and find a competitive edge.”
The ability to respond rapidly to changing customer preferences is identified as a key growth strategy in the research.
Yet in practice this remains a challenge for many SMEs.
Fewer than half surveyed (46 per cent) believe they are able to respond to changing shopper demands quickly. Only about half (52 per cent) feel they are effective at innovating in their product or service offering.
Australian SMEs say fostering an innovative culture and employing talented innovators will be the most important factors when it comes to evolving their businesses.
As they look ahead to the next three years, they say they are acting ahead of their global counterparts to intensify innovation. They are doing this through increased staff engagement and development. In particular:
- Encouraging all staff to contribute to ideas (57 per cent locally versus 53 per cent globally).
- Allocating time for idea generation (64 per cent locally versus 57 per cent globally).
- Encouraging an innovative culture (75 per cent locally versus 68 per cent globally).
Oxford Economics carried out the research in October and November 2017. It surveyed senior executives at 3000 SMEs. They ranged in size from 10 to 250 employees across 12 countries and 16 industries. The researchers used telephone interviews to explore opportunities and threats, business prospects, strategies, investments, and SMEs’ strategies for managing growth sustainably.