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Spending Green: Will Consumers Pay More To Be Eco-Friendly?

Thiru Murugan

It costs consumers more to buy ‘green’ or eco-friendly products. But retailers are hoping that consumers’ conscience will override price-consciousness when it comes to buying these green lines.

The question is whether there is truly a behavioral shift among Americans which would make paying a premium for organic and green products a sustainable trend. During a downturn, consumers may not want to pay more to feel more environmentally friendly or healthy.

Then again, maybe it is better to view these buying trends along product lines rather than along organic categorization. In other words, perhaps the trend of eating in, instead of dining out, will mean a boom for organic food products even if organic clothing doesn’t sell. SuperValu just launched an organic food line that it hopes will help it compete with the higher-end Trader Joe’s and Whole Foods .

Wal-Mart has been at the forefront of low priced green products. Clearly the company realized that it can save money itself via its green initiatives and selling green products can also be a moneymaker.

The giant purchasing power and appeal of the world’s largest retailer makes its merchandising strategy a trend-setter for the rest of the industry. It was interesting today to see Wal-Mart’s “live better index” fact sheet. The company has been tracking the sales of its various ‘green’ product categories and published them today.

According to WMT:

- Delaware is the leader in adoption of compact florescent light bulbs.

- Virginia is the top adopter of organic milk.

- California’s babies are the biggest consumers of organic baby food and formula.

- Oklahomans buy the most concentrated liquid laundry detergents.

- Minnesotans buy the most extended life paper products.

It is no big surprise that California is the ‘greenest’ state when it comes to consumer purchases of sustainability products. The weakest consumption levels were in Utah. (Hawii and Alaska were not ranked)

These basic staples are big sellers. My guess is that higher-ticket green clothing lines will be less successful during this economic slowdown. Consumers are already buying less apparel. I don’t think that they’ll pay more to feel that their t-shirts and handbags are more eco-friendly. Budget-friendly is what concerns shoppers right now.

Questions? Comments? retaildetail@cnbc.com

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