Millennial Bug

Millennials are now the largest demographic in the workforce, which has led to changing trends in consumer behaviour as their spending power increases. So how will the habits of millennials shape our circular economy aspirations? Tim Price, marketing director at DS Smith Recycling, discusses…

The circular economy is not a new concept. In 1976, Walter Stahel and Genevieve Reday outlined their vision for an economy in loops for a European Commission research report.

The drive to adopt circular economy practices has become more urgent in recent years, which is due in part to changing consumer attitudes and habits. Research focusing on these changes often identifies trends among ‘millennials’ – people born between 1981 and 1996, or the first generation to come of age in the new millennium – because the demographic balance of society is shifting.¹

In 2016, millennials became the most populous generation in the workforce, with 1 in 3 workers in the US alone born after 1980.² Between the increase in millennials’ spending power and the rise of digital technologies, shopping trends and consumer habits are changing – and all this against a backdrop of increased recycling targets as part of legislative changes such as the EU Circular Economy Package. So what are the trends around the concept of millennials that are influencing the transition to a circular economy?

1. Millennials are socially conscious consumers.

75% of millennials are willing to pay extra for sustainable products.³ Coffee cups, palm oil, and single-use plastics are some recent products to face public discussion, which leaves businesses rethinking both the sustainability of their materials and processes, and the environmental impact and recyclability of their products. With the increase of millennials’ spending power, the consumer pressures for sustainability are also rising, so products must become more sustainable to help them stay competitive, because…

2. As a consumer group, millennial spending power is increasing.

…by 2025, millennials will represent 75% of the workforce in the US alone, which means their disposable income is on the rise.⁴ Their spending habits will become more influential with time, as will the drive for products and services that match their expectations as consumers. Products with better sustainability credentials will gain a greater competitive advantage over those with less sustainable practices.

3. They’re more comfortable with the concept of shared ownership.

40% of millennials in the UK will live in rented housing until the age of 30, with a third expected to rent for the rest of their lives.⁵ Sharing is more economically viable for many millennials, and the idea of shared ownership goes beyond housing to other products services. Examples include online streaming services like Netflix, or fashion rental sites like ‘Rent the Runway’, where users can rent clothes rather than buy them outright – a principle that was described as “selling goods as services” by Walter Stahel in 1989.

With an acceptance of shared ownership widespread, any products that millennials do buy outright are usually both of a higher value, and sustainable. This dovetails with circular economy aspirations, where an increase in re-use and recyclable products reduces waste sent to landfill and incineration.

4. They prefer online shopping, which changes the flows of packaging through waste management systems.

Online sales of non-food items accounted for 24.1% of purchases in the UK in 2017.⁶ The convenience of online shopping means that consumers are conducting multiple short shops to be delivered to their homes or offices, so packaging needs to be designed to be robust enough to allow products to be delivered to consumers through a variety of channels – something the packaging industry terms ‘omnichannel packaging’. As well as helping brands be competitive, good packaging will prevent waste through protecting against product damage, and being easily recyclable at the end of its useful life.

With these change in packaging flows becoming more and more apparent, recycling systems must adapt to these changes to make sure that as much packaging as possible is recovered for recycling. Packaging designers and suppliers, local authorities, and the recycling sector must work together to make sure packaging can be easily recycled – helping to contribute to circular economy aspirations.

We are already seeing a move away from single-use, hard to recycle packaging material, towards more easily recyclable packaging such as cardboard, which already has a recycling rate of 82% in the UK, the highest of any material.⁷ However the challenge is to maintain and improve that recycling rate as brands and retailers look to utilise the recyclability of cardboard packaging.

5. Sustainability consciousness is a social media conversation.

The access that millennials have to a public platform is unprecedented – and they actively use social media to publicly comment on sustainability issues. Stories like coffee cups and single-use plastics spread quickly, sometimes jumping to headline news within hours.

So with organisations’ sustainability credentials increasingly in consumers’ awareness, those that demonstrate their commitment to sustainability will benefit more from positive social reach. Correspondingly, organisations who greenwash, or who have less sustainable practices, are less likely to be trusted and purchased from.

Millennials and the future of the circular economy

Millennials will be heavily involved in the way the world achieves its circular economy aspirations, and the trends we’re seeing now will become increasingly relevant to how we shape our sustainability frameworks in the future.

Millennials are more sustainability conscious than their forebears, and are eager to demonstrate this publicly through their buying habits. But a focus on convenience has led to the rise of online shopping and a need for swift, effective services, which presents new challenges for the recycling sector. So how does the sector respond?

At DS Smith, we believe that we need to tackle big challenges facing society in the whole, not just examine one part of the problem. What we need to ask is: how could these trends become long-term, circular changes? Trends in shopping are leading to new challenges in packaging, delivery, and recycling. Rising to these challenges will bring us closer to a circular, resource-efficient economy.

So what steps can we take now to support the transition?

• We need to tackle big challenges in the whole and not just one part, to find answers that would otherwise be out of reach. From design to production and supply to recycling, we need to find joined-up solutions that are sustainable for all. Organisations need to put whole-of-life analysis and design for recycling right at the forefront of their business decisions.
• Industry and government need to collaborate to make recycling easy and accessible to all. Clear messaging around recycling, and consistent approaches to recycling systems, are two things that will engage consumers more in recycling initiatives.
• We need to create the right economic conditions to foster better recycling – making sustainable actions rewarding, and unsustainable actions less appealing.

By adapting to the behaviours of millennials, the recycling industry can take advantage of today’s opportunities to capitalise on the sustainable aspirations of the largest proportion of our working population.

Sources

1. Definition of ‘millennial’ – http://www.pewresearch.org/fact-tank/2018/03/01/defining-generations-where-millennials-end-and-post-millennials-begin/
2. Millennials in the workforce – http://www.pewresearch.org/fact-tank/2018/04/11/millennials-largest-generation-us-labor-force/
3. Sustainability as a shopping priority: https://www.nielsen.com/uk/en/insights/news/2015/green-generation-millennials-say-sustainability-is-a-shopping-priority.html
4. Percentage of the workforce: https://www.brookings.edu/blog/brookings-now/2014/07/17/brookings-data-now-75-percent-of-2025-workforce-will-be-millennials/
5. Millennials and renting: https://www.resolutionfoundation.org/media/press-releases/up-to-a-third-of-millennials-face-renting-from-cradle-to-grave/
6. Online sales of non-food items in the UK in 2017: https://www.ft.com/content/a8f5c780-f46d-11e7-a4c9-bbdefa4f210b
7. Recyclability of cardboard packaging:https://assets.publishing.service.gov.uk/government/uploads/system/uploads
   /attachment_data/file/746642/UK_Statistics_on_Waste_statistical_notice_October_2018_FINAL.pdf