New consumption of a year of sand, who can still "make the tide"? Responding to social needs is the key to becoming a new brand evergreen of Generation Z

Per reporter: Wang Ziwei Per editor: Liu Xuemei

Entering 2022, the new consumption heat wave is gradually receding, and the "body feeling" can be described as obvious.

After the tide is calm, the "tide" that can still be left is more worth cherishing.

315 this year, in the "2022 China New Consumption Generation Z Brand List" sponsored by the Daily Economic News, micro-hotspot research institute, independent consulting agency Syntao Zongheng to provide professional data support (thematic link), the score of "social responsibility", if the 6 points passing line, this year's TOP30 brands on the list, 6-10 points of the brand a total of 20, accounting for 66.7%; while last year's selected brands got only 16 passing scores. Among them, there are 8 brands with a score of 8 points (including 8 points) this year. In addition, the top 30 brands have an average score of 6.4 points in the social responsibility category.

Lang Hua, a partner of SynTao and director of the China Sustainable Development Case Center, who has been professionally scored as the "social responsibility" of the Z generation brand list for two consecutive years, sighed to reporters that her most direct feeling is that the brand changes on the list in two years have changed rapidly.

Lang Hua Image source: Courtesy of the interviewee

"I'm actually thinking, what happened to the brands that made the list last year? Is it a flash in the pan? Lang Hua said.

This problem may be seen in the ebb and flow of new brands this year. At the beginning of this year, many new offline brands began to close stores one after another, and the queue phenomenon fell to the "altar", compared with last year, the survival of new consumer brands seems to be poor.

Last year, many industry insiders told reporters that the imbalance between the development of new brand business and the fulfillment of social responsibility is a "common phenomenon". In just one year, some new brands have been like waves, surging into the tide and tumbling into the sea.

The new consumer group of Gen Z is paying more attention to social responsibility issues than many new brands can imagine. Judging from the Gen Z brands selected for the list this time, they have obviously done something right in the social responsibility issue and won the favor of Gen Z.

In an exclusive interview with the Daily Economic News reporter, Lang Hua believed that these new brands still need to embrace social responsibility if they want to be evergreen, and make changes that are more in line with the expectations of society, capital and consumers.

A wave of "transformation" that has swept the industry has arrived.

"Hard shoulder" explosive logic VS "switching" to social responsibility?

As a judge of the Z Generation brand list for two sessions, Lang Hua's scoring criteria are not the same for companies in different tracks and different degrees of development. She explained to the "Daily Economic News" reporter that such scoring standards are mainly because different product categories, their related substantive issues and social responsibility evaluation dimensions are also different.

"For example, the new intelligent enterprise mainly examines key issues such as product quality and safety, consumer experience, responsible supply chain management, carbon footprint management of the whole life cycle of the product; the new tea industry, I will look at the whole process of raw material collection, the use of standards (sustainable), quality management system, packaging management and sustainable lifestyle advocacy. Different industries have different business formats, and the corresponding substantive risks are different, so my scoring criteria will be adjusted accordingly. Lang Hua said.

Overall, in this scoring, 3-4 points of enterprises compared with last year, the overall proportion is decreasing. This means that the response of the selected brands to social responsibility has generally improved. This time, among the 100 new brands shortlisted, a total of 40 brands scored between the 6-10 divisions (selected brands).

Lang Hua told reporters that the score is in the range of 6-8 points, indicating that the new brand has made some more eye-catching practices; if the score is higher, it means that the company has done "beyond expectations" at the level of social responsibility.

For example, in the field of fitness, keep, a sports technology brand that has just handed in the table, has a high score of 8 points. Lang Hua told reporters that Keep has been able to systematically think about the promotion of brand health, and is not limited to their online business, but also through the venue, training course APP way to unite the community, and through the creation of the community to let more people enjoy a happier fitness concept.

"I will also find that Keep also pays attention to teenagers in underdeveloped areas and helps them build dream sports fields, they (Keep) make the concept of health more universal, so that fitness can become a right that everyone can enjoy, I think this thing is still doing a good job." Lang Hua said.

In the past year, many new brands have insufficient information disclosure related to CSR, which has led to a general low score for enterprises in the industry. This year this trend has improved considerably.

"I can see from the disclosure system how they manage the supply chain and how they manage the environmental and social risks of the brand." Lang Hua told reporters.

At the beginning of its business, the plant meat brand "Cu Ding Meat" will respond to social needs such as climate change as an entrepreneurial opportunity and take it as a brand selling point; from the perspective of the "Cu Ding Meat" format, its core products and business philosophy also respond to the challenges of globalization. "Whether it is the supply chain or the localization of the brand characteristics, the trajectory of its sustainable development is very clear, and this brand impressed me." Lang Hua recalled to reporters one by one the brands that impressed her in the scoring.

However, there are still many new brands that have not gotten rid of the "explosive idea", and are trapped in the chain of creation and marketing of explosive products, and have not better dialogue with Z generation consumers and respond to their spiritual pursuit of higher brand consumption.

And even if there are explosive models loved and briefly pursued by the Z generation, the Z generation that seeks innovation and change will not stay for this product, which also brings challenges to the growth idea of seeking the market with "explosive models". From the product point of view, enterprises need to keep pushing products and expect to produce explosive models, but explosive models are always unattainable.

"If you only win the market based on one or two bright products, then this company is destined to be short-lived." Lang Hua expressed concern about those companies that take advantage of the momentum by creating explosive products, otherwise they will lack motivation.

With the retreat of the new consumer heat wave, the kinetic energy of many new brands is insufficient, which makes it difficult for them to improve their social responsibility. Is it "hard shouldering" the logic of the explosion, or "switching" to social responsibility? This choice is becoming particularly urgent at the moment. Industry insiders generally believe that it is now a critical point in time for the cognitive transformation of enterprises.

Social responsibility can become a new brand "bailout medicine"

Lang Hua believes that the development of enterprises is closely related to the fulfillment of social responsibilities. She gave an example: At present, the transformation of enterprise development mode, enterprise business model transformation, supply chain operation transformation, product innovation transformation, business logic transformation, etc., many of them are responding to the "double carbon" strategic goal.

The "double carbon" strategic goal is the two-stage carbon emission reduction goal proposed by China, that is, carbon dioxide emissions strive to peak by 2030 and strive to achieve carbon neutrality by 2060.

In this critical period of transformation, not only companies are involved, but consumers are also participating in the transformation. "Every business is a unit in the supply chain, and when we purchase the company's products as a buyer, it means that you may be a part of the supply chain, and you are also responsible for your own 'vote'." Lang Hua said.

The sense of social responsibility of Gen Z consumers has become very clear in consumer behavior. At the beginning of 2022, China's first "China Charity Consumption Survey Report" released by MKTforGOOD, a public welfare marketing advocacy agency, pointed out that consumers believe that "doing the right public welfare at the right time" is a kind of responsibility. In addition, young consumers are more interested in "sustainable development (including SDGs)" and "social responsibility (including business for Good)". According to syntao's six consecutive years of sustainable consumption research in China, we have also seen the rapid growth of China's low-carbon consumer group, according to last year's data, more than 90% of respondents believe that "low carbon" is closely related to everyone. We define respondents who "consider themselves low-carbon consumers" as awareness forerunners, and among The Gen Z under the age of 20, awareness forerunners account for 77%, and Gen Z is more willing to share their own low-carbon consumption and life concepts than other generations.

Corporate social responsibility has become an important way to win the favor of young consumers. In this regard, Lang Hua suggested that enterprises can change their thinking and shift from product logic to solving social needs.

"If we can gradually change from product-oriented to social demand-oriented, and make the management mechanism of the entire company more and more perfect, mobilize the entire company to establish a social mission-driven behavior model and culture, which will provide more development opportunities for many new brands." She said.

In addition, Lang Hua suggested that new brands can also consider promoting their own social innovation through innovative value identification and mission expression, and use this as a driving force to achieve the second growth of the brand.

For example, Lang Hua said that some of the shortlisted clothing brands such as Bossie, in their brand establishment, in addition to standing on the foothold of "trend", also paid attention to the topic of gender equality, responding to the trend of gender de-labeling by young people, so Bosie successfully obtained rapid development in this market segment.

In general, if you hope that the brand will become popular, the new brand should also keep the "spiritual link" with consumers in addition to "fighting the world" to meet the material pursuit of consumers, and show their more inclusive and altruistic side by fulfilling their social responsibilities, so as to meet the spiritual needs of the Z generation people for the brand.

Policy, capital focus on social responsibility: the soil for the growth of new brands has changed

Judging from the brands on the list, the new brand has reached a higher level of awareness of social responsibility in this year. However, in Lang Hua's view, there is still huge room for improvement of new brands.

She believes that if entrepreneurs consider the entrepreneurial path from the perspective of responding to social needs, they may have unexpected gains.

"When an entrepreneur goes to a business, he has to see if the field he wants to start is really an area that can respond to the needs of the current society. Can companies consider doing some social issue segmentation and social innovation segmentation? When enterprises respond to the more urgent needs of society through their products and solutions, this enterprise has a possibility of sustainable development. ”

Lang Hua believes that taking positive social responsibility as the original intention and responding to or solving social needs is an "altruistic" undertaking in itself. Such a business does not mean to be free, in a business society, to comply with business rules and paths, and to provide functions that address social needs, businesses can be profitable as well.

In the consumer track, new brands with potential evergreen may not appear in those segments that cater to consumer demand. Lang Hua believes that it is more likely to appear in brands that explore the existing social needs and continue to promote innovative solutions.

"If I want to be evergreen, I still think that social innovation and social demand segmentation may be a good direction." Lang Hua suggested a new brand.

She believes that being able to identify the direction of her own innovation and entrepreneurship according to the development and changes of social needs actually provides an unprecedented opportunity for start-up brands to achieve sustainable development. "The mainstream approach of new consumer brands is to investigate the existing consumer demand, but I think the more important development direction is that the new brand can lead the consumer value orientation, aesthetic direction, and drive the brand of new demand." Lang Hua further said.

The "social needs" in Lang Hua's mouth can be understood as social issues. Such topics are very extensive, such as environmental protection, climate change, energy conservation and emission reduction. In the past two years, the mainland has advocated energy conservation and emission reduction, circular economy, common prosperity and other expectations, which are in line with the definition of social needs.

Lang Hua told reporters, "After the release of the double carbon target, all walks of life have continued to strengthen the management of carbon and continue to explore the path of low-carbon transformation, and the environmental risk management of listed companies by regulators has also continued to strengthen." "As societal needs shift, companies that focus more on social responsibility issues will also gain stronger momentum.

In addition to policy factors, another big driver is accelerating: in recent years, responsible investment has been mainstreaming, and ESG (environmental, social and corporate governance) performance has become an important basis for investment decisions. Whether in the secondary or primary markets, investors have made ESG an important consideration.

"UNPRI (United Nations Principles for Responsible Investment) is a global investor initiative that includes financial institutions, banks, asset managers and other institutional investors who are joining the alliance faster and faster. In the past two years, the size of its signatories has grown rapidly, and it has never been so fast. Lang Hua sighed to reporters.

Joining this alliance means that these investment institutions must consider the ESG performance of the invested enterprises when making investment decisions, and even these investment institutions hope to use voting rights to influence the invested enterprises and promote more systematic environmental and social risk management.

As domestic mainstream investment institutions have begun to do ESG-themed investment products, correspondingly, invested stocks and enterprises need to systematically deploy environmental and social risk management and governance models to improve.

Overall, whether it is a start-up enterprise or a mature enterprise, in the face of the change of social needs, changing ideas and changing the way of development is not optional, but a must.

"In the process of starting a business, new brands should consider the background of policies, the concerns and expectations of investors. For mature enterprises, it may also need to do some transformation work to better face the expectations of society and the public. Lang Hua finally said.

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