The consumer-entrepreneur: the start-up that is restoring value to consumption

 We’re witnessing a minor revolution in consumption and retail. It’s a groundswell which, if stimulated, might transform into a virtuous tsunami. At the heart of this transformation, the consumer is increasingly determined to take action in favour of a more reasonable form of consumption.

This evolving consumer is turning towards more ethically and environmentally responsible practices. According to l’Observatoire Cetelem 2020, 9 out of 10 Europeans said that they had already changed their consumption habits in this direction. Gone are the days of consuming “more”, it’s the era of consuming “better.”

Since the 1990s, the advent of NTIC (New Information and Communication Technologies), has been transforming consumers into masters of marketing, better informed and better able to share information.

The 2020s will make them champions of commerce in the wider sense, thus consecrating the consumer-entrepreneur of their own consumption. Economic stakeholders will align themselves with the practices of consumers, who are more honest and integrated in their consumption habits. A breach is therefore opening up, that favours new partnerships, where the consumer-entrepreneur will occupy a central and unprecedented role. A new-generation ecosystem is in the making, in tune with the circular economy.

How consumers are taking back power!

Thanks to these new practices, consumers might redefine the meaning of their consumption habits. An added value, more responsible, and sustainable form of consumption. While today, it symbolises the industrial era of abundance, one that is “consuming” the planet itself.

A significant lever in this renewal, the circular economy involves taking into account three key dimensions. 

• Enrichment: The consumption of an item will be less and less considered as a straight loss of value by its purchaser, because they will be able to regenerate value via resale and sharing;
• Empowerment: Consumption will invite its participants to reclaim their product via its maintenance, its use, as well as via involvement in its eco-design, as well as its subsequent life (resale, donation, recycling, etc.),
• Usage: Eventually, consumption associated with usage will replace consumption based on possession.

These three dimensions converge to promote a greater awareness of the use of consumed goods.

The circularity of goods as a lever for purchasing power

The resounding success of internet platforms specialising in the sale of goods from person to person is no longer any surprise: in the space of one month, 30 million users logged on to Leboncoin.com, i.e. close to half of the population of France. With 400 euros a year earned by sellers on the platform (source: Leboncoin), this represents the equivalent of half of the average income generated by French people from reselling. According to l’Observatoire Cetelem 2022, French people earn on average 67 euros per month from reselling, and Europeans 77 euros, with the British and Germans leading the pack. But the wealth effect on purchasing power doesn’t stop there: we know that second hand, and, more generally, practices relating to the circular economy (sharing, rental, repair, etc.), provide access to a more diversified, more rational, and ultimately more enriching form of consumption. While, through these practices, 56% of Europeans are inclined to buy fewer things, thus leaning towards a certain form of sobriety, 3 out of 4 consider that they are spending less, and as many say that they are earning money.

E-commerce is becoming one of its strongest levers, but physical stores also have every chance with consumers. This will especially be the case when it comes to purchasing. According to l’Observatoire Cetelem 2022, Europeans state that they are as likely to buy second-hand goods from a retailer or a shop as they are from a peer-to-peer buy/sell platform.

A valued product: quality, authenticity, and guarantees

Buying and selling second-hand is therefore now part of consumers’ habits. Marketplaces will further accelerate such practices. Thus the L’Observatoire Cetelem highlights that during the year, 70% of Europeans bought at least one second-hand item, and 62% sold at least one.

This normalisation will inevitably lead to new habits.

Buying second-hand, whether second-hand or refurbished, will involve taking into account other characteristics in purchase decisions, such as the quality and authenticity of the item, which are not necessarily guaranteed. Depending on the item, consumers may require additional reassurances before finalising their purchases: an extended warranty, a certificate of authenticity, or simply additional photos of the item in order to verify its general condition.

These quality criteria will be integrated by consumers into their purchase decisions, as they will already potentially be thinking about the future resale of that same item. In other words, the consumer-entrepreneur will increasingly take into account the evolution of the residual value of an item that they buy, and especially the price at which they can resell it. If they buy a new item, they will be able to move up the price range, as they know that they will get a better price on resale; they will also take good care of the guarantees of authenticity of the product (instructions, certificates, etc.), and will take care of their item so as to ensure its high residual value.

A holistic view of price

Whether they are a buyer or a reseller, the observation of this consumer-entrepreneur will be the same: price will retain a central position, but will also include other aspects.

It will involve environmental and societal criteria, guarantees of more responsible and ethical consumption, as well as the aspects of quality and guarantee.

This is why, unsurprisingly, l’Observatoire reveals that 9 out of 10 Europeans already think that repairability and durability will become important selection criteria in their purchases. And 7 out of 10 would be willing to pay more for that.

While, since January 2021, the repairability index has focused on five categories of household appliances and electronics in France, European and even global manufacturers will have to follow suit. More generally, sustainability indicators will set new standards by 2024.

This survey confirms the importance of eco-design in the perception of products by consumers, and the opportunity, or at least the competitive need, for manufacturers and distributors to lead from the front. 

Homo circularus is still far from replacing homo economicus: while consumers are including a range of new quality criteria into their consumption habits, price will often have the last word. The figures from the Observatory confirm this balance of power: 44% of Europeans are motivated by the price of a purchase, compared to 30% by criteria that help protect the planet. It’s up to us, as professionals, to reconcile the two!

A redefinition of relationships to products

Consumers who are more scrupulous in preserving and reselling their purchases, will increasingly take better care of their items, by repairing them themselves, or by transforming the initial use of used or unused goods. Up Cycling, Do It Yourself (DIY), as well as Repair It Yourself (RIY) are thus appearing as forms of personal accomplishment. A much-needed return to normal after a several decades of frenetic consumerism based around disposable goods.

This DIY trend is also being driven by economic motivations, and an Ipsos survey for E. Leclerc points out that French people save 272 euros per year on average thanks to DIY . And brands are not failing to grasp this fact. The “iFixit” site was also created from this observation: “Let’s fix the world, one device at a time.” The perfect example is Apple, announcing last year that its customers will now be able to repair their iPhones themselves, via their new “Self Service Repair” service. This system promises to deliver the manuals, tools and spare parts necessary for repairs, to users.

Is there any room left for brands? Absolutely!

While the consumer-entrepreneur is regaining power over their consumption, they won’t be able to do it alone. According to the l’Observatoire Cetelem, nearly 2 out of 3 Europeans depend on brands to support them in a circular economy, integrated into their new use cases. They might in fact be crucial allies in reassuring, simplifying and enhancing the value of the micro businesses of this new breed of consumers.

It’s up to us to support this unprecedented start-up, this unicorn in-the-making of our economy! 

Cécile Gauffriau - Stream Leader Circular Economy BNP Paribas Personal Finance

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Want to know more on the Observatoire Cetelem 2022 special Circular Economy