Consumers, particularly those in the younger generations, are becoming increasingly aware of both the financial and environmental benefits of circular practices including repair and second-hand shopping; a new report from Klarna, the AI-powered payments network, has found.
However, even though people are more aware of the benefits of circular practises, the ‘2024 Circularity Insights Report‘ by Klarna also discovered a gap between attitudes and actual behaviour persists, with barriers like cost, feasibility, and convenience hindering widespread adoption of these practices.
Sixty-nine per cent of consumers have or anticipate potential savings from second-hand fashion, repairs, and rentals, with 66 per cent noting similar benefits in second-hand electronics shopping. This awareness is more pronounced among those under 35 than it is among older generations.
Consumers are also prioritising eco-friendly choices, with 36 per cent of global consumers more concerned about their ecological footprint when compared to a year ago.
Alexandra Colac, sustainability lead at Klarna, said: “Klarna’s 2024 Circularity Insights Report highlights consumers’ increasing awareness of the economic benefits of more sustainable, circular practices, like repairing items or second-hand shopping.
“It also sheds light on challenges in turning this awareness into action. Our research is geared towards bridging this gap, offering businesses, including our over 500,000 retail partners globally, deeper insights to help them actively engage with and apply the principles of the circular economy in their practices.
“What our research shows is that there’s an educational opportunity for brands to remind consumers of the true and long-term value of products. Brands can also boost consumer involvement in the circular economy by emphasising the financial, convenience, and style benefits of second-hand shopping, rentals, and repairs.
“This strategy not only extends product life but also merges environmental and financial perks, making circularity more appealing to consumers.”
Awareness vs actions: The disconnect
Drawing on insights from a survey of over 3,000 consumers across the UK, USA and Germany, along with interviews with sustainability experts from The Wardrobe Diary Project, Save Your Wardrobe and Refurbed, Klarna’s latest report also found that the growth potential in the second-hand market is being led by younger consumers.
In fact, younger consumers, particularly Gen Z, are three times more likely to opt for second-hand electronics than those over 55, indicating a shift towards more sustainable consumer habits and a potential market expansion in second-hand goods.
Meanwhile, while 45 per cent of consumers believe repaired electronic devices are as good as new, the majority of consumers chose not to repair their entertainment electronics (85 per cent) and mobile phones (71 per cent) the last time they broke.
Similar trends are observed within the fashion category, with 77 per cent avoiding clothing repairs. Although this disconnect is disappointing, it presents an opportunity for brands and businesses to encourage and facilitate repair options, potentially shifting consumer behaviour towards more sustainable practices.
But why aren’t consumers adopting circular practices when they know the benefits that they offer? According to Klarna, cost (57 per cent) and feasibility (33 per cent) are the top barriers preventing them from repairing electronics. Software incompatibility and built-in expiration dates also make it difficult for consumers to extend the lifespan of their electronic devices.
In fashion, feasibility (31 per cent), convenience (30 per cent), and utility (27 per cent) emerged as the most prominent barriers. Depreciation also hinders second-hand shopping, with 21 per cent of consumers citing low clothing resale value, and 27 per cent for electronics, as deterrents to reselling.