Understanding customer behavior in the circular economy

In the dynamic landscape of sustainable innovation, circular products and services are taking center stage. But just creating them isn’t enough. Companies need to understand what makes consumers embrace or ignore these solutions. At the core of this challenge is the need to design the value proposition effectively. What makes it stand out? Why should customers care? This is deeply intertwined with how emotional and rational thinking influence consumer behavior. In circular offerings, the real appeal often lies in how well they match consumer values, like sustainability, efficiency, and long-term benefits. Moreover, consumers can be part of the solution. But aligning with values isn’t a one-and-done task. It requires an ongoing commitment to life cycle management, ensuring products stay relevant as trends and expectations shift.

The role of nudging to overcome consumer resistance

Even the most compelling value propositions and best circular products won’t gain traction if consumers don’t see how they fit into their lives. That’s where nudging comes in—small, intentional efforts to steer behavior toward sustainable choices. Whether it’s through smart product design, engaging marketing that speaks to both logic and emotion, or incentives for responsible use that reinforce their role in the solution, nudging helps bridge the gap between good intentions and real action.

Of course, not everyone will immediately jump on board with circular products. Some consumers are hesitant, skeptical, or simply unaware of the benefits. In these cases, companies need to meet customers where they are—sparking conversations, offering education, and providing the right tools to make informed decisions that empower them as part of the change. This ongoing refinement is a key part of life cycle management, ensuring products continue to meet consumer needs.

Paving the path to circular success

At the end of the day, winning in the circular economy is about more than just great products—it’s about understanding people. If you’re ready to take your circular strategy to the next level, now is the time to act. Start by evaluating your value proposition, test new approaches, and fine-tun your life cycle management strategy. Need help? Let’s collaborate to drive real impact and innovation together. With the right mix of consumer insights and gentle nudges, companies can create solutions that not only meet demand but also drive real change. And with continuous adaptation and smart life cycle management, they can stay ahead of the curve while making a lasting impact, paving the way toward a more sustainable future for all.

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The hidden cost of playing it safe

At Verhaert, we’ve not just observed this trend in the beauty industry, but across the entire FMCG and consumer market. Over the past year, large companies have become noticeably more risk-averse, opting for small updates instead of pursuing bold, breakthrough products. This cautious approach is influenced by various factors: post-COVID economic shifts, surging ingredient costs, evolving regulatory requirements, and consumer spending patterns that favor tried-and-true products over innovations.

However, choosing safety over innovation comes with hidden risks. Continuous innovation is the key to sustainable differentiation. When brands fall back on incremental updates, the gap between budget and premium offerings starts to close. The recent surge in ‘beauty dupes’ and store-brand purchases illustrates this trend: consumers who try these lower-cost alternatives may not return to premium brands even as their finances improve. According to an EY study, 38% of consumers now prefer these alternatives, a shift that could be difficult to reverse.

Reigniting innovation in beauty

So, what’s the way forward? Beauty brands looking to reignite their innovation pipelines are adopting several strategies:

1. Strategic acquisitions with a purpose

Corporates are increasingly acquiring start-ups with unique products or advanced technologies. L’Oréal, for example, partnered with Gjosa to pioneer water-saving beauty tech, and Givaudan acquired Myrissi for its innovative AI that visualizes scents. While acquisitions can fill innovation gaps, companies must acquire with a clear growth strategy rather than just expanding their portfolios.

2. Tapping into emerging markets

Emerging markets in Asia, the Middle East and Africa often reveal overlooked consumer needs and trends. By drawing inspiration from these regions, beauty brands can access fresh ideas and create products that address untapped global demand.

3. Investing in beauty tech for personalization

Beauty tech is booming, with the market projected to grow at an impressive CAGR of 18.6% through 2030. Cutting-edge technologies such as AI, augmented reality (AR), and 3D printing are redefining the beauty experience. For example:

• AI and AR: virtual try-ons and personalized skincare routines make the shopping experience interactive and tailored.
• Wearable beauty devices: products like UV trackers and smart rings analyze skin health, providing insights on sun exposure, skin damage and more.
• 3D printing: tools like the Mink 3D printer allow consumers to create custom cosmetics on demand, setting a new standard for personalization.

Embracing bold innovation for future growth

In today’s evolving market, innovation is more than just a trend, it’s the lifeline for beauty brands looking to build and sustain brand loyalty. Those who continue to lean on incremental changes risk blending into a sea of sameness, while brands that embrace disruptive tech, explore emerging markets, and pursue strategic acquisitions stand to differentiate themselves and capture consumer interest. For beauty brands, the choice is clear: those who dare to innovate, to reimagine what’s possible in beauty, will not only survive but thrive in the years to come. It’s time to move beyond safety and step into a future of beauty that’s bold, personalized and impactful.

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