Are Retail Consumers Willing to Pay for All Circular Products? A Study on Consumer Perception of the Circular Economy in Retail

Abstract

The planetary crisis, stemming from overconsumption and unsustainable production patterns, necessitates a shift towards balanced economic, environmental and social growth. The circular economy presents a promising solution by promoting material recirculation. While its success relies on collaboration among various stakeholders, consumers are crucial for accepting circular economy products and business models. However, despite increasing environmental awareness, the literature shows that many consumers resist purchasing previously used products due to perceived inferiority, risk and low quality, which could hinder the adoption of circular economy products. Understanding consumer behaviour, particularly their willingness to buy and pay for circular economy products, is essential for businesses seeking to promote sustainable consumption and achieve market growth. This study investigates consumer perceptions of circular economy, using simplified terms of reused, recycled and recovered, across 11 product categories through a quantitative survey of 607 Australian respondents. The results indicate that personal financial benefits are prioritised over ecological reasons, and there is variability in perceived product performance across categories. Additionally, price sensitivity and affordability play a key role in consumer decision‐making. Notably, while younger and male consumers show a greater inclination to purchase circular economy products, the broader consumer base remains unwilling to pay a premium. These insights can guide businesses and policymakers in developing targeted strategies emphasising price, functionality and quality to enhance consumer acceptance and adoption of circular economy products. We advance theory by demonstrating that consumer decisions are primarily driven by personal financial savings, rather than ecological or social benefits, challenging the prevailing assumption in literature that environmental and social motivations are the key drivers of sustainable consumption, even in developed economies. We also emphasise the need for theories to account for significant variability in perceived product performance across categories when investigating willingness to pay for circular economy products.