62% will buy second-hand clothes and refurbished smartphones because they are cheaper and better for the environment.
This article is part of a series of articles titled “Environment in Danger? Opportunities and Risks From a Young Generations’ Point of View”. Even though 70% of the younger generation think that gluing yourself to the street is not the right way to deal with the current situation, the prevailing feeling is that something must be done about climate change. We asked GrECo’s youngest generation for their opinions.
Gen Z is right behind reusing and refurbishing old items. 62% of them view refurbished products as both a sustainable and cost-effective choice. They appreciate the opportunity to reduce electronic waste, and the appeal of getting high-quality gadgets at a lower price aligns with their pragmatic and eco-conscious values. As a result, refurbished products have surged in popularity in recent years as an enticing alternative to purchasing brand-new items. This category, encompassing everything from hand-held electronics and household appliances to furniture, typically consists of pre-owned goods that have undergone a rigorous refurbishment process, rendering them akin to near-new condition.
Positive outcomes for companies investing in the ‘nearly new’ trend.
There are not just positives for the environment because of this prevalent ‘reuse things’ attitude. Yes, purchasing refurbished products helps reduce electronic waste and therefore the overall carbon footprint, and by giving a second life to pre-owned items consumers and companies are contributing to a more sustainable and eco-friendly approach to consumption. However, it goes beyond that. Refurbished products offer companies a competitive edge by expanding their market reach and appealing to price-conscious consumers. By refurbishing and reselling their own products, companies can tap into a new customer base. This approach also highlights a commitment to sustainability, enhancing the company’s reputation as it actively participates in reducing electronic waste and promoting a circular economy.
However, this isn’t just limited to businesses in certain industries offering a recycling policy on old goods that they can refurbish in return for some money off your next new product. All companies can use this concept. Buying refurbished mobile phones or laptops for employees is one such way other businesses can help to reduce electronic waste.
New risks arising from refurbished goods.
Overall, the idea of reducing, reusing, and recycling is an unvaryingly positive one, however there are a few new risks arising in this category. Quality assurance is a big concern for many. There are currently no real standards in this area, and every company/industry defines their own degree of wear and tear. For example, what “used” means to one company or individual might mean “heavily worn” to another, or “like new”, which should mean it comes in perfect condition, comes with a few small scratches or marks and might have been better described as “lightly used”. There are definitely discrepancies in these listings from site to site and from vendor to vendor. Furthermore, ensuring the quality and reliability of refurbished products can be challenging, because a hidden defect could remain unidentified by the refurbisher. All-in-all these factors can lead to customer dissatisfaction, returns and warranty claims.
With refurbished products warranty risks are also increasing. Many dealers have to offer a warranty on refurbished products by law. Although the warranty period is often shortened in comparison to new items, the quality assurance of the refurbished product might be more difficult as previously described. Companies may need to allocate resources to honour these warranties.
The final major risk faced by companies in the refurbishing sector is reputational risk. Eventually, poorly refurbished products, non-standardised qualities, frequent warranty claims, and an untraceable supply chain can harm a company’s reputation, leading to reduced customer trust and brand damage.
It is not only manufacturers and traders who are being called upon to rethink their business models. The insurance industry is also required to come up with new solutions for its clients as well. Conventional solutions will not be sufficient to manage the transformation of this entrepreneurial sector with rapidly changing risks.
Traditionally uninsurable risks such as product warranties or lack of reputation will also require a new perspective from insurers in the future. Furthermore, there’s a big advantage for inventive insurance companies if they can come up with innovative solutions: embedded insurance-products (affinity-solutions) are becoming more and more relevant especially for consumer-related products.
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If carefully designed and managed, a captive is a tool in the risk manager’s toolbox for large companies that can help build resilience to future transformation risks as a result of climate change, amongst other things.
If you have followed the media recently, you are probably aware that the younger generation cares about the environment and their future, and that they are willing to go to the extreme to prove their point.
A third of the younger generations believe climate change is the biggest threat of our time, and over half believe they don’t have the power to do anything about it.