Consumers edging into "green" territory

By Brad Dorfman

NEW YORK (Reuters) - U.S. consumers are slowly becoming "greener," though the motivation may be more about saving money and less about concern for the environment, executives and analysts said this week.

Consumers are willing to pay a premium for items like energy-efficient washing machines and might also spend more for toys made with corn-based biodegradable plastic, corporate executives said at the Reuters Consumer and Retail Summit in New York this week.

"A few customers in a few places are talking about it," said Simon Hay, chief executive of dunnhumbyUSA, a joint venture between London-based consulting firm dunnhumby and U.S. grocer Kroger Co. (KR.N: Quote, Profile, Research, Stock Buzz)

Appliance manufacturers are seeing strong demand for energy efficient, front-loading washing machines, which also use less water.

U.S. industry leader Whirlpool Corp. (WHR.N: Quote, Profile, Research, Stock Buzz) is using energy efficiency to help promote its Duet washers and dryers. A set costs about $2,000, which may put it out of the price range of many consumers.

But by focusing on energy efficiency and the attendant cost savings that go with it, Whirlpool and its retailers have attracted lower income buyers. The average household income for a Duet buyer is only $40,000, David Swift, president of Whirlpool North America, said.

"Overall, the general tenor around the U.S. is about energy conservation, there is no doubt," he said.

Soon Kwon, president of U.S. digital appliances for LG Electronics Inc. (066570.KS: Quote, Profile, Research, Stock Buzz), said about 30 percent of washers sold in the United States are now front loaders, compared with only 5 percent five years ago.

But executives also think customers may be willing to spend more on environmentally friendly products for less selfish reasons.

"Customers are willing to pay a little bit more if it's going to help the environment," said Isaac Larian, chief executive of MGA Entertainment, maker of Bratz dolls and other toys. He also noted that Wal-Mart Stores Inc.'s (WMT.N: Quote, Profile, Research, Stock Buzz) push for manufacturers to use corn-based plastic "looks promising."

While biodegradable plastics are more expensive now, they may become more cost effective as prices for oil, a key component in traditional plastic, rises.

Office supply retailer Office Depot Inc. (ODP.N: Quote, Profile, Research, Stock Buzz) has put together a "green book" of products made from recycled materials and has also worked with suppliers to develop better quality recycled paper, Chief Executive Steven Odland said.

He would not say specifically what percentage of sales come from recycled products, but said "it's a growing percentage every single year. It is significant."

Still, consumers' perceptions of how environmentally conscious they are and how much that actually affects their buying decisions can be two different things.

"We all like to think that we're terribly green and looking out for the planet, and then we're also as selfish as the next guy," dunnhumby's Hay said.