We are living in a world where retailers are transforming their business models towards a paradise of service and personalization to gain competitive advantage with less loyal customers. It is a world where customers can order a product online and have it at home in less than 30 minutes. Tonnes of plastic and cardboard waste generated by this delivery whirlwind are a result of these forces. According to the World Bank, the apparel segment makes up 10% of humanity’s carbon emissions. Fast fashion has increased clothes “consumption” by making fashion accessible to the masses and increasing the demand for new garments to an unsustainable extreme. It takes about 7,500 liters of water to produce a single pair of jeans, which is equivalent to one person’s drinking water for seven years. Impressive figures when we look at the various jeans in our wardrobes.
Is it possible to reconcile a customer-oriented, competitive environment with a strong sustainability claim and make it compatible? How can both goals be aligned and well combined?
The retail industry has shown great examples of sustainability commitment. Many large companies have dedicated a lot of time, effort, and talent in promoting, managing, and communicating sustainability. The challenge now is to scale these efforts and systematically integrate them into all retail processes without jeopardizing business success. Numerous studies have shown that companies that address environmental, social and governance concerns do not have a negative impact on value creation. On the contrary, sustainable actions pay off and there is a positive correlation between them and financial performance.
At the same time, public opinion is becoming increasingly aware and demanding action. According to a recent Eurobarometer public-opinion survey, most European consumers want a stronger focus on sustainability and the environment, and they want industry stakeholders to act accordingly. PwC’s June 2021 Global Consumer Insights Pulse Survey reveals that 59% of consumers say they are more “eco-friendly” today than in previous times. According to shopping trends reported by Forrester, shoppers are increasingly evaluating products and brands based on a company’s ethics and values. However, this is not only true for retail customers, but also for retail employees, suppliers and partners. There is a common concern and a common call to action for sustainability.
Sustainable retail models will bring relevant, profound and transformative changes to significantly reduce emissions: Use of new materials and manufacturing processes, a different and more sustainable energy mix, alternatives to existing packaging with recycled and lighter materials, waste-reducing production, new service models at the PoS moving to bare products and “reusable packaging,” an increase in circular business models that encourage renting, reselling, repairing, refurbishing and recycling, and delivery models moving from thousands of vans to more sustainable types of transportation, etc. There are already examples of all these initiatives around the world, but none of them are widespread enough to really make a difference.
For some, the scale of change seems a little scary, so much so that it can even prevent that change. Organizations need to start small, communicate properly (externally and internally), measure transparently and expand the level of change according to an agreed plan. There are concrete actions that can be taken NOW:
This last point, the data platform, has a special role to play. It should support retailers by:
A strong increase in sustainability measures can be expected in the coming years. Public interest is increasing, retailers and partners are joining forces, and governments are launching investment support programs. For retailers, data transparency across the entire value chain will be a key element of all sustainability initiatives as part of this development.