When It Rains, It Pours – The Sustainability Transformation Challenge for Retailers

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The environmentally conscious customer.  

Row, row, row your boat, gently down the stream, merrily, merrily, merrily, merrily, life is but a dream… what was once just a nursery rhyme could soon become everyone’s living nightmare!  

Water LevelsWith water levels rapidly rising and temperatures drastically changing, climate change, once only a hot (no pun intended) topic amongst scientists, has now reached each of our doorsteps.  

Awareness about climate change and concerns over increasing levels of anthropogenic environmental pollution have started to shape each of our everyday lives, it’s not just about recycling our household waste anymore, it reaches far wider and now includes our shopping habits. Even high-profile celebrities such as Leonardo DiCaprio are helping to promote the important need for us all to address the pressure we are putting on the Earth and the devastating consequences. 

A staggering 91% of global consumers expect businesses to operate responsibly and to address social and environmental issues, and a further 84% of correspondents say they seek out responsible products wherever possible. So, how should retailers address sustainability to retain, and attract new, customers who are increasingly more environmentally conscious? 

We have started to see a new consumer profile which is primarily focused on the convenient experiential shopping experience and the values that brands represent. In parallel, shareholders seek more transparency regarding social, environmental and operational elements of the products and company.  

To gain competitive advantage, retailers are compelled to explore opportunities to reduce costs and improve brand loyalty by leveraging sustainability to develop their label and keep ahead. Two major retail sustainability streams within the materials/manufacturing processes and energy consumption have emerged.

1. Front-end materials

There’s been a huge increase in the introduction of recycled fabrics, such as materials created from plastic bottles, as well as replacing real leather or fur goods in favour of faux leather or fur. It’s also pleasing to see that brands are eager to declare their eco-friendly credentials and the transparency of the manufacturing processes.  

This spring, the well-known international clothing company Gant launched a new line of TECH male and female shirts that incorporate PET waste recovered from the ocean that was turned into fabrics. The new product incorporates 10% recycled plastics and places Gant on the list together with other brands like North FaceAdidas and H&M, who all recently introduced new sustainability initiatives.  

Another aspect of manufacturing sustainability which offers measurable value is the upcycling of returned or defect items. A good example is the North Face project “Renewed”, where returned or defect coats are cleaned, fixed and then sold again. This creates a sustainable cycle, which significantly reduces waste and raw material consumption.  

While these initiatives are fantastic and very helpful, it’s still not enough, so what else can we do at the product development stage? The success lies in creating an interconnecting, uniform sustainability framework and aligning the overall strategy. Each step of the process should go hand in hand and therefore increase the chances of success first time around.  

To efficiently address the Design for Environment (DfE) guidelines and to stay competitive in the global market, companies need to move towards PLM platforms to integrate product development with their sustainability initiatives and create an integrated system instead of using silos. Only through innovative approaches like 3D-PLM can retailers progress in their sustainability initiatives, improve customer experience and reduce operation costs.  

Virtual prototyping and sampling using 3D processes has shown to reduce, and even eliminate, usage of energy and raw materials, as well we the footprint of distributing physical samples across the globe. What’s even better is that it enables retailers to consider and test an almost unlimited amount of products/ideas/innovations leading to greater choice for the customers without the increased effect on the environment. Virtual design and development expand the company’s resources and supports the build of a ‘sustainable’ business model, which can bring long-term positive benefits. 

2. Energy consumption 

It’s not just at the product design stage that we can address environmental concerns. In the past few years, large technology companies have started to buy into the benefits of clean energy, and this has inspired others. In April 2018, Apple Inc. announced that their retail stores, offices and data centres in 43 countries, including India, are now powered with 100% clean energy (you don’t have to be an Apple fan to appreciate this). They also confirmed that 23 manufacturing partners are committed to powering all of their production with 100% clean energy.  High-street retailer energy consumption is skyrocketing, with retailers spending roughly $20 billion on energy every year across the industry. Cutting energy costs is a complex process that requires understanding, optimising your existing energy data and leveraging emerging technologies/automation in pursuit of sustainability.  

Implementing these practices mainly relies on a well-defined strategy and functional software architecture which provides data collection infrastructure, monitoring and control, and advanced analytics.  

– A retail sustainability journey could start by setting the founding corporate sustainability values and commencing with philanthropic and charity programs such as planting a tree for every item 

– The second step would involve addressing operations – optimisation of energy consumption and waste reduction in stores and distribution centres followed by product and supply chain transformations.  

– At the most advanced stage, the leading companies would engage consumers and other stakeholders in the company’s sustainability vision and implementation process to help them understand the full impact of this metamorphosis.

Sustainability Diagram

So, who else is getting sustainability right and inspiring other retailers? 

Companies that engage in sustainable and environmentally conscious business are enjoying increased customer growth, brand loyalty together and increased sales.  

A great example is Unilever, whose sustainable brands accounted for 60% of the company’s turnover growth in 2016, and they grew faster than the company’s other brands by 50%. The best performer was PG Tips tea, who now mostly use biodegradable tea bags and by the end of this year, all the PG Tips range will be packaged in a new plant-based material which significantly reduces environmental impact. 

In 2007, British retailer Marks & Spencer committed to becoming carbon neutral, sending no waste to landfills, extending sustainable sourcing and much more by 2015. The most recent report, listing its sustainability achievements and plans, revealed an impressive 36% improvement in energy efficiency in M&S’s UK and Ireland stores. Through its clothes recycling initiative, M&S has also raised an astonishing £50m for charity since 2007, including £15m for Oxfam

Are you ready for the challenge? 

The numbers don’t lie! With more people now demanding environmentally friendly and ethical products, it’s obvious that retailers need to accept shopping is not just about aesthetics, it’s about values and beliefs and expressing those. It is also very clear to see that consistent sustainability initiatives can help companies outperform their competitors, improve margin, increase customer goodwill and employee engagement.  

The fact early adopters of sustainable methods have shown an increase in profits as a result of their cleaner and more ethical practices only strengthens the argument that retailers can overcome the sustainability transformation challenge, both in terms of success for the business and Mother Nature, all at the same time… so, how will you make it rain?! 

Ripple Effect

Author

RimaRima Trofimovaite is a Business Consultant at Thought Provoking Consulting, who holds a doctorate in sustainable chemistry and renewable energy.

When she’s not working on creating retail solutions, Rima enjoys mountaineering, going to the theatre and visiting as many new ice-cream and cake shops as possible.