Retailers remain under ever-growing pressure from a younger, more socially conscious, and more vocal consumer and employee base to embed values deep into business strategy. A National Retail Federation survey in early 2020 found that consumers prioritize buying from brands that are sustainable and transparent. And despite the many imminent anxieties of COVID-19 in the year since, consumers have continued to be concerned about the environment and sustainability. In fact, the pandemic may have made consumers even more aware of the links between their health and the health of the planet, especially as the rise of online shopping landed the problem of excess packaging quite literally at their doorsteps.
Almost 80% of global consumers we surveyed in January to better understand their priorities and behaviors going forward indicated that the pandemic had caused them to become more concerned about the environment. In all, 38% said this had impacted their buying decisions, although there were some country differences, as detailed here.
The momentum around sustainability has been building, prompting many retailers to vocally set environmental and social responsibility goals. However, actions and results remain messy—both due to a lack of industrywide benchmarks and deep-seated harmful practices within the industry that demand deliberate undoing. According to a Business of Fashion report, actions continue to lag public commitments even for the biggest names in the industry. For the majority of the industry, it’s now table stakes to make public pledges about sustainability goals, but there is still little to no pragmatic action on making lasting changes that do not compromise profits or quality.
This is not to say no efforts have been made. Several retailers have taken steps such as lowering the carbon footprint of their manufacturing and sourcing operations, reducing waste in packaging, and making the product itself more easily reusable or recyclable. Walmart has committed to zero emissions from its own operations by 2040. Sainsbury’s has similar goals and has pledged to ask suppliers for their own reduction commitments. Meal kit company Hello Fresh uses predictive algorithms in its supply chain, which help increase accuracy in planning and ultimately reducing waste. H&M has run a well-publicized garment takeback campaign for years but has now taken a step forward with the launch of its technology that can separate, recycle, and reuse fibers at scale. Asda, meanwhile, is focusing on packaging waste with a commitment to make all owned brand packaging 100% recyclable by 2025.
However, uptake among a large percentage of retailers remains low, especially as this is a complicated web of problems with no single magical solution. Sustainability needs to be integrated into everyday operations and decision-making to ensure systemic change can be delivered without a negative impact to the bottom line. How does a retailer create a sustainability-focused strategy that can go deep and last long and ultimately achieve more than greenwashing? Here is how to start:
Define strategic brand objectives: Understand the pulse of your constituents, including consumers, employees, vendor partners, and the overall market through consumer sentiment surveys and other tools. This is also the time to do a scan of the marketplace and identify best practices from competitors and other retailers. Map these to your corporate goals to define a tailored but practical strategy for your brand. A thorough survey of vendors and suppliers and their own sustainability goals and current strategy will be critical in this process. Set your sustainability goals and guidelines to define success and build these into business function key results and individual performance plans.
Appraise current state of affairs: Conduct category level product, supplier, and brand review to score your current state and determine your penetration of sustainable factors and percent of brands or products that can be considered part of sustainable assortment. Next, align on a detailed action plan to meet target objectives, which may include identifying new national brand targets that have better sustainability practices or developing your own private brand products.
Strengthen the value chain: Conduct joint business planning with existing suppliers around sustainability targets. Incorporate sustainability measures into new supplier criteria and onboarding protocols. Constantly review and offload offenders to curate a new, more sustainable supplier base. It will also be useful at this stage to incentivize and empower suppliers to invest in these initiatives. Establish mentorship and partnership with select suppliers to develop capabilities with nascent vendors or brands.
Chart progress and adjust targets: Look to lead in the space by establishing a structured measurement and feedback approach to maintaining a lasting focus on sustainability goals. Institute accountabilities at every level while continuing to revise short-term goals into longer-term targets.
As the world gradually prepares to emerge from the worst of the pandemic, consumers will continue to prioritize values alongside value. Ultimately, all talk and no real action is going to aggravate consumers serious about these issues and holds the potential to cause a backlash. And because the area of sustainability is ripe for innovation and breakthrough technologies, including novel raw materials, it is easy to get distracted and chase after the next shiny object. While experimentation holds some value, most retailers will be best served to focus on embedding sustainable actions into the building blocks of running a retail business. It also makes business sense to get ahead of stringent regulations that might be on their way and mitigate any possible future disruption to operations now.
