Every day brings a new batch of articles about the growing urgency of sustainability initiatives in retail. Implementation, however, largely remains complex. There is mounting evidence of consumer pressure, especially from Gen Z.
According to an AlixPartners survey from January, 80% of consumers grew more concerned about the environment during the pandemic, and 38% said they had changed behaviors due to these concerns. However, this hasn’t reduced consumers’ desire for low prices, innovative designs, and convenient, fast shipping options. In short, consumers want sustainability without the sacrifice.
The footwear industry is responsible for more than 700 million metric tons of carbon dioxide produced annually, largely via manufacturing. Sustainability practices, especially in footwear, have a cost and figuring out who pays for it is still to be determined. Despite this, many leading footwear companies are dedicating themselves to sustainability efforts.
There is a way to integrate environmentally focused practices that also create efficiencies and benefit the bottom line. Minimizing waste in certain areas like packaging, distribution, inventory, and energy consumption is in the best interest of companies and the environment alike. We group footwear sustainability into three areas: materials, manufacturing, and recycling and resale. And many footwear companies are beginning to take action (Figure 1).
Clearly, commitments are being made and actions taken, but are they moving the dial to deliver improved sustainability and value to footwear companies? It can be overwhelming to assess where to focus and how to integrate practices into business processes in a way that sustainability sits within larger corporate goals and fulfills financial requirements. There are several actions, capabilities, opportunities, and challenges in any sustainability journey. The key is to establish a concrete plan that outlines pragmatic actions paired with financial opportunities. Here are some practical steps:
Define sustainability for your brand and your customer: The term “sustainability” often clusters different problems and tactics together. Brands must define the parameters of sustainability they want to focus on – ranging from circular economy, manufacturing waste reduction, carbon neutrality, etc. – and how those parameters align with the values and lifestyle the brand represents. Just as important is leveraging consumer insights to understand how their specific customer thinks about and will react to sustainability. They must then build short-, medium-, and long-term plans that deliver on specific goals.
Partner with suppliers throughout the value chain: Because so much of the carbon impact in shoemaking comes from the manufacturing process, footwear producers must partner with their suppliers in ways they haven’t done before and find fixes at every possible step. Seeking the most energy-efficient processes and designs is a shared effort and requires new models of collaboration. It’s time to take responsibility for the end-to-end value chain and be fully involved in driving sustainable manufacturing.
Orient your customer to your goals: Consumers are bombarded with different studies, documentaries, articles, and news stories around sustainability. It’s clear that most consumers support sustainable business practices but are often unclear on which brands are simply greenwashing and which ones are making a real change. Is it the responsibility of brands to educate customers on what true sustainability can look like? We think so. Marketing plans and messages should be aligned with sustainability objectives.
Build a sustainability P&L statement: While sustainability can drive revenue growth, it often comes at a cost. Understanding true costs that are mapped to specific sustainability objectives allows for a clear view of what a sustainable P&L would look like so decisions can be made to accomplish financial objectives. Some of the expense can be offset by opportunities such as lower material costs through using recycled materials, energy reductions, packaging efficiencies, etc. AlixPartners deploys a Sustainability Value Index to assess companies’ current and planned sustainability initiatives and determine if they are value accretive or not.
While global legislative efforts to enforce sustainability standards on businesses are gathering steam, waiting to fall behind is not a good future-proofing strategy. More urgently, consumers are beginning to put pressure. Footwear retailers must put a plan in place now: starting with a status quo assessment and then defining precise goals that make sense for the customer, company, and the environment.