The retail industry is under constant pressure to connect consumers and suppliers, and the COVID-19 pandemic underscored that responsibility. Retailers were at pains to provide essentials such as food while upholding safety standards. Further, the resulting supply chain bottlenecks made it impossible for the industry to deliver as pressure mounted.
Yet retailers today grapple with even more severe, existential concerns as the impact and relevance of climate change and sustainability loom increasingly more significant by the day. Retailers can no longer ignore their roles in achieving a sustainable future. As a result, many in the industry are adopting retail sustainability strategies and initiatives.
This article briefly contextualizes retail sustainability and recommends a few ways that you can start building your retail sustainability strategy.
Retail sustainability in the pre-and post-pandemic era
Retail sustainability was a primary concern for retailers even before the pandemic. But when the COVID-19 pandemic hit, retailers went into survival mode as they scrambled to keep their businesses afloat and serve their customers safely. However, shortly afterward, climate change's reality took its place in the world's priorities with renewed momentum.
Participate in public-sector sustainability efforts
Your strategy, pricing, and research teams should deepen their understanding of your target customers' evolving sentiments around sustainability in retail.
Building a successful retail sustainability strategy
Consumers under lockdown became increasingly interested in buying from brands and retailers with a mission. Nonetheless, many retailers still have a long way to go beyond their genuine intent to adopt sustainable strategies, and many haven't even started the journey.
The most effective way to approach this global challenge is to identify barriers that retailers face in their attempts to take effective action against climate change. Once you define these barriers clearly, you can take tangible steps toward overcoming them.
Great start to a long road ahead
Only a few leading retail operations are making meaningful efforts toward incorporating retail sustainability throughout their departments and value chains. Most lack comprehensive sustainability strategies, and only a tiny minority of retailers have reported significant reductions in their emissions.
Many retailers admit that it's not clear to them how to improve their performance while doing their part in achieving the 2015 Paris Agreement goal of keeping the rise in global temperature under 1.5 degrees Celsius.
Furthermore, retailers are among the most significant contributors to plastic packaging waste, accounting for about 36% of the world's plastic usage. More than 25% of global emissions come from retailers. Here's how you can integrate sustainability into your retail strategy.
Your strategy, pricing and research teams should deepen their understanding of your target customers' evolving sentiments around sustainability in retail. Find out how much more different customer segments are willing to pay for sustainable products. Accompany the research with real-world pricing experimentation to determine your customers' intent when they purchase these products.
Integrate retail sustainability into consumer research and product testing
Give your private-label teams space to develop innovative product versions that prioritize sustainable materials and rely on a low-carbon supply chain. Let these teams direct-test the pricing power and consumer uptake of sustainable products. If possible, partner with vendors on similar products to set the stage for future sourcing negotiations. Likewise, test the positioning of sustainable products to see how well they resonate with customers.
Embrace emissions transparency within product categories
Track your emissions for specific product categories and subcategories. Doing so lets you prioritize your decarbonization efforts and empowers your customers to make sustainable purchases. An excellent start would be creating internal teams to build emissions databases.
Encourage your board to develop relationships with leading institutional investors for whom ESG efforts are a top priority. Such investors are often more open to sharing ideas and expectations for sustainability timelines. Moreover, seek opportunities to secure short- to medium-term project funding from green bonds, which are now highly valued in the debt markets.
Include retail sustainability in discussions on strategy, planning and procurement
Enable your customers to access emissions information easily using innovative technology, such as the blockchain.
Retailers play a central role in the economy, so they should have a say in decarbonization policies and receive a share of the funding allocated for the carbon transition.
Consider including emissions criteria in your procurements and sourcing process. Track vendors' pricing diligently to identify cost increases related to sustainability. Develop a comprehensive clean sheet of sustainable processes and materials to facilitate data-driven negotiations with suppliers as the industry undergoes a carbon transition.
Find government agencies with the relevant mandates for sustainability goals and offer to get involved in initiatives and pilot projects. Retailers play a central role in the economy, so they should have a say in decarbonization policies and receive a share of the funding allocated for the carbon transition.
In many communities, leading retailers are one of the economic anchors, and they're also usually among the early adopters of innovations, such as renewable energy technologies. Additionally, significant retailers can help their smaller counterparts, such as local shops, embrace retail sustainability by sharing sourcing support and expertise.
Create and strengthen industry partnerships
Few retail operations are prominent and influential enough to encourage suppliers to switch to sustainable materials for production. However, by mobilizing and working together, retailers can wield enough clout. In any case, even the most prominent retailers stand to gain from an industry shift toward prioritizing decarbonized supply chains.
Furthermore, a unified industry effort minimizes the free-rider effect because all retailers benefit from these changes. Retailers can also form industry associations that propose common standards and negotiate guaranteed order quantities from specific suppliers, if only in the short term. Suppliers who accept the cost of sustainable products can benefit from competitive pricing.
Retail sustainability is achievable
The growth and success of your retail business need not be at odds with the efforts to combat climate change. The recommendations in this article are a good starting point for taking proactive action toward achieving a sustainable future as you steer your business forward. Sign up for Retail Brew today to get more news and insights on the retail industry.
Retailers account for about 36% of the world's plastic usage
More than 25% of global emissions come from retailers
Carrefour lets customers use a QR code to access product information, such as production dates and locations, cotton cultivation method, product composition and environmental compliance certifications.
Additionally, consider partnering with suppliers and third-party emissions-monitoring providers to create the databases. Next, enable your customers to access emissions information easily using innovative technology, such as the blockchain.
For example, Carrefour has invested in blockchain technology that traces the life cycle of textile products. It lets customers use a QR code to access product information, such as production dates and locations, cotton cultivation method, product composition and environmental compliance certifications.