A rapidly changing world means untangling problems that don’t yet have a reliable solutions playbook. While the current health and economic crisis has shown that all businesses need to put plans in place for sudden disruptions, risks specific to retail have also come into sharp focus. Among the headaches retail had to deal with over the last few months were disposing of sizable unsold inventory, an exposed supply chain, and operational challenges caused by product and people unable to move from one place to another. It was a wakeup call for the industry to change age-old practices. At the same time, there were hard conversations to be had about human impact on the environment as letups in certain activities, like traveling and manufacturing, caused pollution levels to drop measurably.
Sustainability and a more thoughtful approach to certain industry practices that have negative effects on the environment – and consequently on consumers, employees, assets, and business overall – has been a critical topic of conversation in retail for years. According to one estimate, clothing is responsible for releasing half a million ton of microfibers into the ocean every year, which is equivalent to more than 50 billion plastic bottles. And it is predicted that by 2050, the fashion industry will use up to 25% of the world’s carbon budget. It is widely acknowledged that things need to change. Consumers are getting more vocal about demanding action, and extreme weather examples are materializing more frequently, affecting availability of raw material and labor, and adding to manufacturing and supply chain volatility – making this a top-of-mind issue for the industry.
Different retailers have taken different approaches to sustainability over the years. Taking steps to protect the environment has been part of Patagonia’s mission from the very beginning, and the outdoors apparel and gear retailer has now pledged to make its supply chain carbon neutral within the next five years. Nordstrom is new to the conversation but has launched a product category that only sells items sourced sustainably and manufactured in factories that meet certain social or environmental standards. Primark has set up collection boxes in 190 stores across the UK where it encourages customers to drop off used clothing from any brand, which will then be reused, recycled, or repurposed.
With such varied approaches and a wide range of areas where changes can be made, how can a retailer hoping to make a real impact know where to focus and what the appropriate first step to take is? When setting your sustainability strategy, it’s important to ask yourself some fundamental questions. What are the goals of your sustainability program and how will they evolve over time? What environmental or sustainability initiatives would be most effective and realistically implementable for your business? Will your customers value and respond positively to a sustainability-related program? Does this add to your bottom line? Sustainability does not have to come at the expense of profit or make product prohibitively expensive for consumers already getting hit by financial pressures. Here are some practical ways to think about sustainability:
- Leverage consumer insights to improve buying and product development: Take advantage of data to understand what consumers, and specifically your customers, want so you don’t end up producing product that shoppers won’t buy and that will need to be disposed of using methods that may be harmful to the environment. You may need to change your buying strategy and product development models to incorporate smaller, more frequent buys closer to the in-store date. This is likely to ensure you’re giving your customers what they want while also optimizing your own processes and avoiding creating post-production waste.
- Increase transparency around sustainability: Even as regulatory and public requirements for companies to change practices that are harmful to the environment become more mainstream, it will be incumbent on retailers to have an honest conversation with their consumers. Consumers have been trained to expect fast-fashion prices, and while they want to make the right choices, they are still unsure about how to identify sustainable brands, what real-life impact these practices have on the environment, and how it impacts their buying habits. Stay clear of greenwashing efforts, but it is incredibly important to have a strong communications, branding, and marketing plan in place. It’s not just about doing what is right, but also having the right conversation to change mindsets across the whole industry.
- Adopt a test-and-learn philosophy: This is not a scenario where what works for one company will necessarily make sense for another. Bring in a test-and-learn attitude to your sustainability goals just as you would to any other new element of your value chain. Retailers will likely need to keep revisiting guiding questions on what they can realistically achieve in this area versus what their long-term sustainability goals are as they pressure-test and enact program elements. The most practical approach involves focusing on progress rather than perfection. In addition to thinking about the long-term improvements, there are also proactive steps retailers can take today to make a positive impact, including taking part in the circular economy, such as repair, resale, and rental.
Retailers that are able to make successful forays in this area will be better prepared for the future, prevent disruptions from affecting their business, and get a jumpstart on unlocking positive customer sentiment.