The Covid-19 pandemic has sent a wave of disruption through the retail industry. While some parts of the sector have been under significant strain, the impact has been a positive one for others, and, from the food and home categories to e-commerce, some players have seen rapid growth in the past couple of months.
Retailers may think that all consumers really want now to ensure on-going loyalty and growth are safe shopping experiences, click-and-collect or fast home delivery, but this is just one side of the story.
The U.S. National Retail Federation and a McKinsey consumer sentiment study both found that the extended periods of lockdown have led to a rising environmental consciousness among consumers, accelerating the pre-pandemic trend towards more sustainable shopping behaviour. This is supported by a July study published by the Boston Consulting Group (BCG) that saw 70 per cent of consumers are more aware that human activity threatens the environment and, in turn, environmental degradation poses a threat to humans.
Significantly, this trend towards environmental sustainability is a key driver for consumers to switch retailers. McKinsey found a decline in retailer loyalty as consumers take a more thoughtful approach to shopping, the search for quality and organic products being one the main drivers for change. BCG also saw 40 per cent of consumers intend to adopt more sustainable consumption behaviour following the pandemic. Further, the same study found 87 per cent of consumers asking for companies to integrate environmental considerations into their products or operations.
However, contrary to the findings of consultancy-backed research and advice of industry bodies around the world, sustainability has fallen off the agenda in many retailers’ response to COVID-19. Such ignorance cannot only be regarded as fallacy but simply as bad business strategy.
Retail’s responsibility in building the future of retail
Not only is there rising consumer and regulatory scrutiny on environmental impact and waste in the retail industry already today, but the planetary emergencies of climate change and biodiversity loss are waiting behind Covid-19 with the potential to send a much larger shock through the global system and business supply chains than what we are currently experiencing.
For retail, this means that with great growth also comes great responsibility.
The current sales figures are exhilarating for those riding the wave, and, particularly the acceleration in e-commerce is heralding a retail revolution. However, as capabilities are being scaled up to meet demand, and entire shopping concepts re-designed and reinvented to adjust to the new status quo, our planet’s boundaries must be considered in the process. There is a world outside the paradigm of limitless growth and bubble of quarterly results and all decisions need to be approached with a view of the larger systems at play. The truth is that retailers are inextricably tied to the systems within which they operate and, in turn, their operations have the power to form those systems.
Focus on impact reduction, consumer education and industry collaboration
Now more than ever, retailers have to play a much more active role in shaping the times ahead, and have a responsibility to make consumption more sustainable.
Firstly, this means that retailers must assess their business and supply chain to drastically reduce their environmental impact. All new infrastructure, process and material investments should be made with sustainability and efficiencies in mind, particularly if there are decisions being made right now that will be the operational status quo for quite some time. Here, retailers need to address everything from company travel policies to energy use, packaging, logistics or store operations. Aldi’s recent commitment to powering its Australian operations with 100 per cent renewable energy by the end of 2021 is an example of a simple step in the right direction that other retailers can easily follow.
Secondly, retailers must use their position of influence to build a new rapport with increasingly conscious customers not only to foster loyalty, but to actively influence customer shopping habits and re-frame consumerism. Most importantly, retailers should consider how they can moderate their own offering and processes to reduce impact, ranging from inventory and stocking decisions to customer education on use and end of life of products sold.
Selfridges UK’s “Project Earth” campaign launched in August is an example of how a retailer can nurture more sustainable shopping behavior. All consumer-facing communications, from their online presence right through to their flagship on Oxford Street highlight sustainable shopping options, including their 14 highly coveted store windows. In addition to this significant marketing effort, Selfridges has substantially expanded their business model to include circular concepts such as product rental, refill and repair services.
Thirdly, assessing business operations and product offerings is only one part of the puzzle. Aside from every retailer doing the best they can on topics they can control individually, it is also key that businesses collaborate with industry peers, policy makers and other stakeholders in broader society to drive larger-scale innovation and systemic transformation.
There is growing momentum around the world for businesses to unite in tackling sustainability initiatives together via industry-wide commitments to impact reduction, sending signals to policy makers, or sharing access to resources or technology. In Australia, a recent example is the collaboration between SEKO Logistics and The Better Packaging Co, which is offering discounts on home-compostable packaging to SEKO clients to reduce the use of single-use plastics in e-commerce.
While the above-mentioned initiatives still require much more work, they are all steps in the right direction to introduce responsibility into business practice and reduce the impact of the retail industry. Most importantly, retailers must understand that the momentum caused by COVID-19 is not only an opportunity to gain market share, but also a pivotal moment to do right by the planet and the people living on it.
Sustainability is everyone’s business. Only those players who understand this and act by it will be able to thrive in the future.
If you want to find out more about how we can assist your business in driving growth responsibly, contact us at The Purpose Agents.
This article was first published in Inside Retail as an analysis piece on the importance of keeping a focus on sustainable business practise, especially in times of accelerated growth.