The Pandemic Shouldn’t Be a Reason to Punt Sustainability
This past year was tough for retail. From store closures to the explosion of e-commerce to a holiday “return-aggedon,” retailers were forced to make some tough choices, pivot, and then pivot again. Amid a financially challenging and uncertain retail environment, some retailers have, unfortunately, placed environmental and social responsibility programs on the back burner.
It’s understandable. When faced with harrowing decisions, any perceived “extras” must go. However, taking this position is the problem. Sustainability isn’t a line item that should be cut easily — it’s imperative for the health of our planet. The fashion industry alone generates over 92 million tons of waste annually, or about 4 percent of the world’s waste, while e-waste in 2019 reached a record-breaking high of 53 million metric tons worldwide — a number that’s expected to soar over the next decade. The impact of unsold or unused goods is also a glaring problem exacerbated by the growth of e-commerce. Consider that product returns in the U.S. result in nearly 6 billion pounds of landfill waste.
Now, with retail already going through a reinvention phase, is the time to push harder on greener business practices, the fight against climate change, and a more sustainable retail industry for the long haul. Failing to adopt sustainable retail practices now is simply too costly for the environment and your bottom line.
Meet the New Eco-Conscious Consumer
Even following the COVID-19 outbreak, 90 percent of consumers are more or equally concerned about environmental issues, and 95 percent believe their actions could play a role in reducing pollution and improving climate change. This trend will only grow; 62 percent of Gen Z and millennial consumers prefer to buy from sustainable brands, pointing to how top-of-mind sustainability will be for consumers in the years to come.
The growing preference for sustainable retail has fueled the explosive growth of resale, pushed the tide towards eco-oriented brands, and increased the demand for features like environmentally friendly packaging. As consumers’ values continue to shift, retailers that don’t demonstrate tangible efforts towards sustainability will get left behind. For this reason, retailers need to incorporate sustainability programs across their operations, from improved sourcing to re-commerce.
Invest in Sustainability Now to Reap Financial Benefits Later
Amid COVID-19, retailers had to deal with a slew of supply chain issues, including sourcing disruptions, transportation hurdles, and shipping delays. Admittedly, investing in sustainability where it matters most — the supply chain — requires an upfront investment, but the environmental and financial gains are more than worth it in the long run. As sustainable supply chains’ investments can increase value chain revenue by up to 23 percent, the commitment to sustainability will pay itself off.
For example, Unilever has cut $1.5 billion in costs through sustainable sourcing since 2008, generating impressive savings in a short period of time. Through its buy-back program, Ikea was able to resell 30.5 million returned, damaged or displayed products at discounted prices, reducing waste and even generating new revenue streams. These sustainable cost-saving and environmental recovery methods will ensure retailers can build a more sustainable industry and are better prepared to handle future crises.
Don’t Get Left Behind
As the industry as a whole moves towards a sustainable future, dropping sustainability as a priority will leave retailers behind the competition. “Zero waste” and circularity are now mainstream concepts, with retailers like Ikea, Everlane, and Inditex making public commitments to sustainability.
Beyond the competition, retailers need to anticipate another trend: increased government regulation. According to an HSBC survey conducted in May 2020, 38 percent of businesses anticipate increased regulation as a factor driving more sustainability in the next two years. The Biden Administration is injecting renewed focus and commitment to fighting climate change, reducing emissions, and enacting cross-industry regulations. Retailers face the risk of costly issues tied to compliance if they don’t prepare now.
Moving past the pandemic, retailers now have an opportunity to turn a new (green) leaf and move forward more sustainably. As e-commerce continues to accelerate — and with it, its impact on the environment — factoring sustainability into products, operations and programs not only makes business sense, but helps retailers shape the future of ethical and responsible shopping.
Tobin Moore is the CEO and co-founder of Optoro, a complete returns solution for retailers.