What Consumers Expect of Retail Brand Sustainability
Circular economy, cradle to cradle, zero waste, upcycling, recycling – the list goes on. The consumers of today are more informed than ever before, and demanding transparency of the brands they consume. The social and environmental footprint of the retail industry is a hot potato, and consumers are opening their eyes to the working conditions in factories, scary reports about waste management problems, and loss in biodiversity due to farming and water pollution in developing countries.
Just consider Nike’s catastrophic child labor scandal a few years back, or environmental nightmares affecting millions of people, caused by water-pollution from textile and leather dying. This is the reality behind the operations of many well known retail brands. The flip-side of the retail-coin is well documented, and thanks to viral exposés consumers have a pretty good idea of what pitfalls the industry is paved with.
Value Driven Brands Are Winning
Especially the younger generations are increasingly betting their money on value based brands that are promoting socially and environmentally responsible business. Millenials and Gen Z opt for brands that are able to show how and where their products sourced and produced. Patagonia is one of the most famous examples of retail sustainability. The company was founded on social and environmentally sustainable values, donating 1% of their sales to environmental causes. Reformation is another brand that focuses on sustainable fashion, using surplus materials and upcycling waste to sew their pieces.
A sustainable retail brand does more than strive for profit. It cares about the health and safety of its employees, opts for ethically sourced raw materials, and takes responsibility for the entire product life-cycle; from packaging waste to up- and recycling of a consumed product.
Changed Consumer Attitudes Towards Retail Sustainability
The Fashion On Climate-study by McKinseyreveals that the fashion industry stands for 4% of global emissions, of which 70% is represented by upstream activities, “particularly energy-intensive raw material production, preparation and processing”. A sustainable way of operating, being energy and sourcing efficient benefits more than just the brand-image.
A sustainable product is one that lasts, right? We can probably all agree on that, but, simultaneously consumers have gained interest in many more qualities affecting a product’s sustainability and longevity; raw materials, wear and tear, repurposing value and disposal of a product. We talk more than ever before about the brimming landfills and microplastics escaping from our clothes, tyres, and single use plastics in circulation, and we want to know what the footprint of our consumption leaves on our environment and biodiversity.
The Deloitte Global Millennial Survey 2020 shows that the top concerns among young consumers include e.g. climate change and unequal distribution of wealth. As an effect, 65% of Millennials and 57% of Gen Z stated that they have increased their recycling-efforts and that half of Millenials and 41% of Gen Z reduced or fully stopped consuming fast-fashion. Furthermore, the survey states that 38% of Millenials have initiated or deepened relationships with brands that make a positive impact on the environment, while declining relationships with companies perceived to harm the environment or companies that pay executives disproportional rewards compared to employees.
This goes to show that the young generations are ready to vote with their wallets, rewarding brands that can prove their sustainability efforts are real, while eliminating those not cohering with the values of the buyer. The paradigm shift in the younger generations is an incentive clear as day for companies to ramp up their sustainability efforts, simply in order for them to survive.
Consumer attitudes towards the retail industry have changed, and probably accelerated more rapidly due to the corona-pandemic and its social effects on society, such as lockdowns and self-isolation. A survey by WRAP studying post-COVID19 attitudes shows that 55% of UK consumers see the environmental footprint of the clothing industry as severe, a steep increase (35%) from 2017, just three years ago. The same survey shows that the pandemic has changed peoples’ priorities about being fashionable to less important, while comfort and longevity of a garment increased in importance.
Other Incentives: Lower Costs, Risk Mitigation and Valuable Insight
While consumer demand for more sustainable alternatives is a carrot in itself for companies to invest in sustainability, there are many other benefits of turning sustainable and transparent for a business.
The sooner we act, the lower the cost. Extreme weather, caused by climate change, has already cost the U.S. an estimated $240 billion in damage control over the past decade, and the numbers are just bound to grow over the coming decades with the current pace. However, an estimate by the European Union shows that investing in sustainability often spills over on economic benefits. As a consequence to a law that bans single-use plastic, the EU predicts that it will generate savings, otherwise spent on environmental conservation, equivalent to €22 billion by 2030, while saving consumers an estimated €6.5 billion.
A classic example of a lack of control and understanding of the value chain are the aforementioned PR nightmares, caused by a lack of insight in the supply chain or operations, that are both costly to address, and immeasurably harmful for the brand.
A transparent supply chain and a complete understanding of the value chain brings more certainty and resilience to a business. With insight in where and how raw materials are sourced and how a product is produced, a company can mitigate risk and stay on top of issues, if they were to arise. Gaining control of the value chain is possible for retailers of all sizes, and is a superb way of getting started towards a fully transparent value chain. When the ground has been covered, it’s easy to start digging.
Worldfavor’s solutionsSustainable Sourcing and Supply Chain Visibility allow your company to track and gain control your entire value chain. The platform technology makes automated data collection and aggregation straightforward in a user friendly interface. Collect all the data you need to identify and mitigate risk, and gain valuable insights about your supply chain in order to reach your goals and meet the requirements of your customers and other stakeholders.