Our world is based on interactions. I would propose the most influential of these is the flow of money in our capitalist global culture. That financial flow relies on the interaction between businesses, consumers and government with the retail environment sitting at the intersection between facilitating the transfer of capital.
Sustainability is in many ways a system of supporting those interactions: creating supply chains that can provide in challenging circumstances; focussing design on products that minimise waste and using resources responsibly so that future generations will have the opportunity to live in the same way we have without fear of catastrophic climate changes. Sustainability now thoroughly permeates all three of retail’s prime influences and as such has become the dominant force within the sector. How then does it wield its power?
The consumer sits as the power broker in this relationship. A rapidly growing trend in capitalist society is the awareness that our money acts with political and social agency. People care more than ever about how their spending effects causes they align with and just as importantly are willing, even eager, to find out how. Concerns on sustainability issues dominate this and a staggering 57% people will choose their brand or method of purchase based on its environmental impact. This number is on the rise.
As millennials and Gen Z (where this figure rises to 64%) become the dominant financial force in the world, this will become the most influential issue facing consumers. Information is now readily available on every brand and supply chain at our fingertips so consumers have all the knowledge they need to make those decisions. Businesses and retailers are reacting to this in a hugely refreshing way, with transparency and authenticity.
Never before have business practices been more open to scrutiny. This has marked the rise of the purpose driven brands. Those who are making sustainability the heart of their branding, marketing and business model are being rewarded with customer loyalty and survival through the toughest business environment the 20th century has seen, and the resilience to cope with change.
Businesses are rightly committing to improvements based on embodying sustainable practices in their value chains and demonstrating sustainable credentials in disclosure policies. The number of companies committing to Science Based Targets, especially the more ambitious 1.5°C target are on the rise. 1,045 companies worldwide are committed to or have already set public and binding Net Zero agreements that require emissions across all three scopes to be cut drastically. The most pro-active in this space are even creating the representative bodies enforcing change within their own sectors.
Prana developed the Responsible Packaging Movement aimed at removing all plastic from packaging by 2021. The Sustainable Apparel Coalition, with 250 members representing $750billion in annual revenue, developed the Higg Index, a suite of tools to enable retailers and brands to score on a set of sustainable metrics. This transparency recognises the consumer’s desire to spend with purpose. Sustainability is now even transforming our concept of ownership. Subscription retail and the circularity of the model it represents allows companies to control the end of life of their products in a new way. This ensures re-use and less production with fewer emissions in the life cycle of the product.
ON Running is one example adopting this model with the release of the Cyclon, its own advertising bravely and cleverly stating that “you will never own this shoe”. The emergence of more circular supply chains is more important than ever as it not only ensures sustainable authenticity for the consumer but delivers far more resilience from major business interruptions, Covid-19 being the prime example by reducing availability of key commodities sharply and suddenly.
Products themselves are changing to reflect this as well. Salomon have announced the INDEX.01 shoe entirely designed with end of life as its focus. The entire shoe is made from two materials thus enabling recycling and re-use, a constant issue with footwear as the products are made of so many materials. No doubt retailers will be emphasising its sustainable credentials at the point of sale. The rise of the secondhand market is directly linked to sustainability becoming a dominant force in consumers decisions. eBay active buyers have risen from 171 million in 2019 Q1 to 183 million in 2020 Q3 alone.
The savviest brands are bringing this in house to get their share of this growth and sustainability is the umbrella under which this is done. Patagonia pioneered this with their Worn Wear range increasing sales but also crucially reducing the carbon, waste and water footprint of an individual item by 73%. Their brand principles now are reflected in year on year growth in sales.
The environmental and sustainability policies of government’s worldwide have a huge influence on retail. Offering both carrots and sticks to brands and retailers they shape the environment in which money flows. Whilst policies across all sectors carve this environment, the dominant trend lies within sustainability yet again.
The UK’s governments commitment to Net Zero by 2050 will necessitate massive legal compliance in all areas, retail very much included. Reporting methods like the introduction of Streamlined Energy and Carbon Reporting (SECR) in 2019 force companies to engage with their carbon footprint. We have seen the Chancellor rolling out new mandatory disclosures that will force companies to enter the world of transparency and comparison whether they like it or not.
The carrots are powerful enablers however. Paris for example via Mayor Anne Hidalgo stating it will become the seat of Sustainable fashion by 2024 aligns an entire city to sustainable policies. A decision of this scale will need to be backed by significant government spending and support of businesses in retail. Creating a world leading ecosystem for fashion to flourish under sustainable practices is a noble goal, but also a shrewd and timely branding alignment of a city wide scale.
In short sustainability cannot be ignored by retail. It is shaping the methods of sale, the products being sold, the core beliefs and business models of the brands creating them and those selling them. As influential as it is now, that force will only grow. Each younger generation places greater importance and value on sustainability. As companies and countries commit to massive carbon reductions those not engaging will soon become irrelevant or, at some point, on the wrong side of regulations. Companies that do not evolve to make sustainability a pillar of their business model, and adopt a transparent method of reporting this, will simply fail.
We are experiencing a rare win-win situation where companies that do good, that genuinely commit to better practices, that make authentic changes and live by them, are being rewarded by a more knowledgeable and principled consumer base. There is no logical reason why companies in retail should not be doing everything in their power to make sustainability a core tenet of their business. We are short on time, but the path is clear.
more than a word.