Convenience has reached the top of many shoppers’ wish lists during the pandemic as retailers work overtime to scale their online shopping services to match demand, with recent REPL research revealing that the number of people shopping exclusively online increasing from 24% to 34% in 2020. The unprecedented period has led retailers to adapt quickly while continuing to reduce operational costs and support profitable growth where possible. These developments however can lead to a level of complacency in terms of responsibility around sustainability, particularly in the operation of their supply chains.
88% of consumers are now looking for brands to help them make an environmental difference when purchasing their products, meaning that the juggling of convenience with sustainability is a top priority for retailers. It’s no longer the case that retailers can simply address sustainability issues in their supply chains. They must also ensure that they contribute to easing issues such as carbon emissions, air pollution, deforestation, water shortages, H&S issues, child labour and modern slavery. But how do retailers achieve this delicate balance between delivering convenience and ensuring sustainability? The following three focus areas provide the basis for an effective roadmap and explore the opportunities for change.
Many prominent retailers have used to their buying power to positively influence providers further down the supply chain, helping to create sustainability programmes and initiatives of their own. American fashion retailer Patagonia promotes its environmental and social initiatives as a key part of its marketing. With suppliers worldwide, the brand shares information about owned facilities and suppliers to give customers full end-to-end transparency on where and how the products they purchase are sourced, representing a clear understanding of its responsibility to ethical and sustainable fashion. Utilising technology at this stage also allows retailers to see a detailed view of each aspect of their supply chain.
With an increasing number of retailers being investigated for unethical practices in their supply chain, such as unfair and exploitative zero-hour contracts, making improvements to poorly integrated working practices and maintaining visibility of ethical working practices is key for customer trust while continuing to offer convenience.
Making impactful changes across the supply chain can only come from the effective analysis of where and how natural and human resources are being used to establish success indicators. Many brands create sustainability reports to ensure priorities are clear to their employees and customers, such as in the case of technology company Sony, which reports on its approach to human rights and employment practices yearly. This reporting can help improve processes and methodologies and help challenge employees to improve or further their careers.
Retailers can also take inspiration from the work of UK brewer Brewdog, an organisation which ran a sustainability update, addressing the perceived shortcomings in its supply chain and making changes to address its role in sustainable manufacturing. Brewdog’s initiatives have included shifting to wind energy and using renewable biogas to power the product’s delivery through the supply chain. Customers who purchase from the brand now not only benefit from the convenience of online delivery, but also from knowing that each purchase is contributing to carbon negativity and benefitting the planet.
New technology is increasingly playing a role in helping retailers optimise their sustainable supply chains without impacting on convenience. Whether it’s the ability to streamline transport routes or the use of warehouse monitors or IoT devices to manage energy consumption and check for faults, these advances are enabling retailers to act before any failures happen by securing engineers to carry out repairs before supply chains are impacted. While many are adapting to new sustainability measures, further opportunities also lie in wait for retailers in 2021.
Future opportunities to optimise sustainability in supply chains
Beyond these three initial areas, retailers should further explore the wealth of technology available to make changes to their supply chains to improve sustainability. For example, retailers that work with carriers that use vans in the delivery of items to customers’ homes can help to offset carbon emissions through the uptake of electric vehicles. With the mileage of electric vehicles rapidly improving, electric van fleets are becoming much more commonplace, enabling retailers to continue to offer the convenience of direct-to-door delivery while maintaining sustainable practices.
Beyond owned delivery fleets, future opportunities could also exist for those brands who embrace collaborating with other retailers to coordinate deliveries to customers via common platforms, enabling products to be delivered to customers in higher numbers and at a lower environmental cost. Whilst this is not something currently available on the market, given that the B2C supply chain is traditionally the last mile due to the need for one-package-per-stop trips, this could present considerable financial benefits to retailers too. While this method may mean slower delivery times for customers, for those that find environmental impact to be more important to them, giving them this option allows purchasers to make a direct impact on sustainability.
The increased cost of returned items, estimated at $1.1 billion during the 2020 festive period, has brought greater financial pressures to retailers. Fashion retailers in particular face the issue of waste associated with customer returns. Clothes that are returned need to be steam cleaned, re-pressed and re-packaged, which becomes a wasteful process across the supply chain. To combat this, many retailers are now already using automated workflows to remove item variability, while the integration of repeatable systems can ensure that the condition of items such as clothes can be assessed more quickly.
Another method of improving the returns process is via the use of shared return locations. Again, in this case, collaboration between retailers can allow consumers to return items to a convenient location at a convenient time without having to venture too far and removing the need for a van to travel to their home to collect an item. Making it possible for online purchases to be returned to stores would also be beneficial. A more seamless approach means customers benefit from the convenience of returning an item quickly, while retailers have greater visibility and understanding of their supply chain and its effect on sustainability.
Maintaining the balance
Convenience is king, and for retailers, this will remain front-of-mind in 2021 and beyond, particularly as the Covid-19 pandemic and its subsequent restrictions means that retailers are under greater pressure to attract customers. What cannot be ignored however is the growing demand from consumers for brands and their supply chains to be sustainable in their practices. It’s clear that now is the time for retailers to look to their supply chains to identify where improvements can be made.
Many organisations, both retail and non-retail, have already achieved substantial sustainability objectives in their supply chains through such applications as alternative energy uses, fair and transparent treatment of suppliers and employees and integration of automated workflows. With industries continuing to evolve, retailers and their supply chains need to adapt to ensure they aren’t left behind to keep pace with consumer priorities. Ultimately, they can play a crucial role in the sustainability of the planet by effectively optimising their supply chains.
Will Shepherd, Managing Partner Supply Chain at REPL Group