Sustainability: Shining a Light on Retail’s Say-Do Gap

As the UN Cop26 climate conference wrapped and in the wake of the pandemic, retailers are actively searching for more sustainable ways of operating, a research report from Visualsoft and Klarna has revealed.

The findings from the report reveal that 96 percent of brands have implemented some sort of sustainability strategy. However, there remains a huge gap between what brands say they want and what they’ll actually do to improve their sustainability practices. This goes for shoppers and brands alike.

Waste360 sat down with Dean Benson, CEO and founder of Visualsoft to dig deeper into these findings.

Waste360: This research focuses on the U. K. market. Any sense of how the trends can apply to other markets as well, such as the U.S.?

Benson: Yes, although our research focuses on the UK market, we are seeing a lot of similarities in the ways retailers are trying to be more sustainable in the U.S.

For example, the research showed that 96 percent of UK brands have implemented some sort of sustainability strategy. But, it’s not just in the UK that retailers are attempting to prioritise sustainability. Across the world, retail players are being pressured into reducing their impact on the environment.

A great example of this is, The North Face. The brand has created Clothes the Loop, which collects used clothing and gives customers $10 off a purchase of $100 or more. Those items are then turned into products like insulation, carpet padding, stuffing for toys, and fibres for new clothing.

And, take Patagonia, one of the earliest defenders of environmental ethics in the industry. The retailer was one of the first to use recycled materials and switch to organic cotton. The brand continues to expand its commitment to labour ethics and works with US factories as often as it can. Patagonia’s positive impact through its fair-trade factories worldwide, its secondhand Worn Wear collection, and sustainable apparel are positive examples for other brands to follow.

It’s not just the U.S. market. The German brand, Adidas, has taken the issue of sustainability head-on. Recycling is becoming incredibly important for sportswear brands as their products tend to contain a high volume of plastic, so using innovative sustainable materials is becoming one of the only ways they can hit their carbon neutral sustainability targets. Adidas is now partnering with Parley to create a line of clothing from upcycled marine plastics.

Waste360: The report notes that with COVID-19, retailers have put a greater emphasis on sustainability. Can you explain that in greater detail?

Benson: It goes without saying that Covid-19 has shaken things up. From investors right through to customers, sustainability now influences everything that happens in retail.

It starts with the consumer. The pandemic has increased customers’ awareness of sustainability issues. This has had a knock-on effect for retailers and their priorities. The pandemic brought a surge in eCommerce, with retailers and brands now under pressure to make online purchasing more sustainable.

For years, I’ve seen sustainability remain a significant item on retailers’ to-do list. But recently, it’s changed. Now, sustainability is a front-end as well as a back-end consideration for brands.

Not only has the discussion about the climate regained new focus due to COP26, but businesses are also encouraged by it.

Waste360: A major point here in the report is that a large gap remains between what retailers and shoppers say and what they actually do. Is sustainability perhaps destined to be a niche market? Or will that growth will be slow and incremental at best?

Benson: I would say that it’s impossible for sustainability to remain a niche market. In order to survive, brands must adapt and become more sustainable. What we’re seeing is some newer brands succeeding simply because of their sustainability credentials. Others, meanwhile, are haemorrhaging customers because of a lack of them.

And, although our research shows there remains a gap between what retailers say they want and what they are doing, gains are being made. In an ideal world, all online retailers would completely overhaul their processes and become carbon neutral tomorrow. However, this is not realistic. Our very existence and that of business, unfortunately, means a carbon footprint is inevitable. So the focus at the moment has to simply be on being better. Even if that means slow progress.

But there are definite signs of improvement. Data from the British Retail Consortium (BRC) revealed earlier this year that carbon emissions across leading firms in the sector have dropped by 49% since 2005, smashing environmental targets for the past year.

Smaller players like Nudie Jeans offer business models built around reuse, and giants like H&M have built transparency into their supply chain.

COP26 has also shined a light on the industry. There is a growing likelihood that things such as carbon taxes and other legal requirements will be placed on businesses to be more sustainable. This will force businesses to move quickly and close the gap on promises and take action.

So although a few years ago the word “sustainability” was probably considered to be a passing phase, that’s no longer the case. Customers, globally, now care about the impact that their purchases have on the planet. And retailers are finding out that sustainability isn’t a trend — it’s here to stay.

Retailing is constantly changing, particularly as the pandemic has forced more consumers online, so making online shopping more sustainable is paramount, not only for retailer success but more importantly for the fate of our planet. 

Waste360: Shipping to customers has been a big growth area during the pandemic, but again, this appears to have had limited effect in changing environmental practices. Any sense of things changing significantly here, perhaps in the future?

Benson: Yes, I think this will change significantly.

Retailers will need to focus on shipping as consumers continue to buy online. The pandemic has caused a massive – and irreversible – shift to eCommerce. The rapid growth in online shopping over the last 18 months has dictated a large increase in shipping to customers globally. In a post-covid world, it’s concerning that our research showed that just 29 percent of retailers are consolidating packages when shipping products to customers. And, just 24 percent of UK brands say they partner with environmentally friendly delivery companies.

We are seeing some delivery carriers offering more environmentally friendly shipping options. Companies such as Green Courier and DPD offer more sustainable options, using bikes and electric vehicles to deliver parcels. Other carriers have invested greatly in making their inner-city deliveries more eco-friendly.

By offering customers the choice of greener shipping options, retailers can ensure their carbon footprint is reduced. Or go one step further and offer a fully green fleet of delivery services.

Waste360: Shipping returns also have been a growing area during COVID. But has much really changed to benefit the environment? 

Benson: Although progress is slow, retailers are trying to find new ways to reduce their carbon footprint and this includes reassessing their returns strategy.

The cost of returns on the environment has long been a key focus for retail critics and little has changed since COVID-19. With the growing pressure on retailers to fulfil online orders at a time of rapid growth, sadly returns are still an area of improvement for many.

Our research showed that 25 percent of brands said they are putting an emphasis on in-store returns, and 22 percent are replacing items without forcing customers to return the original product.

And, just 23 percent of retailers suggested they are reusing or refurbishing returned goods. Some (25 percent) are using their eCommerce marketplace to resell used merchandise.

I remember in the early days of eCommerce, some digital-only retailers, including Ocado, raved about their delivery services as a greener option than consumers driving their cars to the supermarket. There may be some truth in that, there may not, but as eCommerce has grown in popularity and more and more trucks and vans from multiple retailers have hit the road, the argument has been watered down.

By consolidating the number of pickups and collections, companies can improve efficiency, and maximise delivery performance. But it’s not just retailers, shoppers are increasingly becoming mindful of how green the delivery and returns options are.