Embracing Sustainability Post-COVID – How Retailers Can Respond
The pandemic has impacted the UK business sector in different ways, however for many organisations, including retailers, the drive towards a sustainable supply chain remains on-track, according to Edward Court, a consultant at 4C Associates.
While for many operators in the the retail sector, just staying operational has been an achievement during the pandemic, for others, we have seen a surge towards a sustainable supply chain and operating model focus. Several big names such as Asda, Burger King and many others have made big announcements towards sustainability this year, driven by consumer demands.
What these major players have been able to do well is understand that a sustainable agenda, and the effects of the pandemic can coexist. The demand for sustainable practices is only going to increase – driven by consumers, suppliers, and regulators. Retailers will have to learn to adapt their business models and embrace sustainability for the long run.
If the UK roadmap goes to plan, the UK will be back to ‘normal’ by mid-summer. However, the threat of the pandemic, COVID-19 or otherwise will continue to loom over retailers and their respective supply chains. Organisations, including retailers, must learn to manage this risk, implement necessary changes, and move forward. A key part of this is investing in innovation, and sustainability.
Developing A Long-Term Strategy
On average, the consumer goods industry is estimated to account for 60% of worldwide emissions, according to the Consumer Goods Forum. Although the retail industry only makes up a proportion of the entire marketplace, retailers must take responsibility over their entire supply-chain.
As sustainability becomes ever-more prioritised amongst stakeholders, the retail industry must focus on developing its long-term sustainable supply-chain strategies. There exists a multitude of reasons why retailers should be concentrating their efforts in this area.
A YouGov survey discovered that almost two-thirds of company executives believe a sustainable strategy is necessary in remaining financially competitive within today’s business environment. A successful approach to the triple bottom line (Planet, People and Profit) which are all interconnected, can ultimately have a positive effect on the traditional bottom line of a company.
Retailers can significantly reduce costs through increased innovation and efficiency along their supply chains with sustainability forefront of mind. Monitoring and optimising energy and resource usage throughout the supply-chain has proven to result in improved profitability.
Regulatory And Legislative Change
Another huge driver for organisations is regulatory and legislative change. These provide retailers with potentially costly challenges. The UK government is targeting net-zero emissions by 2025, global energy reporting is now a legal requirement, and a plastic packaging tax will be introduced in 2022: all amounting to a potentially serious headache for retail executives who do not prioritise sustainability.
Consumer trends have certainly driven a need for more sustainable processes within retail. As consumers demand clear, responsible and transparent information from businesses, those who can satisfy these criteria will develop a strong competitive advantage over those who 'greenwash', or misinform consumers.
In recent years, governments across the globe have rolled out increasingly stringent policies and regulations with the aim of providing financial advantages to businesses prioritising sustainability. A recent example of this is the UK Government's planned new tax on plastic packaging, which comes into effect by April 2022.
Furthermore, consumers are increasingly aware of the products they are purchasing. With this trend set to continue, in a world where business transparency is becoming increasingly commonplace, consumers will be able to easily identify and tailor their purchasing habits to sustainable businesses.
Businesses that are implementing good sustainability practices now will not only be able to distinguish themselves from their competitors but are also positioning themselves for a significant head start in a business world that is only going to be increasingly centred around sustainability.
Focusing On Transparent Supply Chains
In the retail industry, more than 90% of the environmental impact is in the supply chain. As a result, it is essential that retailers can effectively integrate sustainability both up and downstream in the supply chain.
In general, there are three key steps retailers must take to achieve this: locating issues, assigning appropriate supply chain objectives, and assisting suppliers with sustainability management. Issues such as inefficient usage of resources or unethical practices must be correctly identified.
This can be achieved through leveraging external expertise or implementation of supply chain technologies. End-to-end scrutiny of the supply chain is key for effective identification of unsustainable processes.
When it comes to sustainability objectives within the supply chain, it is vital to consider the objectives and legal requirements of the current global retail industry. As a bare minimum, retailers can look to ensure their own business, as well as their suppliers achieve certain standards such as a B-Corporation certificate.
Additionally, the implementation of well-regarded management systems such as 'lean management' has proven to be highly effective in minimising resource input and maximising efficiency. To successfully embed this strategy into the supply chain, retailers must adopt an organisation-wide 'lean' culture of continuous improvement and waste reduction.
Once issues have been located and objectives have been put in place, actively assisting suppliers is key in maintaining sustainable processes.
Many major retailers have developed an increasingly large focus on sustainability within recent years.
Asda has implemented ‘active and intelligent’ packaging to increase product shelf life and reduce food waste. Fellow UK retailer Co-op has shown persistent commitment to sustainability throughout the pandemic, demonstrated by their recent collaboration with award-winning charity Hubbub.
Elsewhere, Burger King has also set out a roadmap on many sustainability initiatives, including using 100 percent recycled or certified packaging by 2025. These initiatives highlight the ongoing focus on sustainability by big name businesses in a post-covid landscape.
The pandemic changed the demands on businesses and consequently, many companies were forced to rapidly adapt, innovate and embrace new business models. This is highlighted by Tesco, which saw its online sales grow by 49% the first quarter of 2020, compared to the previous year. The company hired 47,000 temporary staff and estimates it spent £840 million on adjusting to COVID-secure shopping.
Many of the changes made by businesses were initially deemed short-term measures to meet consumer demand. It is now evident that COVID has changed the retail landscape for good, so it’s crucial for businesses to ensure they’re operating as efficiently and sustainably as possible. Through the implementation of the three core pillars of sustainability (people, planet and profit) businesses can achieve a competitive advantage and provide value for the firm and their stakeholders.