Sustainability in the Retail Industry

The retail industry is an extraordinarily dynamic sector. Sometimes it becomes hard to identify the key players and key trends that shape its future. In the previous blog entries, I have discussed the technological and socio-cultural factors that would influence it. However, another key factor to take into consideration is how retail industry impacts the environment and all relevant stakeholders.
Perhaps all the buzz about sustainability is receding, as it becomes mainstream, but its effects are still quite noticeable. The retail industry represented approx. 6% of the global GDP in 2015 (BEA, 2016). Therefore, any sustainable practices adopted by this industry would rebound worldwide. So, who is actually affected?

Customers

Consumers are very aware of the negative changes happening in the worldwide environment. As a consequence, they have adopted a particular purchase behaviour. The top sustainability purchasing drivers worldwide are:

Products being made by trustworthy companies/brands (72%)
Product recognized for health and wellness benefits (59%)
Product made of fresh, natural and organic ingredients (57%)

(Nielsen Global Survey of Corporate Social Responsibility, 2015)

This means that consumers have to build a trust relationship with the brands before considering a purchase. Trust comes through transparency and providing information, which have become the public’s most sought after marketing and promotional tools. Consumers are asking themselves: ‘How was this product made?’, ‘Who made it?’, “In which part of the world was it made?’, ‘In what conditions was it made?’. Customers’ conscience is seeking answers in the issue of how consumerism is affecting the surrounding environment. After all, me and any other customer, we go to a store to purchase, but we leave wondering if we did the right thing? (Fashion Revolution, 2016).

This rise of conscience can come from simple things as – ‘I like the packaging, but how many trees were killed for this to look good?’ to seeing a commercial emphasizing the company’s/brand’s participation in social commitment (Nielsen Global Survey of Corporate Social Responsibility, 2015). Consumer education is done through multiple means but it’s important to find a specific uniformization in its sustainability principles.

Employees

The top promoters and advertisers of a company’s sustainable practices are the employees. Labour force needs both to be developed through a sustainable way and itself to adopt a sustainable approach towards the working lifestyle.
First of all, employees are not only the people that serve us in stores. They are also the people further down along the supply chain. The people who transport the products, the people who assemble the products, the people who create the products, the people who provide the raw materials. So, what does it say for a company if its product materials are of the best quality, but the products were assembled or obtained by workers in conditions akin to the definition of modern slavery. This social issue is especially noticeable in Asia, where Syrian refugees in Turkish factories supply to brands as Marks & Spencer and Asos, Burmese migrants in Thailand’s poultry farms, workers on tea plantations in South India as well as textile mills, and palm oil plantations in Indonesia and Malaysia (Eco-business, 2016). They face terrible working conditions, often with small wages and no social benefits, under the duress of being expatriated.

Slowly moving from the origin of the products towards the end of the line, the distributer’s labour force problem constitutes in small wages, high turnover and low training investment in training and development. People are more interested in doing the right thing when the right thing is done by them. Investing in employees’ development in order to improve the quality of human resources can result in lower turnover and higher sales due to customer satisfaction. Furthermore, providing fair remuneration is considered still a high-performance stimulant.

Companies

At this stage, companies themselves must change their attitudes, top-down approach. They must create the environment for dialogue and understanding, through transparency and development programs.
Sustainability issues such as waste, global warming, carbon emissions, water shortage, waste of energy, they are caused by human activity. Therefore, logic dictates that humans themselves must change in order for their actions to change. However, in the current social context, humans are more focused on their wellbeing through their working lifestyle, and cannot focus and their action’s impact.

Taking into consideration this point of view, companies must focus their sustainability initiatives both on nature-origin related issues as well as the social origin. And it does not only mean the modern slavery in India but as immediate as the employee in the corner store that is struggling to maintain a normal life.

A Silver Lining in Sustainability

A possible solution comes through technological advancements.

Now it is easier to track tiers of suppliers further down the supply chain. The carbon footprint can be measured and processes can be easily adjusted in order to meet sustainable strategic goals.
Fair trade and labour issues awareness are supported through heavy social media activity by worldwide interested parties.

Employee performance can be easily trackable and accurate training can be provided through e-learning platforms.
All is not lost! However, it is primordial that retail companies realize the advantageous role they play in educating society regarding the environment! It’s time to change the world and retail players can set off an unpreceded domino effect for the good of the human kind! We are waiting!


This post is brought to you by one of AQ’s Undergraduates, Laura Susnea. As part of our internship programs, undergraduates and classic interns are encouraged to take part in company culture. Laura’s primary project focusses on training programs and eLearning and how best to adapt this to industries under pressure.