For many younger consumers, the environment is the defining issue of our time. That’s hardly surprising, given the growing fears over global warming. However, it’s also influencing their shopping habits, posing a serious challenge for retailers.
Research by consultancy Alchemmy shows that 75% of Gen Z shoppers say their purchasing decisions are influenced by whether a brand or product aligns with their green values. Lucy Gibbs, Alchemmy’s director of retail and consumer, believes the figure reflects a younger generation that wants to engage with brands which are authentic in their efforts to become more sustainable.
“To meet the sustainability expectations of Gen-Z, it is not enough for retailers to appear as if sustainability is important to them,” she says. “Instead, retailers need to work with consumers to make sustainability profitable in the long term and incentivise them to want and choose more sustainable options.”
Retail’s dirty secret
That may be easier said than done. Shoppers are now used to the convenience of endless choice, speedy deliveries and seamless returns, all of which come at a high environmental cost.
The British Retail Consortium (BRC) recently acknowledged that the sector’s annual greenhouse gas emissions are 80% higher than those of all road traffic in the UK. Significant carbon outputs are evident across the whole retail supply chain, from the energy required to run in-store operations to the fuel used by delivery vehicles.
In November, COP27 again highlighted the need for immediate collection action on climate change across both the public and private sectors to avert environmental catastrophe, with fears that we’re unlikely to meet the goal of limiting global warming to a 1.5°C increase. With Gen Z’s spending power on the rise, businesses that don’t deliver on sustainability risk turning off value-orientated consumers. It puts the big-name retailers in something of a double bind.
Namrata Sandhu is CEO and co-founder of Vaayu, a software development company that allows retailers to calculate and cut their carbon emissions in real-time. She believes retailers must first understand their total carbon outputs before they can identify how their climate strategy will impact the customer experience.
For instance, scope 3 greenhouse gas emissions – which include all emissions generated up and down the supply chain – can account for as much as 80% of a retailer’s total carbon footprint, according to McKinsey. This can rise to as much as 98% for home and fashion brands. Because many of these emissions aren’t directly in the control of the retailer, they are difficult to accurately calculate or mitigate.
To overcome this, retailers must include emissions criteria and reporting into all procurement discussions with vendors, Sandhu suggests, so they can build a holistic view of their total carbon output. “You can’t cut what you can’t measure,” she says. “Retailers need granular and accurate data across their entire supply chain to identify issues and what they can do about them. They also need the ability to test different scenarios to drive business decisions that provide significant carbon reductions.
“It is only by optimising logistics and supply chains that retailers can offer the same level of customer service while making tangible steps towards sustainability goals.”
Changing the game
But accurate data alone won’t solve retailers’ climate conundrum. If the UK is to truly move away from its throwaway culture, retailers must create a new customer proposition centred on sustainability.
The good news is that consumers – particularly those from younger generations – have shown a willingness to pay a premium for sustainability. What’s more, they also proactively want to shop with brands that are dedicated to embedding sustainable practices into their operations.
One option is dedicating as much focus to post-sale as to pre-sale, according to Stephanie Crespin, CEO and founder of Reflaunt.
For example, the status quo around customer returns prioritises convenience above all else, with consumers able to freely return products despite the heavy environmental toll of shipping and the eventual disposal of goods into landfill. But Crespin thinks retailers should instead seek to minimise the number of returns they need to handle in the first place. Better sizing information, more detailed product descriptions, and highly tailored personalisation to connect consumers with items they’re less likely to return would improve rather than degrade the customer experience, she argues.
“Today, we are still in a retail dynamic where all efforts and investments are funnelled into making that first sale,” she explains. “Little investment and responsibility is taken for what happens after that.”
A slight move up the value chain would also help. “It’s a win for the planet and for consumers’ wallets to invest in quality products that hold decent residual value if they are resold,” Crespin explains.
Thomas Walters, CEO and founder of advertising agency Billion Dollar Boy, agrees with this view. However, he believes the success of this approach and any sustainability efforts driven by brands hinges on retailers being consistent and committed in their approach.
“Transparency is key,” he says. “For example, if as a business you’re offering free returns, then you need to demonstrate that those returns aren’t simply going to landfill. And at times when you’re potentially falling short of your climate responsibilities, you need to be honest and say ‘we’re doing this well, but we know we can do better and this is how we’re going to achieve change’.
“Sustainability has to be long-term, holistic and consistent across the business.”