Retail as an industry has faced many challenges in recent years – many of them unprecedented – and there’s a wider sense that more is yet to come. Against this backdrop of sudden shifts and uncertainty has been the steady drumbeat of changing consumer expectations of brands.
Sustainability has become possibly the hottest topic when discussing the future of retail but look far enough back and the idea isn’t new at all. Environmental impact has been part of the conversation for a long time but changing political landscapes and the increasing influence of consumer activism have increased the urgency for retail brands to take sustainability seriously.
There has been a marked increase in environmental awareness, fuelled largely by the rapid growth of social media and the real-world impact of climate change. This has led to a shift in consumer behaviour in two key ways:
The first change is an expectation that brands should take responsibility for their products across the entire supply chain and that the responsibility does not end at the point of sale but should also offer consumers a way to return or recycle products that have reached the end of their life.
The second major change is that consumers are now increasingly aware of their own choices and are prepared to make changes to what brands they will support. If brands aren’t willing to take responsibility for their products as consumers expect, consumers will actively shift to a brand that is, even if that brand is more expensive.
The impact of that change should not be overlooked or underestimated. Consumers being willing to boycott brands that aren’t perceived to be sustainable and shift their business elsewhere is a seismic shift in consumer behaviour. It threatens every retail brand that has yet to fully engage with sustainability. Short of a major change in consumer behaviour, brands without sustainable policies and actions will not exist in the near future.
What Does Sustainability Mean?
Sustainability is a complex and multifaceted topic. It can be difficult to define, and even more difficult to achieve. There are many ways to approach sustainability, and no one solution is perfect or without cost. A sustainable retail brand understands the importance of environmental responsibility and strives to create a positive impact on society.
While most brands are focused on the environmental aspect of sustainability, it’s important to remember that community impact, staff wellbeing and the wellbeing of everyone in the supply chain are just as important. Consumers are hyper aware of these issues and expect brands to take them just as seriously.
Sustainability is one part of corporate social responsibility, and while consumers may not have the specific language or awareness of what CSR is, their expectations of a brand and judgement of its ethical and sustainable practices all fall under the umbrella of CSR.
You may have already noticed that the younger generations are more likely to engage in sustainability-focused buying habits. A recent study of consumers found that Gen Z (those born between 1995-2005) was the most likely generation to buy green products and engage in sustainable activities. The study found that 64% of Gen Z respondents said they were willing to pay a premium for sustainable products, compared with 47% of Millennials (born 1981-1994) and 39% of Gen Xers (born 1965-1980).
Gen Z have higher trust and loyalty towards brands that practise sustainability and are more likely to buy from brands that practise sustainability over those that don’t. They are also far more likely to try a new brand based on its sustainable practices.
The study found that the three generations surveyed were similarly concerned about sustainability when making purchasing decisions. 74% of Gen Z and 71% of Millennials said that a brand’s commitment to sustainable products was an important factor in their decision-making process when buying from retailers, compared with 65% of Gen X.
Consumer sentiment around sustainability and green practices is changing rapidly. While this shift has been happening over the last few years, it has now become a key factor in purchasing decisions across all generations. There is clear evidence that Gen Z consumers are leading the way and actively changing other generations’ attitudes on sustainability, leading to a boom in sustainability-first purchasing decisions. Gen Z is the first generation of consumers to grow up with social media and use it effectively to challenge brands and retailers on their sustainability credentials, while also advocating for brands that are committed to sustainable practices. As Gen Z matures into its prime spending years, the impact of their advocacy will be felt across the entire retail sector.
Retail is always changing. Adaptation is the only constant in retail. The last time the retail industry faced such a colossal shift in consumer behaviour was the early 2000s as the internet became a major force in people’s lives. The era of instant convenience was born, and brands that adapted to this new state of play thrived. It’s unusual to find a retail brand operating today that isn’t also online.
Retail brands facing this new shift in consumer behaviour effectively have three options ahead of them:
- Adopt an incremental approach to change while being transparent about their goals and timelines;
- Make radical changes and hope to capture new consumers away from competitors;
- Make no changes in the hope that consumer demands change.
Each option has its own challenges and costs.
Adopting an incremental change is an easier way to make your brand sustainable as it comes with more time to achieve the goal; the danger however is that your customers will see you as complacent. Effectively communicating your commitments and being transparent with how long it will take can negate some of the risks associated with this approach, but there will be a section of your customers who won’t have the patience to wait for you to catch up to their expectations.
Making radical changes is the quickest way to become a sustainable brand. It is also the most expensive route, and there are risks that elements of your supply chain are overlooked. Consumers react vocally to brands that claim to be sustainable and are found out not to be. This route offers opportunities to capture impatient consumers of other brands.
Making no changes is clearly the easiest option, as it requires no change. However this strategy is a rather large bet on consumer behaviour radically shifting away from environmental concerns. If it doesn’t, and there is no indication it will, then brands pursuing this strategy will likely find themselves left behind and ultimately out of business.
The Impact of Sustainability on Brand Reputation
Retail brands live and die by their reputation, and a brand’s reputation is often defined by its products – ‘are they good quality, good value, stylish or practical?’ But the new consumerism has added demands of ‘is the product ethical?’, ‘is my favourite brand socially responsible?’ Whether brands engage with these questions or not, they factor into a brand’s reputation.
Brands that have sustainable policies and practices in place have invested in their long-term reputation. We believe brands should be putting sustainability at the heart of their brand strategy; this means thinking about how their product is being produced, where it comes from, who produces it, whether human rights and workers’ rights are respected, how it is marketed and how it is disposed of at the end of its life.
This isn’t just about being good corporate citizens, but about building a brand that lives the values of its consumers and can clearly demonstrate how their actions match their stated values. These brands will be the industry leaders of the future, and the race has already started. Ugg and Patagonia are already investing heavily to stand out as leaders in the drive for wider sustainability within the retail sector, and there are many more brands on the same journey.
It is important to note that sustainability efforts are not just reserved for big brands. There are plenty of ways that small and medium-sized brands can be sustainable as well – such as employee wellness being made a priority, reducing energy consumption and waste, committing to carbon offsetting, taking responsibility for recycling old products, and working with sustainable partners. Ensuring that the entire supply chain is sustainably operated will take longer for smaller brands, but even small brands are not immune from consumer demands.
Getting Started with Sustainability
The first step on the path to putting sustainability at the heart of your brand is to create a sustainability policy. To keep up with consumer demands and expectations, brands must provide transparency and trust in their operations. A policy that includes clear codes of conduct and ethics for employees and suppliers will demonstrate that your brand cares about its impact.
It’s worth outlining the main activities of your brand; this should include sourcing, suppliers, manufacturing, transport and distribution, packaging, end of life, and marketing. Each of these areas will have different impacts and require bespoke sustainability strategies. You don’t have to tackle everything at once so long as you’re putting transparency at the forefront of your strategy and are committed to eventually having sustainable practices in place for each area.
Reaching out to your suppliers to discuss their sustainable policies and practices will help you to understand how they can help you achieve your goals, and it may identify which suppliers need to be replaced with sustainable partners.
As a supplier ourselves, IPOS has been having conversations with our retail brand partners. We have our own sustainability policy in place and regularly review it to ensure we’re maintaining our goal of being a sustainable agency. IPOS recognises that we’re one part in a larger supply chain, and to meet the needs of our retail partners we’ve secured suppliers with sustainability practices and sustainable products on offer. This has allowed us to deliver sustainable brand campaigns without compromising on quality or performance.
If you’re looking at your sustainability policies and want to talk through your strategy, we’re here to help. Get in touch today.