Skip to main content

Sustainability in retail

4 Drivers of sustainability for the retail industry

The last few years have seen a continuing focus on sustainability, but the focus of retailers’ efforts is shifting into new areas. Key themes include the importance of the resale market, the need to embed sustainability practises across supply chain operations, the role of technology in sustainability, and the adherence to ESG-related regulations and frameworks.

73% of Consumer Industry CXOs have increased investments in sustainability over the last year, according to Deloitte’s 2023 CxO Sustainability Report. Companies feel pressure from a variety of stakeholders, with customers, board members, and regulators as top 3. The figure below shows how retailers are focusing their sustainability strategies. Beyond impact on our planet, CxOs also see benefits of their sustainability efforts expand into areas like brand recognition, customer satisfaction, and increased supply chain efficiency and/or resilience. 

Resale in retail

Several retailers are entering or expanding into the pre-owned goods market by introducing marketplaces and buy-back options. This market is fuelled by consumers who are increasingly conscious of what they purchase. Especially those from the millennial and Gen Z generations prefer sustainable buying options and are also affected by the increasing costs of first-hand goods. We expect future retail models, especially those used by large companies, to combine mainline, outlet, and resale models. Since consumers are becoming more demanding regarding sustainability, it is only logical that brands would want to control their own resale channels. This allows companies’ profits to grow and reduces reliance on production channels.

Lululemon is one of the retailers with their own marketplace for slightly used products.

Read the full interview in the Global Powers of Retailing 2023 report.

Sustainable supply chain

Data shows that the retail supply chain currently contributes to 25% of greenhouse gas emissions (GHG) globally. This staggering number cements the need for retailers to embed sustainable initiatives into their supply chain operations. Other major focal points are the traceability of products and eliminating waste from the value chain.

Reducing GHG emissions across a retailer’s supply chain takes the top spot in the list of sustainability priorities, while at the same time it is one of the more complicated pieces of the decarbonisation puzzle. Setting science-based targets and monitoring progress through dashboarding, independent audits and by using frameworks such as CDP (formerly the Carbon Disclosure Project) could help retailers accelerate their progress towards sustainability. Achieving sustainability across a retailer’s supply chain operations also comes with the added benefits of cost savings and improved efficiencies.

Technology-enabled sustainable progress

The possibilities offered through technology such as blockchain and artificial intelligence are helping retailers forward in their sustainability initiatives. Blockchain technology, for example, aids sustainability efforts by increasing the level of traceability and transparency across a retailer’s supply chain operations. It can be used to track products and components as they progress through the entire value chain, from sourcing to production, and purchase to disposal.

Artificial Intelligence (AI) also has various applications across sustainability initiatives. It can help to design circular products, improve traceability, and make forecasting functions more accurate, helping to reduce wastage from excess inventory. AI can be used to cut out waste right from the design stage of the product lifecycle and is estimated to unlock a potential value of USD 90 billion every year in the consumer electronics category, and USD 127 billion in the food category.

Regulations and frameworks

Stakeholders, including consumers and investors, are placing retailers under increasing scrutiny when it comes to their sustainability efforts. This makes the adherence to frameworks and regulations, and accurate reporting more critical by the day. The sustainability section of the Global Powers of Retailing report outlines some of the most widely used and highly relevant reporting standards for retailers.

Find out more about how retailers are focusing on sustainability

Download the full Global Powers of Retailing 2023 report to find out more about the focus on the resale market, and embedding sustainability across the supply chain, with real examples from retailers. The report also further explores the role of technology and adherence to the various regulation and frameworks.

Besides this focus on sustainability, you’ll also find an overview of the top 250 retailers in terms of revenue, the 50 fastest growers, and an analysis of performance across product sectors. Finally, the report looks at how retailers are creating the future of the store.

Connect with us

Inspired by these storeys of growth, sustainability, and innovation? We look forward to connecting with you.

Did you find this useful?

Thanks for your feedback

If you would like to help improve further, please complete a 3-minute survey