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3 Sustainable Retailing Practices for Supply Chain Leaders

October 08, 2020

Contributor: Rama Ramaswami

Sustainability is becoming a critical component of retail supply chains. Here are three essential ways to embed consumer demands for sustainability into your last-mile fulfillment operations.

As a retail supply chain leader, how do you make sure your company demonstrates action to protect the environment to meet your consumers’ level of concern about sustainability?

“This is the question contemporary retailers are asking themselves right now,” said Tom Enright, VP Analyst, Gartner, during the virtual EMEA Gartner Supply Chain Symposium/Xpo™, 2020. “They’ve moved away from just selling products to also really listening to consumers’ environmental concerns about how orders are delivered.”

One outcome of this is a heavy push to enhance sustainability in the supply chain’s so-called last mile — the final stage of order fulfillment between the nearest inventory holding location and the time the package is delivered to the buyer’s door or picked up by the consumer. Increasingly, retailers are enabling customers to choose last-mile options for packaging and delivery based on their sustainability preferences. 

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“The concept is to use sustainability as a currency,” Enright said. “Most consumers want the delivery process to be carbon-neutral and would pay more for sustainable packaging. Concern for sustainability is becoming universal.”

Environmentally responsible retailers should focus on three key activities to demonstrate they are responding to the sustainability concerns of their customers.

1. Offer more sustainable delivery speeds

Consumers don’t always need their orders fulfilled as quickly as retailers think they do. Buyers are open to alternatives, especially when presented with environmental impact information.

For example, the planting of trees in exchange for a carbon-reducing delivery method is a highly effective incentive for consumers to wait longer for package delivery. And for retailers, the extra lead time enables better inventory distribution across the supply chain. 

2. Provide recyclable packaging

Numerous consortia, foundations and alliances have emerged in recent years to help organizations navigate the challenging environment of legislation, technology and post-use options concerning packaging. Make sure your company collaborates with these groups, as the complexity of circular economics and new packaging technologies is too vast for any individual organization to tackle alone. 

Organizations are supporting sustainable packaging in innovative ways. For example, one company aims to reduce ocean waste by buying plastic from consumers and selling it to manufacturers to reuse; another provides reusable totes for consumer home delivery and recycling of empty plastic containers.

3. Accept “re-commerce” as a part of sustainable retailing

Consumers are increasingly rejecting the throwaway culture. This creates a market for what may be called “re-commerce.” Many retailers — particularly sellers of apparel, footwear and accessories — offer services enabling consumers to donate or resell their unwanted items rather than consign them to landfills.

The list of companies reselling or recycling used clothing is expanding fast: It includes established retailers such as REI, H&M, Patagonia and Primark, as well as new online players such as Poshmark, The RealReal and Kidizen. Research shows that within the next 10 years, the resale market will exceed $80 billion in value, outpacing fast fashion’s estimated value of $43 billion.

As the circular economy takes root globally, retailers must incorporate sustainability into their entire supply chain. Responsible retailing can no longer be seen as an expensive inconvenience; it’s now a mainstream requirement.

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