Sustainability: the strategic response to the market

Sostenibilità retail Retex
23 Jan 2019

The United Nations World Summit for Social Development in Copenhagen in 1995 endorsed the strategic commitment of sustainability.

The concept was extremely clear. “Economic development, social development and environmental protection are interdependent and mutually reinforcing components of sustainable development, which is the framework for our efforts to achieve a higher quality of life for all people.”

Since then, the need for sustainability had mainly been disregarded, only to become a present-day emergency. Even retail is finally beginning to take notice in diverse ways and at different speeds but it cannot escape consumer pressure.

Retail suppliers and distributors

The “Observatory on the Evolution of Sustainability in the FMCG Market” publicised its data at the Green Retail Forum in Milan last October. The research sets out how differently the players in production and distribution behave.

The data shows that between 2011 and 2018 retail suppliers above all worked on reducing the impact of production of the environment, while distributors showed a greater sensitivity towards social impact.

So, retail suppliers focused their attention on internal processes, such as making changes to facilities, equipment and structures and getting certified. The retailers however paid greater attention to public-facing activities with collaborative agreements and philanthropic operations, such as support for health research or food collections.

Consumers

As the third and most important player on the scene, consumers have very clearly demonstrated the demand for sustainability and this also applies to consumers purchasing clothing and not solely food.

This demand was expressed in many different ways in 2018.

For example the case of Burberry was met with a huge public outcry when it was revealed that the English brand was systematically destroying unsold items. The backlash was so fierce that the management was forced to drastically change their policies, which now target reusing and recycling these products.

For every retailer, and especially the big-name brands, the trust of their customers has to be earned, maintained and recovered with incisive action on all aspects that touch on the environment, health and working conditions.

Forecast

According to forecasts made by Nielsen about what shoppers put in their trolleys, “green products” are set to rise from 19% in 2014 and 22% in 2017 to 25% in 2021.

With regard to the fashion sector, a survey by Ipsos MORI - one of Europe’s leading research companies - states that two out of three Italians (64%) are not willing to buy from a brand if it is associated with environmental pollution in its manufacturing processes.

Furthermore, eight out of ten Italians want these brands to provide information about their employees and workers in their supply chains. As a result, 58% said that they would not want to buy clothing from brands that were not paying factory workers a fair living wage.

Property market

The goals on the United Nations 2030 Agenda (responsible consumption and production, action to combat climate change, good health and well-being for people) also impact the property market. Consumers are actually also placing increasingly greater importance on the characteristics of the physical place where they go shopping.

Green Pea, the new project by Oscar Farinetti, opens in Turin at the end of 2019. Made entirely with wood from certified forests, the 10,000 m2 structure has bioclimatic greenhouses (irrigated with recycled water) and solar and photovoltaic panels. They are also working on how to capture the energy generated by people’s footsteps and convert it into power.

Demand and awareness

Until now manufacturers’ and retailers’ strategic choices have been restricted by the importance of the demand for sustainability, but managers have been decidedly slow in developing awareness and need to make up for this deficit.

Even though the critical nature of the subject is not up for debate, this has traditionally been the prerogative of the non-profit world. In contrast, the owners and marketing and communication managers in the business world mainly focus on behavioural models that are often outdated and cling solely to the concept of growth.

Their perception of the company as a social entity is still weak. What is much stronger though is their mistrust of the “anthropological” nature of the third sector, which takes action and it expresses itself with practices and semantics that are far removed from the rationale of business.

Finding an agreement is a matter of urgency shared by all the parties involved, irrespective of their nature.

 

Read also: Sweetgreen, the food platform