HOW WILL SUSTAINABILITY CHANGE THE RETAIL INDUSTRY?

Retail Consultancy | 14.10.2021

Despite non-essential retail reopening in April 2021, major shopping streets are still reporting much lower footfall levels than those recorded in 2019. This ranges from 20% declines in many town centres to London’s Oxford Street receiving 40% less footfall than 2019, according to Springboard data. Although this also reflects fewer tourists and office workers as a result of international travel restrictions and remote working, there are still considerably fewer people visiting high streets to shop compared to 2019.

However, the retail industry also has a lot on its plate given the climate change report published by the Intergovernmental Panel on Climate Change (IPCC), which has been coined ‘a code red for humanity’. This – alongside Greta Thunberg’s Vogue Scandinavia interview, which included accusations of greenwashing within the retail industry – has heightened thinking about how retail can be more sustainable.

This presents an opportunity for retailers as they consider both the most effective methods for attracting customers back to their stores and initiatives to boost sustainability efforts across the industry. For example, online retailer Depop has grown exponentially throughout the pandemic with a business model that allows consumers to easily buy and sell second-hand clothing online, a concept that has attracted many younger shoppers. Depop states that 80% of their UK shoppers are under the age of 26, signalling the desire of Gen Z to develop more sustainable shopping habits.

However, Depop — and the plethora of other online brands — has contributed to the lower footfall levels on the high street. To attract shoppers back, retailers need to capitalise on the increased awareness of sustainability amongst consumers and use it to transform physical store concepts. In addition, retailers can make clear the ecological benefits of high street shopping, which removes the need for excessive packaging used in home deliveries and product returns, and reduces the number of delivery vehicles on the roads.

One study by Futerra found that 88% of consumers would like companies to help them improve their environmental and social footprints. In the absence of clear top-down direction, many retailers have already started to capitalise on the demand for sustainability, and have introduced innovative and experiential concepts into their physical stores.

Last year, H&M introduced Looop, the world’s first in-store recycling system which turns old clothes into new ones. Shoppers can visit the Stockholm store and contribute to the circular economy by transforming their old garments. Know the Origin, a sustainability-focussed department store, opened a pop-up at Angel Central in Islington and also ran workshops on zero-waste living. IKEA trialled a buy-back and resale programme in Philadelphia and will roll it out to other markets.

However, recycling and reselling in isolation will not combat the climate crisis. New concepts are also focussing our attention on different ways to be sustainable, such as the increase in rental services offered by retailers. Extending a clothing item’s lifecycle by nine months drastically reduces its carbon footprint; addressing the issue of throwaway culture is therefore a huge step for retailers in combating the climate crisis.

Luxury rental platform Rotaro entered the physical retail domain with a pop-up, sustainability-focussed store in Carnaby, London. Customers can rent pieces from Rotaro for four, eight or 12 days, and take part in events that consider a variety of subjects such as sustainability versus profitability and upcycling garments. Department stores have tapped into this trend with John Lewis, Harvey Nicholls, Harrods and Selfridges all offering rental services on their products. This is likely to encourage shoppers outside of Gen Z to boost their sustainability efforts.

Perhaps we will start to see an increase in the marketing of accreditations confirming a retailer is environmentally friendly. Certifications such as B Corp, which certifies that a business meets a very high level of social and environmental standards, already address this issue. Globally, there are 4,088 B Corp-certified companies, including retailers such as Eileen Fisher, The Body Shop, Patagonia and Ben & Jerry’s. In addition, there is now a dedicated section for products from B-Corps on the Getir grocery delivery app.

Many retailers have net-zero targets. Products could advertise that the company is achieving this aim, akin to the Fairtrade label. The use of these labels, in addition to other marketing such as a dedicated B Corp section, can allow shoppers to make easy choices about how to consume sustainably. There is undoubtedly a significant pressure on the retail industry to do better in terms of environmental sustainability. The number of brands that are already tackling climate issues — and thus providing examples for others — should be recognised and applauded.

Landlords also have their part to play, from running their assets in a more sustainable way to working with their tenants to meet the common goal. GreenPea in Turin, Italy, is the world’s first green retail park, where the brands, products and buildings are all centred around sustainability.

It is likely to be much easier for more upmarket brands to tackle sustainability issues due to the higher margin earned on their products. Mass market brands or smaller companies will require support – and more creative thinking – to couple sustainability with profitability, so that selling cheaper products is not at the expense of the environment.

The scale of change required will ultimately need leadership from governments across the globe. China’s recent announcement that it will not fund new coal power stations abroad but will invest in green and low-carbon energy solutions, and the US’ doubling of funds to help developing nations deal with climate change, will undoubtedly help. However, all eyes are on the United Nations’ COP26 Conference in November, where global leaders will convene to accelerate action toward addressing climate change.

Ultimately every consumer, occupier and landlord will need to play their part in our society becoming more sustainable and ecologically friendly. The challenge for retailers will be how to do this profitably.

Andy Metherell, Head of Retail Consultancy, Harper Dennis Hobbs

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