With today’s dueling priorities of competitive pricing and a drive towards sustainable practices, retailers may feel stuck between a rock and a hard place. For the last decade, sustainability has been growing in the consumer consciousness; nearly 70% say it is important to buy from brands committed to sustainability. Online searches for sustainable products are up over 70% in five years. However, the truth is that sustainably produced goods are often more expensive – between 75% and 85%, according to some analysts.
However, with inflation at its highest in over 40 years, the cost of living crisis is forcing consumers to make complex value judgements; how can they square the need to budget carefully with their desire to purchase sustainable goods with a heftier price tag? Research suggests that these high prices put consumers off sustainable options, so what do retailers do? Offer lower prices and put the planet in jeopardy?
In the short term, consumers may be prepared to sacrifice sustainability for goods that they can afford, but where does that leave retailers in the longer term? What happens when the inflationary crisis lifts, and consumers look to see which brands have kept their green promises?
This is a difficult question: balancing short-term budget-friendly pricing with long-term ESG values. And this isn’t the only challenge that hangs in the sustainability balance right now.
An unhealthy cycle of returns
Between 2014 and 2019, e-commerce returns rose 95%, and in the UK, it is expected to rise by almost another 30% by next year, driven mainly by clothing and footwear returns. Consumers take advantage of free returns with streamlined processes to try before they truly buy and often over-order to return the bulk of their purchases. This strategy is a nightmare for sustainability, encouraging a fast-fashion mentality and contributing to increased carbon emissions and landfill.
Many consumers were horrified to hear about unworn, returned items being sent straight to the dump. Still, the reality is that the cost of restocking and reselling these items makes it cheaper to get rid of rather than relist. Even green-aware customers may not be aware of their return-heavy shopping strategies’ environmental fallout, and brands are not transparent about the real impact.
Perhaps the time has come for retailers to consider greater transparency and share these hard truths with their customers? No retailer wants to put a barrier in front of potential purchasers, but this could be as simple as checkout prompts for those with multiple sizes of the same item in their basket – or providing more in-depth product information. When it comes to the floodgates of returns, it likely won’t be long until regulators have to step in to stem the tide.
Empower balanced change
The truth is that there is no single fix for these complicated issues. However, organisations must understand how all the barriers to sustainability interlink within their business to achieve progress. Understanding customer behaviour and drivers, alongside supply chain visibility and efficiency tracking, can create the perfect circle of insight that drives greener business.
A data-fuelled green future relies on organisations accessing, analysing and using insight effectively. Here there is still a long way to go. Recent research from Software AG warns that nearly a third (31%) of organisations are struggling with unintegrated, siloed data and processes – the top barrier to clearing technical debt. Without the resources to clear these siloes, retailers risk falling further behind. But by connecting the dots through integration, they can balance consumers’ needs while making significant progress with sustainability initiatives.
It is data that drives impact – whether seeking greener supply chain management, decarbonising manufacturing, reducing packaging, improving resource usage or investigating circularity (recirculating products and materials). Data is the foundation of all sustainability journeys. When retailers are empowered with information, they can set and achieve realistic but ambitious targets. This data also enables them to work with their customers, sharing the environmental impact of production, packaging, delivery and returns so that consumers can make informed decisions.
The imperative to reach sustainable commerce can only be achieved by putting insight and intelligence into action. No matter the hurdles in the race to a greener future – whether inflation or consumer behaviours, it is only by intelligently deploying data that we will win.
