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Retail in the age of sustainability

artificial intelligence retail
(Image credit: Image Credit: Zapp2Photo / Shutterstock)

It’s clear that the retail industry and customer expectations have shifted during the pandemic. What we are seeing now is that customers are still readjusting their buying behavior and testing what suits them best ‘post’ pandemic. While many brands may see this as a challenge to know how to connect with their customers successfully to positively impact sales, it is also an opportunity to look internally and rethink the business. One critical area retailers and brands are continuously looking to improve is their sustainability approach – and they have the opportunity now to review business practices and readjust accordingly. 

While retailers recognize the benefits greener operations can bring for the planet, driving efficiencies and supporting customer retention whether it is due to customer expectations, shareholder demands, or an increasing sense of responsibility for ‘conscious consumption’, many will have found the pandemic initially derailed many eco-friendly initiatives. However, sustainability has become a priority again in 2021. Consumers are increasingly thinking about how sustainable their shopping habits are now that the pandemic has tipped the scales in the direction of online purchases more than ever.

So where do retailers start when it comes to looking at how to improve their sustainability approach and readjust practices? A key starting point will be the supply chain. And a recent study from MIT Center for Transport and Logistics on the State of Supply Chain Sustainability proves that supply chains are becoming increasingly recognized for their impact on a business’s sustainability objectives and public image. And there are three key questions, retailers can ask to help themselves to get started and support the shift in their thinking from solely focusing on convenience in a crisis mindset, towards longer-term sustainable planning and flexible models.

What efficiencies can I create in fulfillment and in the last mile?  

Throughout last year, consumers were unable or unwilling to go to the shop for necessities and turned to online. And to fulfill this increase in online orders, retailers had to increase their deliveries, packaging but also importantly online orders had to be fulfilled on store inventory. Although this made sense while stores were still closed, it caused serious logistical and cost implications. In aiming to become more sustainable, retailers should look to a more flexible, hybrid fulfillment model based on the optimization of their orders. The flexibility in the fulfillment model will be critical as the desire for alternative fulfillment methods is increasing. 

Retailers have used this as an opportunity to work smarter by collaborating with each other, acting more intelligently over the last mile to roll out deliveries using electric vehicles (EVs) to cut emissions as well as costs. This is also in addition to look at alternatives to plastic packaging. Subway is a great example. They have replaced the use of a plastic bag to wrap its product with a cardboard box. The company carried out a global initiative over the last few years and now currently uses 100 percent recyclable packaging and has made further adjustments such as removing the paper interleaf between its sliced cheeses. This removal of unnecessary packaging that so many companies practice, has led to an additional 450,000 pounds of paper being removed from its waste stream annually.

How can I utilize technology in the supply chain? 

It is clear that AI plays a critical role within most elements of a business, and it is no different when it comes to the supply chain. Why? Putting it simply it can adjust and optimize operations based not simply on the past but by understanding demand influences to create accurate future forecasts. This will help retailers understand risk and variability so that item-level decisions can be made. And it can generate synergies and efficiencies in-store, through storerooms, through to micro- and macro-warehouses. 

Take the fact that leveraging smart technologies enables retailers to ingest many factors and data points to accurately predict sales - imperative for the reduction of food waste. Or AI playing a part in optimizing the right price to clear inventory in a store, such as when an item approaches its expiry date. Or lastly, innovations like smart shelving, traceability – that is the ability to track the production of a product from source to store – and the optimization of smart equipment, whether computing power or energy-efficient lighting and appliances.

Are my partners just as focused on sustainability? 

To set and meet sustainability standards, sourcing reliable and sustainable supply chain partners is vital. However, this is impossible to achieve and sustain without a collaborative approach. So what is required is for all businesses to be transparent from factory to store to show partners that they are committed to creating a positive impact. Businesses have begun to take this mission more seriously in recent months, as mega-retailers like Adidas and Marks & Spencer have made commitments to improving ethical transparency across the supply chain.

And supply chain control towers are a key component of being transparent. Why? Retailers can view their inventory across the supply chain to mitigate issues and evaluate the approach that is most sustainable for them, whether be around their supply base, manufacturing processes, shipping or transportations. And creating new goals around emissions and other sustainable approaches will enable retailers to make more well-rounded decisions. The next level of transparency will come when sharing this information with customers to enable better-informed purchasing decisions.

By asking these three questions retailers can really take a step back to readjust and re-evaluate key elements of their supply chain that will improve their sustainability. This will then allow them to show consumers they are instilling more sustainable practices which is of increasing importance to them. Mark Baxa CSCMP President and CEO rightly said following the recent MIT study on sustainability; “Our members tell us that now, more than ever before, that the very notion of embedding sustainable practices from within their company’s supply chain delivers real, tangible results. Competing in today’s global marketplace is not just about the high-quality products supply chains plan, procure, make and deliver. It’s about doing the right things right for the whole of society.”

Wayne Snyder, VP Retail Industry EMEA, Blue Yonder

Wayne has worked in retail for more than 20 years and is a recognised expert in planning and supply chain operations. At Blue Yonder, Wayne is responsible for Blue Yonder’s retail strategy across EMEA, working closely with leading retailers to ensure they maximise full value from their technology and supply chain investments.