By T. Leigh Buehler | 07/24/2024
As a professor of retail management, I have observed a significant shift in the retail industry over the past decade. Consumers demand sustainability in the products they buy and are growing more aware of environmental issues. This change compels businesses to adopt sustainable practices.
Customers want companies to implement their own sustainability efforts, including sustainable packaging, sustainable materials, energy-efficient equipment, and carbon emission reduction. This transformation is not only essential for the planet, but it also helps companies to improve their brand reputation, reduce costs, and increase customer loyalty.
A Demand by Consumers for Sustainability
The consumer demand for sustainable goods is being driven by the undeniable need to address climate change. Sustainability in retail is no longer a niche concern. It is a mainstream imperative driven by customer demand and regulatory pressures.
Today's consumers are increasingly aware of the environmental and social impact of their purchases. A survey by Nielsen found that 73% of global consumers will change their consumption habits to reduce their environmental impact. Millennials and Generation Z, in particular, are more likely to support brands that reflect their own sustainability beliefs.
This shift in consumer behavior presents a tremendous opportunity for retailers to differentiate themselves by adopting green practices.
Retail operations have a significant environmental footprint, from the sourcing of raw materials to the energy used in stores and warehouses. By adopting sustainable practices, retailers can reduce their environmental impact, enhance operational efficiency, save energy, and create a competitive advantage.
As the global retailer Patagonia® states on its website, “Everything we make has an impact on the planet.” It is up to businesses to decide if that impact will be positive or negative.
Regulatory Pressures
Internationally, governments are implementing stricter regulations to limit environmental impact. From carbon emission targets to waste reduction mandates, retailers must navigate an evolving regulatory landscape. Compliance with these regulations not only avoids penalties but also positions retail businesses as responsible corporate citizens.
The Need for Climate Action
The retail sector is a significant contributor to greenhouse gas emissions, deforestation, and waste generation. Addressing these issues is critical to help mitigate climate change and preserve natural resources. Many people believe that retailers have an ethical responsibility to lead by example and implement sustainable retail practices that minimize their environmental footprint.
Sustainable Practices in Retail
To achieve sustainability, retailers must adopt a holistic approach that encompasses their entire value chain. There are six areas where the retail sector can implement green practices, such as:
- Sustainable sourcing
- Energy efficiency
- Waste reduction
- Sustainable transportation
- Sustainable store design
- Ethical practices
Sustainable Sourcing
Sustainable sourcing involves procuring raw materials and products in a manner that minimizes environmental impact and promotes social responsibility. Retailers may choose to source from suppliers who adhere to ethical labor practices, use renewable resources, and minimize waste.
Patagonia, for instance, is legendary for its commitment to sustainability and corporate social responsibility. The company sources materials like organic cotton, recycled polyester, and responsibly sourced down. Patagonia also collaborates with suppliers to ensure fair labor practices and reduce its environmental impact while adhering to its standard business processes.
In addition, their "Worn Wear" program encourages customers to repair and reuse clothing, further reducing waste. The program also offers to buy back Patagonia clothing that customers are no longer using, further reducing the environmental impact of producing new clothing.
Energy Efficiency
Retailers can significantly reduce their carbon footprint by improving energy efficiency in stores, warehouses, and distribution centers. This effort includes using energy-saving lighting, HVAC systems, and refrigeration units, as well as investing in renewable energy sources. Many retailers proudly post signs at door entrances to inform customers about how the company is conserving energy.
As the world's largest retailer, Walmart® has made substantial investments in sustainable retail practices. For instance, the company has set a lofty goal to be powered by 100% renewable energy by 2035 and solar panels have already been installed solar panels on numerous store rooftops to assist in this goal. Walmart also utilizes energy-saving lighting and refrigeration systems, which have resulted in significant energy savings.
Waste Reduction
Waste reduction involves minimizing waste generation, promoting recycling, and implementing circular economy principles. To adopt a circular economy, retailers can share, reuse, repair, lease, refurbish, or recycle existing materials and products for as long as possible.
Retailers practice waste reduction by optimizing packaging, reducing single-use plastics, and encouraging product recycling and reuse.
IKEA® has made significant strides in waste reduction. The company has committed to becoming a circular business by 2030, which means that all of their products will be made from renewable or recycled materials.
IKEA's "Furniture Take Back" program allows customers to return old furniture for recycling or resale, reducing waste and promoting a circular economy. For many customers, this is a great option other than dumping broken bookshelves into their apartment dumpster.
Sustainable Transportation
Transportation is a major source of greenhouse gas emissions in the retail sector, contributing approximately 25% of global greenhouse gases every year. Retail businesses can reduce their transportation footprint by optimizing logistics, using fuel-efficient vehicles, and exploring alternative delivery methods like bike couriers.
Amazon® has made significant investments in sustainable transportation. The company has ordered 100,000 electric delivery vans from Rivian with the hope of having them on the road by 2030. Amazon is also exploring the use of drones for package delivery to help further reduce transportation emissions.
Sustainable Store Design
Sustainable store design involves creating retail spaces that minimize environmental impact through energy-efficient construction. Designs include using sustainable materials and green building certifications such as LEED (Leadership in Energy and Environmental Design).
Starbucks® has incorporated sustainable design principles into many of its stores. The company opened its first LEED-certified café in 2005.
Today, it operates over 1,500 LEED stores around the world. The cafés use energy-efficient lighting, water-saving fixtures, and sustainably sourced building materials.
Ethical Labor Practices
Ethical labor practices need to be implemented throughout sustainable supply chains. Retailers must ensure that workers are treated fairly, paid living wages, and work in safe conditions. Ethical labor practices also include ending child labor.
Brands like Dr. Bronner's® are committed to fair trade practices. This company makes sure that its sustainable products are sourced from suppliers who adhere to ethical labor standards. This practice only supports worker welfare but also promotes sustainable farming practices.
Call to Action for Retail Industry Leaders
While these examples showcase significant progress with sustainability in retail, there is still much work to be done. We need to urge retail business leaders to take bold steps toward sustainability practices that can reduce their carbon footprint, and there are five ways to accomplish that goal.
1. Set Ambitious Goals
Retailers should set science-based targets to create a positive environmental impact and reduce their energy consumption. This effort includes committing to net-zero carbon emissions, eliminating single-use plastics, and adopting circular economy principles. In addition, transparent reporting on progress is essential to build trust and accountability in sustainable retail.
2. Collaborate Across the Supply Chain
Retail green practices are a team sport, and collaboration throughout the supply chain is key to achieving sustainability goals. Retailers need to work closely with suppliers, manufacturers, and logistics providers to ensure sustainable practices throughout the supply chain. Joining industry sustainability initiatives and partnerships can also amplify efforts and drive systemic change.
3. Innovate and Invest in Technology
Innovation is crucial in the retail world as well as for developing sustainability practices. Companies need to invest in research that focuses on the creation of eco-friendly products, as well as solutions to improve energy efficiency and waste reduction.
Embracing digital technologies like AI and blockchain can enhance supply chain transparency and efficiency. For example, AI can monitor supply chain activities continuously, helping to identify and address any deviations from sustainability goals. Transparent supply chains that are verified through blockchain can increase consumer trust as more customers become aware of the sustainability of their purchases.
4. Educate and Engage Consumers
Businesses need to educate consumers about the importance of sustainability practices and how they can make a positive impact on the planet. Customer engagement can take place through awareness campaigns, product labeling, and loyalty programs.
In addition, customers like to learn about the environmental impact of their purchases from sustainable brands. Making this information available to the consumer helps them to make informed decisions.
5. Advocate for Policy Change
Retailers have a powerful voice in advocating for policy changes that support sustainability throughout the supply chain. Engaging with policymakers to promote environmental regulations, such as carbon pricing and waste reduction mandates, can drive industry-wide change.
Supporting initiatives that protect natural resources and promote social justice is also essential. Patagonia is paving the way in political activism. Now we need others to join the cause.
The Future of Sustainability in Retail
Sustainability is not just a trend, but a fundamental shift that is reshaping the industry. Retailers that embrace green practices are not only contributing to a healthier planet but also positioning themselves for long-term success. Practices like sustainable sourcing, improving energy efficiency, reducing waste, and promoting ethical labor practices create a positive impact on the environment and society.
The future of retail is green, and those who embrace this transformation will thrive in the years to come.
The Retail Management Degree at American Military University
For students interested in topics such as sustainability in retail, retail strategies, innovations, merchandising, ethics, and management, American Military University (AMU) offers an online bachelor's degree in retail management. This degree program provides a compelling introduction to the retail environment.
Designed in partnership with business leaders, the program offers real insights into how to effectively manage various types of retail operations. Courses in this program also teach students useful business skills, such as interpersonal, managerial, leadership, and communication skills.
This degree program offers four concentrations such as business analytics, marketing, reverse logistics management and digital retailing is also available. These courses highlight technologies such as smart stores, virtual and augmented reality, and ecommerce.
For more information about the retail management degree, visit our program page.
Patagonia is a registered trademark of Patagonia, Inc.
Walmart is a registered trademark of Walmart, Inc.
IKEA is a registered trademark of Inter-IKEA Systems B.V.
Amazon is a registered trademark of Amazon.com, Inc.
Starbucks is a registered trademark of the Starbucks Corporation.
Dr. Bronner’s is a registered trademark of All One God Faith, Inc.