Last updated: Sustainable retail: Better for the planet and the bottom line

Sustainable retail: Better for the planet and the bottom line

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Sustainable retail has recently transitioned from an “if” to a “when” and “how.” More and more, consumers expect their favorite brands to take a stand for what they believe is right and sustainability is a priority. Customers and investors alike want to support a brand that puts humanity and the environment first.

This shift didn’t happen overnight; it came about alongside generational shifts. For example, as Gen Z gains more spending power and millennials solidify their position as leaders in the market, sustainability and ethical practices are becoming core to retail strategy.

The newer generations of consumers are very passionate about these topics and are willing to pay more for greener practices.

Gen Z leads the charge for sustainable retail

Half of Gen Z shoppers said they are willing to pay more for a sustainable product, but that number keeps dropping as older generations were surveyed, decreasing closer to 20% for Baby Boomers.

Sustainable retail is more critical for brands that primarily target younger generations. There are three different rationales for these brands:

  1. It’s simply the right thing to do and will help future-proof their business
  2. It’s important to their customers
  3. It gives them a competitive advantage that will compound over time

Brands that focus on sustainability now are setting themselves up for future success. Building in sustainability or elements of the circular economy open up huge opportunities to differentiate their business and become a consumer favorite.

Example of sustainability in retail: Levi’s and slow fashion

One brand getting this right is Levi’s. In the spring of 2021, the brand launched a campaign titled “Buy Better. Wear Longer.” It’s the antithesis of fast fashion, when consumers buy vast quantities of lower quality goods that they throw out quickly.

The campaign notes that global clothing consumption has doubled in the last 15 years and urges consumers to buy fewer, higher quality goods. This strategy flies in the face of the normal retail strategy that encourages as many purchases from shoppers as possible.

While Levi’s might be encouraging less purchases over time, they’re likely to bring on loyal customers with higher average order values. This is thanks to higher product quality, which can help boost long-term loyalty and potentially even word-of-mouth advertising.

Ecofriendly retail, built from the ground up

In theory, this all sounds great for every brand, but cost is a concern. The concept of the “digital native” brand has been popularized over the last several years, and now there’s the concept of the “sustainable native.” For sustainability to really work for a brand and not disrupt established supply chains or other business practices, sustainability needs to be built into the business model from day one.

This is much easier than having to switch production practices and find new vendors when everything is already established.

Sustainability practices have to align with profit and revenue in order to be more widely adopted in the retail community. Retailers like Amazon that handle massive orders every day offer the ability to batch packages instead of sending multiple packages to complete the order.

After all, being “the everything store” doesn’t mean that all of those products are necessarily in the same warehouse. Batching orders slows down the shipping time a bit, but it also cuts down on emissions and waste from multiple boxes and deliveries.

Sustainable retail: Rewards for recycling

Established brands must look for ways to be greener without raising prices higher than their customer base is willing to pay. One option is offering an incentive for batch orders, like a small discount or free gift.

Another way to take action on sustainability is to reward shoppers for recycling products they no longer want. Brands like Apple and Madewell have done this for years, offering discounts on new products when an old one is given back to the retailer.

This way, they can recycle or donate the products, helping the consumer feel good about not contributing to unnecessary waste and extending the product lifecycle. The Madewell recycling program boasts that it’s saved 548 tons of waste from landfills from the 1,096,265 (and counting!) pairs of jeans recycled to date.

E-commerce and sustainability are much more closely linked than it may seem, in fact they can be mutually reinforcing. Brands can up-level their most sustainable practices and still increase revenue by making “going green” part of their key value propositions.

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