In a challenging economic environment, retailers face the daunting task of balancing sustainability with business imperatives.
Yet, amidst this struggle, consumer demand for eco-friendly alternatives continues to surge, influencing spending patterns. A recent report revealed that 71% of Australian respondents express concern about the planet’s future, with 67% advocating for significant lifestyle changes.
Further intensifying the pressure, the Australian Government has issued warnings of regulatory intervention unless retailers proactively address issues of waste, packaging, and product lifecycle. The ‘Seamless’ initiative, initiated by the Australian Fashion Council (AFC), aims to combat clothing waste through a levy system. This levy, mirroring the EU model, imposes a 4-cent charge on each garment sold, with proceeds funding sustainability research and textile recycling infrastructure.
While some retailers have embraced this initiative, others remain hesitant, prompting Environment Minister Tanya Plibersek to emphasize the necessity of action, stating, “The alternative to this program isn’t a weaker scheme with a lower levy; it’s government regulation.”
Today’s retailers face the challenge of providing seamless, cost-effective shopping experiences while upholding sustainability principles. Here are three strategies for achieving meaningful, long-term sustainability goals.
1. Be inventory aware
Inadequate inventory visibility leads to waste and logistical inefficiencies, impacting profit margins. Over-purchasing and overstocking result in unnecessary markdowns or even landfill waste. Additionally, overselling, where retailers run out of stock but allow customers to complete purchases, exacerbates the problem. Recent research indicates that nearly 40% of retailers cancel at least one in ten orders due to inaccurate inventory data, resulting in fulfillment delays and dissatisfied customers.
The costs associated with overproduction and surplus inventory are significant, tying up capital in unsold stock stored in warehouses or other locations. Investing in advanced order management software enables retailers to accurately forecast demand and purchase or manufacture the appropriate amount of stock to minimize waste. It also enhances the efficiency of the delivery process, streamlining operations and promoting sustainability.
2. Make the last mile count
Implementing a streamlined omnichannel approach enables retailers to minimize the unnecessary and wasteful transportation of goods between outlets and customers. This approach facilitates grouping products together to reduce multiple trips or ensuring products are dispatched from the nearest distribution center, thereby cutting down on transit miles. Retailers can also utilize existing replenishment routes for order consolidation, thereby saving on transfer costs, emissions, and delivery expenses.
Today’s environmentally conscious consumers often prioritize sustainability over speed. Therefore, offering a variety of sustainable shopping and delivery options can significantly benefit the environment without significantly disrupting business operations. Alternative delivery methods like click and collect can eliminate the need for home delivery entirely. Retailers may also incentivize customers to opt for these greener alternatives by offering rewards such as discounted delivery or loyalty points in exchange for selecting slower shipping options. Expanding the range of delivery options and incentives can lead to substantial financial gains in the current economic climate, where brands strive to differentiate themselves.
3. Rethink returns
The ecommerce return rate averages between 20 and 30%, presenting significant operational challenges and costs for retailers. Online purchases are nearly three times more likely to be returned compared to in-store purchases, exacerbating the issue.
A substantial portion of returned goods ends up in landfills, posing environmental and financial concerns. To address this, retailers must take proactive measures to minimize returns. This starts with optimizing online product presentation, including accurate photos, descriptions, and sizing information, to preemptively address customer queries. For instance, The Iconic offers a universal sizing tool on its mobile app, utilizing algorithms to match customers with their correct size across various brands.
Offering diverse return options also contributes to greener logistics. Implementing solutions like lockers in shopping malls, cycle couriers, and crowd shipping pickup points simplifies and reduces the environmental impact of returns. Adopting a circular model, coupled with effective processing, enables retailers to keep returned items in circulation longer. Brands like Adidas have initiated programs to recycle used products.
Returns provide valuable insights into product quality, customer preferences, and marketing effectiveness. Retailers can analyze return patterns to identify trends such as sizing or quality issues and make adjustments accordingly to mitigate future problems.
Given growing consumer demand for eco-friendly alternatives and increased regulatory scrutiny, sustainability has become a strategic priority in 2024. Fortunately, retailers can leverage modern technologies to enhance supply chain efficiency, reduce costs, and improve the overall customer experience. Embracing sustainability not only benefits the environment but also positions retailers for long-term success in an increasingly conscious market.