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The Impact of Sustainable Practices on Shaping Retail Business

3 min read
sustainable practices

Sustainable practices are increasing both locally and globally, across many industries. Retailers face many challenges in this area, but many major industry leaders, such as H&M and Inditex, are taking bold steps to implement green standards in their business practices.

Many of these trends are starting to impact small retailers as well—whether they are embracing them or not. More and more customers are looking for products with socially responsible overlays.

The Key Drivers

Consumers are the ones driving the change. Globally, 81% of consumers believe businesses should do more to protect the environment. By 2021, consumers will spend $150 billion on sustainable goods, according to some projections. Moreover, Retail Industry Leads Association estimates that 68 million Americans base their purchases on their values (environmental, social, personal). The consumer base of a company can affect their growth, and with the bigger chunk of the population being environmentally-conscious, no business can afford to ignore the eco-consumer.

Consumers vote with their hard-earned money and they will give companies a piece of their mind if their expectations are not met.

Brands have realized they need to adopt environmentally-friendly practices in order to stay relevant. As millennials reach the peak of their purchasing power over the new decade, many brands are racing to establish themselves as champions of sustainability.

We can expect more businesses to start competing in this area. The competitive landscape is already moving these efforts forward. However, companies are still lagging behind consumer sentiment. Only 27% of companies have included the UN’s Sustainable Development Goals in their business strategy, while 72% mention them in their annual corporate reports, according to an analysis by PwC.

There’s still a discrepancy between action and sentiment, even though awareness is increasing. Businesses that are not taking action towards implementing environmentally conscious business models run the risk of losing customers’ trust. Regardless of their messaging, they will be disconnected from the conversation.

Supply Chain Transparency

More and more retail businesses from around the globe are rushing to clean up their supply chains as regulators and shoppers are increasingly taking notice of dodgy practices.

For instance, in Australia, because of all the talk around sustainable palm oil, the confection is currently a huge issue at the moment. In the UK, 71% of businesses reported they believe it is likely that modern slavery occurs in their supply chains, according to the Ethical Trading Initiative.

One of the biggest drivers for the retail sector to prioritize sustainability is the inefficient use of resources they have identified in their supply chain. The impact of sustainability on supply chains will be significant. Recently, numerous MNCs (multinational corporations) have pledged to do business only with suppliers that operate according to environmental and social standards. One such example is the Responsible Business Alliance (RBA). Members of the pact include Apple, Philips, Dell, IBM, HP, and Intel. Harvard Business Review has concluded that such collaborative initiatives make sustainability more feasible.

Such industry leaders hold a lot of power over their first-tier and lower-tier suppliers. The idea is for MNCs to request from their first-tier supplier to impose the same demands of adhering to environmental standards to their suppliers, and so on.

The goal is to ensure sustainable practices throughout the supply chain. However, putting these ideas into practice has been difficult so far.

To tackle the obstacles that come with this, some MNCs have started including lower-tier suppliers in their sustainability strategy.


To ensure sustainability in the industry, retailers will have to end overstocking. Overstocking is a huge financial strain on retail, aside from being an environmental problem. The average retailer loses 3.2% due to overstocking.

To avoid disappointing the shoppers, retailers do everything they can to make sure their stores are well-stocked.

So, overstocks persist, despite the environmentally-friendly trends among shoppers. This inevitably leads to a heap of unusable merchandise.

Overstocking is often linked to poor inventory management. An increasing number of retailers are adopting new order management technology to combat overstocking, relying on a global, real-time view of inventory.

Recycling and Upcycling

Retailers who fail to do their part to reduce single-use packaging and products will have many more dissatisfied customers as policies in developed countries begin to reflect the wider consumer sentiment.

Seeing “not currently recyclable” stamped on the package deters many shoppers from purchasing a product. Businesses were quick to respond when the impact of single-use plastic on the environment became a huge topic in 2018.

Yet, most retailers and other businesses still continue to shift the responsibility of recycling to the consumer through their packaging strategies. The next step for them is to eliminate non-recyclable plastic at the source.


Sustainable standards can be a win-win opportunity for retailers. By improving environmental performance, retailers are able to appeal to the consumer sentiment and even tackle the age-old problem of overstocking.

A strategic approach to sustainability allows retailers to take advantage of tremendous growth opportunities.

Sustainability in Retail: Practices That Will Help You Make a Positive Impact

Michael has been working in marketing for almost a decade and has worked with a huge range of clients, which has made him knowledgeable on many different subjects. He has recently rediscovered a passion for writing and hopes to make it a daily habit. You can read more of Michael’s work at Qeedle.


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