Evolving technology, changing supply chain models and consumers empowered with information on retailers’ business practices are each impacting retail and changing long-established standards in the industry.As more favorable economic conditions slowly return, retailers envision a prosperous and profitable future but must manage growth while accounting for these and other disruptive forces to maintain margins and improve operations.
The five forces impacting retail each carry unique pressures and require careful consideration from the C-suite before a sustainability strategy can be mapped out. These forces are:
1) Technology
2) Big data
3) Demographics
4) New consumption patterns
5) Resource constraints
All of these trends converge in one area of business: sustainability. While sustainability plans may vary slightly in different retailers depending on size, number of locations and regulatory oversight, there’s no denying that these factors affect every retailer in some significant ways.
Sustainability expectations
How the future of retail will be shaped by these five forces is a corporate imperative for major retail brands in the US and worldwide. The future of retail is also the theme behind the upcoming Retail Sustainability Conference sponsored by RILA this week (Sept. 29-Oct. 2).
The rapid evolution in each of the five forces can hamper, stall or paralyze retailers’ efforts to build or recreate a sustainability strategy. As with any fast-moving business phenomenon, there are some who are content to sit on the sidelines while others blaze a trail for the industry. Yet companies can little afford this passive approach as public pressures, always a foundation of sustainable business practices, haven’t abated. One recent study from an independent firm found 93 percent of US consumers expect companies to do more than just make money, but only 16 percent believe these companies have actually made a positive impact.
Further, the 2013 Global CSR RepTrack 100 report found that 73 percent of global consumers are willing to recommend companies that are perceived to be delivering on their corporate social responsibility and sustainability programs.
Partnering for the future
Because of these myriad challenges and rising consumer expectations, retailers must take an inside-out view of their sustainability strategy. In other words, whereas in the past sustainability plans may have been created within a company’s four walls, today’s environment requires companies to engage with external partners in order to successfully build and manage sustainability.
Here are a few ways experts from a leading environmental solutions provider can assist retailers with the five forces shaping the industry:
1) Technology. Cloud, mobile and social are all major disruptors, yet it’s not always clear how these apply to sustainability programs. Retail IT teams are focused on applying technology solutions to revenue-facing programs and getting new devices into the hands of employees, but IT should also be involved in sustainability planning. An expert can determine where a retailer’s existing tech can support sustainability efforts.
2) Big data. Companies in all sectors are attempting big data projects, or plan to do so in the near term. Gaining insight from big data can mean the difference between a competitive edge or falling behind the market, and sustainability can play a role by using big data and analytics to identify areas where efficiencies can be gained. Driving new programs and making their positive impact publicly known can raise customer loyalty.
3) Demographics. Sustainability programs can vary widely depending upon the areas in which a retailer operates. For nationwide retailers, demographic information is critical to create multi-layered sustainability policies and plans; for regional retailers, understanding the local, statewide and regional environmental laws and policies in place is perhaps more important. Policies and standards of these overlapping regional agencies can shift often, and staying abreast of these changes can be time-consuming and difficult. Environmental solutions providers with first-hand, real-time knowledge of national and regional variances can help create sustainability programs with these sensitivities in mind.
4) New consumption patterns. Using technology and data, many solutions providers for the retail sector are becoming more adept at determining consumer consumption patterns and how they are changing. For retailers, this knowledge can mean changes to inventory, logistics, delivery patterns and even marketing. Managing thousands upon thousands of products isn’t easy, but without a way to listen to the marketplace, it becomes a much more challenging task. In terms of sustainability, software and technology-enabled equipment can assist retailers and their vendors with adapting to inventory, delivery, fulfillment and waste removal needs, for example, in order to make this aspect of the business more efficient.
5) Resource constraints. Limits on time and resources to take on important projects, like a forward-looking long-term sustainability plan, are challenges as old as business itself. In most cases, retailers are not armed with the luxury of extra staff in IT, corporate social responsibility, logistics and waste management to maintain constant vigilance over sustainability. Likewise, thin profit margins may be directed toward other business objectives. Expert partners in environmental solutions can help retailers identify which areas of their sustainability plan should be handled first in order to optimize resources and mitigate against potential environmental fines.
The RILA Retail Sustainability Conference will act as a good window into the future of retail, the future of stores and the future of sustainability. How companies manage their sustainability programs now is likely to be very different five, 10 and 20 years from now. While the future of retail is murky, retailers’ ability to incorporate sustainability in every aspect of their business—from training employees to managing the supply chain to handling toxic materials at brick-and-mortar locations—will differentiate them from competitors and bring greater transparency for consumers. Ultimately, they can successfully combine the five forces of retail to work in their advantage for a sustainable, profitable future.
Mike Rozembajgier is vice president at Stericycle.
