From the earlier library, with its original date.
Written in April 2021. The figures are as they stood then; the argument has aged better than the numbers.
I have written before about how being a retail strategist involves spending a lot of your time feeling dizzy, spun around by constant disruptions and trends from competitors, other industries, consumer expectations and employees. Last year it was all about logistics: who can deliver fastest, and free? Now, with the US administration massively increasing its ambition on sustainability, the calculation has shifted from the customer experience of speed to the environmental cost of it.
The average online purchase releases around 3.1 kilograms of carbon dioxide equivalent, and that doubles if the item is returned. Somewhere between fifteen and forty per cent of online purchases in the US are returned. With more than two billion online purchases in 2020, that is a minimum of 620,000 tonnes of carbon dioxide, which would take around 31 million trees to offset, and we are not counting the returns in that figure.
So, with momentum building from government, employees and consumers, what does this mean for how retailers should think about sustainability? A warning: a heap of data is coming your way, but it is worth it for the conclusion.
Analysis by Food Business News projected sustainable product sales in the United States reaching $150 billion by the end of 2020, and found that 48 per cent of US consumers intended to change their consumption habits toward more responsible ones. It has been building longer than people think, with fairly consistent growth since 2014, and we expect a spike through 2021 and 2022 to sharpen the trend.
NYU Stern's sustainable market index found that while sustainability-marketed products made up about sixteen per cent of the market, they accounted for nearly fifty-five per cent of growth in consumer packaged goods since 2015. That is a growth rate around seven times faster than products not marketed as sustainable, and it happened despite those products carrying a price premium of close to forty per cent. That is a whole lot of value.
The trend lands differently by category, and a big part of the reason is the availability and accessibility of sustainable alternatives, both geographically and in price. The same research shows that the value of a sustainable product is largely driven by how much impact the unsustainable version is perceived to have. A product that does not visibly affect the environment does not create as large a market for alternatives as one that does. It seems obvious, but having objective data to lean on is always a good thing.
It is Earth Day, and we see a seasonal lift in sustainable purchases this month, but the curve is flattening because it is becoming a permanent consumer choice rather than a seasonal one. Becoming sustainable is not easy, either. It is not a case of switching to recycled packaging and colouring it green, although many try. It has to exist across the product, the marketing and the operations of your brand, which can be daunting. So break it down. Work out what matters most to your brand and your customers, then choose initiatives that deliver in a real way. Remember the ten per cent recycled toilet paper that claimed to be sustainable? Do not be them.
Three steps to define your direction. First, workshop the areas of sustainability that are relevant to your business: manufacturing, logistics and returns, energy, sourcing, technology infrastructure. Second, find your ambition, starting with baseline metrics for each area rather than plucking "fifty per cent reduction" out of the air. Take each area, workshop hypotheses for how you could improve it, estimate the size of impact for each, and let the sum of those become your ambition. Third, test the hypotheses and see what is possible. Nothing gives you confidence like ideas that are tested, proven and pass the golden rule: value to the business, value to the customer, and aligned with the purpose of your brand. That becomes your sustainability pipeline.
I get it. I am a retailer too, and I know we never get today back. Some low-hanging fruit that can be picked immediately.
Returns. Simple as it sounds, reduce returns and you reduce your footprint. Fifteen to forty per cent of online purchases come back, each one needing shipping, packaging and energy. Reduce that and you make a big dent, and improve the customer experience while you are at it. If you need help, find it; there are businesses focused entirely on this.
Paper. It is 2021. Paperless is possible. It requires change and support, but plenty of brands have done it and there is no reason yours cannot be one of them.
Packaging. Look at recycled materials, and also at how your packaging can be reused by customers.
Customer choice. Offer customers the chance to offset their shipping, or do it for them and tell them how. It is a simple way to build trust and do some good. Choice can also extend into second-hand goods and damaged-packaging options that reduce waste.
Sources: MIT Center for Transportation and Logistics, environmental analysis of US online shopping. CNBC on the cost of returns. Food Business News. NYU Stern Center for Sustainable Business.
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