Once viewed as a costly exercise, sustainability is being embraced by a growing number of retailers as a strategy that delivers cost savings and satisfies the demands of consumers.
Companies are exploring automation tools to reduce the amount of packaging used, trying to find alternatives to plastic, and looking to install solar panels to reduce their carbon footprint.
With the rise of the conscious consumer, more ecommerce retailers are putting the time and the effort into making sure they have more sustainable practices. Some have found it can be the decider between a customer buying off their site or a competitor’s.
To chart a more sustainable path and manage the increased consumer scrutiny of their business practices, retailers are also hiring more professionals whose main responsibility is to manage the ethical side of the business. Others are embedding sustainable practices into their DNA.
Flora and Fauna is an ecommerce retailer that prides itself on stocking only vegan, ethical and cruelty-free products. It was founded in 2014 by Julie Mathers, a retail veteran with 26 years of retail experience working for giants like Coles and Woolworths.
Flora and Fauna started out retailing cosmetics and skincare, but now sells homewares, reusable items and sustainable fashion.
Before she started Flora and Fauna, Mathers was frustrated with the lack of ethical practices in retail and a lack of focus on environmental causes.
“There are so many facets to being a sustainable and responsible business and what I wanted to create was a business that was sustainable in every decision that we make or trying to do the very best we can,” Mathers told Which-50.
She said being an “ethical” company doesn’t necessarily mean additional costs — but it depends on how you budget.
Mathers explained, “We budget to be a sustainable business so we know we are going to give X amount of money to charity, and we plan and forecast for that.”
Well-established ecommerce companies such as Adore Beauty and The Iconic are also examining how to make their businesses more sustainable.
Last September, ecommerce cosmetics company Adore Beauty installed new warehouse management software to assist the company in cutting down packaging through volumetric calculation.
Kate Morris, CEO and founder of Adore Beauty, said it was a big project — taking the best part of eight months to get everything in place. To use the volumetric system, they needed to scan more than 13,000 products to get the dimensions and weights into the system.
With that in place the system can calculate which is the smallest possible box required for each order.
She said, “This enabled us to create a smaller box — which is made from recycled content — and that’s allowed us to significantly cut down the amount of cardboard we use. But also from a carbon footprint perspective we can fit so many more orders into each Australia Post crate.”
Morris explained there are other benefits to being sustainable. For one, it saves a tonne of money.
She said, “Actually the boxes are cheaper and take up less space, so it has reduced our shipping costs. It’s more efficient in the warehouse because they can fit more of those boxes into each shipping cage before they have to go onto the truck.”
Apart from cutting down packaging, Morris is looking at solar power for her workplace as she wants to reduce the company’s footprint in any way she can. She also wants to cut down on plastics and will most likely have conversations with her suppliers to see if they can do the same.
Doing well by doing good
Online fashion giant The Iconic made sustainability one of its key strategic pillars in 2017, which led to the creation of its first sustainability strategy the following year.
Jaana Quaintance-James, Head of Sustainability and Ethical Sourcing at The Iconic, said the company has implemented a four-pillar sustainability strategic business plan covering ethical sourcing, environment, community, and governance.
She explained, “This plan guides everything we do — whether it’s the impact of our own operations on the physical environment, to looking at how we contribute to the social fabric of the community in which we operate.
“Some of these initiatives have included: implementing a program to ensure decent working conditions in the international factories that produce our private label brands; conducting our first carbon footprint baseline and energy audit; investigating solutions for a more sustainable packaging alternative; and assessing the feasibility of solar roof panels in our fulfilment centre.”
Quaintance-James said The Iconic has a number of sustainable initiatives on the way.
The fashion giant is currently investigating environmentally friendly packaging alternatives, creating an online platform to enable its customers to shop by their personal values, as well as exploring the feasibility of solar panels on the roof of its fulfilment centre.
By 2020, The Iconic will have its sustainability action plan in place for every area of the business.
Julie Mathers at Flora and Fauna has a number of sustainable practices, including a recycling program where anyone can send in their waste and it gets turned into other items like dog bowls and benches.
Another is a minimal packaging option at checkout, introduced at the end of 2017 as a number of customers said they just wanted the product and didn’t need the samples or tissue paper.
“We had an option where they could tick a box and it was just products in the box. We got a 40 per cent uptake on that straight away,” she said.
Less than six months later the company decided to make it a permanent feature, where customers need to opt out at checkout.
Mathers said more than 95 per cent of customers choose minimal packaging, saving 17 tonnes of wastage so far.
As the company’s reputation for ethical practices has grown, Mathers said she gets a few businesses coming up to her asking for advice on how to be a bit more environmentally friendly.
She said she gets both businesses and suppliers but — more surprisingly to her — a few big ecommerce names ask her for advice.
“One big business called up our customer care team the other day and was asking where we got our boxes and packaging from.
“Our mission is to help others to make better choices, but one part of our mission as well as a passionate retailer is to change how businesses operate. So we have to lead the way for others to follow. I’m totally okay with that because if we want to stick around on this planet then we’ve got to make some significant changes.”
Rise of the conscious consumer
Driving the shift to operate more sustainability is the rise of the conscious consumer.
According to Deloitte’s Global Powers of Retailing 2019 report, “Opportunity awaits retailers committed to driving change in more responsible practices, as consumers increasingly expect that brands should be accountable for sustainable manufacturing practices, transparency and reducing their overall carbon footprint.”
The report said when it comes to sustainability, business leaders need to set a tone at the top that puts both the interests of the consumers and society front and centre.
The report cautioned, “In a consumer-led sector such as retail, failure to take heed of this could be fatal, so it’s no surprise that some of the most successful and sustainable global retailers, like Patagonia and Ahold Delhaize, have embraced this to differentiate themselves in the market.”
Kate Morris at Adore Beauty has noticed the positive responses from her customers since posting about the company’s sustainability practices.
She said she wasn’t expecting anyone to be the least bit excited about cutting down their packaging and sustainability practices, to the point where they would pick her brand over someone else.
“Certainly people were saying what we were doing was important to them and meant something to them in terms of what retailer they were going to choose,” she tells Which-50.
Quaintance-James knows many customers are passionate about sustainability, so the company encourages customers to get in touch to find out more about current and future initiatives.
Mathers said retailers need to look at consumers today when it comes to catering to shoppers.
She said, “The shoppers today are millennials, young people, and I think you’ll see in the next couple of years they will be taking over as the biggest share of consumers.
“They actually care about values and they want to work for and shop with businesses where their values mimic their own.
“I think it’s one of those things where you have to do it. If you want to remain alive as a business, you have to be thinking about it in some way. People want more than just price when they’re shopping.”
Simon Griffiths, CEO and founder of ethical toilet paper company Who Gives A Crap, said despite being an environmentally friendly company and donating 50 per cent of its profits to charity partners, consumers are always questioning its every move.
He said, “We’re held to a super-high standard and can sometimes be scrutinised in a way that many companies our size wouldn’t be. We get lots of questions asking why we only donate 50 per cent, and where the other half of our profits go, why we produce the way we do, and what certifications, ingredients and production practices we use.”
Griffiths says the feedback can be tough, but it pushes the company to be better.
“The trust we can build with our customers by showing up in a way that’s transparent, humble and honest, has been incredibly valuable.
“We strive to share as much good information as we can, and take the time to consider everyone’s viewpoints, concerns and objections. If we can overcome them, the return in customer loyalty is huge.”
Everybody wants to be sustainable
It’s not only online retailers that are embracing sustainability, according to David Cawley, regional director of recruitment company Hays.
He said there has been a consistent upward trend across the board with regard to the quantity of sustainability roles available in the market.
He said, “Across the corporate sector organisations are acknowledging the need to invest in sustainability programs that perhaps only a short time ago were deemed cost prohibitive. The opportunity cost has cemented the business case for change in many instances.
“We are seeing positions such as sustainability managers, sustainability program leads, ethical sourcing managers and sustainability analysts and advisors coming through more and more.
“From consumer goods and ecommerce/retail through to management consulting, procurement, engineering and construction, the demand is truly cross-category. With this increasing demand, we have also seen an increasing supply of candidates seeking a job with purpose that aligns to their value-set.”
Some retailers may have better sustainable practices than others, but Morris said it’s the start of a journey and all retailers need to put a bit of thought into what they’re doing and the impact they’re having.
She said, “Sometimes the changes you can make are big, but not always. There’s often small things you can do to move the needle.”
For companies like Flora and Fauna and Who Gives A Crap, being sustainable underpins their entire business model. Other ecommerce companies like Adore Beauty and The Iconic are reevaluating how their operations and supply chain can be more sustainable.
The combined force of both approaches may have ramifications for the broader retail market.
If the sustainability efforts gain critical mass — or are mandated by legislation — sustainability will no longer be a consumer trend or competitive advantage, but a necessary requirement to survive.