As we begin 2024, the retail sector is witnessing a dynamic shift towards sustainability. Highlights of the millennial and Gen Z consumer trends almost always center around sustainability, with 72 percent and 77 percent of them, respectively, likely to pay more for environmentally-friendly products, according to the PDI Business of Sustainability Index. The behaviors of these growing consumer segments, along with other industry trends, are compelling retailers to innovate and adapt.
The Current Landscape Shows Why Sustainability Has Become an Imperative
Key macro trends are reshaping the retail industry. Research analyst firm IHL Group expects generative artificial intelligence to have a $9.2 trillion impact on the retail industry by 2029. AI is revolutionizing operations and enhancing efficiency and traceability — a critical asset amid economic uncertainties and the need for resilient supply chains. This technological shift aligns with the commitment of younger generations with rising purchasing power to support sustainable brands even in challenging and uncertain economic times, according to an Amazon Ads’ Higher Impact study. This coupled with stricter regulations like the EU Corporate Sustainability Reporting Directive and the Green Claims Act are setting a new standard for not just EU retailers, but also those in the United States and globally toward greater transparency and responsibility. As these trends steer retail toward a more sustainable and agile future, innovation and improvement opportunities will continue throughout the value chain.
The 6 Strategies to March Toward Sustainability
To thrive in the ever-changing retail landscape, adopting sustainable practices isn’t just an ethical choice; it’s a strategic imperative. Here are six strategies to guide retailers toward a greener supply chain in 2024:
- Elevate your portfolio with eco-conscious products. Expand your product line with eco-friendly options. From organic to recycled and responsibly sourced, these offerings attract a growing conscientious customer base and increase the value of your brand.
- Improve packaging efficiency. Opportunities abound for efficient packaging practices, including using recycled or plastic-free materials, reducing unnecessary packaging layers, and using fit-to-size packaging. These efforts not only reduce waste but also maximize transport capacity and allow for the use of lower-cost shipping methods.
- Streamline processes and improve quality. Collaborate with suppliers to streamline processes and improve quality, reducing waste and extending product longevity. AI and machine learning technologies can help further optimize inventory levels and automate defect detections.
- Communicate with data and transparency. Communicate your sustainable practices and impact across channels. With customers becoming savvier, data should be incorporated where possible to guide consumers toward more sustainable choices and showcase your commitment.
- Produce locally. Work with production partners that make products closer to your end customers, minimizing transportation-related carbon emissions and creating safe and well-governed jobs locally.
- Produce on demand. By producing goods only when there’s a confirmed need, retailers and manufacturers can drastically reduce excess inventory and overproduction risks. It also reduces raw materials, energy and water usage, along with the need for storage space and an upfront investment in products.
To effectively pursue sustainability, retailers are encouraged to broaden their focus from solely managing direct emissions to indirect ones and other social and governance impacts. It’s advisable to collaborate with partners in production and distribution, ensuring all operations align with sustainability goals, a vital step for fostering a greener, more sustainable future in the retail industry.
Rebecca Razulis is the COO of Gelato, a global print on-demand platform.
View Original Article
