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Retail
Omnichannel Experience & Intelligent – The Future of Retail
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Consulting
TCS Consulting Services to Achieve Success in the Business 4.0 Era
Highlights
- Sustainability in retail is no longer a ‘nice-to-have’ agenda; retail businesses are facing pressure from customers, investors, regulators, and employees to espouse conscious retailing.
- Take the road to sustainability with the ‘retain, obtain, abstain, detain’ approach.
- Accelerate your journey by combining technology, data-driven decision making, and establishing sustainability standards within the retail enterprise.
On this page
Know your sustainability enablers
Retailers stand to gain heavily through sustainability.
Sustainable retailing is pricey and more challenging than ever. However, the impact of being a bystander is even costlier—the new breed of mindful consumers is likely to boycott brands that don’t put their act together as a business to protect the earth. Further, Gen Z customers are willing to pay more for sustainable products, inspiring other age groups to be more responsible.
Leading retailers across the globe like H&M, Sainsbury’s, Amazon, IKEA, and Walmart have already shifted to sustainable operating models across the value chain and are prioritizing ethical, social, and moral aspects of their actions. There is pressure from customers, investors, regulators, and employees to demonstrate investments toward this cause.
As the global retail market grows fast, businesses must consider the 17 sustainable development goals (SDGs) that the UN has outlined for making the planet a better place to live in and to ensure a sustainable future. Retail players can directly impact the following SDGs: good health and well-being (SDG 3), sustainable cities and communities (11), responsible consumption and production (12), climate action (13), and partnerships for the goals (17), and contribute toward the universal call to action.
They can adopt an approach with four aspects—retain, obtain, abstain, detain—to achieve these and other sustainability goals.
Road to sustainability in retail
The 'retain, obtain, abstain, detain’ approach can help improve sustainability KPIs across key business processes in the retail value chain.
If you are committed to sustainability but are not sure which road to take, then start with self-assessment—evaluate the impact of all retail business processes and activities on sustainability KPIs such as wastage, landfill, water, electricity, paper, and fuel. Next, apply the ‘retain, obtain, abstain, detain’ approach (Figure 1) across the value chain—from product development, merchandising, logistics, marketing, and advertisement, to sourcing, inventory management, vendor management, demand planning, store operations, and warehousing.
Figure 1: An approach for driving sustainability in retail
The best practices for driving sustainability can be illustrated with an example of a large ready-to-eat food brand. As a private label, the business oversees procurement, development, packaging, marketing, and retailing. Say its weekly reports suggest that overproduction is resulting in higher utilization of resources such as water, fuel, fertilizers, and increased greenhouse gas emissions. The reports also point out discrepancies such as inaccurate demand prediction, additional buffer from suppliers on top of the inventory to meet predicted demand, expiry or food decay, packaging, and out-of-stock errors. Here’s how the business can reduce errors and wastage, thus driving sustainability in retail:
- Retain existing practices such as eco-packaging and avoid food wastage by distributing food items before expiry and by sourcing sustainable products.
- Obtain algorithmic models and technology enablers for higher accuracy in demand and inventory predictions.
- Abstain from adding higher inventory buffers when past prediction errors have been high.
- Detain packaging and out of specification (OOS) errors; these are easily controllable with resource allocation.
The ‘retain, obtain, abstain, detain’ approach helps organizations identify areas of focus not only in the retail value chain but also across manufacturing, health science, and travel industries.
Know your sustainability enablers
Retail businesses require two crucial enablers—technology and data—to renew focus on more socially responsible operative models.
Sustainability data comprises data points on wastage, emission, water consumption, electricity consumption, environmental-friendly raw materials and processes, circularity of products, standard of living of employees, and satisfaction of customers with sustainable alternatives. By tracking these data points and analyzing business decisions, processes, outcomes, and activities with the help of the ‘retain, obtain, abstain, detain’ approach and overlaying technology enablers such as artificial intelligence or machine learning models, cloud, internet of things, and blockchain on top of it, retailers can build a truly sustainable business ecosystem.
By combining technology and data-driven decision-making with algorithmic interventions, retailers can:
- Optimize retail functions, including logistics, supply chain, merchandising, truck space, route, energy, sustainable range, and eco-packaging.
- Factor in historic and integrated data sources in decision-making to reduce wastage in procurement and avoid multiple truck trips.
- Measure interim social, environmental, and economic impacts of reduced carbon emission, and increased green cover, employment, and profits.
- Perform real-time accounting of available inputs for raw materials and labor to avoid excess inventory with in-transit and store inventory. Reduce dependency on vehicles through intelligent labor allocation.
- Strategically deploy assets across operations for reuse and renewal of resources, less consumption of fossil fuels, and adoption of renewable energy.
Five steps to sustainable retailing
Sustainability is no longer a ‘good-to-have’ KPI but a necessity for all businesses.
Embracing sustainability requires companies to nourish synergy between their own actions, relationship with suppliers, and engagement with customers and the wider community. These five steps can serve as a road map to establish sustainability standards within the retail enterprise:
- Create dashboards and views: Develop reports, views, and alerts on KPIs related to the 17 sustainability development goals (SDGs) of the UN across various functions in the retail value chain.
- Monitor sustainability KPIs: Constantly supervise and track sustainability KPIs applicable across the value chain like carbon emission, fuel consumption, water and energy usage, wastage or landfill, raw material sourcing, and operations or maintenance.
- Adopt best practices: Adopt the ‘retain, obtain, abstain, detain’ approach to examine functions that cause alarm and determine the focus areas considering readiness of data, investment, technology, and time to adapt sustainability in business operations.
- Leverage enablers and algorithms to devise solutions: Use data, technology, and algorithmic interventions to identify problem areas and come up with solutions or alternative approaches.
- Enable and execute solution: Ascertain the required investment and time to implement the ‘retain, obtain, abstain, detain’ approach.
The way forward
Retailers need to create their own ecosystem that will yield sustainable value across the retail chain.
It is important for each organization to investigate its own functions to identify interventions that will help achieve their sustainability goals.
A successful sustainability journey will increase the number of ‘retain’ initiatives and reduce those for 'detain' and 'abstain'. Driving sustainable practices helps global retailers maintain momentum in the dynamic consumer economy and gain a competitive edge. Assessing internal data and adopting newer technologies to process them can be a great way for retailers to kickstart the sustainability journey.
