Sustainability in supply chains and business at large is a complex process involving many players – producers, brands, retailers and consumers. This article is the first in a three-part series that aims to raise some critical questions and most importantly, reflect on solutions for the biggest question – is the retail environment for sustainability in India supply driven or demand driven?
Sustainability in not a one-sided responsibility. But the question of ‘who leads?’ is one that often arises in the early days of market evolution. Is it the role of business, the consumer or the pressure of external factors that drives change? Retail in India is in a phase of great transition – from being a largely fragmented sector until a few years ago towards large format stores, international brand chains and online convenience. With the opening up of FDI norms by the Government of India and the subsequent investments from large global retailers, there is now more than ever a need for Indian retailers to match their global competitors.
One clear point of difference between global and local operators is the level of focus on sustainability. Companies like Marks & Spencer (M&S), Walmart, and IKEA have for a long time incorporated sustainability metrics throughout their operations. For Indian retailers, however, one point of hesitancy on following suit is whether the relatively price-sensitive local consumer is at a point where this offers any kind of commercial advantage in an already cost-constrained operating environment. But in order to address this gap, who should take the first step on leading the change?
The answer is perhaps mixed. There is now a growing understanding among retailer businesses that there are a number of key risks that are associated with “business as usual”. Most retailers do realise that their businesses rely on finite natural resources. Pressures from price and supply shocks related to raw material sourcing, regulation, supply chain logistics and competitive pressures are all pertinent. Consumer preferences change quickly and concerns around health and food safety are often quickly followed by broader considerations around the environmental and social impacts of personal consumption.
Progressive businesses cannot only ready themselves for such shifts but also proactively engage their customers on the same – building a connection that goes beyond price and convenience. There have been many initiatives by retailers to reach consumers with the sustainability message. For example, M&S has involved its customers in a number of initiatives like ‘shwopping’, which encourages customers to exchange old garments to get discounts on newer ones, and ‘Forever Fish’, which involves customers in marine conservation programmes. In 2009,Oysho, a part of Inditex, supported WWF in a campaign to raise awareness and for the protection of marine biodiversity. The campaign reached out to its customers specifically to save the dolphins and tortoises of the Mediterranean Sea. Another example is Australian retail chain – Coles – that sources sustainable seafood, including Marine Stewardship Council (MSC) and Aquaculture Stewardship Council (ASC) certified products; and helps educate consumers about sustainable seafood choices. Coles remains a signatory to the WWF Global Sustainable
Seafood Charter, committing to continuing work with WWF to help safeguard valuable marine ecosystems, ensure the long-term viability of seafood supplies, and to preferentially source and promote MSC and ASC certified products.
Such global examples reflect the trends in retail to inspire consumer demand for sustainable products and also throw light on the many long-term paybacks to business. For Indian retailers, the battle to secure profitability and market share is a constant challenge. Using creative customer engagement mechanisms linked to emerging consumer preferences is one way to establish a point of difference and drive deeper business change. Holistic sustainability strategies are most effective when they contribute to core business outcomes by boosting revenues, reducing costs, managing scarce natural resources and anticipating shifting regulatory pressures.
Retailers willing to learn from sustainability practices will have a competitive edge, by positioning their businesses for long-term sustainable growth. Such practices also provide them with a larger opportunity to contribute to safeguarding the environment and contribute to improved social outcomes. By working with customers and leading this conversation, there are gains to be made.