Retail trends and sustainability – what to do as a retailer

In this article, EOG Head of Retail Peter Ottervanger shares his thoughts on some of the key issues relating to emerging retail trends around sustainability, and how they link to the accelerating digital age.

The next consumer revolution has been fast tracked due to the Covid -19 crisis. Trend watchers have been indicating for some time that a new age is imminent, but the pandemic has accelerated the pace towards ‘The Golden Age of Digital’. After the first tech revolution, we moved on to mobile platforms and now we are moving again, on to artificial intelligence (AI) and learning machines.

Due to Covid-19, more than ever we are now used to working in a world of digital meetings and conferences, virtually catching up with families, buying online, using multiple interactive digital tools, and more. As a consequence of this digital sprint, consumers are spending more time online and learning on deeper levels about products and services. Today, they are even better informed than they were before the crisis. This human transformation presents us with a new reality and a more than critical super well-informed consumer. Without going into a very detailed approach, looking at different generation types, we can identify three major trends.

1. Contribution instead of buying

Consumers are more and more willing to contribute to a better world and are well informed, making conscious choices. The demand and knowledge relating to sustainability topics is growing, whether that relates to greenhouse gas emissions, fibre choices, supply chain transparency, or transportation choices, and digital provides more access to the latest information than traditional retail. In this context, large public companies find that they need to publish their corporate social responsibility efforts in annual reports and similar documents, driving even more attention in media, and allowing consumers to access more information easily at hand.

2. Usage instead of owning

The new buzzword is PaaS (product as a service) – new business models are emerging such as leasing and renting, with service as the key factor. The retailer will become more of a service provider, with a well-developed purpose describing the reasons behind its existence. This purpose is the driving force and enabler of strategies.

3. Pass on and recycle instead of throw away culture

While raw materials in general, and specifically oil and gas, will be phased out, the need for reusage and circular thinking such as second hand kit and recycling, is on trend.

The trend for more sustainable products is being fast tracked by the digital sprint, with some industries taking good steps: Outdoor industry (microfibre choices, an overall sustainable approach); food business (organic assortments); automotive (electric vehicles).

The debate continues about whether consumers are willing to pay a higher price for sustainable goods. The answer is somehow twofold. On one hand, a minority is already willing to pay a premium price (>10%), while research has indicated that half of consumers are now critically aware of sustainability, environmental impact, child labour, material choices, and fair trade. It is clear that with the ever-growing attention, retailers have to make a choice over whether to surf a big wave and position themselves as leaders, or to position themselves as followers. When the consumer is truly the centre point of attention, it will be logical to become, or reinforce a position, as an industry leader. The next stage is to start a planning cycle that has the output of a strategic sustainable roadmap.

A roadmap for sustainability with clear targets for the next three years should incorporate the following elements:

Defined purpose of the organisation – ‘who are we and what do we stand for?’

Define sustainable goals from the supply chain

Conscious choices about brand portfolio role and function (e.g. phasing out microfibres)

Provide clarity in price structure to consumers – what are they paying for?

Design new business models: circular, second hand, PaaS, repair services, rentals, subscriptions – look for cooperation with other partners

Communication of sustainability efforts (staff, consumer, instore, digital, out of home and other stakeholders)

Financials integrated into overall business plan.

This is a call out in the spirit of never wasting a good crisis and working collectively with all stakeholders, to build a solid plan to serve today’s and future consumers, and make the world a better place.

At the EOG, we have expertise in house to deliver strategic and technical support.

For more information, please contact us directly you can reach me on peter.ottervanger@europeanoutdoorgroup.com or +31 642079169.

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