The retail industry has been slow to embrace the environmental, social and financial benefits of sustainable practices, though momentum is building globally and locally.
Ahead of a new project by The Fifth Estate to focus on the sustainability of the retail sector, and how it can navigate the future sustainably and profitably, we’ll be sharing some of the major trends in the industry.
Following is the final part in a three-part series on global retail sustainability trends, with insight from Sustainable Business Australia chief executive Andrew Petersen and brand consultancy We First chief executive Simon Mainwaring.
Mega-trend 6: Circular economy
With metal and mineral resources diminishing, extraction costs rising and 80 per cent of products thrown away in just six months, our “take-make-dispose” linear economy can’t survive. Closed-loop solutions aim to recover and reuse resources to minimise waste to landfill. According to the World Economic Forum, the circular economy could become worth $1 trillion worldwide and a $26 billion in Australia by 2025.
With just 13 per cent of global e-waste undergoing some form of recycling and the majority dumped in the developing world, action is needed.
BlueOak Resources is building the US’s first urban mining refinery in Arkansas to retrieve metals including gold, silver, copper and palladium from e-waste.
Umicore, a Belgium-based mining company, is recycling new generation batteries – such as lithium-ion, lithium-polymer and NiMH. The use of such batteries is set to grow substantially, particularly as electric vehicles become more prevalent.
Outdoor apparel business Patagonia’s Common Threads Initiative and Worn Wear encourages customers to extend the life of garments through care and repair, reducing the need to buy more and therefore avoiding CO2 emissions, waste output and water usage. The company provides DIY repair guides and employs 45 full-time repair technicians who save 40,000 items a year. Worn-out items are recycled into new fibres or fabric.
Andrew Petersen says Millennials, in particular, connect with these principles.
“In apparel, you have less interest in the product itself and more interest in the value and connected experience that Patagonia and Kathmandu have created in relation to their products,” he says.
Mega-trend 7: Values-driven community initiatives
Companies are increasingly recognising that externalising their values is an incredible tool for mobilising action within and outside the business, says Simon Mainwaring.
Late last year Seattle-based outdoor retail co-operative REI closed its doors on Black Friday (the day after Thanksgiving and one of the biggest shopping days of the year), and instead encouraged employees and customers to spend time outdoors and share their experiences with the hashtag #optoutside. This exercise in shared value branding came amid a growing backlash against retailers trading over Thanksgiving.
“The result?” Mainwaring asks. “Not only did the brand receive more than 1.4 million submissions from stakeholders showing how they chose to #optoutside, it is establishing itself as a leader of a new movement in the category.”
Mega-trend 8: Adapting to water scarcity
Strauss & Co’s Water<Less process has significantly reduced water usage in finishing processes – up to 96 per cent for some styles – saving more than one billion litres since 2011. By 2020, the Levi’s brand aims to make 80 per cent of its products in this way. The Coca-Cola Company aims to become water neutral by 2020 and, in conjunction with its bottlers, has invested almost $2 billion in water conservation since 2003.
Sustainable cotton farming is another area with water-reduction innovations. The Better Cotton Initiative aims to develop Better Cotton as a sustainable mainstream commodity, transforming production worldwide. In conjunction with WWF and the Better Cotton Initiative, Marks & Spencer is working with farmers in India to help develop ways of producing cotton that use less water. The initiative will help the retailer ensure that 70 per cent of its cotton comes from sustainable sources by 2020.
“If you look at the work of the Adidas Group, for example, they now source 43 per cent of their cotton from sustainable sources – past their own target of 40 per cent – and are leaning towards an accelerated reduction and elimination of unsustainable cotton by 2018,” Petersen says.
Mega-trend 9: Sustainable shopping centres
Leading US retailers are continuing to expand their solar portfolios with Walmart topping the rankings for corporate solar users in the Solar Energy Industries Association’s 2015 Solar Means Business report. The big box retailer boasts 142 megawatts of solar photovoltaic capacity at 348 locations. Other “solar retailers” include Kohl’s, Apple, Macy’s, Walgreens, Target, IKEA, Bed Bath & Beyond and Safeway. In addition, US retailers are testing fuel cells at stores to generate onsite energy.
Petersen says the Australian property sector, particularly the retail and commercial property sector, has been very active over the past 15 years “building a much better platform around energy efficiency, water efficiency and waste reduction into the designs and then ultimate developments”.
“I don’t think it’s an easy sell for the property owners to communicate the benefits of having solar panels on the rooftops of the shopping centre, but it’s very true to say that a number of leading companies – IKEA, Stockland, Mirvac, Lendlease – have, over the years, developed a suite of tools and protocols to ensure they bring about reductions in carbon emissions, wasteful energy use, water reduction and waste management,” he says.
In 2015 IKEA boasted the most rooftop solar by a retailer or shopping centre owner in Australia with more than 4MW, while Woolworths aimed for around 2MW. The GPT Group built a 1.25MW rooftop solar system at Casuarina Square shopping centre in Darwin, while Stockland has installed a 1.22MW system at its Shellharbour shopping centre in NSW.
The Ponds in Greater Western Sydney achieved 6 Star Green Star Retail Centre Design v1 shopping centre certification with a rooftop solar PV system. In Melbourne, the new retail development at the Burwood Brickworks site is striving for Living Building Challenge certification.
Beyond improving energy reduction in shopping centres, we have to consider their actual future.
“There are clear signals in major markets like the United States that old 20th century model shopping malls with the large car park are clearly starting to breakdown and become less viable and valuable to the consumer who are looking for a more interactive experience,” Petersen says.
“The desire by retailers to be where it’s happening, where people could be more engaged within their urban space; the creation of public transport nodes – that is going to be an important one as well. It’s not just one element, a number of different factors are occurring that have opportunities but also have impact on the retailing experience.”