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Retail and sustainability: how it can pay

While some businesses see the need to act sustainably as just another expensive hoop they have to jump through, others are using it as a way to reduce costs, gain market share and improve their bottom line. By Helen Dickinson


Retail and sustainability: how it can pay

While some businesses see the need to act sustainably as just another expensive hoop they have to jump through, others are using it as a way to reduce costs, gain market share and improve their bottom line. By Helen Dickinson

The fact is that the drive for sustainability can be turned from a challenge into a business benefit and there are some great examples of this in the retail sector.
Those who use sustainability to focus on their business practices, and look for the efficiencies and benefits it can bring, find themselves operating more effectively with lower costs and a growing customer base.  On the other hand, those who pretend it’s not happening, only act in response to legislation and then do just enough to comply really are missing an opportunity to benefit from new business practices and reduce their costs.

One of the problems of tackling the whole question of sustainability is that it covers such a wide range of things, from saving energy to investing ethically and from protecting raw material supplies to corporate social responsibility.

What is increasingly clear, though, is that the public is demanding that businesses act sustainably and is looking for evidence that retailers are doing their bit to comply with 21st Century thinking on the future of the planet and its resources.

Companies such as Marks & Spencer continue to make loud noises about their Plan A campaign, which the retailer describes as “working with our customers and our suppliers to combat climate change, reduce waste, use sustainable raw materials, trade ethically, and help our customers to lead healthier lifestyles.”  The M&S website also points out: “We’re doing this because it’s what you want us to do. It’s also the right thing to do. We're calling it Plan A because we believe it's now the only way to do business.”

Companies that share that view that sustainability is “the only way to do business” are benefiting from the feel good factor they are creating amongst their customers – which is why they are making a point of advertising what they are doing as well as doing it.  More importantly, the smaller fish swimming in the big retailers’ pools are also having to brush up their sustainability act to make sure they don’t lose out.

Companies are more and more concerned about image these days, and supply chain vetting is increasingly frequent and increasingly tough.  I understand businesses which have adopted this approach have removed products if their criteria could not be met by suppliers, providing a stark warning of what can happen if action is not quickly enough to make ensure products are sustainable.

There are other benefits too.  For retailers, focusing on its operation can simplify and streamline business.  Keeping track of fewer product lines has to make life easier, particularly if one or more of those products might have damaged your reputation.

It seems where retail has led others are following with all kinds of end users from local government to large corporations to IT companies now flaunting their sustainability credentials and weeding out those firms that might damage their reputation. 

There is a real competitive advantage to be gained in being one of the leaders in sustainability rather than one of the laggards that is just making a minimal effort to comply with the letter of the law. The public wants it, customers are demanding it and the bottom line will often be better for it.  Rather than just seeing the cost of compliance, if sustainability is tackled in the right way, compliance becomes a by-product of the growth generated by focusing on new opportunities.

Helen Dickinson is  Head of Retail at KPMG

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