Sustainability has become an increasingly crucial factor in purchasing decisions. According to the study done by IBM, 60% of consumers are willing to change their shopping habits to reduce environmental impact. Nearly eight in 10 respondents indicate sustainability is important for them. Of those who say it is very/extremely important, over 70% would pay a premium of 35% more, on average, for brands that are sustainable and environmentally responsible.
Awareness and education have been key to this shift in consumer behavior. People are demanding more transparency from brands they buy from, thanks to the likes of ecolytiq.
In this episode of the new Disruption Talks series, Sustainability in Retail, Jinder Kang, Innovation Consultancy Lead at Netguru, and Gio Giacobbe, CEO at ACBC, talk about whether brands can stay authentic while being sustainable.
What is sustainability in retail?
Sustainability in retail is a way to reduce the negative environmental impacts of the production and distribution process of developing products. Sustainable brands will typically opt for more natural or sustainable raw materials and boost transparency in the supply chain. They may also be involved in sustainable or eco-friendly initiatives, charities, or events to promote sustainable living.
Natalia Chrzanowska: Do you think retail brands are authentic in their sustainability?
Jinder Kang: It depends on what part of the sector you’re talking about. As someone who’s been around retail for the best part of the last decade, I’m leaning towards no. I haven’t seen enough from traditional retailers, but I’ve seen other companies like Gio’s create measures for themselves with an authentic purpose.
Gio Giacobbe: Anything can change in fashion, and sustainability leaders are collaborating with different brands.
We’re working with 25 different brands, so we’re helping to bring sustainability to them, and they’re often much bigger than us.
Jinder Kang: Gio, what made you take this route to get involved in sustainability?
Gio Giacobbe: I lived for five years in Shanghai, and the pollution is something that really hurt the people. I remember one time I was flying to Japan, and I was shocked when I saw the ocean was brown. After one hour flight, it was just brown in the middle of the ocean. That’s something real, not something that’s happening by 2030 or 2060 or whatever. This was three years ago, and it made me realize we have to do something.
Natalia Chrzanowska: The retail industry is one of the biggest polluters in the world. Why do you think it’s been so slow to change?
Gio Giacobbe: ACBC is focusing on sneakers, so looking at that, the world produces 23 billion sneakers per year. According to research from MIT, the CO2 emissions are equal to the production of cars of Germany and Italy combined.
We are fighting every day to try to change this, but the struggle is that there’s not enough sustainable raw material to serve the big brands like Nike. There is not a supply chain that can serve 23 billion shoes. This affects the design as well because you can’t design however you want if it needs to be based on sustainable materials. It’s also a matter of demand. If customers want sustainable products, the companies will have to align with that.
Natalia Chrzanowska: Would you say that not enough consumers want or can afford to pay for premium sustainable goods?
Gio Giacobbe: It’s not true that sustainability is expensive. You need to think about what percentage is sustainable. 100% is hard to achieve. But 5% is better than zero.
If everyone adds 5% more sustainability to their business, we wouldn’t have a problem.
It’s also about educating the consumers as well because things are rarely black or white.
Jinder Kang: I agree that sustainability doesn’t need to be expensive. We’ve already seen high-street brands start the idea of a circular economy. So, you could take in your former H&M clothing to recycle and receive a voucher to use it in-store. That’s a step in the right direction. But when it comes to educating the consumers, what else needs to be done to ensure consumers are taking responsibility as well?
Gio Giacobbe: I believe that the only way to push the customer is to continue in this direction. COVID highlighted the need for sustainability in some ways. We were all stuck indoors and saw blue skies in cities we’d never seen it before. It accelerated the idea of us being more sustainable and prepared for the next wave.
Natalia Chrzanowska: What is the role of regulators in making retail more sustainable?
Jinder Kang: If the retailer is truly authentic about sustainability, they shouldn’t need regulators.
The idea of self-regulation should be what drives them.
You should want to self-regulate your supply chain, modes of transport, logistics, and production methods. The worry I always have about regulation on an industry is they are always behind the curve and police in it in certain ways that reduce the authenticity in the purpose.
Gio Giacobbe: I believe that we have to divide the retail from the company that is doing retail. If we're talking about a company that is doing retail, the company should start the process of sustainability. So that means they should care what they produce and how much. If we’re talking about retailing itself, we can’t just talk about the store itself. We have to start from the beginning where the company started and if it changed according to regulations or for another reason.
If the customers ask for something, the company, sooner or later, has to change. If the government is setting a regulation, there is always a way to go around it.
Jinder Kang: I agree. Accountability needs to be pushed by the consumer. I remember when there would be bad practices within retail, but the story died as soon as the newspaper was thrown away. But now, we live in a constant world of information. You’re held more accountable.
Trust has decreased, and skepticism has increased, and brands are held more accountable by consumers.
Natalia Chrzanowska: There’s a brand called Everlane, which has a radical transparency approach where they share everything – costs, materials, manufacturing, transporting details on how clothing is produced. What do you think of this approach?
Jinder Kang: I’m a big fan of full transparency. I think consumers want that. Something I really like about Gio’s website is knowing exactly how materials have been used in the production of each shoe.
Gio Giacobbe: I believe that like how food has the ingredients listed, fashion should be the same so the customer can choose. That’s why I appreciate transparency. If you want to be transparent, tell me where the product is made, how it's made, and what materials are used, and what you do in terms of wastage and circularity.
Natalia Chrzanowska: 13 million tonnes of textile waste are produced every year. How can we reduce that?
Gio Giacobbe: In fashion, things change all the time. New trends occur, and the customer always wants something different. This leads to waste because companies need to build up stock levels. We could try to reduce stock or use the circular economy as a solution.
Jinder Kang: It’s a difficult one to answer. What I would say is there are ways to try and reduce that waste, like the circular economy. Another possible solution is to utilize services that could help retailers understand demand before products go into mass production. For example, you could use virtual try-on technology and see what general demand is for an item of clothing. There’s also AI to predict trends, but it’s tough in the world of fast fashion.
This discussion is part of our Disruption Talks recordings, where we invite experts to share their insights on winning innovation strategies, the next generation of disruptors, and scaling digital products. To get unlimited access to this interview and many more, sign up here: www.netguru.com/disruption/talks
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