This is what a sustainability makeover looks like.
Sustainability is a buzzword in today’s business world. That’s because it’s no longer a choice – but a requirement – for remaining competitive in the retail industry. But what does sustainability actually mean for businesses?
Sustainability is often about creating or doing less throughout the product lifecycle: less waste, lower emissions and fewer impacts. It also means increasing efficiencies across the supply chain – an often ignored aspect when looking to reduce environmental impact.
Some retailers might think that building a sustainable business requires too many resources and makes little difference to customers.
In a study by Nielsen, however, 55 percent of global online consumers said they are willing to pay more for products and services provided by companies committed to positive social and environmental impact.
“55 percent of online consumers would pay more for products from a company committed to environmental progress.”
While it’s easier to focus on day-to-day tasks rather than long-term challenges, retailers must recognize that today’s customer looks for more than just a good product. Retailers must make sustainability a business priority and initiate the investments needed to keep up with consumer demand for ethical and sustainable practices.
After all, isn’t making the customer happy what the retail business is all about?
The retail and fashion landscape
In 2020, global retail sales are expected to top $27 trillion. Asia Pacific will remain the world’s largest retail e-commerce market, with sales expected to double to $2.7 trillion by 2020.
South Korea, in particular, is expected to see a nine percent increase in retail sales in 2017. Furthermore, the sector will grow nearly 13 percent up until 2020, according to projections.
While these are positive signs for the health of the market in South Korea, the total disposed volume of the nation’s textiles in 2014 alone reached nearly 100,000 tons, according to government figures.
Designing sustainable solutions
The fashion industry plays a big role in retail sales. But it also contributes largely to the environmental issues at hand. The industry is known for its heavy use of resources, including the considerable consumption of raw materials and fuels throughout the design, production and distribution process.
To put this into context, the World Bank estimates that textile dyeing produces roughly 20 percent of the world’s industrial water pollution. Rapidly changing seasonal designs and pressure to keep prices low have led to disposable clothing, or so-called, fast fashion.
Sustainable or eco-friendly fashion is often characterized by a pro-environment design philosophy and products made using ethical or fair-trade materials. However, responsibility should not rest on the shoulders of just the designers.
“Responsibility should not rest on the shoulders of just the designers. ”
Although designers have embraced sustainable design techniques like up-cycling (creatively reusing products) or producing merchandise with environmental friendly materials, there are other impactful innovations taking place across the supply chain such as made-to-order (MTO) manufacturing. MTO is a process where manufacturing of a product starts only after receiving a customer’s order. The shift to a demand-driven business model minimizes waste and over-production.
Carbon-footprint comparisons made between offline and online shoppers estimate that a consumer would have to buy a staggering 24 items to equal the carbon footprint of one item ordered online. And yet, retailers are expected to adjust to consumer needs and make decisions that are profitable, efficient and sustainable.
Delivering a more sustainable tomorrow, today
At UPS, we work alongside our global retail customers to tackle operational challenges in the evolving business landscape. We’re showing customers how to take advantage of growing consumer demand, while leveraging existing physical assets.
One of the solutions to address this omni-channel transition is fulfillment out of storefronts with inventory near their customers. This captures sales continually, both offline and online, and also improves customer service by shortening delivery times.
We’re also showing our customers that efficiency need not come as the expense of sustainability. We believe that sustainability and efficiency go hand-in-hand.
“The UPS one-driver advantage results in fewer trips and less fuel consumption.”
Aside from our Eco Responsible Packaging program and carbon neutral shipping option, the UPS one-driver advantage gives customers a single driver to handle all package pickups and deliveries, resulting in fewer trips and less fuel consumption.
Our integrated delivery service network also allows greater flexibility to use our assets more sustainably. For example, we know that rail is four times less energy-intensive than truck, so we use rail transport to reduce carbon emissions for less time-sensitive shipments.
A more holistic approach is required to facilitate green growth. As one of the world’s largest logistics companies, we are positioned to help promote sustainable practices, procedures and services in our customers’ industries.
For example, UPS partnered with a Hong Kong-based NGO called Redress to organize the EcoChic Design Award – a sustainable fashion design competition with a mission to promote environmental sustainability in the fashion industry. Redress was looking for an environmentally conscious partner to figure out the logistics of running a fashion competition spanning 10 countries across Europe and Asia. By partnering with UPS, Redress was able to ship all packages carbon neutral and transport them via UPS’s hybrid-electric vehicles in Hong Kong to reduce the project’s carbon footprint.
Looking at the bigger picture
Global commerce is constantly changing, and sustainability is a growing demand. Businesses must be nimble and make constant, incremental improvements to their value chains.
The successful companies of the future will be those that can adapt to the world’s evolving economic, social and environmental needs. They will be the ones that can meet the needs of today while addressing those of tomorrow. They will be sustainable.
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