Distinction rebellion

How being a sustainable retailer can grow your profits


Catherine Erdly is founder of Future Retail Consulting

In 2019, sustainability is on everyone’s minds in a way that’s not been seen before. There is a renewed sense of urgency, not just among the communities that have been focused on environmental issues for many years, but now among the wider population.

Whether it’s Extinction Rebellion blocking the streets in London, or the growing awareness within the general public of the impact of our modern lifestyles, sustainability is causing a major shift in consumer behaviour and sentiment.

And this major shift in consumer behaviour can actually have a hugely positive impact on your bottom line – more than ever before, customers are looking to retailers to be sustainable.

Dubbed the ‘Blue Planet 2 effect’, customers are modifying their behaviours in an effort to live more sustainably.

Customers are willing to pay more

A report by the Retail Industry Leaders Association on the subject of sustainability suggested that customers were prepared to pay up to 20% more for products that supported their goals of living more sustainably. Are there other products that you can add to your offering that will meet those criteria?

According to a report by research agency Walnut Unlimited, 75% of customers are modifying their behaviour concerning dairy, meat, sugar, non-recyclable items and single-use plastics.

Consumer trends often start with food first, then move into other purchasing areas, so the move away from single-use plastics in the food industry, whether that’s offering cheaper refills if you bring your own cup, or the proliferation of paper straws, is really just the start of a much wider trend. Already, 66.3% of customers are actively looking to buy products that don’t use plastic, according to Retail Insight Network, but expect that number to only increase in the coming years.

Clothing is usually the next area to see a consumer trend take hold after the food industry, and certainly the fashion industry has come under its own scrutiny, with a growing rejection of fast fashion.

Documentaries such as Stacey Dooley Investigates – Fashion’s Dirty Secrets have raised awareness of the impact of manufacturing processes on the environment. Sustainability is important here too, according to a Forbes article, with 50% of customers planning on switching their brands in the future to support more environmentally-friendly brands.

Customers are changing their own behaviour, and they are looking to retailers to do the same – the GlobalData report on UK Sustainability in 2019 showed that almost 80% of customers did not feel that retailers were doing enough to act sustainably.

“Individuals are not satisfied with the current actions of retailers, as 93.5% of consumers agree that it is the responsibility of retailers to act sustainably, but 79.8% agree that retailers are not doing enough to address issues around sustainability and climate change,” GlobalData reported.

The message is clear - customers want to buy more sustainably, and they don’t think that retailers in general are being sustainable enough.

Sustainability to increase footfall

Can you consider ways to use sustainability to help drive footfall and return purchases? For example, offering to recycle packaging from your products will require a return visit. So will re-filling your products if that is practical.

An advantage for independents

While this new shift in customer behaviour can feel overwhelming, independent retailers are actually perfectly placed to take advantage of this new and growing customer sentiment.

As the GlobalData report highlighted, 93.5% of consumers want retailers to act sustainably, and 80% of them feel that retailers are not doing enough.

Where customers are perceiving big retailers as acting in a non sustainable way, this leaves a gap for smaller retailers to tailor their messaging to explain to their customers why they are a sustainable choice.

You have the advantage of being able to talk directly to your customers, which builds trust. You can address their fears and concerns on your website, via your social posts, or by talking to them face-to-face in store.

Independent retailers can also come up with engaging, creative ways to make their own business more sustainable. Whether that’s switching to an energy supplier that runs on renewable resources such as Ecotricity, or putting LED lights in the shop, you can share this journey with your customers.

Not only can you share this journey, you can go further towards building rapport and engagement by inviting customers to suggest ways in which you can become more sustainable.

Can you ask your customers to vote on which energy-saving initiatives you should invest in? Can you ask them what they find most difficult to recycle and become a community drop-off point for those items (which also encourages footfall)?

Trust is an incredibly important element of how consumers decide to buy. Sharing your journey towards being a more sustainable retailer is an excellent way to build up that trust with your customer.

That's not to say that you have to be perfect. In fact, transparency is equally as important when it comes to building trust, so don’t be afraid to share when things don’t go exactly to plan. For example you may be trying to move towards being a zero waste shop, but you accidentally order something that arrives wrapped in layers of plastic. If you share this part of your journey with your customers, along with what you are going to do in the future to avoid making the same mistake, then you are demonstrating transparency. You never know, it may well spark an interesting debate with your customers, and encourage other people to think about what small steps they can take instead of only focusing on doing sustainability “perfectly”.

Millenials and Generation Z shoppers are even more concerned about trust, transparency and environmental issues than older shoppers, so it will only become more and more important for businesses to communicate openly with their customers.

Sharing your journey towards sustainability and getting your customers’ input will not only give them the chance to talk to you about something that is very important to them, but will also help position you in your local community as a business that cares about sustainability.

Ultimately, loyal, returning customers on average spend 67% more than new customers, so engaging people long term on issues that are important to them not only feels good, it will help boost sales as well.

Boost your top, and bottom line

Investing in sustainability is not just a great way to engage with your customers, growing loyalty and ultimately top line sales. It’s also a way to boost your bottom line by reducing your costs.

According to an article by Hargreaves Lansdowne, any reduction in energy costs can increase profits, even without an increase in sales. Even if energy costs are only a small percentage of your overall turnover (research suggests that it averages between 4% and 9% for retailers), then reducing these costs can have a significant impact on your bottom line.

In fact, research from the Carbon Trust suggests that a reduction in energy costs by 20% has the same bottom line benefit as a 5% increase in sales.

Here are some ideas for reducing energy costs in your business:

Lighting

  • Install LED lighting (this alone can save up to 85% when compared to incandescent bulbs)
  • Make sure light fittings are regularly serviced
  • Replace older light fittings with more energy-efficient modern units
  • Introduce automation such as daylight sensors, movement sensors and automatic timers to cut down on the amount of time that the lights are on
  • Encourage staff to turn off lights, and label all switches to avoid lights being turned on unnecessarily

Appliances

  • Look out for any older appliances with poor energy ratings, and when replacing them, make sure that they have the highest energy ratings
  • Encourage staff members to turn off all monitors and computers at night. A single computer and monitor left on 24 hours a day will cost a business £45 a year

Heating

  • Avoid the use of electric heaters wherever possible
  • Turning down heating just one degree saves an average of 1% on heating bills
  • Installing additional insulation such as draught strips around your doors is an excellent way to reduce your heating bill

Reducing waste

  • Any actions you can take to reduce waste in your business, such as going paperless or eliminating single-use plastic bags will also contribute to reducing costs.

Summary

With today’s customers increasingly concerned about the sustainability of the retailers they buy from, independent businesses are perfectly placed to win the trust and loyalty of these customers by sharing their sustainability journeys with them.

Not only will this give them the chance to engage and inspire their customers, it can also have a significant bottom line impact.

Catherine Erdly, founder of Future Retail, is available to health stores as a consultant in creating greater success for modern retailers. Email catherine@futureretail.world or visit www.futureretail.world

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