Can sustainability help retailers overcome a 'trust deficit'?
EXCLUSIVE: With the retail sector battling against low trust-levels, high-street closures and a transition to e-commerce, delegates at edie's Responsible Retail conference claimed that embedding sustainability as part of a holistic brand purpose can drive prosperity for businesses.
The retail sector is faced with an unprecedented and ill-timed transition. Law firm RPC claimed that the number of retail insolvencies climbed by 7% last year, with separate figures suggesting that more than 35,000 high-street jobs have either been lost or are at risk this year.
RPC’s research highlighted the ongoing shift to online shopping as a contributing factor, as the UK’s top 20 dedicated online retailers saw annual sales increase by almost a quarter to £8.4bn. In stark contrast, footfall on the high street recorded its largest year-on-year fall last year.
However, the sector has also felt the shockwaves of an issue that is impacting wider business performance – a lack of consumer trust.
At last week’s responsible retail event, sustainability professionals from Kingfisher, Ocado, Selfridges and British Retail Consortium (BRC) outlined how purpose and sustainability could be aligned to create opportunities in a time of widespread challenges and panic.
“What a time it is to be a retailer,” the BRC’s head of sustainability policy Peter Andrews says. “We are facing an incredibly challenging period at the moment. As a sector, we have a huge influence and one that we really need to use to demonstrate responsible actions within society.
“There are increasing expectations from our customers and an increase in the opinion that we are not doing enough to deliver against them. Of particular importance is that the future customers of our businesses have the lowest level of trust.”
Andrew’s comments are based on the latest Edelman Trust Barometer, which showed that less than half (43%) of the British public trust retailers. According to the Telegraph, trust in wider business sphere has fallen dramatically since the collapse of construction firm Carillion. The Telegraph cites a survey from the Confederation of British Industry (CBI), which shows trust levels falling from 65% to 56%.
Although not a retailer, Carillion’s collapse serves to highlight how sustainability itself isn’t enough to be viewed as sustainable. In August 2017, Carillion was presented with the Queen’s Award for Enterprise in recognition of its contribution to sustainable development. Perhaps a more holistic understanding of what is sustainable and ethical is needed to thrive?
But with retailers facing economic constraints, how can sustainability be used as a lever to ensure brands thrive in a new online era? According to Selfridges’ director of sustainability, Daniella Vega, sustainable practices must form one part of a new-found sense of culture and purpose that drives trust.
“Where brands could once build their reputation on selling products, they now must stand for so much more,” Vega says. “Retailers must become curators of space and experience as well as products. The future of department stores lies in culture as well as commerce.”
According to Vega, consumers are beginning to ask more questions about the environmental impacts of products, and are demanding that retailers deliver benefits beyond an economic bottom line to drive societal prosperity.
Selfridges is guided by a “very personal set of ethics and a strong moral compass” and “overall, a desire to do the right thing”, according to Vega. The company was ahead of the curve in its decision to stop selling plastic bottles back in 2015, and has since introduced solutions to the recyclability of paper coffee cups.
The company’s own research found that 82% of consumers care about the social and environmental impact of the product they buy. Vega states that “radical” transparency will be key in strengthening relations with consumers – an important task given the diverse purchasing pool of online retail.
“Retailers will need to be radically transparent in the future and begin to share information about all aspects of their supply chain and the creation of their products,” Vega adds. “Contrary to some of the perceived wisdom that customers in the luxury industry simply don’t care about sustainability, we have found through our own research that they absolutely do, and they are very exacting about where they want us as a multi-brand retailer to focus.”
“I believe that through our conscious curation, we will not only be able to take a stand for what we believe in, but to marry progressive style with progressive values. This is key for the customer engagement piece.”
Purpose and leadership
The Edelman Trust Barometer highlights the role that leadership can have in building customer loyalty. There is renewed optimism amongst consumers that brands driven by boards can deliver positive environmental and societal change, before it is imposed by regulators.
Kingfisher is enjoying a renaissance of sorts in relation to sustainability. The company was far less vocal about the sustainability agenda when Véronique Laury was announced as chief executive in 2015. However, the launch of its new sustainable growth plan, which is backed by Laury at a boardroom level, has seen the group’s head of sustainability, Caroline Laurie, act as a high-profile figurehead that is keen to drive the sustainability agenda.
Speaking at the Responsible Retail event, Laurie championed Kingfisher’s “social purpose” and how it was delivering environmental benefits to its consumers.
“Without social purpose, no company can realise its full potential,” Laurie says. “Customers increasingly expect companies to do more than make a profit, and to operate responsibly to address environmental and social issues – yet their trust in us to do so is at an all-time low.
"We’ve got a big trust deficit here and, to be truly purposeful, your purpose must be at the heart of everything you do – otherwise, it will feel like a sham and customers will see right through it. Done right, this will reduce cost and risk, it will kick-start innovation and commercial growth, and it will build trust, attract talent and enhance our reputation. You have to keep translating this into core business benefit, or the jargon will kill it.”
Kingfisher has partnered with charity Shelter to create sustainable homes for the homeless, generating money through corporate donations and employee fundraising activities. More broadly, the group has generated £3.8bn in annual sales through products that “actively make customers’ homes more sustainable” - such as LED lighting, insulation and low-flow taps.
For Laurie, consumers don’t need to have a dialect with business on sustainability, they now expect corporates to deliver it regardless, or filter their ranges accordingly.
Sustainable Development Goals
For companies still trying to uncover a core purpose to act towards, the United Nations’ Sustainable Development Goals (SDGs) are a unique framework to utilise.
More than 25 UK retailers have committed to a series of commitments to collaboratively tackle pressing societal issues by using the SDGs as a framework. The BRC’s Better Retail Better World pledge aims to boost corporate alignment to SDGs covering decent work and economic growth, reduced inequalities, sustainable communities, responsible consumption and production and climate action.
Ocado is one of the retailers that has signed up to the pledge and the company’s head of corporate responsibility, Suzanne Westlake, noted that the 17 Goals acted as a lens to uncover how their impacts could be translated into an embedded and purposeful action plan.
“It was really important to align who we are as a business and what we do with our impacts, to determine how we could correlate and make a response that actually means something,” Westlake says. “If we can integrate who we are and what we do on a day-to-day basis with the SDGs, then it becomes more manageable and more meaningful.
“Everything we do is about trying to address who we are as a business and where we can, therefore, have the biggest impact. There would be little point going to an awful lot of effort that doesn’t have a profound impact on our business because, ultimately, it won’t make a great contribution (to the SDGs) in the long-term.”
Ocado is tackling material impacts including food waste and resource efficiency by partnering with non-profits that deliver societal value – notably through food redistribution schemes and textile reuse partnerships with select prisons.
Westlake added that there was value in retailers working together to try and tackle the “massive global issues” represented by the SDGs. For now, the onus is on the sector to transform an appearance of bricks, mortar and profit to one of culture and purpose that builds trust amongst a new tech-savvy consumer base seeking authentic brand values.
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