The best retailers for the world: Driving responsible retail and one-planet prosperity
Low-carbon, resource-efficient retail is the only way forward, but we might also need to dig deeper if we are to find one-planet prosperity. Ahead of Wednesday's Responsible Retail Conference, Mike Townsend explores the real challenges and opportunities - along with evidence of an innovative shift - taking place in Sweden.
Responsible retail is becoming a very hot topic – and rightly so; it represents an essential step, as we strive towards a sustainable future, and ‘one-planet prosperity’. There are some important challenges in this space, including supply chain transparency, resource management, reduction of food waste, recycling and the circular economy transition, ‘glocalisation’, and how we might deliver a more positive social impact.
There’s also a strong call-to-action, to motivate real change, at scale. Through collaboration, we can seek to develop a level playing field – with consistent standards and regulations across different markets and jurisdictions. These are all worthy issues and ambitions; retailers can, and should, be empowered to develop more responsible and sustainable approaches. Without change in this sector, we will make little in the way of real progress, towards a sustainable economic future.
The bigger picture
While we need to deliver on all the tactical and strategic opportunities available to us – we also need to be mindful of the ‘big picture’ and systemic shifts that are also necessary; without which, we are only likely to deliver incremental improvements to our ‘business-as-usual’ performance, and miss the real target.
There are two key issues, here. First, there is the business model challenge, and how we can generate sustainable value, along with responsible growth, all within planetary boundaries. Then, looking further, there is the bigger picture role for 21st century retailers – and how we need to work in concert with other actors, in developing and shaping the new, sustainable economy.
On the business model challenge: our conventional retail business models are configured towards selling more and more products, each year – maximising sales and consumption – within a linear take-make-waste model of economy.
In most cases, we tend to make money from selling more stuff than people really need. Just look at the boom in self-storage activity over the past 20 years; we now have as many self-storage centres in the UK as we do McDonalds’ fast-food restaurants. As responsible retailers, we might become more mindful of our potential to exacerbate the growing burden of non-essential possessions and wasted resources.
Meeting the real challenge
The key challenge for responsible retail going forward will be in the zone of business model innovation and how we find new ways to generate value while reducing the ecological footprints for our businesses and our customers. Getting real about meeting this challenge is vital; it will not be possible to continue with maximising consumption within a linear economy. We can no longer afford this outdated model.
In many cases, this will mean a shift towards more service-oriented, circular economy business models – with product take-back, keeping products and resources at their highest use, for the longest time possible. We will tend towards becoming custodians of assets, rather than purely sellers of stuff. The problem is, this shift also represents a challenge to how we make money. This is the hard part – and a real challenge that cannot be overlooked, or left in the ‘too-hard’ box: time for some real sustainable, commercial innovation.
Of course, in meeting this challenge, it is not just about responsible retailers – we need responsible shoppers, too. The mantra for ‘sustainable shopping’ will become buy less, buy wisely (for the long-term) and waste nothing. This will mean a new bottom-line for retail, with new expectations.
This level of retail transformation is not easy, but meeting this challenge also provides us with an essential stepping-stone towards addressing the systemic challenge – and how, as retailers, we can make our contribution towards one-planet prosperity. How could responsible retailers contribute – where do we fit in?
In delivering responsible retail, it is right that we talk about collaboration and partnership – although, not just in horizontal terms, across markets and between retailers – but also vertically, within our local and city economies, where retailers and other businesses operate. Systems-thinking really does apply – map it out; responsible retail has a major part to play in optimising the whole system, and not just meeting the aims for any single, specific retail business. This requires a very different role and mindset.
Keeping it real
OK, enough of the utopian ideals. Is it really possible to combine our notions of responsible retail with a transition towards sustainable cities and sustainable economies?
In a word: yes. This innovative shift is not only possible, it is already happening. There is a great story emerging, from the Swedish City of Malmö – where they are finding ‘purpose’ and economic growth, beyond shopping and consumption. And they’re reducing their ecological footprint, too. The keys to unlock this level of transformation are all about strategic planning, collaboration, and business model innovation.
The Malmö Citysamverkaninsert (Malmö City Centre Partnership) team are paving the way, creating a shift in emphasis – away from the city centre being seen as purely a ‘shopping’ venue – to providing a more ‘experiential’ approach in city-centre configuration. The aim is to develop a growing and thriving local economy, while enabling lower consumption impacts. This is an exciting prospect; could the Swedes find the Holy Grail for sustainable city economies, which includes a template for responsible retail?
A strategy is evolving, in support of a new vision, with Malmö positioned as “a city centre for everybody to love and re-experience”. Focused on four distinct zones – the new approach is all about rebalancing the economy, with specific initiatives developed for specific local needs. A Mecca for Everybody; a Catwalk for Tradition and Relationships; Chic-Boheme, to escape the mainstream; and the Metropolitan Zone, for people “on the go”.
Fundamentally, as we reflect on the need for sustainable consumption, the mechanics of the new strategy respond to the changing needs of visitors and residents alike – whether rich or poor – and, not just in terms of the shopping environment, but also for the experiences for ‘non-shoppers’. Almost half the visitors in Malmö are non-shoppers – they are more interested in social and cultural experiences, rather than purely consumption-based activities. As such, non-shoppers are interested in more greenery, more art, more spaces to sit comfortably, more activities and events, more conferences, culture, and new experiences.
A programme of local change projects is underway, developed in dialogue and collaboration with local businesses within each zone. Some projects are cosmetic, designed to make the street scene and walkways more appealing – to encourage people to visit and enjoy their surroundings. There’s also a programme of cultural events (often free) providing a vibrant atmosphere, which draws people into the City – to enjoy a coffee, or a meal with friends.
The ‘experiential’ approach is particularly important for the non-shoppers – and underpins the growth of non-retail economic activity. This change in emphasis means that people are using their incomes in different ways – with less money spent on buying stuff, but more on services and non-consumption activity.
Is this bad news for retail? Not necessarily. Retail is still, of course, an important part of the mix; we all still need to buy things that are useful in our everyday lives. But there are changes here, too. Responsible retail is all about moving towards lower consumption formats. To this end, the City is encouraging more sustainable business models – on an informal basis – configured on repair and re-use, diversification, and greater social engagement.
Business model innovation
The repair and reuse aspects of the circular economy are growing and thriving – and it is no surprise that some big names are involved. Swedish clothing outlet H&M is providing a ‘clothing take-back‘ service for any brand of clothing – not just their own. Where returned clothes are in good condition, they may be sold on – otherwise, they are repaired for re-use, or materials are recycled through remanufacturing processes. This is all good – but we need to look further.
Within a healthy and diverse economic ecosystem, innovation is not just for the big players. In Malmö, there is also a great deal of business model innovation in smaller, independent enterprises. Uma Bazaar, an organic fashion company, is also offering to take back your old clothes, providing you with a discount on new purchases in return. Old clothes are repaired or reconfigured as new garments – a service full of imagination and creativity.
Nifty Jeans incorporates an in-store jeans factory – making and selling customised and ready-made jeans, along with a selection of quality brands. And, you can also watch, while clothes are being remade.
AB Småland is a hybrid store, focused on clothing and home interiors, offering products for purchase, along with a café, and a customer workshop – where you can bring your old furniture along, and borrow a full range of tools, to effect your own repairs and extend the useful life of your household favourites.
It is difficult to say, today, just how much of the entire pool of retail activity within Malmö could be describes as ‘circular’, but a quiet revolution appears to be underway.
Moving beyond a simple reliance on market forces, the City is quietly influencing the transition through its new strategy – and also through encouraging property owners and landlords to think more deeply about the longer-term; to be discerning in whom they award leases to – ideally selecting tenants with more sustainable models.
As this approach grows and spreads, it can only lead to a more resilient and vibrant local economy, with lower consumption impacts. But is the new approach delivering on its promise? Do the numbers stack up?
Is it working?
The vital question is whether this shift in emphasis in Malmö is actually delivering local economic growth while concurrently enabling ecological footprint reduction.
While it is still an element of ‘early days’, the emerging signs are good. The local economy is still growing year-on-year and the emphasis is shifting; annual retail spend was down by 4% in 2014 while the total spend on tourist activity and on services increased by 7.7% in the same period.
In terms of its ecological footprint, Malmö is making great progress on sustainable urban development – demonstrating positive progress on 19 indicators: they are doing particularly well on sustainable transportation. Although, they are still experiencing challenges on 12 other indicators: for example, more work is needed on green space & trees.
Overall, the level of greenhouse gas emissions is falling – the City is just over halfway to achieving its target on 40% reduction by 2020. Carbon dioxide emissions are at 4.63 tonnes per person in 2015, down from 6.22 tonnes per person in 1990. There is good progress on renewable energy, although some challenges still remain with the complete transition away from fossil fuel power. Nowhere is perfect, right?
The challenge for Malmö, as with every city, going forward, will be in maintaining economic momentum while continuing to find ways to reduce ecological footprint. But, through its ‘Re-experience’ strategy – with the emphasis on rebalancing, re-use, repair, and re-engagement – Malmö is a city that is making the most of what it has got – and is undergoing a quiet transformation in response to the challenges of the 21st century.
And, looking a little further ahead, it is probably no great surprise to learn that Sweden will be the world’s first nation to develop a National Strategy for Sustainable Consumption – due to be published towards the end of this month. It will be interesting to see how far this new strategy goes, too.
Becoming the systems-leader
There is clearly a great opportunity to reframe the responsible retail conversation; to embrace business model innovation, and to align with a ‘greater purpose’ in our era of unprecedented global challenges.
We certainly need to carry on with all our tactical and strategic initiatives – these are still necessary, although not sufficient. We will need to go further if we are to deliver sustainable consumption and prosperity within planetary boundaries. For me, this is where the rubber really hits the road for responsible retail.
Genuine systemic transformation is necessary and possible – as we see in Malmö – but we need to raise our sights and integrate actions at systemic and strategic business levels.
Here are six key takeaways for responsible retailers in driving the future of sustainable retail within one-planet prosperity:
1) Tackle the business model challenge: We need to fully adopt circular economy business models, and find sustainable ways of making money: selling more ‘experiences’ and less ‘consumption’ – and not just settle with becoming more eco-efficient within old linear business models.
2) Purpose and positioning: Moving from maximising self-interest, to optimising our position within a balanced and healthy economic eco-system. This means working towards a greater purpose, developing the whole system, and not just working in isolation.
3) Strategic Planning: We need to take strategic planning to a whole new level – and not just rely on market forces. This means applying real systems thinking – map it out – and rethink the role and contribution for responsible retail. A new systems needs design and engineering – and then, careful nurturing.
4) Collaboration and Partnership: Full and open collaboration is essential, between all actors in the economy – not least, between: city planners, businesses, suppliers, customers, and the local community.
5) Models for Effective Change: Build and engage top-down economic strategies to provide frameworks for responsible retailers to develop innovative business models, coupled with bottom-up initiatives – for joined-up action within a strategic framework.
6) Sustainability as a Mindset: Be open to real innovation – beyond today’s narrow view of commercial success. Dare to be future-oriented, while keeping one foot in the present.
Responsible retail – if we really mean it – has to meet the sustainable consumption challenge, and has to deliver one-planet prosperity. Responsible retailers have a major part to play in developing the architecture for sustainable prosperity. Ideally, we need each responsible retailer to reach their own ‘Unilever marketing moment’ to find renewed purpose – shifting from the aim of being the best retailers IN the world, to becoming the best retailers FOR the world.
edie’s 2016 Responsible Retail Conference
Are current retail business models fit for purpose if we are to deliver the transformational change needed to create a low-carbon, zero-waste economy?
Taking place on 21 September in London, the edie Responsible Retail Conference equips retailers, government representatives, sustainability professionals and key stakeholders with the tools they need to achieve more efficient resource use and improve brand reputation in the process.