The year 2016 brought more disruption than ever in every industry. The pace of change in how we work, live, shop and have fun is accelerating. New technologies and customer preferences have challenged the way that all companies — in all sectors — approach every aspect of their business.
Retail is no different. The retail store formats of the 1980s until 2010 no longer apply given consumer expectations for convenience, authenticity and personalization. Retailers must rethink the way in which they connect with their customers, source products, fulfill demand and talk about what they do, all in the most efficient way. Innovation is no longer an opportunity, it’s a necessity. As we look towards 2017, we’ll see retailers explore innovations along many dimensions. Sustainability will be one of those.
Technologies are enabling whole new modes of sustainability. Investments in clean energy are already paying dividends for the leading retailers: technologies such as 3D printing; radio frequency identification (RFID); driverless trucks; logistics tracking; mobile devices; augmented reality; and more. These technologies promise to be ripe testing grounds for integrating sustainability into retail store operations, truck fleets and supply chains. Here are the trends in retail sustainability to watch for in 2017.
Adapting to consumer preferences
Technology and lifestyle changes are leading to new consumer preferences and desires. One major shift is the desire for products on the shelves to be sourced, manufactured, packaged and sold sustainably. Customers care about where and how their products are made and they want to know that the store from which they buy them also cares.
Transparency and authenticity is key. They’re looking for local, healthy products and ones made solely with the individual customer in mind. With this in mind, I expect there will be more developments in the way that retailers track this information and share stories with their customers. Technology is enabling this trend.
Experimenting with experiences and new models
In 2017, retailers will experiment with new technologies and business processes to facilitate sustainable operations. Taking a page from the concepts of design thinking, they rapidly will prototype new concepts to test new models. That will include new business models — such as take-back, renting and sharing — and new goals, processes and partnerships.
As technology enables new business models, consumers become more comfortable with them and startups test them, more traditional retailers will adopt them. New online and offline store formats will emerge, testing new experiences and social engagement. We are in the age of letting a thousand flowers bloom; experimentation is the name of the game.
Cross-industry partnerships to address specific sustainability needs
Retailers enter into new partnerships every day. Some examples are the Sustainability Consortium, the Sustainability Apparel Coalition, the Bangladesh Alliance for Worker Safety and the Closed Loop Fund. New collaborative groups are forming to address focused elements of sustainability in retail, moving from the big pronouncements to the "get it done" specific efforts.
While these are less flashy, they are rooted in deep business and systemic needs. Therefore, they can be more substantive. In 2016, RILA announced several partnerships of its own to address landlord-tenant collaboration on energy reduction, sourcing products in a responsible manner and building toolkits to address the circular economy. These will align existing efforts and build resources to effect the specific industry changes that are now necessary. The value of working together with other public and private organizations across sectors is only growing. We expect to see this trend continue and grow into the new year.
Embedding into the business
With the value of operating sustainably — both to company reputation and the bottom line — growing every day, it’s becoming ever more essential to integrate sustainability into all aspects of the business: marketing; merchandising; supply chain; sourcing; human resources; and more. We can expect energy and sustainability managers to gain a seat or two at the table for strategic planning conversations moving forward.
Aligning with newly forming innovation teams
Innovation is now the strategic pillar for growth in retail. Companies that haven’t already born their innovation programs are miles behind. As companies look to upend the status quo and pave the way for growth into the future, they will integrate innovation into all aspects of the business, including sustainability. Keep an eye out for innovative technologies to help retailers advance sustainability and energy efficiency efforts in new and exciting ways.
While these predictions for retail sustainability trends in 2017 are just that, one thing we can be sure of is that retailers understand just how important it is to invest in this area of the business. Time will tell how our approach to sustainability will adapt to the changing retail landscape. It will be exciting to see all of the innovative new processes play out.
Adam Siegel and Caroline Stec