In the fourth of our articles on the Store of Tomorrow, we explore how this model can create more sustainable stores and drive a more responsible approach to the whole retail business.
Retailers know that a responsible purpose-driven approach is essential. Everyone—from consumers to employees, and from investors to governments—expects the retail industry to act on sustainability with greater urgency.
They want retailers to embed environmental, social and governance (ESG) practices into every vertical of their businesses, thereby reducing carbon emissions, limiting waste, acting inclusively and responsibly, and helping the world get to net zero.
The Store of Tomorrow is an open and flexible space, one that combines the speed and simplicity of digital commerce with the hyper-efficiency of automated warehousing—while putting a greater emphasis on human-centered shopping experiences. It does this by merging online and offline operations and experiences to create a more holistic, efficient, customer-centered, and profitable approach to retail.
Because the Store of Tomorrow calls on retailers to rethink their stores from the ground up, it’s the perfect opportunity to embed sustainability, responsibility and other ESG principles at the core, free from legacy constraints.
And because it aligns with what consumers now want and expect in terms of retail sustainability, it will be a core component in driving future profitability and growth.
Let’s consider four of the most important ways this can happen.
1. A purpose-driven retail experience
Drive consumer loyalty, engagement and sales.
The Store of Tomorrow recenters the shopping experience around purpose-driven retail. The store therefore takes on a new role as a consumer-oriented omnichannel platform. A place where a customer can improve their wellness, and shop responsibly and according to their values as a person.
Specifically, retailers can develop new portfolios of products and services that are differentiated by their use of sustainable materials and responsible practices. This can drive loyalty with existing customers, and attract new ones. They can also use new in-store technology to interact digitally with shoppers in real time, giving them clear and detailed sustainability information for each product as they browse.
In our recent consumer research, we find that consumers are positive about retailers’ efforts to help them shop sustainably:
of consumers believe that brands and retailers have a positive impact on their ability to shop more ethically
believe that food and grocery companies make it easy to identify which products are most sustainable and 67% believe the same is true for homecare products
2. A responsible retail operating model
Drive efficiency in energy use, product waste, and packaging.
A more integrated offline-online retail strategy is inherently more efficient—and thus more sustainable—especially in areas like energy usage, product wastage, and packaging.
For example, retailers can use precision analytics to match supply and demand more accurately, reducing excess and unsold inventory. They can add edge computing to the mix to enable “smart shelves” that automatically monitor product wastage and replenishment.
When you factor in edge computing, it’s even possible to have dynamic pricing that encourages more sustainable choices. Take grocery. Imagine the impact on food wastage if your local supermarket could proactively tell you which products are nearing expiry—and offer them at a discount—as you browse.
And by rethinking the design and layout of the store, retailers can enable circular business models. That includes refillable containers and “product as a service” models on the one hand, and micro-fulfilment centers that open up new home delivery options on the other.
3. A sustainable retail supply chain
Drive transparency in supply chains and productivity in delivery.
By connecting up the supply chain in a transparent digital network, retailers can get the visibility over carbon emissions and ethical guarantees that can be so hard to achieve today. This transparency can have the added benefit of enabling more accurate track and trace for customers.
It can also play a role in de-risking the value chain. For example, by having more local suppliers, a retailer can transform supply chain resilience, while also better supporting the communities it serves.
Similarly, by reconfiguring the fulfilment network around store-based micro-fulfillment centers, retailers can transform both the productivity and sustainability of last-mile delivery—reducing fuel costs and carbon emissions. And by leveraging the flexibility and accessibility of digital platforms, they can also open up the supply chain to smaller suppliers, including those run by previously marginalized groups.
What does all this change mean for retail employees? It’s true there’s a significant degree of upskilling required. But this is another opportunity for businesses to act responsibly and build a more inclusive workplace.
For example, as more of the routine fulfillment tasks are automated, retailers should be looking to reskill their people for value-adding customer facing roles. Similarly, a program of digital literacy may be required, equipping the workforce with the digital skillsets they’ll need to deliver products and services in the future.
Employees are re-evaluating their priorities, and the discrepancy between the digital experiences they enjoy as consumers and those they endure in the workplace are becoming ever more noticeable. These new connected technologies are an integral part of the Store of Tomorrow—whether that’s in the back office, in the micro-fulfilment center, or on the experiential shop floor—and they also change the skillsets required of employees.
Let’s get serious about sustainability
Combined, these benefits will transform retail’s social and environmental footprint, and we have already seen companies making big strides forward.
There’s still much to do, however. And that’s an important point about the Store of Tomorrow. Sustainability isn’t only a part of retail’s future. It’s an essential component of the here and now, and is the very foundation on which successful retail businesses will now be built. Welcome to the Store of Tomorrow. Read full report.