Why Data Is The Key To Driving Sustainability In Retail

We are entering the age of circular economics where “once is never enough.” Products and businesses will need to be designed for regeneration, rather than produced, delivered, and trashed.  getty

Both corporate values and customer expectations are driving more conscious policies and spending to benefit the planet. Here’s how data and analytics are helping retail organizations hit their sustainability targets.

It can be hard to remember just how much things have changed in the months since the pandemic seized the world. Sustainability is now as much about the resiliency of your business as it is that of the planet—with both benefiting accordingly. Sustainability represents a huge opportunity to serve consumers with what they want, and the world with what it needs, in order to help keep everyone thriving—including your bottom line.

We are entering the age of circular economics where “once is never enough.” Products and businesses will need to be designed for regeneration, rather than produced, delivered, and trashed. Sustainability is rapidly growing as a way to evaluate the non-financial performance of companies and measure the purpose and values that drive a brand.

Coupled with the ongoing concerns around the environmental impacts of carbon emissions, material waste, energy consumption, and scarce resources, retailers are using the challenges raised by the pandemic as a chance to rewire their systems to drive healthier, sustainable, and more resilient value chains that will allow them to thrive in the future.

For example, reducing synthetic PVC plastics in products can reduce fossil fuel consumption. Sourcing raw materials ethically and sustainably helps increase supply chain longevity. Providing services that encourage consumers to repair, rather than buy new products, can reduce unnecessary waste.

Such an emphasis on sustainability may seem like a whole new way of doing business that at times runs counter to the conventional practices of the past. Yet if we don’t seriously reconsider the future of business, will there be much of a future for businesses at all?

Building this future will require an entirely new understanding of the components, inputs, and resources that go into a business. This kind of understanding is made possible on the cloud.

Sustainability sells: Consumers are driving new transformation

The turmoil of COVID-19 didn’t just bring social distancing—it marked the beginning of an eco-awakening. The increased attention on health, safety, and well-being sparked a renewed awareness around sustainability, particularly in the personal choices consumers make in their own lives and how those choices impact the environment.

In fact, Google research* shows that people now have a greater appreciation for life, are more aware of how valuable nature is for their mental and physical health, and recognize being sustainable plays a critical role in protecting it. As a result, sustainability is more top of mind than before the pandemic.

Now, shoppers are looking more closely than ever at the products they buy and the brands they support—and they’re ready to make different choices if they don’t like what they find:

• As mentioned, Google search interest in “ethical brands” and “ethical online shopping” during 2020 grew 300% and 600% compared to the previous year.
• 1 in 3 shoppers stopped purchasing certain brands or products due to ethical or sustainability related concerns.
• Nearly 6 in 10 consumers say they are willing to change their shopping habits to reduce environmental impact.

Retailers were already feeling the pressure to reduce their impact on the environment long before the pandemic. After all, the fashion industry alone accounts for 20% of wastewater and up to 8% of carbon emissions globally. But this new shift in consumer behavior serves as an extra warning that it’s time to accelerate changes now—or pay the price later on.

And it’s not just consumers looking for a commitment from retailers—suppliers, investors, employees, and policymakers are also expecting tangible, sustainable action from businesses. Sustainability is rapidly growing as a way to evaluate the non-financial performance of companies and measure the purpose and values that drive a brand.

At least 65% of world economies have made 2050 net-zero commitments and new EU regulations even require businesses to disclose ESG data about what and how they operate and manage social and environmental challenges.

These changes are already underway. So how can retail businesses stay ahead of them?

Data is key for doing good for retail and for the planet

Retailers have been pushed to illuminate the murkier aspects of their value chains to strengthen credibility and prove in concrete terms exactly how they are delivering on sustainability. But companies can only manage what they are able to measure, so data is crucial for sustainability efforts.

There is a lot of valuable data that can be generated from the first mile to the last mile of products; from direct energy consumption in stores and in warehouses; to CO2 emissions from supply chains and manufacturing; to the effects of resource procurement. Organizations can also gain insight into upstream and downstream activities, such as product distribution and delivery, consumer disposal of product packaging, and other waste.

Migrating to a sustainable cloud can reduce CO2 emissions by 59 million tons a year, which is equivalent to taking 22 million cars off the road, according to Accenture research.

Nearly every aspect of the value chain has the potential to be measured in terms of the impact on the environment as long as companies have the right technologies in place.

Given the public cloud’s inherent efficiencies, it is one of the fastest paths to hit sustainability targets and reduce energy costs. In fact, according to Accenture research, migrating to a sustainable cloud can reduce CO2 emissions by 59 million tons a year, which is equivalent to taking 22 million cars off the road.

But the cloud offers other capabilities that benefit the overall sustainability efforts of retailers, too. Namely, the cloud enables a strong data foundation that allows information to be collected, processed, managed, and analyzed in one place.

The reduction of silos and the availability of a single, centralized view of all relevant data creates the end-to-end visibility needed to understand the full environmental impact of business decisions across the value chain.

Here’s how data is helping retail organizations hit their sustainability targets:

• Lowering carbon emissions and energy usage. Retailers need to accurately measure and understand carbon emissions and energy consumption across thousands of devices, facilities, processes, and locations. By gaining a full picture of carbon emissions, businesses will have the power to optimize and implement sustainable best practices—and track future progress—that will deliver real reductions. For example, data can be used to identify cleaner times of day or lower carbon density regions that can create big opportunities to offset and lower emissions.
• Reducing waste and optimizing supply chains. There are numerous opportunities for retailers to apply data to supply chain sustainability problems, such as inaccurate demand and inventory planning, manufacturing inefficiencies, packaging or product surplus waste, and more. Integrating data from disparate internal systems, partners and suppliers, and external public sources can help create more sustainable and resilient supply chains. Real-time visibility and advanced analytics enable retailers to drill down into key sustainability metrics, benchmark their progress against other industry players, identify and mitigate risks, and improve overall production quality.
• Unlocking deep insights for better decision making. Retailers are looking to answer questions about how current processes impact the environment now and how their businesses will be affected by climate change in the future. Leveraging rich datasets about the planet, new AI and machine learning models, and smarter analytics enables them to extract insights and predict outcomes around sustainability, helping them to make better decisions that keep them on track to future goals.

Retailers are already working on sustainability

Putting their vast amount of data to work, retail companies are already starting to harness, organize, and democratize data both within and outside of their organizations, identifying where environmental impact is happening and taking action.

For example, retailers are applying predictive forecasting models to chase down waste to make demand planning more accurate. Understanding what products customers are most likely to buy and where they will purchase can influence decisions about sourcing, where to place inventory, and optimize shipments and deliveries. It also provides a more personalized product selection, keeping both customers and suppliers happy.

Retailers can also reimagine last-mile delivery packaging. For instance, intelligent packing recommendation (IPR) solutions can analyze the physical dimensions of every SKU, packing materials, and other properties like fragility and temperature to make sure every box is optimally packed. Google Cloud research shows that IPR brings significant savings and an improved customer experience, reducing the total packaging cost per order by 29% and total shipping costs by 19%.

When retailers do good while doing well, everyone wins—consumers, businesses, and the planet.

To learn more about the role of technology in sustainability, check out our Sustainable IT Masterclass or watch our “Solving for Sustainability in Retail and Consumer Goods” on demand.