Embracing sustainable business practices – once regarded as a substantial cost tied to a transitory consumer trend – is now becoming more widely recognised as a source of competitive advantage that can help drive top-line growth.
While gathering and analysing millions of data points can be difficult, data has always been crucial to sustainability efforts in helping businesses focus on where to best apply their efforts.
An enterprise data platform such as Teradata Vantage help businesses get a full view to understand sustainability alongside profitability and enables them to not only make promises, but to deliver real and significant environmental change.
There has been a huge increase in awareness around ethical and environmental issues, as well as consumer concerns around wellbeing which are contributing to not only ethical but also healthy living trends, according to Teradata senior industry consultant for retail and customer experience, Mohit Kapoor.
“Investors are also encouraging boardsto actively drive mindful consumerism and sustainability initiatives. In fact, a recent PWC’s CEO Business Priorities 2022 survey shows CEO’s view ‘climate change’ and sustainability related issues, as a significant risk to business operations,” he told Retailbiz in a recent interview.
“Another factor is the role Covid also has played. Reports indicate that coming out of Covid, consumers are becoming increasingly more deliberate and planned in their consumption and less spontaneous. Awareness, availability and affordability drive consumers’ interest in ethical living. However, consumers still rank features such as efficacy and value as the main driving force behind their purchases.”
So how do sustainable business practices provide a competitive advantage?
Among those businesses that are placing a greater emphasis on sustainability, the most common reason is to improve efficiencies and reduce costs, according to Kapoor.
“Embracing sustainable practices also fosters greater customer loyalty. There is an increasing number of new brands coming to the market that are built completely around sustainability as a value proposition. Existing large retailers realise that if they do not embrace sustainable practices, they are likely to lose customer loyalty and market share to these brands, in their respective categories,” he explained.
“Additionally sustainable business practices improve access to investment and capital, enhance business reputation to attract, motivate and retain top talent and mitigate risk to their supply chain and operations, reputation, and license to operate.”
Teradata offers a comprehensive framework that helps retailers evaluate sustainability initiatives across the value chain, under four broad themes:
- Sustainable Product – creating sustainable products aligned with market needs
- Sustainable Production –optimising methods of production, location of production, production volumes, packaging and transportation for reducing emissions and waste
- Sustainable Supply Chain – optimising supply chain operational decisions to understand CO2 footprint visibility and traceability
- Sustainable Consumption – driving sustainable customer experience across communication, education and incentivisation to drive uptake of sustainability initiatives
Organisations should leverage data to evaluate new sustainable business models for sustainable products. In some cases, it may be necessary to change the business model to provide better alignment with sustainability while maintaining profitability, Kapoor said.
“We are seeing this with car manufacturers experimenting with mobility-as-a-service business model (for example Ford) or apparel retailers now extending into fashion rental services (for example H&M’s blockchain rental services).
“Retailers can use data to create products that connect with the consumer, provide increased consumer value, minimise the risks associated with a new product’s launch, and both allocate, and coordinate the use of, internal R&D resources efficiently.”
Solutions like Teradata Vantage allow retailers to identify consumer needs it might not otherwise have captured, and then engage them effectively with real-time hyper-personalised promotions to incentivise customers to adopt these new products and sustainable offerings.
On a final note, Kapoor shared his advice to organisations that want to make sustainable changes without sacrificing profit.
“Embrace and do both,” he said.
“In fact, sustainable business practices can help retailers bottom line pointing to a future where they can sustain profits as well as the environment. We must avoid building silos where sustainability is directly competing with other key business parameters such as cost and service, we must learn how to integrate them.
“Patagonia is a great example. Sales and brand awareness soared since it doubled down on efforts to reduce its environmental impact a decade ago by implementing a sustainable supply chain, offering repairs and resale of older products and even opening a new vertical in eco-conscious food.”