Greener Supply Chains, Stronger Profits: Turning Sustainability Into Retail Success
Welcome to another episode of Retail Reckoning! In today’s show, host Clare Bailey looks into how sustainability and supply chain resilience are no longer just buzzwords - they’re powerful drivers of profit and customer loyalty.
With supply chain disruptions becoming the norm and eco-conscious consumers pushing brands to do better, retailers are faced with new challenges and opportunities.
Clare unpacks the latest risks shaking up the retail landscape, explores the shift towards near shoring and greater transparency, and reveals why greener operations don’t just help the planet—they can boost your bottom line too.
From real-world examples like Aldi and Innocent to actionable steps for building trust and trimming waste, this episode is packed with insights for anyone ready to future-proof their retail business and win over the next wave of customers.
Click play and discover how thinking green can help you stay in the black!
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Transcript
Sustainability isn't just a gimmick, it's a profit driver. And if
Speaker:you're not sustainable and your competition are, you're going to miss out
Speaker:on customers who'll move over to those who can make them feel like it's easy
Speaker:work to do the right thing.
Speaker:Supply chains and sustainability aren't luxury add ons, they're
Speaker:frontline strategy. Disruption is baseline.
Speaker:Eco consciousness is a profit defense. Name your
Speaker:top three supply chain risks right now without potential closing. Go.
Speaker:Okay, so permanent disruption, what does that really mean?
Speaker:47% of UK businesses have reported disruption in the past year,
Speaker:with 60% saying supply line was more brittle than ever.
Speaker:Drivers are inflation as declared in mid August
Speaker:at 3.8%. Energy costs, Ukraine, war,
Speaker:Red Sea issues. It's coming out of all sources
Speaker:and we know as the industry that stock issues
Speaker:are a major problem. Retailers have lost
Speaker:billions. Delayed stock, disrupted inventory,
Speaker:cyber attacks. M and S claim they lost around
Speaker:300 million and a billion
Speaker:off their valuation, according to AP News, due to
Speaker:everything that happened to them. We've got to build redundancy,
Speaker:diversify supplier base and scenario plan for disruption
Speaker:because disruption is no longer uncommon. It's
Speaker:the norm. And what does that even mean? What we need to look at
Speaker:is being more nimble and being able to pivot. There's a couple
Speaker:of brands who I've noted are working more on near
Speaker:Shoring. What I mean by that is they're not reliant on
Speaker:routes out of China, India, Pakistan and so on.
Speaker:They're near shoring, perhaps to Europe and the UK.
Speaker:Fat Face and Jules. The PwC
Speaker:have noted that retail tech investment is up 10% year on year
Speaker:for things like point of sale, inventory planning,
Speaker:AI forecasting and lean operations. So
Speaker:lots of the businesses in this sector, the bigger guys,
Speaker:are finding ways to be more flexible,
Speaker:I guess, and more able to respond to the chaos
Speaker:that we see in the world. I mean, we haven't even talked about tariffs.
Speaker:Near Shoring appears to be the best choice for
Speaker:now. It may change in the future. But if you can get
Speaker:UK or relatively close EU supply
Speaker:and that there is some level of security
Speaker:of the supply chain, that would be the best option. Despite it
Speaker:probably being higher cost on the product. But is it
Speaker:really higher cost? When you think about the cost of lost
Speaker:inventory, containers stuck in the Red Sea, containers being
Speaker:hijacked and so on, it feels sometimes like the world's gone a bit
Speaker:mad. So my advice would be to test regional
Speaker:and more local options, investing in
Speaker:much more transparency about the supply chain and speed of
Speaker:supply. So you've got much more agility, meaning
Speaker:if a product takes off and you're on a six month lead time from China,
Speaker:you can't respond. But if you're on a one month lead time from say,
Speaker:France, you can. You need to reduce reliance on single points
Speaker:of failure. That's been the case for supply chains for years. And with the way
Speaker:things are in the global economies, there is no other
Speaker:choice but to really work on creating some
Speaker:level of resilience and also much closer sourcing
Speaker:options. The other
Speaker:thing when it comes to supply chains is people are looking at
Speaker:carbon miles. They're far more cautious,
Speaker:let's say, about where they spend than they ever were.
Speaker:Certainly Gen Z. And they are the next generation of
Speaker:consumers. They may not have the spending power just yet, but they
Speaker:are your next wave of customers. So I think you need to use
Speaker:sustainability as a profit engine. 64% of
Speaker:UK customers are saying they will pay more for green,
Speaker:whatever that means to them. I mean, you know, define that, but
Speaker:the point is a third are already switching to
Speaker:brands because of their ethics and that's coming out of people like
Speaker:Vogue Business and so on. We do know there is a
Speaker:growing and burgeoning trend towards
Speaker:greener and more sustainable products and services.
Speaker:Aldi have ditched non recyclable packaging by 2026
Speaker:according to their statements. And I think that that says an awful lot
Speaker:because as a lower cost provider they are moving
Speaker:towards also being a lower cost and most
Speaker:ethical provider. Now, Ms. Have had plan A for many,
Speaker:many years because there is no plan B. But it's true
Speaker:if the businesses tell their shoppers
Speaker:that by shopping with them you're doing the right thing for the planet
Speaker:without even trying. It drives loyalty, it makes the
Speaker:lazy consumer much more aligned to our brand.
Speaker:Yes, you've got the zero waste shops where you can take something and refill
Speaker:it and so on, but that's more hassle y than Aldi telling
Speaker:us that they'll have no non recyclable packaging. M and s
Speaker:telling us everything they do is going to be as green as possible because that
Speaker:just makes our lives that bit easier. So I would say for any business, large
Speaker:or small, you've got to make your sustainability
Speaker:credentials visible and you need
Speaker:to translate it into the marketing and in store experience. Sell the
Speaker:story. I've seen some brilliant imagery in co ops.
Speaker:I was in Lincolnshire at the time, so I think it would be under Lincolnshire
Speaker:co op. All credit to them. They had images of wind turbines in
Speaker:the toilets, but it sold the story and it was
Speaker:everywhere. And you felt like by shopping with them you were doing the right
Speaker:thing. I would say if you can make your customers
Speaker:feel like by shopping with you they are doing the right thing, then you're going
Speaker:to win. That kind of
Speaker:leads us to storytelling versus trust.
Speaker:If you've got information about something, sustainability,
Speaker:supply chains, ethical purchasing and so on, whether that
Speaker:be through trained staff, QR codes on products that
Speaker:someone can click to find out more, labels which carry the
Speaker:clear messaging, I think there's a red tractor, isn't there, in the sustainability
Speaker:for food and so on. All of that goes a long way.
Speaker:And I think one of the brands that I feel is the most innovative
Speaker:in this or certainly has been a leader is
Speaker:Innocent. Because you'd get your little smoothie with telling a story. It's
Speaker:got a funky picture on it sometimes. It wore a little woolly hat
Speaker:too, which is quite funny and innocent. Told us about
Speaker:where the food had come from and it told us about how it was made
Speaker:and so on. And more and more brands are doing that now and
Speaker:I can see a quiet shift towards
Speaker:those brands that feel more honest and
Speaker:more aligned to our personal values and our care
Speaker:for the planet, for those of us that care. So my advice on
Speaker:this is you need to be really authentic.
Speaker:Customers have got to see you as real. You need to make sure that
Speaker:staff are well trained so that if customers talk to them, they know
Speaker:exactly how to get across the positioning, the messaging and
Speaker:tell the story and even down to products and
Speaker:labeling. It needs to somehow relate them back to something that
Speaker:they can buy into. Not just because
Speaker:it's a good value for money product or because it's
Speaker:something they fancy buying, but because when they buy
Speaker:it, it makes them feel good about themselves. And that's
Speaker:really, really important. Similarly linked to
Speaker:my earlier episode, I just want to reinforce that
Speaker:heritage doesn't mean impunity because
Speaker:despite the fact a company may have been going for years,
Speaker:literally hundreds of years, the evidence from Woolworths,
Speaker:Debenhams, Clares, River Island, WH
Speaker:Smith, it proves that being trusted
Speaker:isn't enough and that the legacy of those businesses in the
Speaker:years they've traded isn't protection against the economic stresses
Speaker:everybody's feeling these days, we need to constantly
Speaker:reevaluate and pivot businesses where necessary
Speaker:because consumers expectations are changing.
Speaker:So what more could those businesses have done? For example, to show
Speaker:that they were reducing wastage, that they were being more sustainable? What
Speaker:stories were they not telling that they might have been able to tell.
Speaker:And that's the sad fact. Lots of businesses
Speaker:almost become complacent and think, well, you know, we've been around for years,
Speaker:we're doing really well, but they're not telling the stories that are relevant to
Speaker:today and to today's customer. And unfortunately, that
Speaker:means they're losing their customers to other people.
Speaker:The other issue I've got with supply chains is wastage.
Speaker:Wastage is basically lost profit. 40%
Speaker:of retailers reported cost savings in the first year of their
Speaker:eco investments by looking at lean packaging
Speaker:and inventory management in a much more focused lens.
Speaker:Because less waste was better margin. It
Speaker:stands to reason that's what the Japanese car industry did
Speaker:in, I believe, the 80s or 90s with the kaizen culture.
Speaker:They worked on kaizen, which meant reduced waste.
Speaker:I think the word for it was muda. Kaizen,
Speaker:or total quality management, as it became known, was all about
Speaker:reducing waste to increase profitability. And that's why the Japanese car
Speaker:industry did so well. And simply by
Speaker:doing the right thing, you can actually increase profits. But the
Speaker:principle is you invest in lean
Speaker:packaging, lean inventory and eco
Speaker:efficiency and you will make more profit. It stands to
Speaker:reason. You can tell the eco story on your social media, your
Speaker:website, your blog, your packaging and so on, but you also make more money.
Speaker:So my advice would be look at your waste, optimize your stock
Speaker:levels, make sure your supply chain is efficient and functional, and remove
Speaker:inefficiencies that are going to leak margin effectively. It's all
Speaker:about auditing past errors, shoring up the supply
Speaker:chain, getting rid of dross, as we said in one of the earlier
Speaker:episodes, making sure that you eliminate the long tail of
Speaker:underperforming products, small operational fixes,
Speaker:but many of them result in significant financial
Speaker:gains later. So to wrap up,
Speaker:supply and sustainability aren't just corporate social responsibility,
Speaker:they are power plays. Relying on heritage
Speaker:leaky supply chain and forgetting to tell your story,
Speaker:that's your decline path. Retail winners this year and
Speaker:next are pivoting packaging. Well, persuading
Speaker:customers and convincing people that by buying from
Speaker:them, they're doing the right thing as well as satisfying their own needs.
Speaker:I'm Claire Bailey, retail champion, and you've been listening to Retail reckoning.
Speaker:Yeah. Retail reckoning.
Speaker:Retail reckoning. No space for
Speaker:dusty shelves. Cause retail
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