The future of retail is sustainable, responsible and data-driven
It is a critical time for retailers. The convergence of consumer demands for transparency, sustainability and social responsibility with the availability of cutting-edge data analytics and technology has transformed how retail businesses operate.
Driven by conscious consumerism, retailers are implementing data-driven sustainability strategies to create innovative processes and systems that allow them to better manage their supply chains, a major contributor to carbon footprints industry wide.
According to a report from the Boston Consulting Group and Ascential’s World Retail Congress, the retail industry is responsible for 25% of global emissions. The supply chain is primarily to blame, from materials to the supply chain and so on to the consumer’s final use of a product.
Fine-tuning processes will shift sustainability efforts from an overhead cost to a positive driver of commercial success. For retailers which have yet to focus on sustainability, the time to act is now, and the path forward is illuminated by a combination of technology, collaboration and a commitment to meaningful change.
Vital to this effort is the creation by retailers’ technology teams of data-led composable architecture, a technology platform composed of an ecosystem of parts that allows for different solutions based on the changing needs within an enterprise.
Composable systems
Composable systems provide three important benefits.
First, composable systems offer full visibility into sustainability impacts across the entire value chain. By weaving various data streams into a single framework, the system provides a cohesive view of the social and environmental footprint beginning from raw material all the way through to disposal.
Take, for example, a fashion retailer’s new-found ability to map the lifecycle of a cotton t-shirt, linking data from farmer, through to production, retail sales, all the way to consignment shops and second-hand markets. This unified picture allows for transparency, facilitates customer-driven sustainability choices, and enhances brand trust.
Secondly, these systems mitigate initial investment risks. The composable architecture systems permit targeted implementation in critical areas such as supply chain traceability and carbon accounting, which can then be gradually expanded to align with organizational growth and needs.
To address packaging waste, for example, a fashion retailer might first track plastic usage at key sites, then establish reduction targets, engage vendors for alternatives, and integrate these solutions across retail locations.
Thirdly, centralized data-sharing through composable architectures fosters collaboration with vendors, regulators and stakeholders and will align strategies to propel industry-wide ESG standards and impact. The ease of interoperability between systems leads to coordinated sustainability efforts.
A fashion retailer working toward sustainable sourcing, for example, might establish a unified data platform connecting fabric suppliers, manufacturers, logistics and stores. The platform enables collaboration, which aligns all parties on sustainable practices, streamlines production and distribution, and ensures adherence to responsible sourcing and environmental standards.
Success found in targeted, strategic action
To address customer expectations for ESG without busting the budget, retailers must avoid over-engineered solutions that promise much but underdeliver. The way forward involves targeted, strategic actions that generate real value, not sweeping changes. Begin pragmatically by pinpointing key ESG risks and opportunities, then address them with lightweight platforms and existing data. Collaborate with vendors knowledgeable in retail, not just technology.
Retailers should proceed in a focused and consistent manner, expanding as success justifies further investment. This approach will massively de-risk your sustainability transformation program with the right architecture, creating a cycle of enhancements that become progressively easier to implement.
The cumulative effect of these careful improvements is significant, because they are measurable. Each success fuels the next step in this cycle of sustainable growth: meeting growing consumer expectations and providing hard data for accounting and targets.
To fully realize this potential, a relentless focus on data must be maintained. Composable systems are the framework, but quality data is the core. The data must be central to strategic decision making to truly drive sustainability. This means investing in the technology, talent and culture needed to become truly data-driven enterprises.
Some critical capabilities needed by retailers to ensure a successful effort include:
- Integrated data platforms that bring together structured and unstructured information across the value chain. This breaks down data silos to expose hidden insights.
- Powerful analytics and visualization toolsto identify root causes and model scenarios. Advanced AI can help spot patterns and predict outcomes to guide sustainability initiatives.
- Trusted data processes with strong governance to ensure quality. This is the foundation of reliable analysis.
- Dedicated data teams and centralized leadership to democratize access and align stakeholders. People ultimately unlock the value in data.
- Change management and communication to build a data-driven culture. Plus, extensive upskilling to develop data fluency at all levels.
With these enablers in place, data transitions from “rear-view metrics” into an active, forward-looking view that can guide the organization.
Reliable data provides the feedback loop to iterate, adjust and optimize every sustainability action and investment. This is how retailers move from theoretical ambition to on-ground impact. In the earlier waste reduction example, thorough data analytics could statistically model savings from various packaging choices using historical data. This enables leaders to rigorously assess decisions before committing, and subsequently optimizing sustainability investments. Multiply this across countless decisions, and the overall impact grows significantly.
Retailers must embrace this transformation. Conscious consumerism is sparking real change and the choice is this: lead or be led. Composable systems and data-driven strategies allow retailers to align sustainability with business success, but it requires decisive leadership.
It’s clear that customers care about sustainability and they're watching retailers. With composable architectures, retailers can meet consumer demands without breaking the bank. Retail companies need to focus on the data. It's clear, it's doable, and it's time to take action.
About the author
Andy Knowles is vice president for retail, hospitality and CPG at UST. He has over 30 years of retail IT experience.