Accenture Retail Roundtable – Insights Report
Sustainability and Adaptive Retail
From devastating bushfires and a global reckoning on race through to a relentless pandemic, the last twelve months have issued a historic challenge to our shared social fabric. However, beneath this surface of confusion and frustration, significant change is unfolding. Consumers are moving beyond transactional commerce and aligning with businesses that they connect with on a deeper level. As the ethical dimensions of consumer decision-making continue to become more important, Retailers have a significant opportunity to reject tokenism and establish purpose led agendas that earn the lasting support of consumers.
Accenture alongside Connect Media recently called upon leading Retailers to better understand what it takes to influence the corporate agenda and embed sustainability at the heart of business strategy. Moderated by Ann Burns, Client Group Lead , Accenture and featuring case-studies from Eloise Bishop, Head of Sustainability, David Jones & Country Road Group; Bridget Veals, General Manager Merchandise, David Jones; Sarah Hunter, CEO, Officeworks; Pip Marlow, CEO, Salesforce ANZ & ASEAN; and Michelle Grujin, Managing Director ANZ Retail, Accenture, our conversation considered what it means to live and breathe sustainability as an anchor of corporate identity. We are sharing some of the key takeaways from this executive conversation with you today.
A Global Paradigm Unfolds
Before the pandemic, our children were taking to the streets around the planet demanding action on climate change; spurred by a shared frustration with what they saw as inaction from governments, industries and world leaders, they called for change and demanded action so that their futures wouldn’t be spent rectifying the damage caused by previous generations. Our modern and industrialised world has created a status quo for economies that suffer from an overuse of raw materials and resource and overproduction, not to mention the human rights issues that exist within our complex supply chains. The impact of climate change and changing weather patterns are affecting the ability to grow crops and raw materials which in the future will become a fine art and certainly not sustainable by today’s levels of consumption. Every year 80 billion new items of clothing are consumed globally, which is 400 per cent more than what we consumed just two decades ago.
However, the past twelve months have demonstrated that the global community is capable of large-scale transformation to ensure it’s survival. In this time, the world has changed beyond what we could have previously imagined possible. While the pandemic is an ongoing crisis of health that continues to destroy lives and economies, it could also be the catalyst for a paradigm shift towards a global economy that can exist within our planetary boundaries. As consumers we have come to realise how little we need when confined to our own four walls. We are more aware of the fragility of our planet and the importance of being connected to our local communities and supporting them. We’ve learnt to value what we have and question what we thought we needed. We’ve come to appreciate values that are most important to us and there’s no doubt that these are increasingly playing a role in influencing our shopping habits and what we expect from the brands that we choose to support.
Consumers Voice Elevated
In the past twelve months, businesses and consumers alike have embraced their shared responsibility for sustainability. Consumer intent has become more visible as we witness a growing desire for understanding the environmental costs of consumption. Cost and quality remain powerful purchase motivators, but there has been a material uptake in sustainable purchasing when consumers are given a conscious choice to contribute to a circular economy. According to recent Accenture research, 57 percent of customers are willing to change their purchasing habits to help reduce the negative impact on the environment, and 71 percent – who indicated that traceability was important to them – were willing to pay a premium for the brands that can provide it.
Within this broader shift in momentum is the growth of rental and resale, facilitated by digital platforms providing direct customer-to-customer interaction. A recent thredUP Report projected that resale is expected to be worth $44 billion by 2029 compared to fast fashion’s projected worth of $43 billion. Businesses are responsible for driving responsible consumption and pushing the boundaries of sustainable innovation, and those that can embrace these disruptive practices will be seen by customers as proof of them standing behind their quality products. By diversifying their product offering, businesses can demonstrate their sustainability credentials and resonate with consumers that expect the brands they align with to stand for a purpose.
The current climate is also having an impact on consumer behaviour. Preferences have shifted from physical to digital and these will be enduring, from lingering longer in a store or visiting the shopping centre (behaviours that were already decreasing prior to the pandemic), consumers are embracing shopping online at home. The data is showing us that grocery retailers have experienced double-digit increases in demand for online grocery ordering and delivery.
Consumers will trade speed for convenience and a shopping experience they can enjoy from the comfort and safety of their own home. Beneath the surface, consumers will still want to shop in a store, or at least they will want the feeling of shopping in-store. Consumers will want to roam aisles. They will want to seek out bargains and pick up and examine products off a shelf. Price and assortment will also remain important to consumers.
Newer generations are also looking at the next big thing in retail, which is the use of virtual reality (VR) to give consumers the opportunity to virtually shop from the comfort of their home, while providing them with an ultra-realistic retail experience. The challenge that retailers that enters the VR shopping space will encounter is the lack of fulfillment capabilities. Leveraging VR can be essential for retailers sustainability strategy that looks in to bring newer generations to their brick and mortar customer experience.
Brave Leaders Rethink Business Models
Consumers have provided businesses with a mandate for sustainability action. In recent research published from Accenture, 80 per cent of surveyed consumers believed that businesses are responsible for leading the charge in sustainability. Rather than relying on government intervention, sustainability has become a business imperative. Change of this magnitude requires a core reengineering of business models and courageous leadership. Many organisation at the outset of their sustainability journey gravitate towards Operations, a common path to tread given both its measurability and predictability. But these steps, while fundamentally important, are only the beginning of the sustainability journey. Businesses need to entrench a mindset of transparency and evolve their thinking from products as a transaction to products as a service. This remodelling extends beyond process, product development, and packaging, to a deeper consideration of an organisation’s talent and values, and the promotion of consumer choice as an anchor for corporate strategy. It is a maturity journey that requires leaders to constantly think about creating impact from the choices they make every day.
Moving Beyond Aspiration to Demonstrate Progress in Sustainability
The prevailing challenge for many Retailers in this space is quantifying the environmental and commercial impact of their sustainability agenda. Businesses are building their capabilities in sustainability reporting, not simply to remain in step with an evolving regulatory environment, but because consumer and commercial stakeholders are dictating greater transparency. Climate related risks have been escalated to Board level conversation as the gravity of the situation becomes increasingly tangible from a commercial standpoint. Salesforce’s Sustainability Cloud, in essence a carbon accounting service, has been architected to empower businesses with this transparency and provides tangible measures on the impact of their sustainability agenda. Beyond transparency, sustainability also provides Retailers with an opportunity to increase their responsiveness and counter emerging business threats. A prime example of this evolution in strategy is the growth of rental marketplaces, where brands are embracing the opportunity to connect with consumers and create affinity rather than miscategorising the service as a lost sale.
The last twelve months have illustrated both our vulnerability and our resilience. Consumer calls for sustainability have been amplified, and we are experiencing a groundswell of partnerships in the wider Retail ecosystem to accelerate sustainability outcomes. Accenture will continue to work alongside the nation’s Retail community in recognition that the challenges we are facing cannot be combated alone. It is only once we have embedding purpose and transparency in our Retail models, and have elevated consumer sustainability choices above the historical business case, that we can begin to truly transform business for the better.