Increasing retail sustainability

Rob Shaw at Fluent Commerce describes five ways that retailers can adapt their sourcing strategy to reduce costs and emissions

 

Many retailers are struggling to balance a need to operate more sustainably with business needs in today’s difficult economic climate.

 

However, consumer demand for sustainable shopping options remains strong. In fact, research shows nearly two thirds of UK consumers say sustainability is more important to them than it was two years ago. This is influencing how and where they spend their money. 

 

In addition, new rules and disclosures on ESG and climate are coming into play worldwide this year. This is prompting businesses to find ways to cut emissions and meet climate goals.

 

For the retail sector, which accounts for roughly 25% of global emissions, the focus will be on finding a way to cost drive sustainability whilst maintaining profitability. However, reducing emissions can also lead to real cost savings, making it a win-win for retailers. Let’s look at how. 

 

Delivering on sustainability

Consumers wanting to be more environmentally focused has meant giving lip service on sustainability simply isn’t enough. Sustainability practices must be integrated across all elements of the business.

 

When it comes to the last mile, there are a number of changes that retailers can implement. For example, more carbon neutral deliveries, more sophisticated and optimised fulfilment options and reduced packaging.

 

Here are five ways retailers can adapt their sourcing strategy to reduce costs and emissions:

 

1. Increase inventory visibility

Timely, accurate inventory data helps retailers better understand buying trends and manage demand. Utilising this data, they can adjust inventory to meet demand and reduce split shipments. Retailers can also reduce the average distance from which orders are delivered.

 

With a real-time view across all inventory locations, businesses can use merchandising to recommend products that can be fulfilled from the same location. Retailers can also use this information to offer customers the option to consolidate various orders. For example, Amazon gives shoppers the chance to receive multiple orders on a Sunday. By optimising these fulfilment processes, retailers can reduce the number of deliveries required.

 

2. Order consolidation via existing trunk routes

For most retailers, inventory is stored across various locations. Say a customer orders two items, but one is in a Distribution Center (DC), the other in a Store. Or they’re in two different stores. What can you do?

 

One option is to use existing replenishment routes for order consolidation. This saves having to use a parcel carrier to ship from DC to store or a store-to-store transfer. As a result, retailers can eliminate transfer and delivery costs, and the subsequent emissions. With a clear view of inventory and the right technology partner, retailers can manage the staging, transfer and consolidation of items for an order.

 

3. Promise against future inventory 

Modern retailers can accurately quantify the inventory levels they have available to promise and sell. With the right technology at hand, they can monitor inventory more efficiently across all locations. They can also use this to take into account future availability of products and services.

 

For example, if a customer doesn’t need an item in a hurry and a retailer can see that a replenishment order is on its way to a location near the customer, they can promise against the future inventory. This means the item can ship from a closer location which will reduce emissions and cost of delivery.

 

4. Offer green delivery options

Sustainable delivery methods such as electric vehicles, bikes and drones are becoming more common. Retailers can negotiate contracts with (or switch) current couriers to integrate these greener delivery options.

 

By making these changes, retailers can reduce their carbon footprint while appealing to today’s eco-conscious shoppers. And, with flexible order orchestration logic, retailers can create or update workflows to manage any differences in how those orders need to be processed.

 

5. Promote in-store pickup 

Whenever retailers can get customers to pick up an order in-store, it’s a win for the environment. Especially considering that often customers will have planned to be in the area anyway or will use public transport to get there.

 

To encourage in-store pickup, retailers should provide an efficient and positive customer experience. With an accurate view of inventory, they can clearly communicate the expected pickup date for click & collect orders.

 

Easy to use, mobile-friendly apps support a smooth pickup experience in store, contributing to a hassle-free experience. Retailers can use incentives like cheaper or free delivery to encourage in-store pickup. If they have a loyalty scheme in place, they could also reward green initiatives with loyalty points or a discount off their next shop.

 

A helping hand

While carbon neutrality may be the goal, the bottom line impact of emissions reductions initiatives can lead to real cost savings. But to save money, retailers need good inventory visibility. They also need the ability to fine-tune their sourcing strategy and to optimise order fulfilment. 

 

Modern, distributed order management systems (DOM) consumes all inventory data from a retailer’s back end system at scale. This provides retailers with the most accurate data of their digital channels, across all locations. 

 

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Rob Shaw is MD EMEA and SVP at Fluent Commerce

 

Main image courtesy of iStockPhoto.com