(Click on Yumpu link above to see article as seen in Global Retail Brands Magazine, April 2020)
HOW TO TAKE THE LEAD AND CREATE CLEAR, VISIBLE AND FOCUSED EFFORTS
Sustainability is one of the most important causes and consumer concerns of our time.
It is increasingly affecting the way we buy, the way we behave and how we perceive retailers, restaurants and brands. And the truth is, while almost everyone is doing something with regard to Sustainability, it varies significantly in its clarity of communication, sincerity and accountability of actions.
Consumers are assaulted with different language around the initiatives – green, clean, sustainable, ethical, lifecycle management, etc. – and the breadth and umbrella of sustainability in the four walls of the store is also treated very differently retailer-to-retailer. For some, the sustainability initiatives are more inward-facing to suppliers, affecting the backstage, and to others the efforts are more outward-facing to actual shoppers.
In what follows, we will try to explore differences in sustainability execution, both the strategies and tactics, and try to shine a light on retailers/brands that are leaning in ahead of the curve. We will make the argument that it will be better to lead in Sustainability than to follow, and that your company or brand will benefit by having a strong, visible and accountable point of view. Importantly, we will also show how retailers’ own brands can play a vital role in their overall sustainability vision.
THE TORNADO OF ACTIONS
The actions around sustainability have been fierce over the last year and they are continuing. In all of these initiatives, it is important for retailers, food service and CPGs to distill their sustainability platforms with the following objectives in mind:
- Who is the sustainability message for? Investors, suppliers or the consumer?
- If it is for consumers, is it for the “deep green” or “newly initated and receptive” sustainable shopper?
- Is it compact enough, both in language and in definition, for it to be universally and simply understood?
- Is it achievable?
- How will you be accountable for it and report it?
Most recently in the food and beverage arena, Starbucksannounced (January 2020) a new Sustainability Pledge, saying their overall ambition is to “give more than it takes away from the planet.”They have stumbled in the past in hitting certain published sustainability targets, but they are refreshingly open about this saying “we don’t fully understand all the complexities and potential consequences”, they are relying heavily on partners like the World Wildlife Fund (WWF) to help, and have indicated a renewed willingness and transparency to succeed.
“Our aspiration is to become resource positive– storing more carbon than we emit, eliminating waste, and providing more clean water than we use,” said Kevin Johnson, Starbuck’s CEO. This involves three goals to be met by 2030:
- Reduce carbon emissions by 50%
- Reduce waste sent to landfills from stores and manufacturing by 50%
- Conserve or replenish 50% of our water use
Tesco also recently reported (Dec. 2019) new Sustainability ambitions that are measurable, with an actual Sustainability Basket Metricthey are also developing with the World Wildlife Fund, which will be refined over the next year. Tesco in an overarching way has committed to a 50% reduction in the “environmental impact” of the average U.K. shopper’s basket by the year 2030– the Metric will literally measure and track this based upon sustainability criteria like food and packaging waste, and also deforestation and climate change.
Tesco’s initiatives are unarguably positive, though it does raise the question of how much of this is clear and tangible to their shoppers. Lessening “waste” is the easiest measure to grasp for most consumers, with the other sustainability facets being equally impactful to the environment, but more nuanced to shoppers.
As the WWF says hand-in-hand with the Tesco Sustainability Metric news, “food production is … the leading cause of tropical deforestation and is responsible for 24% of the world’s greenhouse gases.” All true, but consumers are confused about what they can effect tangibly, with “59% saying they are confused about foods that are counted as sustainable.” (source, The Guardian, U.S.). This underlines the importance of education, and keeping your sustainability goals and communication simple to understand.
THE IMPORTANCE OF VISIBILITY
There are lots of different approaches to improving Sustainability, and attacking the backstage platforms of responsible sourcing with your supply chain, remediating energy use, water and waste across your own manufacturing and logistics infrastructure is vital. But, these are tough platforms to get credit for in the eyes of your shoppers (as well as being tough to crystallize for them).
For their true activation, you have to make Sustainability efforts visible to them. In one of the most visible initiatives in the world last year, Waitrose rolled out their Unpackedstore on Botley Road in Oxford, U.K., with over 200 lines ofplastic-free merchandise.
- Loose fruit and vegetables more extensive than any other supermarket.
- Refill areas for frozen fruit, laundry detergent, water, beer, coffee, wine and 28 dry grocery products
- Recycling stations
- Plastic wrap-free plants and flowers
And if you look closely at this Unpacked Test Store (which Waitrose evaluated during summer 2019), they also extensively incorporated their own brands in the initiative – a highly visible and tangible Sustainability retail execution that got consumers involved and talking (and even behaving differently)!
Kroger in the U.S. has also embraced sustainability through both backstage and consumer-facing platforms, and like many retailers (but maybe better than most) they have a Sustainability Plan that is clear, accessible and thorough. http://sustainability.kroger.com/2020-goals.html
There is more of an investor/supplier version of Kroger’s Sustainability initiatives, but they also do a great job of making “digest” versions that are more consumer-friendly. They are using the Zero Hunger-Zero Waste moniker, which is easy-to-understand, and have even created a social media hashtag #zerohungerzerowaste that they utilize to publish updates.
Kroger has reinforced the initiative in the community, with their consumers and with their store associates by nominating and rewarding “Zero Heros”for their Sustainable contributions. Overall this has the effect of being inspirational, transparent, clear in its communication, and is highly visible to all. And remember, visibility leads to real engagement, beyond just having the positive benefits of a retailer’s role in leading the way.
SUSTAINABILITY AND THE LANGUAGE BEHIND THE MOVEMENT
There is an evolution to the Sustainability movement, and the language behind it has an evolving arc too.
- The language and initiative started as “Green”, which basically meant products that were eco-friendly and safe for your home.
- The next step-up is “Clean”, which refers to ingredients in both food and non-food products that are transparent, organic and safe.
- “Sustainability” and its umbrella are even broader, as this transcends the end “product” in every respect, including farming practices to procurement to lifecycle management.
- And more recently, retailers are reporting on their “Corporate Responsibility”, which goes beyond sustainability and builds in ethics, global citizenship, fair trade, workplace mission/philosophy, and a company’s ethos on the “right things to do”.
Depending on your company’s position and product, how you are perceived, and your overall ambition, it is important to pick the right layer and type of language. Most are sticking with Sustainability as their language, and then in doing so, they are committed to go beyond the product to live up to it.
RETAILERS INVOLVING THEIR OWN BRANDS
Retailers have chosen to utilize their own brands in various ways to embody Sustainability, some with more department and category specific products, and others with portfolios that are more encompassing.
Target’s launch of everspringlast year is a somewhat modern take on the traditional “green” portfolio, 70+ products in paper, laundry and household that try to wedge into the success of brands like Mrs. Meyers, method and Seventh Generation.
everspring complements and doesn’t displace many of the CPG brands that are known-for carving out their eco-conscious identities, but it is a relatively contained effort within the store.
Remember, Sustainability transcends “green” today for many retailers, touching all four walls of the store through every type of product – from toothpaste to plant-based foods to cosmetics to teas and coffees to fashion and apparel.
Connecting the dots from an own branding standpoint, for many retailers, is better done through one, more unified approach. This is because with a larger brand that has organic, green, ethical and plant-based layers, it becomes easier (and more efficient) to communicate to your shoppers than multiple brands. This is indeed what Ahold (Nature’s Promise), Kroger (Simple Truth) and Albertsons (Open Nature – includes everything except Organic) all have chosen to do strategically – creating own brands that cue towards Sustainability and have great breadth and bandwidth.
Nature’s Promise– Sales exceeding $1B and 1400+ skus – a megabrand for Organic, Natural, Free-From and Eco-Friendly.
Simple Truth – Sales exceeding $2B and 1550+ skus – fair trade, free-from, eco-friendly, organic, natural, minimally-processed and increasingly plant-based. It reaches all areas of the store – the perimeter, center store, non-food and HBC/personal care.
PLANT-BASED JUST AS MUCH ABOUT SUSTAINABILITY AS IT IS ETHICS OR DIET
What we are also seeing in the industry is a change in how Plant-Based foods are being repositioned as a key tenet of Sustainability. It used to be that a vegetarian and vegan diet might have been driven more by a consumer’s ethical or even health choices, but today you can’t separate plant-based from Sustainability, and this is a fairly recent insight for many shoppers.
Recent studies even show that “the production of animal products generates the majority of food-related greenhouse-gas emissions – specifically up to 78% of total agricultural emissions.” (Springmann Study, University of Oxford, Journal Of Nature)
In January 2020, Kroger announced that it was rolling out a plant-based meat offering under their Simple Truth brand that will include pea-based patties and grinds. They also said that an additional 50 skus of plant-based products will be introduced during the year.
Another approach to plant-based meats was demonstrated over the last year by none other than Burger King, creatively uniting with Impossible Foods. They took their own brand, the iconic Whopper, and exclusively developed the Impossible Whopper (“0% Beef, 100% Whopper). Still uniquely their own, but utilizing the equity of Impossible Foods. This is a novel approach that other retailers could think about and apply, in effect creating an exclusive co-brand.
SOME COMMON INITIATIVES AROUND SUSTAINABILITY
Though the branding approaches and category territories around Sustainability vary by retailer, there are some initiatives that unite many retailers. The most powerful and adopted common initiative is around own brand packaging.
Walmart, Aldi and Albertsons have all committed to totally sustainable packaging in their own brands by 2025.
This is a goal known more by their suppliers and internally than it is to customers, and it is part of the backstage/procurement influence retailers are exerting around Sustainability. Though how products are sourced is definitely getting consumer-facing exposure in many cases. Sustainable fishing/seafood platforms, fair trade sourcing around coffee, chocolate, bananas and more, as well as utilizing palm oil as an ingredient are all sustainable initiatives that retailers are addressing.
In fact, Iceland in the U.K. notably vowed to remove Palm Oil from 100% of its own brand products, and not able to hit their published deadline, removed 17 products from its portfolio (re-labeled, really, to not reflect that they were Iceland brand). Palm oil is said to have a major effect on deforestation, and is used in a wide variety of everyday products like shampoo and cookies.
KEY SUSTAINABILITY TAKEAWAYS
Own brands are becoming an important, highly visible vehicle for demonstrating retailers’ intent around Sustainability. This will only increase in the future, because it is the best and most prominent way retailers can get unique credit for what they are driving. Many retailers as you can see have ambitious, overarching Sustainability goals, and I think there are some lessons in all of this to embrace for the future. Here are four crucial takeaways:
- Keep your language around Sustainability accessible to all, clear, and even inspirational. The umbrella sorund Sustainability is broad, and even confusing to many consumers, so keep your tone educational, honest and simple.
- Be fully transparent in what you are trying to achieve, even with a little humility. As we have noted, Starbucks had to change course on many of their published goals, and Iceland has been criticized for merely “re-labeling” products from their own brand portfolio. Don’t set goals just for the investor community, but ensure there is visibility around them to your shoppers too. Kroger’s Zero Heroes is a great way of engaging the community in Sustainability.
- Make a real commitment to infrastructure. The retailers and CPG manufacturers that are excelling in the Sustainability space have dedicated senior management and teams, and their plans are not being created off the side of people’s desks. To have any effect on Sustainability and what you are doing as a company you have to have dedicated buy-in from the top-down, engagement throughout your organization, and full-time infrastructure.
- Consider how your sustainable initiatives, products and ecomm can all have connectivity. While concern about sustainability is universal across all generations, there is resonance especially in your Gen Z and Millennial consumers (and remember that they are digital natives). Take notice of Thrive Market, a $59.95 per year membership e-tailer, purely digital, where Sustainability is a major platform of what they sell and who they are.
Sustainability will only continue to be embraced, continue to be mainstream, and increasingly will be a priority for shoppers. It will simply be an expectation they have, and the days of “are they willing to pay more for it” are over. Lead through example, engage your consumers, and you will reap the rewards.