Sustainability is the biggest disruptor the retail industry has faced – with Australian consumers placing significant emphasis on the ethical production and origin of the goods they purchase.
Paul Zahra, CEO of the Australian Retailers Association (ARA), shares that Australian retailers are increasingly incorporating sustainability and traceability into their practices using a range of methods, including reducing waste, using renewable energy sources, recycling and sourcing sustainable materials and products. “Many products, particularly in food and grocery, will have labels of origin on the packaging so consumers know where the product was sourced and, in some cases, also have data surrounding the impacts of sourcing this material,” he explains.
Paul adds that monitoring the impact of sourcing goods is important to not only ensure sustainability, but also to prevent human rights abuse across the supply chain. “Retailers use a number of tools to facilitate transparency, including ongoing risk assessments through third party audits, human rights questionnaires, industry trends analyses, as well as media and government reports of areas with perceived or actual risk.”
“Yearly reporting in line with the Commonwealth Modern Slavery Act has further enhanced this, as retailers provide public information surrounding their supply chain and sourcing practices,” he shares.
The Australian Retailers Association is a proud partner of the upcoming Global Sourcing Expo, Australia’s premier sourcing event that connects 350+ suppliers from around the world. Visitors to the Global Sourcing Expo will have the opportunity to connect with ARA and other experts in sustainable sourcing and production at the Sydney Expo on 11-13 July at the International Convention Centre (ICC), Sydney, followed by the Global Sourcing Expo Melbourne, which will take place at the Melbourne Convention and Exhibition Centre from 21-23 November 2023.
True sustainable practices cannot happen overnight
Whilst Australian retailers have been on a journey to sustainability for some time, the consumer desire to purchase more sustainable products has accelerated this process. However, many still face significant challenges when implementing sustainable and traceable practices in their supply chain. These include:
Cost. Implementing sustainable practices can require significant investment – which can be especially difficult for smaller retailers. However, there is consumer support for the investment, as 24% of consumers surveyed by the ARA indicated that they would be willing to pay a premium if it meant their product is created or grown with sustainability in mind.
Time. The adoption of sustainable practices is a time-consuming process, requiring ongoing vigilance and communication throughout the entire supply chain, which can be especially difficult when dealing with overseas suppliers.
Transparency. The sourcing of products and services often involves multiple suppliers along the supply chain and ensuring that all parties commit to honest and ethical practices by the time a product reaches a retail distribution centre can be difficult. “Ensuring effective traceability relies on improvements in tracing technology, legislation and reporting practices globally to facilitate,” says Paul.
Specialisation. Sustainability and supply chain tracing is fast becoming a highly specialised skill set, with experienced candidates highly sought-after. This means that it can be a significant business expense to bring on individuals with the requisite skills and knowledge of the space.
Helping brands find the balance
These challenges may seem daunting, but retailers cannot afford to ignore the shift in consumer expectation. Research by the ARA, in conjunction with the Queensland University of Technology, found that the majority (69%) of consumers believe that the purpose of a retail company in general is to respond better to social and environmental issues.
This has left many retailers and brands wondering how to mitigate these challenges and find practical and cost-effective solutions for integrating sustainability into their sourcing strategy. To help give these brands a clear roadmap, the Global Sourcing Expo’s Global Sourcing Seminar line-up is stacked with sustainability and retail experts, including Paul Zahra, who will share valuable insights over the course of event.
For those unable to attend the Global Sourcing Expo in person, or who simply want a sneak-peek of what they can expect at the Sydney show in July, Paul shares the following tips for retailers looking to implement more sustainable and traceable practices:
- Consult resources such as the ARA website, which has a set of free tools to help retailers of all sizes on their sustainability journey.
- Understand what sustainable best practice looks like for a business of your size and how this can be achieved.
- Understanding best practice will help identify initial areas of improvement, and perhaps the ‘quick wins’ you can achieve, such as changing light bulbs to increase energy efficiency and reduce emissions.
- Consider the use of technology, as there are some great programs available to track your progress.
- Set clear goals and make sure you work closely with suppliers and other stakeholders to achieve these goals.
“There are new levels of opportunity and improvements occurring constantly in the field of sustainability, ensuring constant business evolution,” says Paul. “Luckily, retailers are perfectly poised to effect this change as it is one of the sectors most in touch with consumer sentiment and demands.”
“The rewards for getting this right are significant – with sustainability emerging as a powerful factor in brand innovation, customer loyalty and retention,” he concludes.