The coronavirus pandemic has further accelerated the shift from in-store retail to e-commerce, with consumers increasingly expecting faster deliveries and more reliable service. Accenture’s 2021 Shipping Study and Out of Stock research—which tested retailers’ ability to fulfil specific orders on popular electronics, toys and Christmas food within a set time frame—showed that retailers have ramped up their delivery capabilities over the past 12 months to meet those higher consumer expectations ahead of the festive rush.
Retailers are rising to the challenge, says Kelly Askew, retail strategy lead for Accenture UK and Ireland. Deliveries are arriving faster: 85% of orders were delivered within six days compared to 72% in 2020, while 77% of retailers are now offering next day delivery compared to 70% in 2020.
Yet while speed of delivery has improved, retailers also need to focus more on sustainability. That doesn’t mean just reducing their impact on the environment (where most of the current focus is), but adopting a more holistic approach that views sustainability through the lens of the five capitals model: natural, human, social, manufactured and financial.
Take social capital. Customer experiences—though generally good—have slipped since 2019: 13% of consumers experienced technical issues when shopping online, such as items going out of stock while in the basket, payments not going through, users being inadvertently logged out of their accounts or websites simply crashing.
Retailers can improve social capital by enhancing customers’ user experience through upgraded tech, not just by avoiding technical glitches but also through supply chain and warehouse efficiencies, such as automation and labour management.
Maintaining investment in manufactured capital (technology) is a key element of the five capitals. These figures illustrate the impact on financial and social capital when technology struggles—customer relationships suffer and as a result, revenues are impacted.
While the research showed that retailers are increasingly focused on sustainable products, there is less of a focus on transportation, packaging and what happens to products when they reach their end of life.
Packaging in particular is an area where retailers have room to improve, with the survey highlighting that a common customer pain point is excessive packaging. Not only can addressing packaging challenges have a positive impact on social capital (in other words, strengthening customer relationships), it can also have a positive environmental impact because if less packaging is used, fewer raw materials are used (natural capital) and waste is also reduced.
Some retailers are also stepping up their recycling initiatives. For instance, clothing retailers including Superdry, Nutmeg at Morrisons and Very.co.uk have adopted a closed-loop recycling system for polythene packaging that ensures the polythene they use contains 30% recycled material.
Yet while 61% of retailers have fully recyclable packaging, only 26% have recycling instructions printed on their packaging, meaning it’s unclear for consumers how to properly recycle it.
The results highlight a focus on the environmental aspects of sustainability, probably because that is what most people understand sustainability as. But what’s driving this? Is it reducing delivery costs or packaging efficiency? There is a huge opportunity to improve industry-wide with packaging and across multiple industries by driving greater standardisation in labelling.
Retailers also have other opportunities to improve their sustainability profiles. Company sustainability messages are not being widely promoted on their websites, with just 45% of retailers publishing their sustainability initiatives online and only 5% offering a sustainable delivery option. Only 6% mention sustainable packaging.
That means retailers are missing an opportunity to increase transparency and build stakeholder trust. They are also overlooking an opportunity to educate customers on the broader dimensions of sustainability and linking how they operate to the five capitals, highlighting what they are doing well and where they need to improve.
Retailers who are already promoting their sustainability credentials also need to ensure they can demonstrate how and why their products are considered sustainable and how they plan to improve in areas such as packaging, logistics and recyclability—anything short of that could be dismissed as greenwashing.
When implementing sustainability initiatives, retailers should focus on their spheres of influence—workforce management, in-store tech and supply chains. By investing in those elements, companies can ensure their sustainability efforts will have the greatest impact.
To read more about Accenture’s 2021 Shipping Study, click here.