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If the pandemic wasn’t hard enough already on retailers, it also accelerated topics such as sustainability. Consumers have become more aware and educated on CSR related topics while they were stuck at home with more time to think about their environmental impacts - especially as this relates to retail. This has created increased importance for retailers to ramp up their sustainability initiatives as well as communicate them.

A snapshot of sustainability before and after a global pandemic

Before the “first wave” of the pandemic in March 2020, IADS polled its members about their overall vision and approach to sustainability and its structure. We had 5 members complete the questionnaire (Breuninger, El Corte Inglés, Manor, Sogo, and The SM Store). The survey asked members to define their sustainability vision, how they communicated internally and externally at the time, as well as clarify its organisation and programmes.

After the first couple of waves of the virus, which had interrupted business for department stores across the world, IADS performed another survey to check in on our members to better understand what main areas of sustainability have accelerated by July 2021. Six members participated in the survey including Beco, Breuninger, Magasin du Nord, Manor, Sogo, and The SM Store. From this survey, we wanted to understand what our members were focusing on in these unprecedented times, how they were communicating with customers, what pain points they have specifically faced, and what has changed organizationally due to sustainability’s heightened importance in the past year.

Enhancing communication and avoiding greenwashing

In the first survey, conducted in March 2020, members cited various ways that they approached the communication of sustainability efforts and protocols:

• Some used internal tactics by either creating a dedicated website page or promoting sustainable products through their own logo. Manor for instance would add a ‘Manor Respect’ tag on physical products and on the website to indicate sustainable products.
• Breuninger shared that they communicate initiatives and spearhead projects through an employee app which allows them to easily store guidelines and share progress on projects and initiatives.
• Other mediums mentioned used to share sustainability involvement included social media, marketing campaigns, and store displays.

During the second survey, conducted in July 2021, a new and major challenge of communication was to avoid greenwashing, but this is easier said than done. IADS members have shared their approach to ensuring that their messaging is not construed:

• Hard facts: Sogo certifies that the contents of the messages to customers are factual without ambiguities and supported by relevant certifications. Manor focuses on only hard facts communication.
• Cooperation: SM works with their suppliers and consigners so that the messaging is more seamless across all external partners and they make sure that the eco-friendliness of the products are communicated consistently across their different channels.
• Tone of the communication: Magasin believes that being consistently honest and authentic will eventually win over any sceptic as it is hard to argue with a proven track record.

Evolving organizations

Organizationally, most of the respondents shared in the first survey conducted in March 2020 that they have cross-functional committees with representatives from different parts of the organization, thus ensuring cooperation and information sharing across divisions. These committees typically have a link to the C-suite. Sogo, for example, has an ESG Committee which is headed by the Executive Director and comprises members from all major departments. This committee is in charge of formulating ESG strategies, sustainability reporting, stakeholder engagement, materiality assessment, monitoring the performance of initiatives, and the promotion of ESG issues internally and externally.

By the time the second survey was conducted in July 2021, IADS members had recognized that CSR topics require dedicated resources to be able to carry out and monitor initiatives:

• Beefing up the CSR team: Breuninger has hired more people in the corporate responsibility unit as well as in the buying department to meet the growing needs. Manor will be reinforcing the sustainability department by one headcount.
• Doubling down on the pre-pandemic committee approach: The SM Store created a sustainability steering committee made up of executives from different functions to ensure a singular message. Magasin du Nord does not have a dedicated CSR team, but members from the marketing and HR teams have been used as project managers to address changes, implement training, and manage external contacts. Sogo has not had any changes and continues to support its ESG Committee.
• Looking for external support: Beco has decided to start a sustainability programme and has hired a company to help them go through the initial steps.

Introduction of new pain points

When conducting the first survey (March 2021), IADS did not know to what extent sustainability topics would progress in the coming years, but through the second survey (July 2021), conducted 15 months later, the Association witnessed the face that CSR topics have become top of mind for many of our members. The global pandemic has accelerated the awareness of consumers as well as the importance of making a stance regarding overall impacts for businesses. But this heightened awareness has also introduced new pain points for retailers.

When posed the question about what major sustainability pain points members are being faced with, they all had different answers:

• For Breuninger, they find that the multiplication of labels is difficult to grasp as well as setting up green logistics, green packaging, and a sustainable supply chain.
• Sogo expressed that it is difficult to set medium-term goals and targets as well as raise the awareness of employees regarding ESG issues.
• Manor shared that they are struggling with having enough resources to implement all the initiatives around sustainability. On a similar note, Magasin du Nord stated that sustainable options do not highlight themselves and that it takes extra resources in stores and online to arrange and label these items. They also mentioned that educating customers on more sustainable options is not simple.
• Finally, SM shared that the pandemic as a whole led to a disruption of their sustainability rollout.

Programmes and initiatives

IADS members have rallied their troops to be able to step up to the new demand that sustainability has imposed. There has been a lot of progress made in terms of programmes and initiatives, especially ones that were fast-tracked due to the pandemic. From members who are taking their first steps to tackle CSR topics to those that have extended resources to meet growing demands, all members have some very exciting and noteworthy activities they have been working on since the beginning of the pandemic. Almost all members were focused on reducing overall waste, especially in the form of offering alternatives to the use of plastic and paper bags at the point of sale. These programmes have matured and progressed quite a bit in the past year.

Breuninger has replaced plastic bags with reusable ones and added a green option for online sales to remove any additional packaging. They also revised their guidelines for sustainable articles, prepared a responsible sourcing policy, and prepared an animal welfare policy targeting future goals. The retailer has also introduced digital receipts through their mobile app to reduce overall paper waste in stores.

Magasin du Nord has focused on their own brands to achieve the best certificates and higher composition of sustainable materials. They also are committed to using more sustainable packaging without compromising durability and strength. And they are focused on reducing food waste and getting more out of less when it comes to electricity and other resources in general. They have also partnered with a popular second-hand store (Time’s Up Vintage).

Manor has stopped offering free bags in store, started a hanger recycling program, and implemented reusable containers for internal deliveries. They also rolled out their partnership with Too Good To Go (a mobile application that connects customers to restaurants and stores that have unsold food surplus) nationally as well as launched the rebranding of their sustainable label and reinforced it with internal guidelines and training.

SM Investments Corporation sealed its commitment as a supporter of the Task Force on Climate-related Financial Disclosures (TCFD) in a strong bid to ensure its businesses meet global sustainability targets.

Sogo has decided to focus their marketing on digital mediums rather than physical ones. They have also created an emergency response team to devise strategies around virus preventative measures, ensured that food waste is composted or turned into animal food, organized charitable events and donated face-masks and gel, and pushed the use of the Sogo Rewards Mobile App to reduce the use of physical gift certificates.

Beyond those that completed the survey, IADS members have been incorporating new programmes that are worth noting for inspiration.

El Corte Inglés is involved in a wide range of CSR projects touching on logistics, merchandise and energy consumption. They partnered with Llewo, a company specialized in social and eco-sustainable logistics management: they will work together to evolve and grow the last-mile delivery from a sustainable and social point of view. The Spanish retailer also joined the Sustainable Apparel Coalition (which is responsible for the Higg Index), an international alliance for sustainable production within the footwear and clothing industries. In terms of commodities, El Corte Inglés reduced its electricity consumption by 25% in just five years and uses renewable energy sources to run its business in Spain and Portugal.

Since its Go For Good programme launched, Galeries Lafayette opened (Re)store, a new women’s fashion space. The section features second-hand labels and circular fashion brands, ranging from affordable clothing to luxury handbags. This month, they opened a Pangaia (loungewear brand) carbon-neutral pop-up store: they nailed both a hot and sustainable brand as well as being able to operate responsibly.

Falabella is also very much involved in CSR questions. They committed to supplying 240 stores in Chile and Peru with 100% renewable energy by 2022. On top of that, 34 stores in Chile, Colombia and Peru received the international certification in Leadership in Energy and Environmental Design (LEED), a distinction granted by the U.S. Green Building Council (USGBC), an organization that aims to promote sustainable construction and development.

Measuring progress

The conducted surveys reveal that there has been an increased awareness and importance put on topics revolving around CSR. Some members have even noted that CSR efforts have a direct correlation to business activity and performance. The survey revealed that sustainability programmes and investment in these types of efforts will continue to accelerate. With the increased activity, there will also be more focused working groups formed cross-functionally and even additional headcounts brought in to help manage the new initiatives.

As members are implementing new programmes and investing money in sustainability efforts, it is important to understand what happens next. How are initiatives measured and how do they know if the time and investment were worth it? All members mention that they define relevant KPIs to quantitatively track predefined targets as well as gather feedback from stakeholders, including customers. Some of these KPIs are:

• Energy consumption per operating area
• Amount of food waste recycled
• Fewer paper mailings based on a specific year
• Percentage of CO2 reduction
• Percentage of turnover of sustainable goods (private label or other brands)
• Percentage of reduction of packaging, waste, and plastic
• Measuring the composition of sustainable materials in each product sub-category
• Tracking customer feedback and brand awareness (El Corte Inglés uses Reptrak as a way to measure reputation, brand, and ESG performance)

IADS also conducted research on the efforts and initiatives of American players such as Amazon, Walmart, HBC Group, and Macy’s Group which all have a robust offering of CSR communications. Comparatively, and as IADS members are quite heterogeneous, some members are in line with the American retail giants, while others are just getting started. This is normal as the prioritization of these efforts heavily depends on the markets they serve as well as customer demands.

Overall IADS members are ramping up their CSR projects and teams and have seen an accelerated demand for such initiatives in the past year. Sustainability programmes used to be ‘nice to have’, but they are now becoming crucial among retail organisations. As commitments to responsibility are made, it is important to follow through and share results through defined KPIs and transparency at each step of the journey. IADS members have found that facts-based communication (sharing KPIs and progress) is a key way to avoid greenwashing and include the customer in the brand’s sustainability journey.

Credits: IADS (Mary Jane Shea)