Sustainability is a hot buzzword in the business world. It is a growing priority for businesses of all types and sizes in all industries. One such sector that has truly stepped up the challenge is the apparel, footwear, and accessory (AFA) industry. These companies are adopting sustainability into their businesses as it is the right thing to do, but are also finding that it is meeting consumer demand and paying dividends at the till. According to a joint study conducted by BCG and the MIT Sloan Management Review, thirty-seven percent (37%) of respondents say that sustainability-related actions have added to their company’s profit, up to twenty-three percent (23%) from the previous year.
For my research project “Sustainability in AFA Retail”, I surveyed over forty-five senior leaders and executives in the AFA industry. The objective of my research was to understand the current scenario of environmental sustainability specific to the apparel retail industry, asking how they are incorporating sustainability in their business process, and the challenges they face while implementing these practices. This research report provides an insight into the findings and offers lessons to managers who are trying to develop a sustainability plan for their organization. Let us look at the top 5 most important key lessons & insights from the survey results.
Key Lesson #1: Executives should consider a well-rounded approach towards sustainability involving every phase of the business process: Ninety-three percent (93%) of executives stated that they are already making sustainable decisions at different stages in the business process. However, our critical finding was that the strategy and KPI’s in many cases were not aligned across key functional teams. In these cases, the retailers are missing out on the benefits of a holistic approach that makes it clear for team members what their responsibilities are in terms of sustainability for the organization.
Key Lesson #2: Opportunity to collaborate with industry stakeholders and build partnerships to drive strategic change: Ninety-five percent (95%) of executives believe that sustainability is important for their company, however only forty-seven percent (47%) say their companies have strategic partnerships to drive sustainability. This represents a great opportunity for executives and teams to reach out to industry stakeholders and build partnerships with others committed to sustainability.
Key Lesson #3: Explore new business models and innovation opportunities: The survey results show that the biggest challenges executives face today in meeting their sustainability objectives was the cost related to sustainable raw materials (63%). The next challenge reported were issues in the supply chain (44%) and the company’s planning and strategy (42%). Leaders in sustainability achieve success when they view these challenges, not as blockers but opportunities to think differently and encourage new start-ups that are trying to solve the above-highlighted challenges.
Key Lesson #4: High interest for the need to collaborate and develop a holistic sustainability measure: Sixty-three percent (63%) of the executives in fashion retail companies think that there is an urgent need for a sustainability score throughout the AFA (Apparel-Footwear-Accessories) retail industry and sixty-six percent (66%) are also interested in participating in a consortium to develop or integrate a global standard sustainability score for merchandise planners in the retail industry.
Key Lesson #5: Impact of a standard score on different business teams to achieve their sustainability vision: More than ninety percent (90%) of the leaders think that a standard sustainability score will be useful for the design team to develop sustainable products right from the start. Eighty-six percent of them (86%) think it will be highly valuable for the marketing team whereas seventy-seven percent (77%) think it will be beneficial for the planning and buying team. Further correlation analysis indicated that leaders who think there is an urgent need for a sustainability score also think that the score will be most useful for the marketing team, followed by the sales and operations and planning team.
You can find the graphical, detailed version of the analysis of the survey in one of my other articles.
This research leads us to consider initiating an organization that will be able to bring together industry leaders and use their expertise and experience to develop or accept an industry-wide sustainability metric. The goal of the consortium will be to provide planners and buyers insight into how their decisions affect the company’s sustainability goals when they make merchandise investment decisions. In addition, the active engagement of sustainability leaders in discussions on sustainability topics with well-established fashion retail companies as well as small businesses can yield critical information for decision-making.
This research was done in collaboration with FIND AI, a predictive AI and machine Learning company for retail planning. I would like to thank the entire team of FIND AI for supporting my research project.