Sustainability as a business investment

IKEA Sustainability StudioSustainable initiatives are increasingly influencing consumers’ purchasing decisions, further driving the need for retailers to better understand what potential customers are looking for.

Last week, Swedish furniture giant, Ikea, temporarily moved into central Sydney to showcase its sustainability credentials.

The Ikea Sustainability Studio was set up for two days in the pop-up space at Central Park shopping centre to demonstrate how consumers can make their home more sustainable by reducing water and energy usage.

Richard Wilson, sustainability manager, Ikea Australia, told Inside Retail Weekly that Ikea is putting sustainability at the heart of its operations to meet consumer expectations – but also to help fuel its Australian expansion.

Recent research conducted by Ikea found that 48 per cent of Australians surveyed indicated they expect the brands that they buy from to be sustainable and, 63 per cent of Australians are willing to create a more sustainable lifestyle if it is easy to do so.

Wilson said consumers’ expectations of retailers are growing, however there is also cost-saving measures for a business with sustainable operations.

“From a business perspective, we realise that with the growth ambitions that we do have the need to be more sustainable,” Wilson said. “How we actually design, build, transport and sell our products is really important to us.”

Ikea will reach 10 stores in Australia when it opens its North Lakes store north of Brisbane later this year. The retailer is currently building a new distribution centre in Marsden Park in northwest Sydney, which is due for completion in 2016.

“You can’t necessarily be producing products that enable customers to live more sustainably without being sustainable ourselves,” Wilson said.

Ikea’s Canberra store is its most energy efficient store (per square metre) in the country. The single level store uses skylights to decrease the need for full use of LED lighting and the roof is covered with solar panels which are expected to expected to deliver 100 per cent of the store’s energy needs at the height of summer.

At a product level, Ikea has launched its instore sustainability shop, stocking 30 “planet friendly products” available at discounted prices for Ikea’s loyalty program members.

According to Wilson, supply chain transparency and sustainability resonate strongly with Ikea’s 1.7 million loyalty members, known as ‘Family Members’.

To communicate the sustainability message to consumers, Ikea has “attached strong stories” to the products on sale in the sustainability shop. The products are given to store staff to take home and then provide feedback on their experiences.

“We use those experiences, directly from our co-workers, to communicate to our customers; that’s the strongest way to do it,” Wilson said.

Walking the talk
Retailers that are staking their reputations on sustainability credentials must be open and transparent about their progress.

Shannon Crisp, marketing and corporate responsibility director of The Body Shop, agrees that sustainability initiatives are becoming increasingly influential in terms of consumers’ purchasing decisions.

“However, I think it is really important here to highlight that corporates — including The Body Shop — need to be ‘walking the talk’ with measurable targets,” Crisp told Inside Retail Weekly.

“CSR strategies need to demonstrate genuine progress and transparency around how they are tracking. It is very easy for businesses to say they care about these issues, but it is even more important to demonstrate to consumers how that impact is being measured.”

Earlier this year The Body Shop unveiled its ‘enrich not exploit’ commitment, which includes 14 measureable targets to be delivered by 2020. The Body Shop provides quarterly updates on its progress designed to continue the legacy of company’s founder Anita Roddick, who died in 2007.

Since beginning the enrich not exploit campaign, The Body Shop has built 350,000 square metres of bio-bridges, restored wildlife corridors in the threatened rainforest in Khe Nuoc Trong, Vietnam.

“The Bio-Bridges campaign is a great example of measureable results,” Crisp said.

Alicia Darvall, executive director for B Labs Australian and New Zealand, told Inside Retail Weekly it’s incredibly risky for retailers to make environmental claims that they can’t back up in the age of social media.

B Corps are for-profit companies certified by the non-profit B Lab to meet rigorous standards of social and environmental performance, accountability, and transparency.

“It’s not only whether or not you have one particular product that has sustainable credentials but we look into your relationship with your workers, your supply chain and community relationships, your environmental impact and your governance and transparency. You must be looking after all your stakeholders,” said Darvall.

Or more succinctly: “using business for a force for good.”

There are now 139 B Corporations in Australia and New Zealand.

“I think the certifications like Fair trade, B Corps and others are incredibly important to show you are walking the talk and not just greenwashing. I think consumers are really, really attune to that now,” she said.

Increased loyalty
“We get a sense that consumers are more likely to buy from B Corps if there are two things being equal,” Darvall said.

However, if given a choice between two products and one is more expensive she doesn’t believe there is enough research to prove Australian consumers are more likely to choose the more sustainable one.

What there is evidence of is exceptionally loyal customers among B Corps.

“What I do think is happening is once an individual understands the certification process and finds out the company is a B Corp they are much more likely to repurchase and have increased customer loyalty,” Darvall said.

“Patagonia is one of the cult brands in the world not just for their sustainability credentials but their whole ethos of how they operate.”

Darvall also argued B Corps tend to be more innovative in product development and how they think about their relationships with customers, looking for longevity over repeat purchases.

“The innovation shown by sustainable businesses is incredibly impressive because I think once you strive for sustainability you become increasingly innovative in everything you do,” she said.

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