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Envisioning Sustainability for Physical Retailers

4 min read

As sensibilities change in favor of sustainability, the luxury retail market is struggling to catch up. The change means a fundamental shift in the industry that starts with the right leadership and infiltrates into marketing, materials curation, logistics, and more. Consider that 82% of shoppers prefer brands that practice sustainability and three-fourths of Generation Z shoppers rate sustainability as more important than brand names.

Meanwhile, greenhouse gasses, pesticides and more plague the retail industry. The textile industry comprises 6% of global greenhouse gas emissions while fashion accounts for as much as 35% of the microplastics in the ocean.

While retail as a whole grapples with inflation, supply chain issues and more amid a post-pandemic and heavily digital landscape, sustainability has emerged as an opportunity for innovation. While the number of sustainable products in the retail market still remains low, McKinsey & Co. reports a five-fold increase in the past two years.

Here are a few ways luxury retail brands are rising to the challenge, whether it’s the increased emphasis on resale and pop-up stores or the investment in sustainability education and storytelling.

Circular Services

One way retail companies are leaning into sustainability is designing their businesses for circular versus linear consumption. This means focusing on resale, refurbishing and repair versus returns. It also means emphasis on ensuring clothes fit the customer before leaving the rack in order to prevent waste created by the returns process. It means making clothes last longer when they are damaged, and reselling what can be enjoyed by another future customer.

For example, Arc’teryx Equipment opened a hybrid brick-and-mortar store in New York for purchasing and refurbishing merchandise. On-site services include product assessment, in-store care and repair, education, and expert care. Merchandise is either refurbished or sourced responsibly. Rather than a feature of the retailer, sustainability informs every step of the business process. It’s not a trend, it’s intrinsic to the DNA of the brand.

Rental fashion is another path to sustainability that retailers are embracing. Increasingly, luxury brands are jumping onto this trend, including M&G and LK Bennett. There are even entire platforms committed to fashion by subscription, such as MatchesFashion and Rent the Runway. Customers select from a selection of curated items and rent them for up to 20 days.

Online rental spaces are especially marketing to millennial and Generation Z consumers, and the selections are high-end edits of well-known brands. White-label service providers have even gotten in on the act so that brands can take advantage of the trend without reinventing the wheel.

In Europe, “recommerce” is growing 20X faster than the general retail market. Cost of living is one of the largest driving forces behind the shift. While traditionally a service for formalwear, rental clothes are now popular for even a weekend getaway.

Ebay UK has been leading the cause, including establishing a fund that benefits innovators in this space. Among this year’s winners were: a social network for fashion renters, a company utilizing QR technology for sustainability, an on-demand tailor service, children’s shoes that grow with their feet, and RFID-assisted clothing repair and upcycling.

Here are a few more examples of retailers embracing a circular economy:

  • L’Oréal USA adopted a new labeling system that clearly communicates sustainability efforts. Carbon emissions, ocean acidification and biodiversity are a few of the factors that were considered. 
  • Coca Cola publicly set goals for refillable and reusable packaging. By 2030, they aspire to have reusable packaging for 25% of their total packaging solutions.
  • Target recently launched a new initiative uplifting and developing sustainable brands. These efforts include a Circular Design Guide to educate team members. 

Alternative Retail Formats

Rental boutique Hurr also has been making waves with pop-up shopping and shop space that tells stories. For one night, Hurr shoppers could raid the rental closet for festive dresses for the holidays. In addition to renting clothes, shoppers were able to browse gifts, access repair services and attend an upcycling workshop.

Meanwhile, vintage dress seller Laura von Behr offers private appointments for shoppers. Developed with a slow, thoughtful shopping process in mind, shoppers are able to book up to an hour to sort through racks with the help of von Behr with the promise of not being pushed into a purchase. 

Ecommerce also has been making strides in its sustainability efforts. This includes responsible sourcing of materials and talent as well as online shop filters that help consumers clearly see what products are made of. Sustainable packaging and carbon-neutral shipping are other strategies ecommerce companies are employing. 

The ecommerce sustainability trend is not without its challenges. For example, in the UK recycling services can’t keep up with the waste created by the ecommerce boom. Single-use plastics, delivery emissions and a high rate of returns are also an issue in the ecommerce space, which comprises one-fifth of global retail sales. 

Other examples of alternative retail formats include:

  • The Slow Down Market in Washington D.C., which features a collective of sustainably-sourced brands. The space combines a home goods store with a jewelry store and Greek sandal boutique. 
  • Thrift-store shopping swaps, such as a recent pop-up experience at the University of Miami. The event encourages sustainable shopping and caters to a Generation Z audience. 
  • Pop-up stores such as Desktop Metal, featuring 3D printing of products made from recyclable materials. One of their lamps, The Cocoon, has become wildly popular. 

Educational Storytelling

Fabrica X in London made headlines for immersive product displays that educate the consumer about sustainable practices. In their own words, the shop is a “go-to impact retail store where visitors can experience sustainable living with the latest eco-friendly fashion (techstyle) and food tech (agrifood tech) brands and innovations.”

Special events include a pop-up exhibit on plastic circularity. Shoppers browse merchandise on racks amid installations and galleries showcasing sustainable practices. Immersive experiences not just educate but delight visitors. Aside from environmental impact, brands like Fabrica X are also focusing on local production and community.

More examples of educational storytelling include:

Fashion startup Ecova, which educates consumers through textiles. Cashmere winter accessories were their first product-and-story-combination.

Clothing retailer Reformation, which develops products slowly and with consumer input to reduce waste.

A Dutch eco-beanie maker that educates consumers about circular cotton. Their goal is to use at least 60% of circular cotton in their products or as much as possible.

Moving Forward

The road ahead remains full of challenges, but to get started a Vogue Business report for Google recommends the following:

  • Utilize storytelling to convey your values, especially through video. 
  • Show sustainability efforts, whether that’s making returns more environmentally friendly or nudging customers toward better choices. 
  • Take advantage of shopping innovations such as phygital stores and augmented reality. 
  • Form partnerships with other sustainable creators to take advantage of the phenomenon “squad shopping”.

In conclusion, luxury retail brands are getting creative about embracing sustainability, swapping out linear consumption for something more circular. While there has been progress, the industry still has a ways to go to make lasting change. Global economic issues have both helped and hindered the case, whether it’s supply chain struggles or the rapid adoption of digital shopping.