Retail-Tech Landscape: Sustainability

Coresight Research has identified sustainability as one of the key trends to watch in retail, with the pandemic shifting environmental concerns and sustainability up the list of demands among many consumers, employees and investors. For instance, Coresight Research’s July 2021 survey found that three in 10 US consumers reported that the Covid-19 crisis has made environmental sustainability a more important factor for them in making purchases. Furthermore, amid the pandemic-induced shift to e-commerce, many retailers have had to rethink their operations and supply chains, bringing environmental sustainability issues into the spotlight.

Coresight Research’s EnCORE framework helps brands and retailers frame their approach to sustainability. The framework includes five components, as shown in Figure 1.

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Figure 1. The EnCORE Framework

[caption id="attachment_132363" align="aligncenter" width="550"] Source: Coresight Research[/caption]  

This Retail-Tech Landscape covers selected startups globally whose technology solutions support brands and retailers in developing sustainable business practices. We have identified almost 37 startups across the following categories:

• Packaging
• Logistics/Shipping
• Last-Mile Delivery
• Returns
• Waste Reduction
• Partner Engagement

Key Trends in Retail Sustainability

We present two key industry trends around sustainability.

1. Retailers Are Switching to Sustainable Packaging

Sustainable and eco-friendly packaging has become increasingly essential for retailers to communicate their commitment to the planet. Many “responsible” retailers see sustainable packaging as a key way to win consumer trust.

Driving this shift is increased consumer awareness about sustainable packaging, especially among millennials and Gen Z shoppers. More than 70% of consumers are willing to pay more for eco-friendly packaging, according to a 2021 survey of more than 15,000 consumers in the US and Europe by sustainable packaging solution provider Trivium Packaging and consultancy Boston Consulting Group. The same survey indicated that 54% of consumers view packaging sustainability as a factor in their product selection process and 57% are less likely to buy products with packaging they deem harmful to the environment.

A move away from conventional single-use and non-recyclable packaging is thus becoming an agenda for many businesses. Figure 2 presents recent packaging initiatives and announcements by prominent brands related to sustainability.

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Figure 2. Retailers Announcing Sustainable Packaging Goals

[caption id="attachment_135822" align="aligncenter" width="700"] Source: Company reports/Coresight Research[/caption]   2. Electric Vehicles Are Set To Drive Last-Mile Delivery and Logistics

The pandemic-led growth in e-commerce order volumes has led to a rise in demand for last-mile delivery and logistics services on a global scale. The demand for last-mile delivery is set to grow by 78% globally by 2030, leading to a 36% increase in the number of delivery vehicles in inner cities by then, according to World Economic Forum.

Electric vehicles are emerging as a popular strategy for local delivery and logistics firms to cater to this growing demand, while reducing emissions from petrol and diesel vehicle fleets. Figure 3 presents an overview of growing adoption among major retailers and e-commerce players of electric vehicles for last-mile delivery and logistics.

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Figure 3. Retailers Adopting Electric Vehicles for Last-Mile Delivery

[caption id="attachment_135823" align="aligncenter" width="700"] Source: Company reports/Bloomberg/Coresight Research[/caption]  

Coresight Research sees opportunity for brands and retailers to partner with third-party solution providers to tackle specific issues related to sustainability, with many requiring minimal set-up and infrastructure investment.

Retail-Tech Landscape: Sustainability—Infographic

Last-mile delivery: Reducing environmental impact through alternative last-mile delivery solutions

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Logistics/shipping: Optimizing freight movement to reduce fuel costs and emissions

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Packaging: Providing sustainable packaging and shipping solutions to retailers

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Partner engagement: Helping retailers to integrate sustainability into their strategy and monitor partners’ sustainable business practices

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Returns: Using technology to reduce return rates and the environmental impact of extra journeys and packaging

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Waste reduction: Optimizing forecasting, inventory and manufacturing to avoid retail waste

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