How to ensure sustainability in retail: Top technologies and practices

Sustainability in retail now extends beyond basic initiatives like recyclable packaging and organic sourcing. With environmental concerns escalating, customer expectations rising, and stricter regulations emerging, it's crucial for companies to invest in sustainable practices throughout their operations. And the retail software development services from tech partners like N-iX allow businesses to do it effectively.

This article explores the reasons behind sustainable retail and the benefits companies achieve from it. Moreover, we’ll review the best practices and advanced technologies tailored to retailers, enabling them to integrate sustainability seamlessly into their operations and achieve environmental and business goals.

What drives sustainability in retail?

Retailers are among the biggest customers of plastic packaging, representing 40% of global plastic usage. According to the BCG report, this industry alone produces over a quarter of global emissions. In the rush for customers’ money, some retailers often neglect legal requirements regarding minimum worker’s age, resource consumption, and garbage processing. In the long run, such an approach generates more problems that spread far beyond the manufacturing or warehouse facilities.

Recently, companies worldwide have introduced different-scale sustainability action plans to respond to the challenges arising from past irresponsible business practices. They were also influenced by the following drivers.

Environmental conditions

Irreversible environmental changes caused by global warming, increased CO2 emissions, and air and garbage pollution are the major reasons businesses are forced to review their operations and improve sustainability in retail. The Deloitte 2023 CxO Sustainability Report states that 42% of companies consider climate change the most pressing issue. Many of them report that these changes already impact business performance.

For example, 46% of surveyed companies state that environmental conditions led to resource scarcity and affected resource costs. As many as 41% of respondents said their organizations experienced the operational impact of climate-related disasters or weather events, and the same share reported shareholder pressure.

To stop aversive environmental impact, companies adopt a sustainability-first mindset and adapt their facilities, operations, and production methods to reduce environmental damage. They’re also doing it due to public demand.

Customer demand for sustainable products and services

With the environmental conditions deteriorating, the customers are also changing their buying behavior, pushing businesses to include more sustainability practices in retail operations. Here are a few stats that prove it:

• As the Statista report states, customers in various countries now care more about product sustainability than they did a year ago. 
• According to Forbes, 80% of American consumers factor sustainability into their purchasing decisions, and 70% indicate they would alter their shopping habits if a store or brand lacked sustainability practices.
• In 2023, one in three consumers stopped buying from a brand/company because of ethical or sustainability concerns, according to the Deloitte report.
• IBM’s Institute for Business Value research found that 59% of buyers paid more for products branded as “sustainable” in the last 12 months. Moreover, 62% of private investors prioritize sustainability in portfolios. 

Consumers are not only demanding changes from businesses—they are also changing their purchasing habits. Many people are taking various actions towards a more sustainable lifestyle, such as buying refurbished or second-hand items, repairing instead of replacing them, and more. This shift indicates that businesses, too, should introduce more sustainable practices in retail if they want to keep the audience using their products and services.

Legal requirements

Nearly half of the organizations (43%) already feel pressure regarding emissions regulations. However, legal requirements for sustainability span not only environmental but also social, governance, and investment issues.

With fashion and food retail regularly ranked among the top five most polluting industries, the regulators impose new requirements regarding carbon emission offsets, waste processing, and more. The legislation below represents a handful of the most important laws regarding retail sustainability.

By enforcing regulations related to sustainability practices, governments incentivize retailers to adopt eco-friendly initiatives, reduce their carbon footprint, and promote ethical sourcing and production methods. Compliance with these laws mitigates fines and penalties risks, enhances corporate reputation, and fosters consumer trust, ultimately leading to long-term business success.

More on topic: ESG and digital transformation: technologies and strategies 

Business competition

Businesses face pressure from competitors who have already adopted sustainable practices, compelling them to follow suit to remain relevant and competitive in the industry.

According to the BCG report, around 70% of the survey respondents agree that sustainability is a priority for their boards and executive committees, with 40% of retailers already on track to meet their Scope 1 and 2 targets.

The statistics prove that companies strive to differentiate themselves in crowded markets by implementing eco-friendly practices and offering sustainable products. Retailers recognize that consumers increasingly prioritize sustainability in purchasing decisions, leading to a growing demand for environmentally responsible brands.

By embracing sustainable initiatives, retailers can attract environmentally conscious consumers, gain a competitive edge, and strengthen brand loyalty, ultimately driving business growth and profitability. But those are just a few of the benefits of adopting sustainable practices in retail. 

Explore more: Retail technology trends in 2024

Benefits of sustainable retail

Adopting sustainable practices throughout the business can yield plenty of benefits regarding customer relationships, legal compliance, investability, operational efficiency, business impact, and other aspects. Here they are in a nutshell.

• Sustainable companies will receive more clients, enhanced customer loyalty and retention, along with elevated brand reputation. 
• The efficient use of resources and energy can reduce the company's operational costs and get it on track for long-term savings. 
• Focus on sustainability in retail fosters innovation and resilience and encourages the development of sustainable products, processes, and business models.
• Sustainable businesses can speed up the shift towards a circular economy (a production and consumption model focused on maximizing the use of existing materials and products through sharing, leasing, reusing, repairing, refurbishing, and recycling).
• Sustainable retailing practices help businesses comply with evolving regulations and standards, mitigating legal risks and ensuring long-term viability in an increasingly sustainability-focused market.
• The businesses adopting sustainable practices can face more attractive investment opportunities as they demonstrate a commitment to long-term viability and resilience and may benefit from favorable regulatory treatment or incentives for sustainable initiatives.
• Sustainable retailers may have access to a broader pool of investors, including those with ESG (Environmental, Social, and Governance) criteria for investment.

Revisioning their offerings and processes and switching to more sustainable options can give retailers plenty of advantages. Consider these practices if you want to achieve these benefits.

Top practices for sustainability in retail (and technologies that enable it)

Many retailers, such as Primark, started repurposing their existing products and equipment, making them part of the store display. Others, like Converse, designed their store interiors with sustainable materials like wood and cardboard. These choices are great for physical stores, and there are many solutions for both online and offline. We’ve collected a few practices and solution examples you can adopt to become a more sustainable retail business. 

Sustainable resource consumption

Going digital and automating resource management is one of the steps towards retail sustainability. And it’s not only about material resources. For example, if the business uses a public cloud, cloud cost optimization can help businesses cut idle resources and pay only for those in use.

Here are a few other sustainable practices in retail you can follow:

• Electronic shelf labels;
• Digital paperwork;
• Alternative sources of energy;
• Automated water/energy level controllers;
• Motion sensor lights across the stores and warehouses.

These practices require adopting various technologies for accurate data processing, storage, and analytics, connectivity between machinery and software, process automation, digitization and digitalization, and more. They will also need a reliable tech partner to implement them in your unique business environment. From here forward, we’ll list the top technologies for each practice and give you a few examples of why N-iX is the right company to partner with to ensure retail sustainability.  

Key technologies: Big Data, data analytics, data visualization solutions, IoT, RPA, cloud solutions, AI/ML.

N-iX expertise: N-iX helped a large manufacturing company address challenges in managing product documents and media assets. By introducing OpenText Media Management and OpenText Exstream, we centralized the repository for media assets, streamlined document generation, and ensured seamless integration with SAP Hybris Commerce. This resulted in decreased costs of document updates, improved user experience with easier multimedia asset search, and consistent branding across all auto-generated documents, ultimately delivering greater agility and competitive advantage for the client. The solution also supported the client's sustainability goals by minimizing paper usage, reducing carbon emissions, and optimizing resource utilization.

Sustainable supply chain

Maintaining a sustainable supply chain is vital for businesses aiming for environmental responsibility and long-term viability. It reduces environmental impact, enhances brand reputation, and mitigates regulations and resource scarcity risks. Moreover, sustainable practices help you save costs through improved efficiency and resilience to disruptions.

Here are a few examples of how you can maintain retail sustainability throughout your supply chain with modern technologies:

• Supply chain control towers;
• Supply chain visibility platforms; 
• Smart sensor-based packaging;
• Green logistics;
• Supplier collaboration platform.

Key technologies: IoT, cloud solutions, AI/ML, Big Data, data analytics, data visualization solutions, blockchain.

N-iX expertise: We helped one of the world’s largest multi-brand retailers build an iOS app for checking suppliers’ sustainability. The platform had to handle over 100 suppliers and thousands of users with different accesses. We helped the client’s internal team design and develop the solution, which automated supply chain processes, improved visibility into material sourcing, and rated them against the client’s sustainability benchmarks. As a result, the client received a tool providing valuable insights and transparency into supply chain operations worldwide.

Read more: Supply chain control tower: what, how, and why 

Waste and return reduction

Waste is one of the biggest problems in the retail industry, with UK retailers only producing over 1.1M tonnes of waste annually. And a huge chunk of this waste is returned items. 

Usually, these items rarely go back to the shelves because handling the return costs companies enormous amounts of money. Some retailers, like Amazon, even refund certain purchases without customers having to send anything back or add a” Problematic item” label to inform shoppers about possible issues. 

However, retailers can decrease the number of returns by providing more information about the products so the consumers can buy the right item. Here are a few examples that a retailer can offer to improve sustainability in retail:

• Virtual try-ons;
• Smart mirrors; 
• Virtual fitting rooms;
• AR/VR visualization tools;
• Interactive product demos;
• Detailed product descriptions;
• Enhanced product information management (PIM) systems;
• Personalization algorithms.

Key technologies: AR/VR,  IoT, Cloud solutions, AI/ML, Data visualization solutions.

N-iX expertise: We have developed a highly intuitive product search engine for a luxury retailer that helped personalize items for the customers, matching their specific needs and preferences. By implementing features like autocomplete, exact filtering, and synonyms, the search engine provides a customized shopping experience, leading to growing customer satisfaction and fewer returns.

Sustainable shipping and returns

According to Wall Street Journal, the costs associated with home delivery costs brands annually 10-15% of their sales, versus 2-3% when delivered to the store. But delivery isn’t only about the costs—it’s also about the negative impact the process has on the environment. As consumers increasingly expect free shipping and returns, companies must balance between catering to their demand and reaching sustainability in retail.

To make retail logistics eco-friendly, companies should revise their shipping options and promote those less environmentally harmful. Here’s what can help you achieve your goals:

• Buy online, pick up in store (BOPIS) and Buy online, pick up at curb (BOPAC) models;
• Green shipping options; 
• IoT-based fleet management and route optimization software;
• Inventory management solutions.

Key technologies: IoT, Cloud solutions, AI/ML, Big Data and analytics, data visualization solutions.

N-iX expertise: N-iX partnered with a leading international smart telematics solutions provider to enhance fleet management and develop an innovative solution for expanding their market reach. Our team conducted in-depth research, leading to the development of an OEM-based Linux connectivity gateway and an Android-based app, facilitating smart fleet monitoring, operational efficiency, safety, and effective maintenance. By integrating these solutions with existing customer services and Google Cloud-based IoT platforms, we enabled our client to certify the product, engage new customers, and achieve industrial fleet efficiency.

Sustainable maintenance

By adopting sustainable maintenance, organizations can extend the lifespan of their assets, reduce resource consumption, minimize waste generation, and lower carbon emissions associated with repair and replacement activities. This proactive approach not only reduces environmental impact but also enhances operational efficiency, resilience, and cost-effectiveness in the long run, contributing to overall sustainability in retail.

Here are a few solutions that can be implemented:

• Predictive maintenance algorithms;
• Early fault detection solutions;
• Remote monitoring and diagnostics;
• Components from eco-friendly materials and sustainable suppliers.

Key technologies: IoT, cloud solutions, AI/ML, Big Data, predictive analytics, data visualization solutions, AR/VR.

N-iX expertise: N-iX has partnered with a leading US-based manufacturer of electronic test tools to enhance asset maintenance and decrease maintenance costs. Our team has enhanced the scalability and customization of client’s solutions, empowering organizations to monitor equipment and reduce unplanned downtime intelligently. Through innovative technology stack and industry best practices, N-iX has delivered solutions that guarantee security, reliability, and cost-effectiveness in the client’s asset maintenance.

Related: Big Data in retail: Use cases that bring the most value 

Conscious consumer behavior

Since consumers are essential stakeholders of sustainable retail, companies should encourage conscious shopping and promote sustainable habits among their clients. They can also equip their audiences with information that helps them make more sustainable purchasing choices. Here are a few examples of tools and practices that would help your shoppers contribute to sustainable retail:

• Carbon calculators;
• Garment information disclosure;
• Recycle programs and memos;
• In-store recycling initiatives;
• Sustainable product labeling;
• Recyclable packaging;
• Retail sustainability education and events.

Key technologies: Cloud solutions, AI/ML, Big Data, data analytics, data visualization solutions, AR/VR.

N-iX expertise: N-iX is committed to sustainability through various initiatives. We prioritize long-term partnerships and deliver high-quality, robust, and secure solutions that stand the test of time. We also invest in our teams' continuous learning and development, fostering a culture of innovation and adaptability. Furthermore, we adhere to ethical business practices and prioritize the well-being of our employees, contributing to a sustainable work environment. Recently, N-iX has joined the UN’s Nations Global Impact, the world's largest community of responsible businesses, focusing on human rights, labor relations, and environmental protection. Plus, we have signed the UN Call-to-Action against corruption appeal to fight against corruption.

Five tips for effective tech implementation for a more sustainable future

Unlocking the potential of innovative tech solutions allows businesses to streamline operations, reduce environmental impact, and drive long-term sustainability goals. Here are five tips to help you manage the tech assets more ethically.

1. Adhere to the "reduce, reuse, recycle" rule

The 3R rule—reduce, reuse, recycle—is a great principle both retailers and shoppers should follow to build a more sustainable retailing environment. Here’s how it works:

• Reduce the consumption of resources, products, and services that are non-recyclable or non-sustainable.
• Reuse already manufactured items by repurposing (e.g., creating store decorations from marketing materials or defective items) or repairing them (e.g., using refurbished hardware in the offices).
• Recycle the items that cannot be reused, repurposed, or repaired.

The good news for the companies is that the customers are ready to support such initiatives. For example, 95% of Sensormatic Solutions consumers agree to participate in recycling and reuse programs if provided with such incentives.

2. Choose technologies that can tackle multiple issues

When adopting new solutions or designing a plan for sustainable transformation, make sure to use the technologies that can help you increase sustainability in retail and solve multiple business challenges. 

For example, switching to microservice architecture will eliminate the idle resources (and the need to pay for them) and help maintain the infrastructure more efficiently, avoiding single points of failure and associated downtimes. Or, if you adopt AR/VR technologies, you can use them to create better product catalogs, employee education, product concept development, and more.

3. Change both processes and tech solutions

Making a more sustainable business requires a complex approach. It includes revising processes, changing tech solutions, and improving employee training. This strategy will ensure a holistic business transformation and sustainable development for the years to come.

4. Double down on resource optimization

By optimizing resources, organizations can efficiently use available materials, energy, and other resources, reducing waste and unnecessary spending. It also helps minimize operations’ environmental footprint by reducing energy consumption, greenhouse gas emissions, water usage, and other negative environmental impacts. Optimizing resources also leads to cost savings, better resilience, and long-term business success.

5. Partner with sustainable software companies

Companies that are themselves on the sustainability journey are more likely to advise on the most effective technologies, tools, and solutions you can adopt to become a sustainable retailer. They understand the specifics, sustainability frameworks, and requirements your company should follow, which will help you receive the expected return on investment. N-iX is a software development company with a sustainability mindset that can help you enhance sustainability through innovative solutions. Here’s why we are a trusted partner for sustainable retail businesses.

Choose N-iX to cover the tech side of your sustainability transformation!

N-iX is a trusted partner for sustainable retail businesses due to our extensive experience and tech expertise in retail software development. We have delivered over 59 retail and ecommerce projects, with over 300 software engineers working on retail/ecommerce projects. Our solutions have been used by over 140M people worldwide.

We have worked with leading global fashion retailers in the UK, Spain, and the Netherlands, helping them accelerate their digital transformation, improve product pricing strategies, and increase efficiency through automation and modernization. Our solutions range from custom data-driven sustainability analysis and supplier cost optimization to predictive maintenance and intelligent automation.

N-iX has also developed solutions for logistics and supply chain management, in-store operations, omnichannel and ecommerce, and customer analytics. Our retail software development services have helped our clients increase efficiency, visibility, and sustainability in their operations and deliver seamless customer experiences.

Contact our team if you’re looking for a reliable tech partner to improve sustainability in the retail business. Let’s discuss solutions to help you reach business and sustainability goals!

References:

1. Sustainable Consumer 2023 - Sustainable Lifestyle | Deloitte UK 
2. BCG Sustainability in Retail is possible but there's work to be done 
3. What Happens to All the Stuff We Return? | The New Yorker 
4. Retailers Set Higher Bars for Free Shipping as Delivery Costs Surge - WSJ 
5. Re_Count: A Lifecycle Footprint Calculator
6. The Data That Can Drive Sustainable Retail | Forbes