Sustainability will drive success

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Sustainability was the hot topic at this year’s aptly titled IGD Convention, The World Turned Upside Down.

We’re seeing change on an unprecedented scale, and as such companies need to be much more careful about how and where they spend money.

Joanne Denney-Finch, chief executive of IGD, said: “Companies need to think radically about how to secure their supply position and think through the implications for the way they trade and the way they work with others.”

The price of oil, for example, has yo-yoed recently and experts say it is likely to get worse before it gets better.

As China, India and central Europe keep expanding the supply of many commodities will struggle to keep up with demand. Denney-Finch added: “The world economy has been built on oil, but look at the looming gap between supply and demand…by 2030 we could need an extra 66 million barrels of oil per day. That’s almost as much as today’s entire production, so it’s a volatile picture.”

She added that we have already seen the oil price prompt a change in shoppers’ behaviour this year, but that this is only the start.

“Shoppers have been jolted out of their habits. They’re more promiscuous, so companies need to invest in grabbing their attention; reinforcing brand values and making it clear what they stand for.”

But although customers are changing their shopping habits, they are not compromising their beliefs. Consumers that have strong environmental or ethical views will not throw them out the window the minute things start to go bad. Instead they will adapt to the change in a way that is in line with their thinking.

“We will go back to value, but we will also stay true to our values,” said Denney-Finch. “If you’re one of the 79 per cent of the population that has some kind of engagement with ethical shopping, you don’t abandon it overnight”

Lucy Neville-Rolfe, executive director of corporate and legal affairs at Tesco, said cutting emissions remains at the heart of their strategy as the environment is still important to shoppers even in the current economic situation.

In order to translate this to the customer, the company has introduced carbon labelling for products to make it easier for them to identify the carbon footprint of their shopping.

The label tells customers how many grams of carbon, or equivalent greenhouse gases, were emitted as a result of growing, manufacturing, transporting and storing a product. It also considers the impact of preparing or using a product and then disposing of any waste.

However, Angus Maciver, group marketing and communications director at supermarket, said retailers and suppliers need to do more to make things less confusing for the consumer.

He used machine washing as an example by posing the question “what is better for the environment – buying eco-friendly detergents or washing clothes at 20 degrees?” The latter he said offers a much greater benefit to the environment, but this is sometimes overlooked by customers as they are not provided with all the information they need to make an educated decision.

P&G has recently launched a nationwide campaign to promote its Ariel Excel Gel, which it says uses 14 per cent less packaging, 30 per cent less energy, 40 per cent less water, 40 per cent fewer trucks to haul and is effective at 15 degrees. (How many washing machines actually have a 15 degree setting is another matter). Irwin Lee, P&G’s vice president and managing director, UK and Ireland said: “It helps consumers be sustainable with no product performance or value trade-offs.”

Greg Peterson, managing director of Kellogg’s UK says environmental sustainability is not a tough sell to consumers so it time for companies to take action. He highlighted five key environmental areas that Kellogg’s is looking at and that others should follow. Kellogg’s aims to reduce carbon dioxide emissions by 20 per cent by 2010, send no food or packaging to landfill by 2015, minimise packaging, reduce water use and cut transport miles by 20 per cent by 2012.

He also highlighted the importance of reviewing hauliers on their service, cost and environmental sustainability commitments.

Kellogg’s and Kimberly-Clark have recently collaborated, supported by TDG, meaning they can fill trucks to capacity, which helps to reduce the number of lorry loads to smaller retailers and take empty trucks off the roads, creating a saving of 270,000 road miles.

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