IKEA, Nordstrom, Walgreens on the many opportunities for circularity in retail
From recipes for recommerce to changing packaging ingredients, the retail sector is integral to adoption of the circular economy. Don't expect a cookie-cutter approach.
A couple of years ago, luxury retailer Nordstrom collected data from its customers to get a better sense of their actions and sentiments about circularity, shopping and its impact on the environment.
Seventy percent of those surveyed said they would drop off items for resale or donation, and 35 percent said they worried about the environmental impact of the clothing they owned. Nordstrom used these data points and others to inform its sustainability efforts.
"We’re seeing circularity as an opportunity as well as an impact area for us to think about," said Chelsea Evans, sustainability lead at Nordstrom, during this week's GreenBiz Group webcast about how retailers can embrace the circular economy. (You can watch the discussion on demand by signing up here.)
There is no one perfect approach for a retailer to embrace circular business models or practices. There’s also no one way to prove the return on investment that comes from shifting to this mode of doing business.
But there are plenty of compelling reasons to explore it — from doing less damage to the environment to meeting consumers’ growing desires to support businesses that are sustainable.
In Nordstrom’s case, the retailer is using several approaches to embed circularity into its business model. One way it is doing so is by driving demand for products that are made or sourced from recycled materials.
It is also getting everyone — including consumers — "on the same page with language" about what it means for a garment to be made of recycled materials. For example, when a company says a piece of apparel is made from recycled plastic bottles, what that really means is that the garment is made from recycled polyester.
The retailer has created a section on its site to help customers filter through products that are sustainably sourced. As part of this resource, it includes brands that use at least 50 percent sustainably sourced materials — organic cotton, recycled polyester and materials that are Fair Trade Certified. The decision to create this guide was informed by the 59 percent of customers that said their purchasing decisions had been influenced by information about a company’s social or environmental policies, Evans said.
"We’re excited to show our customers another way Nordstrom is striving to leave the world better than we found it, and circular fashion is another piece to this puzzle," said Pete Nordstrom, co-president at Nordstrom, in a statement.
Connecting circularity to emissions
Retailer IKEA, which sells an entirely different portfolio of products from Nordstrom and therefore has different needs when it comes to circularity, likewise started with the data to inform its priorities.
In 2016, IKEA measured and cataloged the main source of the greenhouse gas emissions attributable to its operations. It found that more than 60 percent came from raw materials and consumer product use — at 38 percent and 23 percent, respectively.
Lisa Davis, sustainability manager at IKEA, said one of the biggest challenges the company is trying to tackle is unsustainable consumption. "That brings us to how we connected those emissions to our strategy," Davis said, noting that one of IKEA's commitments is promoting circular and sustainable consumption to its customers.
In 2016, IKEA collaborated with Goodwill to run a pilot take-back program in Charlotte, North Carolina, inviting customers to bring back furniture that was no longer of use to them. Workers from both organizations inspected the furniture and determined whether it would be taken to a Goodwill store to be resold or broken down and recycled. The following year, IKEA expanded the pilot to 41 stores.
Davis said success for the program varied across sites, but IKEA is using its findings to inform future programs and has been working to implement circular economy principles in other parts of its business. Two places where strategies are under development: eliminating food waste and revamping its reverse logistics protocols.
The allure of reuse
Walgreens is another retailer that is embracing circular economy ideals, in partnership with Loop. Loop, a shopping service created by parent company Terracycle, enables customers to buy everyday products — from deodorant to ice cream — that are packaged in reusable containers.
"They’re basically operating off of the milkman model from the 1950s and a little after that but really looking at this very wide variety of products that people are using on a daily basis," said Lauren Stone, director of corporate social responsibility at Walgreens, during this week's webcast.
In Loop's current, launch iteration, customers must ship back or find a UPS location to drop off the totes that are used to deliver products. Now in partnership with The Kroger Co. and Walgreens, customers will be able to drop off packaging in person at return kiosks that located are in physical stores. The launch is aimed for fall 2020 in Walgreens stores.
Stone said that the Walgreens-Loop partnership will help customers who want to make more sustainable decisions about the retail products they purchase. While the concept of reuse is still novel to many people, by including exclusive, reusable options in stores, Walgreens is seeking to resolve consumer confusion while adding a layer of convenience for consumers who aren't comfortable with an entirely online experience.
Walgreens acknowledges both the opportunities and challenges that come with implementing a reuse model in stores. The benefits include the chance for Walgreens to offer exclusive products and improve the sustainability of its operations, while the challenges include educating consumers about the process and making accommodations for the space that the return kiosks and merchandise will take up in stores.
Each of these retailers on this week's webcast is implementing different strategies for embedding circular economy processes, and those initiatives will continue to adjust along the way. When the webinar wrapped up, each speaker offered advice to people working in other businesses thinking about embedding circularity into their work. They all echoed the line of thinking that you have to just start.
"Don’t wait for a perfect solution because it doesn’t exist," Davis said. "Take a first step in an area that is of importance to you, learn from that scenario, get the data from consumers, get the results and use that to look at how you move forward."