Creating a sustainable product lifecycle in retail

Microsoft’s Michelle Lancaster explains why increasing the sustainability of products and services has become a vital goal for retail and consumer packaged goods brands, as well as their customers

Rebecca Gibson
Rebecca Gibson
By Rebecca Gibson on 28 April 2021
Creating a sustainable product lifecycle in retail

The recent sharp rise in environmental activism has increased concerns about carbon footprints, landfill waste, the amount of plastic in the oceans, and the detrimental effect this is having on people, animals and the planet. Many people have been inspired to re-evaluate the way they live and identify what steps they can take to minimise their personal environmental impact, pledging to reduce or eliminate single-use plastics, finding ways to recycle or repurpose items, and shopping and travelling more consciously.

“For the past six or seven years, research has suggested that many consumers – particularly in the younger generations – consider the sustainability credentials of a product as an important factor when making purchase decisions,” says Michelle Lancaster, director of sustainability partnerships, sales and products at Microsoft. “Some studies even showed that these customers would theoretically be prepared to pay higher prices for more sustainable products and services. However, it’s not until recently that we’ve really seen a shift in purchasing behaviour to support these claims. 

“Today, consumers are making it clear that they want to know what raw materials are being used in products, whether they are being ethically and sustainably sourced, the total carbon footprint of the manufacturing and shipping processes, and the impact the item will have on the environment once they are finished with it.”   

Cognisant of these new customer expectations and the immediate need to protect the planet’s finite resources, a growing number of retailers and consumer packaged goods (CPG) brands are setting new environmental targets and investing significant revenue to become more sustainable. Many are beginning to embrace the circular economy, which is based on the principles of recycling, refurbishing and repurposing or reprocessing products and materials to eliminate waste, pollution and the continual use of finite resources. However, transitioning to a circular economy business model is challenging because retailers and CPG brands simply do not have access to sufficient data.

“Organisations must be able to calculate the total environmental impact of every single operational process and every individual product from cradle to grave,” says Lancaster. “Although it’s relatively easy for them to calculate the direct emissions generated by their own operations, it’s very difficult to gain data about all the other indirect emissions that occur throughout the value chain, particularly after the consumer has disposed of the product. Consequently, they aren’t often able to provide the full product sustainability credentials that consumers would like to know.” 

Microsoft and its partners, however, are harnessing the power of digital technologies to enable retailers and CPG brands achieve their sustainability goals. 

 “We’re exploring the benefits of embedding tiny sensors, radio-frequency identification tags or QR codes into or onto individual products so retailers can track them from cradle to grave,” says Lancaster. “This will enable retailers and CPGs to collect all the real-time data they need to produce accurate and reliable sustainability information for consumers and, if necessary, regulators. They would also be able to easily pinpoint which materials could be recycled or repurposed in future.

“We’re already helping multinational CPG Unilever to build a digital overview of its supply chain so it can calculate its carbon footprint and share this data with customers.”

In addition, Microsoft has been collaborating with partners to create a mechanism for customers to return products to the retailer when they are no longer fit for their original purpose so they can be responsibly recycled or refurbished and reused. 

For example, Microsoft has teamed up with its partner Ombori to help global fashion retailer H&M Group to introduce new smart garment recycling bins to its selected stores. Customers bring bags of clothing – of any kind, in any condition, from any brand – to the store and deposit them in the smart bins, which are equipped with an Ombori digital screen running on Microsoft Azure. Integrated digital scales automatically weigh the donated clothes, and the screen displays various pictures, social prompts and a voucher or discount code to engage and reward customers for their donations. The clothing is passed to I:Collect, which provides the infrastructure for reprocessing everything into new garments. H&M Group’s ultimate goal is to create a closed loop for textile fibres and find technical solutions to reuse and recycle textile fibres on a larger scale.

“H&M Group is leading the way to circular and renewable fashion industry – this scheme prevents tonnes of textiles being thrown into landfill every year and allows consumers to play an active role in helping to protect the environment and save natural resources,” says Lancaster. “Our aim is to help other retailers set up the IT infrastructures they need to offer this type of scheme in their own stores.”

Once retailers and CPGs have these systems in place, they must ensure they effectively communicate their sustainability efforts and goals to consumers. Lancaster highlights one particularly effective example as the day beverage manufacturer Anheuser-Busch devoted two of its 2018 Super Bowl advertising slots to showcase the sustainability efforts of its Budweiser and Stella Artois beer brands. 

“Super Bowl advertisements are watched by people all worldwide and this was one of the first times that such as major retailer had used its slots to focus on sustainability,” says Lancaster. “It was a real watershed moment, where a brand focused on its renewable energy rather than on selling more beer, and to an audience that is focused on football, not necessarily sustainability.” 

Lancaster predicts that similar sustainability advertisements will become more commonplace in future. “Whether that’s through outlining their climate pledges on their websites, updating customers about progress towards specific targets, adding sustainability labels to products or packaging – brands will make it clear that they care about the environment to differentiate themselves from the competition. Putting greater emphasis on sustainability will also ensure that both organisations and individuals are working together to reduce the impact of products on our planet.”

Partner perspectives
We ask selected Microsoft partners how their technology is empowering retailers and consumer packaged goods companies to make their operational processes, services and products more environmentally sustainable, while also improving the customer experience. Below are extracts from their responses, which you can read in full from page 132 of the digital edition of the Spring 2020 issue of The Record.

Cara Smyth, managing director of sustainability at Accenture, says: “With ai.RETAIL, retailers can also identify their highest profitable customers and focus on providing them with personalised products and services. Having transparency into what the most valuable customers want helps with reconciling supply and demand, as well as reducing waste.”

Jim Hull, senior director of retail industry strategy at Blue Yonder, says: “Blue Yonder and Microsoft partner to help consumer packaged goods companies and retailers minimise their carbon footprint through our Supply Chain Planning and Execution Offers on Microsoft Azure solution.”

Nate Barad, director of product marketing at Optimizely, says: “When we evaluated our business and made processes more sustainable, we discovered that it also resulted in better experiences for our customers and employees.”

Chris Morrison, CEO of Transparency-One, says: “Companies use our platform to trace their products, engage with suppliers, and ultimately identify environmental and social risks at any level of the supply chain, including deforestation, child labour, or carbon emissions.”

This article was originally published in the Spring 2021 issue of The Record. To get future issues delivered directly to your inbox, sign up for a free subscription.

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