Why Sustainability Matters to Retail & CPG Companies

Scaling AI Carla Winston

Sustainability has been a topic of discussion for many years, crossing nearly every industry imaginable from oil & gas, transportation, and manufacturing to fashion retailing and more. 

This once general topic of discussion has been pushed to the forefront in recent years, moving from a nice-to-have to a must-do for companies. This rise in ranks stems in large part to the global COVID-19 pandemic and the upending of how consumers engage with products and services, and the expectations they have on how these products and services are sourced, manufactured, delivered, and marketed — demanding transparency from companies along each step, from conception to delivery. 

So it’s no surprise that the Retail & Consumer Packaged Goods (CPG) industry has been engulfed by these same consumer expectations regarding sustainability and its environment, social and governance (ESG) components (78% of U.S. consumers say that a sustainable lifestyle is important to them). And with added pressures from regulatory entities and investors, the industry is finding that it must prioritize ESG responsibility and show up with a transparent, strategic agenda on sustainability. 

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Sustainability and ESG Responsibility in Retail & CPG 

Sustainability and ESG responsibility in Retail & CPG means establishing practices that adhere to governing regulations, build operational resiliency and support consumer (and investor) expectations in ensuring that brands promote — not harm — their health, environment, or communities. As a result, the journey for companies to deliver on these expectations is a marathon, not a one-time sprint. And it’s a journey that requires each checkpoint to be fueled by a consumer-driven perspective. 

The consumer awakening that occurred during the pandemic — there has been a 71% increase in online searches for sustainable goods over the last five years — triggered a near-equal reaction from companies who state that consumer demand is driving their sustainability pursuits. Consumers back what they say (and demand) with their wallets, as sustainability has become personal to them. And it’s this type of ethical consumerism that has resulted in significant growth of ESG-related products. McKinsey found that more than half of all product growth from the years 2018 to 2022, came from items with ESG-related claims. Continued growth of sustainability and ESG responsibility, dictated by the consumer, will be the catalyst for companies to solidify tangible initiatives, processes, and practices that uphold consumer expectations.  

Putting Consumer-Driven Sustainability Into Practice

So how can Retail & CPG act on the rise of consumer-driven sustainability? Let’s begin with the most critical action to get right — harnessing the power of consumer data. Because one in three consumers stopped purchasing certain products due to ethical and sustainability related concerns, it is imperative that companies remove barriers to purchase and consumer engagement through the use of data in order to unlock transparency across the entire value chain and retain consumers along the purchase journey. 

While accomplishing this with traditional methods (i.e., siloed workflows, gut assumptions, disparate tools and systems) is a near impossible feat, if companies want to remain competitive in an evolving retail landscape, those that leverage advanced analytics have a leg-up in the sustainability marathon because they are able to effectively uncover actionable insights from data. 

By embarking on the critical action of extracting insights with tools and techniques that remove the heavy lifting (advanced analytics) that comes with traditional methods, companies can establish a single-source of truth to:

  • Uncloud visibility to the supply chain
  • Uncover the root cause to obstacles belying the consumer-driven journey
  • Forecast consumer demand and the consumer’s ever-changing preferences
  • Inform strategic business decisions and strategy that will please regulators, investors, and consumers alike

Advanced analytics makes all this possible by connecting disparate datasets and identifying patterns in the data that result in transformative insights – insights that allow companies to anticipate consumer behavior and proactively guide the consumer journey.     

Leveraging Advanced Analytics to Win the Marathon  

The sustainability and ESG responsibility marathon is possible to endure with the help of advanced analytics. Data, and in the case of today’s consumer-driven environment, consumer data is the industry’s greatest champion in winning favor and loyalty from consumers. 

Without the fusing of advanced analytics into sustainability efforts, companies risk leaving billions on the table as reported by Deloitte, along with isolating the 72% of consumers who think companies should participate in building better social and environmental outcomes. Sustainability is the expectation and no longer the exception that can be ignored. Consumers have spoken and their data are the key to solidifying value-added outcomes. The time is now for Retail & CPG companies to strategically leverage advanced analytics to meet and exceed sustainability expectations or else threaten their future success. 

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