Retailers use tech to meet sustainability demands

Sustainability and the environment have shot up the business agenda recently, as consumers have become more demanding of the companies they deal with; with retailers increasingly implementing technology to help them meet those demands.

Earlier this week for instance, Sainsbury’s announced plans to invest £1 billion towards making its operations emit a ‘net zero’ of emissions by 2040. It plans to cut carbon emissions, food waste, plastic packaging and water use, while increasing recycling and sustainable initiatives.

It is not the first UK supermarket chain to commit to such sustainable initiatives, with Iceland trialling reverse vending machines in 2018, Asda and Tesco piloting refill stations, and just last week Tesco announcing plans to reduce 350 tonnes of plastic per year by getting rid of its plastic-wrapped multibuy packs of beans, soups, sweetcorn and tuna.

Smaller retailers have been proactive in their approach too, with Lush announcing work at last November's Amazon’s web summit on a ‘digital packaging’ feature for its LushLabs App, as well as its Fairer Tablet payment prototype.

A statement from the beauty brand explained that technology has become an essential part of its daily practices. “However, technology and electronics in particular, are huge contributors to some of the world’s most serious environmental and human rights problems; from electronic waste and massive CO2 emissions to harsh working conditions and devastating sourcing practices.”

Heather Deeth, manager ethical buying in the US for the cosmetics retailer, admitted that the company’s ethical supply chain requires a lot of work with its many suppliers.

Its sustainable stance means it now buys in as many as 400 different raw materials from around the world. To manage this, it uses technology as a platform to deliver transparency across the whole supply chain. “We have a relentless push on transparency – it’s not enough to just sign things off, you need to get deeply involved,” Deeth commented.

Chris Wong, vice president for product and strategy at IBM, said such systems cannot be run efficiently without being underpinned by IT.

“The issue of sustainability is difficult to solve without technology,” he stated. “For a system to work it needs to integrate disparate partners, sharing and trusting information across them is hard; at the moment for many companies it is a paper-based trust system, but it needs to be more data-driven and agile.”

Lars Gunnarsson, digital transformation leader at IKEA Food, said the company is implementing a solution from JDA that uses artificial intelligence (AI) to help with its forecasting and management of its supply chain that will ultimately help with its overarching objective of cutting food waste.

“It will support our food business and increase efficiency, traceability and sustainability – it will drive less waste, which will be massive for us,” he said, adding that the solution will enable the company to see the demand curve and coordinate deliveries of food, control portion numbers, as well as intelligently managing the workforce based on demand.

A key element of the project involves empowering the company’s 10,000 employees, who deliver 20,000 meal servings per day, by supplying them with rich information via a user interface that they can immediately act upon. This involves the supervisors receiving notifications of the waste levels on each shift that links into the forecasting and replenishment elements and enables changes to be made to orders with suppliers.

As with the JDA solution, AI is also being used by vertical farming company Infinite Acres through a joint venture with Ocado. It hopes this will help it better manage its farms through the improved use of water, removing the need for pesticides, and by growing the produce closer to the point of retail.

Data scientists from Blue Yonder, a JDA company, recently suggested that AI and machine learning technology could help the UK’s eight largest grocery retailers prevent £144 million of food waste a year.

“Sustainability is no longer just a buzzword, it could really make-or-break grocery retailers over the coming years,” said Michael Feindt, founder and chief scientist at Blue Yonder. “Retailers know they must take serious action; using AI and ML across their supply chains provides a tangible way for them to cut food waste."

Meanwhile, the latest OC&C UK Retail Proposition Index, where 50,000 consumers globally are asked to rate the retailers they have shopped with, found that 45 per cent thought a retailer’s impact on the environment was important to them when shopping, rising to 55 per cent among the Millennials and Generation Z; who will drive over 90 per cent of spending growth in the UK over the coming five years.

Another new retailing model powered by technology is re-commerce and the circular economy, which involves products being sold multiple times. Helping this nascent part of the industry is Natasha Franck, chief executive of digital identity platform Eon Group, who is building a protocol that she said effectively creates an in-built identification for products to help brands manage the goods they sell – from initial sale to subsequent resales.

Wong explained that new technologies such as blockchain will potentially have a part to play, as distributed ledgers to hold this type of information.

Tech-powered identification also looks set to play a part in the take-away food market, as McDonald’s has suggested it could in the future use car number plate recognition software at its Drive Thru restaurants. This creates an identifier for the customer that can then be used to bring up personal data, such as their previous purchases, and then tailor the experience.

The solution is powered by based Dynamic Yield, which it bought for $300 million last year, letting McDonald’s shift from using static menus to ones that are responsive to changes in weather, nearby traffic levels, and the time of day.

By changing the menu in real-time, the burger chain can prioritise certain products. Hot drinks can be upsold on rainy cold days, while ice cream is recommended on hot ones. It can also help reduce potential waste by suggesting dishes to customers based on the levels of stock.

Although driving a more sustainable agenda can be a major challenge for retailers, the emergence of new technologies is helping many respond to wider trends and keep up with the competition.

In Retail System's look ahead to the trends expected to dominate 2020, several experts predicted sustainable and environment-focused technology would be prevalent.

Oliver Guy, global industry director at Software AG, commented: “Amazon has ordered an electric fleet of vehicles in response to concerns over its supply chain’s carbon footprint, and we have seen retailers discontinue plastic cotton wool buds and plastic straws due to concerns about littering the ocean.”

Chris Long, managing consultant at Capgemini Invent, agreed: “Consumer opinions are changing very quickly in terms of sustainability, organisations need to be able to react to customers boycotting unsustainable products otherwise they will lose out – sustainable methods have to be business efficient, otherwise they will not be adopted in such an intense climate.”

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