Sustainability in retail - approaching transformation processes strategically and mastering them successfully

21 March 2023

Energy efficiency Climate neutrality

Sustainability transformation in the retail sector - this is a topic currently being addressed by the management levels of many retail companies. In this article, you will learn how sustainability succeeds in the retail sector and which levers need to be used, especially in larger companies.

Decarbonization and sustainability in retail

In fact, doing business responsibly and economically does not have to be at odds with sustainability in the retail sector. However, it is a real challenge for many a retail company to unite several locations as well as distribution centers and stores under the umbrella of one vision. This is a structural feature of the retail sector that has a particular impact on the transformation processes of larger companies. In order to successfully address sustainability in retail, rules and orderly processes are needed. A comprehensive overview is necessary. This is further complicated by the fact that the retail sector is already undergoing a comprehensive transformation process due to the rapid development of online business.

With strategy to success: How sustainability succeeds in retail

CO₂ emissions, energy and water consumption, or waste management - in addition to the switch to digital business models, companies in the retail sector need to initiate numerous change processes in terms of sustainability. This will not work without a concrete plan. The basis of an overarching sustainability management is therefore a top-down approach that involves all company components. An overarching sustainability strategy makes it possible to initiate transformation processes according to fixed rules and across all sites. On the way to becoming a climate-neutral company, data and digital technologies form the foundation for collecting site-specific consumption information and initiating efficiency measures.

Important adjusting screws for more sustainability in retail

But what are the relevant levers for sustainability in the retail sector and how should companies proceed in concrete terms? Here, it is advisable to be guided by the following points:

Analyze actual state

The starting point for a sustainability strategy in the retail sector is a situation analysis. It is necessary to obtain a holistic understanding of the status quo of the company and its many locations. Data-based consumption analyses are the focus and provide information about optimization potential. At the same time, companies should obtain an overview of the relevant local regulations and, last but not least, take a close look at the sustainability initiatives of their competitors.

Define goals

In order to pursue holistic and long-term sustainability plans in the retail sector, careful assessment processes are required. At best, companies explore the potentials of existing and new technologies and business models and assess them with regard to current market conditions. Optimally, a sustainability vision is based on an inside-out and outside-in approach. This means that companies consider both business-oriented initiatives and formative external factors.

Develop Roadmap

A roadmap represents the concrete roadmap for change processes such as that towards sustainability in the retail sector. Ideally, every sustainability strategy can be practically implemented on the basis of such a step-by-step plan. The roadmap itself is always individually constructed and tailored to the respective company. It contains concrete steps that can be taken, for example, to develop new technologies and financing mechanisms. A good roadmap provides the flexibility to incorporate individual site requirements. A fixed time and budget framework for measures to be implemented is an integral part of this.

Focusing on sustainable resource management

Resource management is a complex task in retail. And indeed, the issues of energy, water and waste often represent the biggest cost factors for companies. A holistic resource management program provides support at this point. It reconciles sustainability in retail with economic aspects. Just as with the situation analysis, a data-based understanding of the company's own processes is essential for this. Saving resources therefore means first of all being clear about who uses which assets where and where there is potential for efficiency. Meaningful data provides valuable insights and concrete starting points.

Transforming procurement and supply management

In fact, it is not that easy to manage thousands of purchasing transactions and commercial contracts across the board and in terms of sustainability goals. To ensure that resources are always aligned with sustainability criteria and purchased at the right price, well thought-out procurement and supply processes are important. Sustainable retail procurement and supply management ensures the best possible combination of vendors and contracts for each site portfolio. Here again, data plays an essential role in identifying consumption characteristics and providing resources according to site-specific requirements.

How sustainability in retail succeeds in practice

Digital technologies and a strategic approach that involves all of a company's sites are the key to sustainability in retail. A case study from ENGIE Impact demonstrates how this can be achieved in practice and what great successes a sustainability strategy can achieve.

A leading global supermarket chain had contracted ENGIE to provide strategy-related data and oversee the implementation of programs to reduce energy and water consumption, waste volumes and CO₂ emissions. Over the past five years, the company has thereby succeeded in

to consume 17.9% less electricity,
reduce water demand by 44%,
emit 10.7% fewer greenhouse gases and
24 million euros in costs to be saved.

With the help of ENGIE Impact, the company increased energy and water efficiency at the sites and successfully mastered the investment in renewable technologies. Another part of the sustainability initiative was to create a comprehensive database on waste types and volumes in order to derive potential savings and disposal options. ENGIE Impact acted as a communication hub, bringing all business units and sites together and steering processes in the right direction. Last but not least, regular, performance-oriented reports were a decisive factor in the success of the project.

Would you like to learn more about this topic or get advice?

Write us!

Seeing sustainability as an opportunity in retail

The case study shows that sustainability in the retail sector is not necessarily associated with additional costs. A successful transformation strategy in no way stands in the way of a company's economic development. It is therefore not surprising that the supermarket chain managed by ENGIE achieved savings in the double-digit millions. For this reason, we generally recommend that retail companies consult a strategic sustainability expert. Specialists like ENGIE Impact provide support with a professional, unbiased view from the outside. They have the know-how, the tools and the vision that enable companies to meet their social requirements.

Reading tip: The food and beverage industry is another sector that sometimes seems to play only a supporting role in the public discourse on sustainability. Yet sustainability in the food and beverage industry is no less exciting a topic. You can now obtain in-depth insights and potential solutions from ENGIE Impact.

Our Expert

Anne-Katrin Hagel

Anne-Katrin brings deep expertise in project management (agile and classic), account management and business development. She is highly knowledgeable about the industrial insurance business, financial services, offshore wind and digitalization. She currently oversees the efforts of ENGIE Impact’s DACH Team to build a strong go-to-market strategy. She joined the Sustainability Solutions team at ENGIE Impact in 2023 as a Director of the DACH Team. Anne has 15+ years of experience advising utilities and businesses on IT transformation and offshore wind construction projects.

annekatrin.hagel@engie.com