The National Retail Federation’s annual Big Show event is more than a giant retail conference attended by 40,000 people. It’s an important reading of global business priorities given the prominence of the attendees and speakers, representing companies such as Alibaba, Amazon, Best Buy, Kohl’s, Microsoft, and Target. At the 2020 Big Show, one theme stood out: sustainability. For example:
H&M, AI, and Sustainability
H&M discussed how the use of artificial intelligence helps the Sweden-based global retailer make more sustainable business decisions. For example, AI helps H&M better align product supply and demand to be less wasteful. As Arti Zeighami, H&M’s global head of advanced analytics and AI, said, “We’re actually working very specifically on being able to, for instance, calculate and quantify how many cases you’re going to buy [of any item].” This alignment is crucial because, as Supply Chain Dive noted, “With precisely honed demand forecasts, supply chains can use only the resources they need and no more. Without precise demand planning, the result is waste — a historical problem for the fashion industry.”
Terracycle Creates a Circular System
TerraCycle’s Loop initiative helps consumers shop for goods in reusable containers and packages that can be refilled and delivered back to the consumer, thus cutting down on waste. Loop makes it possible for businesses such as Tide and Clorox to wage war against single-use packaging, replacing it with reusable, recycled materials such as stainless steel and reengineered plastic. Stores such as Walgreen’s are stocking items packaged by Loop. TerraCycle CEO Tom Szaky said, “Everything can be recycled, it’s just a question of whether it’s profitable to do so. An infinitely durable item is infinitely profitable.”
Patagonia is All In
Patagonia, perhaps the premier clothing sustainability trendsetter, discussed the rise of circular supply chains. Patagonia’s Head of Corporate Development Phil Graves said, “Historically these circular supply chains and business models used to be a competitive edge for brands like Patagonia, but going forward, I firmly believe that they are going to be a means for companies, brands and retailers to survive.” As reported on the NRF blog, repairing, reselling, upcycling and recycling has been part of the outdoor retailer’s business model for decades; Patagonia has 70 global repair centers that fix more than 100,000 items every year.
The Crucial Role of AI
The discussion of AI and circular supply chains resonated for me especially. One year ago this month, I wrote about how AI can help create a more sustainable future by helping businesses make the transition to a circular economy. At the time I noted that AI can help businesses design products that either maintain their value over a longer period of time or be reused more efficiently. AI is already helping organizations create new materials to design products that last. AI can also help businesses create a better infrastructure that supports the reuse of products, such as identifying how businesses can design better processes for recycling materials. And by combining real-time and historical data on pricing and demand prediction, AI can help companies transition to a business model that relies more on subscription services rather than product ownership.
The NRF’s Retail Big Show 2020 would suggest that what I wrote about is becoming a reality.
Blockchain and Sustainability
On the UPS Longitudes blog, I recently discussed how blockchain can accelerate a transition from owning to sharing. Blockchain can transition supply chain management to a sharing economy where people and companies reduce waste and decouple growth from the consumption of finite resources — thus becoming more sustainable and profitable at the same time. Here, I think Big Show retailers have yet to figure out a way forward. We’re still in the early days of employing incorporating blockchain to make supply chain management more efficient – let alone sustainable. And frankly we are running out of time to get it right.
Accelerate a Sustainable Future
Retailers have the power to accelerate the uptake of sustainable practices, and they have the tools. One of those tools consists of the design sprint. With design sprints, teams of designers, engineers, marketers, and strategists rapidly prototype products in five days or less. Organizations identify a problem they and their customers are trying to solve, come up with a rough solution, test the idea against feedback from real customers, and create a prototype of the minimum lovable product (the initial version of the product that can be created to generate the most customer love within the constraints of the business).
Design sprints are a powerful way to go from talking about sustainability and AI to actually doing something about it. The time to co-create sustainable solutions is now. To learn more about how to get started, contact us.