Where Retail Waste Begins: Production

Welcome back.

As promised, I’ve started my examination into retail and the Circular Economy. This update, on retail waste, is the first of many different subjects we’ll explore.

But before diving in, you may want to spend some time rekindling your “circular” knowledge. If that’s the case, I’d suggest you visit the first-rate Ellen MacArthur Foundation website, which is my first stop whenever I do research.

You can also check out what I’ve written about retail circularity, herehere, or here.

So now, on to retail waste.

The Sources of Retail Waste

First things first. What is the current state of waste in retail? More specifically, how big is the problem?

Well, most retail waste comes from three key places: production, packaging, and post-purchase (landfills).

There’s a lot to unpack here, but let’s start with the production process, where the fashion industry alone generates 10% of the global greenhouse gas emissions. The industry is also the second-largest consumer of water, which is enough to meet the needs of five million people annually. (CNN).

Moreover, the materials used to produce retail goods do extraordinary environmental damage. According to the UN’s Conference on Trade on Development (UNCTAD), “Annually, more than a half-million tons of microfiber is also consumed, equivalent to three million barrels of oil being dumped into the ocean every year.”

All this wreckage is astonishing since fashion accounts for only a small piece of the retail pie—less than 10% of the annual volume of retail trade in the US, which exceeded $5 trillion in 2019 (Statista). Other subsets of the retail industry, such as consumer electronics, do considerable harm too, but fashion is the unfortunate trendsetter.

Closing the Retail Waste Circle

To make meaningful progress on circularity, retailers will need to create—and eventually close—a circle that addresses production waste.  Production is one of the key places where you can move from a linear “take-make-use-dispose” model on the left to a fully circular model on the right:

Source: MDPI

This, by the way, is difficult and disciplined work, complicated by the fact that retailers, with few exceptions, do not own their production processes or have full transparency into them. To decrease production waste, retailers must rely instead on their suppliers instead.

So how do you get that ball a-rolling?

Talk to any seasoned change management professional, and they’ll outline the three things all organizations must do to deliver a successful change. First, you need to connect the initiative with the “heads” of the team members who are affected—they need to understand the goals of the change. Second, you need to win the “hearts” of these same people—they need to buy into the change and believe it will achieve the organization’s goals. And finally, you need to give the team ample “hands”— they will need time, tools, and other resources to deliver the change.

Making “Heads, Hearts and Hands” Circular

But how can you apply the “heads, hearts, and hands” formula to creating a circle for production waste?

First, communicate what success looks like for your organization. Is it your vision to be 100% circular on production waste? By what date? Furthermore, what benefits would your customers and partners receive from closing the production waste circle? (I’ll go deeper into the known benefits in future posts, but here are some thoughts from leaders at Apple and Nordstrom).

Next, set expectations. Talk about your goals for reducing production waste, the measurements you’ll use, and how you’ll communicate progress on those goals. (I’ll talk more about measures in the future, too.) Realize that you’ll meet some metrics sooner than others, but celebrate the wins, and yes, that includes the small ones. Research shows that you win hearts—and keep people motivated—in a project when you recognize all those small wins.

And finally, make sure you provide onboarding and training for your production waste initiative. Not just for your team members, but for your suppliers, too.

The Importance of Suppliers

When I worked in the corporate space, and we rolled out some new approach for suppliers, it became quickly evident which parts or processes needed much more buy-in. When suppliers are confused about the goals or uncertain about the likelihood of success, their responses will often be voiced as concerns. For example, they’ll say an initiative is “too expensive” or “too slow”—or that the organization doesn’t really “get” what they’re asking the supplier to do.

But let’s be fair here. Retailers mess up, too, often by rolling out initiatives that weren’t as fully vetted or informed as they could’ve been.

In short, you and your supplier must work together to build a credible circularity effort around production waste.

My suggestion? Start talking with your most valuable suppliers. See how much they understand about circularity, how committed they are to the concept, and what capabilities they have for going circular. Share what you’re doing on the retail side, too, and find out what suggestions your suppliers have for you.

When you and your suppliers collaborate on developing and implementing circular approaches, you not only build lasting buy-in, but you also increase your chances of success.

Now, there’s much more to cover about retail-supplier partnerships and circularity, but for the time being, let’s stay with the theme of waste. In my next update, we’ll turn our attention to the massive retail waste caused by packaging.

Thanks for reading, and I’ll see you soon.