Why selling less spells success
US-based outdoor retailer REI made headlines last year when it announced plans to close all 143 stores and its e-commerce site on Black Friday, one of the biggest shopping days of the year. At a time when other retailers were abandoning the pretense of pre-dawn opening hours and starting to sell on Thursday, the day Thanksgiving is observed in the US, REI’s decision to forego sales was noteworthy.
REI is skipping Black Friday again this year under the same tagline, #OptOutside. And while the company’s CEO Jerry Stritzke has mostly discussed the decision in terms of giving employees more time to spend with their families, the underlying critique of over consumption cannot be ignored.
“It’s a manifestation of a broader movement which is moving retail away from rampant selling at any cost and maximising profit at any cost and towards something far more holistic and humane,” Jeremy Meltzer, founder of i=Change, which helps retailers give a portion of each sale to philanthropic organisations, told Inside Retail Weekly.
“All of what we do – from manufacturing, to our interaction with communities, to how we dispose of the things we buy – has an impact. So now retailers are asking, how do we minimise the harm done to communities along the supply chain and to our planet?”
Retail is a US$7.3 trillion global industry. The world’s largest retailer, Walmart, alone makes over US$760 million in net sales every single day, according to Retale.com’s live spending tracker. At the time of writing, US shoppers were shelling out around US$1 million every 10 seconds.
It’s fair to say that many people, mostly in developed countries, are purchasing far more than they need, putting an enormous strain on the world’s resources to manufacture and distribute large volumes of goods. On top of that, an estimated 100 million units of stock go to waste each year, according to the Council of Textile and Fashion Industries of Australia.
This raises an uncomfortable question for retailers: How to reconcile the business of selling with the undeniable fact that many consumers should be buying less?
Abigail Forsyth, founder of KeepCup, is one retailer pushing back against the increasingly disposable view of products on the market. As a Melbourne café owner, she was concerned about the wastefulness of takeaway coffee cups. An estimated one billion disposable coffee cups are discarded annually in Australia, and most of them end up in landfills.
She started the reusable coffee cup business in 2009 and has since expanded to the US and UK. While she has pitched KeepCup to all the major players – Starbucks, Costa Coffee, Caffe Nero and Pret a Manger – so far McDonald’s is the only big brand to get on board, besides the numerous independent cafes which carry her product.
“We’re trying to sell a product that you only need to buy once, we’re not looking for repeat purchases. It’s about selling a product that is of high quality, that you can replace the parts if you need to. That’s how we talk about sustainability in our business,” she told Inside Retail Weekly.
In other words, Forsyth has rejected the notion that selling more products to more people makes for a successful enterprise. And she is not alone in this. Two months ago, the Swedish government introduced tax breaks on repairs, giving people an incentive to have their old bicycles, washing machines and shoes fixed, instead of discarding them and buying replacements.
While this behaviour is not yet the norm across the retail industry, Forsyth doesn’t see it as a disadvantage: “It’s part of the DNA of the brand, and in a world where it’s easy to buy knockoff and find counterfeits and shop for cheaper products, we are making a bid for customer loyalty.”
In fact, nearly everyone agrees that a sustainable or social approach can have a positive impact on a brand’s bottom line. The ultimate example is Patagonia’s 2011 “Don’t buy this jacket” ad, which highlighted the 135 litres of water and 20 pounds of carbon dioxide it takes to make one of its best-selling fleece jackets.
While the ad strongly urged customers to consider the environmental cost before buying a new item of clothing, Patagonia’s sales increased by almost one-third to US$543 million that year, and it opened 14 more stores. REI saw a similar boost in sales after its #OptOutside campaign last year. In any other scenario, this would be viewed as an unequivocal success. But in this case, the sales boost tends to evoke ambivalence.
“It’s absolutely a contradiction, and I worry about it and I think about it all the time,” Forsyth said about the effect her sustainability marketing has on driving consumers to purchase.
Speaking to Inside Retail Weekly, Sean Sands, managing director of the ACRS Research Unit and associate professor of marketing at Monash Business School, took a more pragmatic approach. He suggested brands look to REI and Patagonia as strategic examples, not because their social campaigns paid off, but because of their authentic commitment to the cause.
“Over-consumption, degradation of resources and a blatant disregard for society will not lead to true long-term profitability,” Sands said, adding that he wished more brands globally and in Australia thought like this.
Global non-profit organisation B Lab is working towards that goal by redefining the terms of success. “There is currently a huge drive for businesses to make quarterly profits and that isn’t going to set them up for success in the long-term,” Alicia Darvall, executive director of B Lab Australia and New Zealand, told Inside Retail Weekly.
Instead, Darvall said retailers should adopt the triple bottom line concept, in which their performance is evaluated in terms of impact on people, planet and profit. “We believe that businesses need to be both about purpose and profit. If you’re a company that isn’t making any profit, you’re not going to last long to achieve your purpose.”
Access exclusive analysis, locked news and reports with Inside Retail Weekly. Subscribe today and get our premium print publication delivered to your door every week.
Inside Retail Polls
Nominations for 2020 Retailer Awards are officially open! Tag retailers you believe provide exceptional customer ex… https://t.co/wkhQq3UjFE6 days ago