The COVID-19 pandemic has brought with it a reckoning that has resurfaced fashion’s need for a correction.
“Now more than ever we’ve got the opportunity to rebuild and reset,” Jill Standish, senior managing director and global lead for retail at global consulting firm Accenture, said speaking at WWD’s recent Culture Conference: Sustainability and the Human Element.
Standish presented findings from a new joint report with Accenture, the Responsible Business Coalition at Fordham University’s Gabelli School of Business, published with WWD.
In a COVID-19 survey from June, Accenture found that 67 percent of people agree that companies will “build back better by investing in longer-term, sustainable and fair solutions.” Growth in operating profit of data-driven environmental, social, and governance managed companies outperformed those without it three times over, on average.
With climate change as an alarm and the pandemic as proof, the conversation has pulled in investors who finally agree: it’s about all stakeholders, not just shareholders.
“Fundamentally, our cost structure is very, very different. I think all of us would say to ourselves that the way we evaluate our P&L today is different [than] pre-pandemic. The cost to serve went up. We didn’t in our books prepare for things like personal protective equipment for employees or remodeling stores to handle social distancing or safeguard employees at the cash wrap,” said Standish, who believes cost must be evaluated through an ESG lens.
It’s key, especially today, that companies need to be monitoring and reporting improvement on ESG metrics, and considering where they can curb their carbon footprints.
In tandem, consumers may be considering how they can curb their consumption.
With a cited 61 percent of consumers today making more environmentally friendly purchasing, according to Accenture, on top of a paramount shift to e-commerce amid the pandemic — will customers return to “consumption as usual?”
“A lot of times, no,” Standish said, inviting companies to reevaluate “technology, people and process” to improve efficiencies which can include cost-savings in everything from sourcing to shipment optimization. “That’s the way to actually look at this in a new way.”
Dipping deeper into the role of technology, Artificial intelligence has already influenced the retail industry, with 86 percent of retailers already experimenting with it in some form. But, as Standish explained, there’s more to be done.
“Are we actually leveraging [AI] to its full potential?” Standish posed. “There’s no way we can manage this uncertainty in front of us without leveraging tools.”
By Accenture’s numbers, retailers can expect to see a 5 percent to 20 percent potential savings in cost per order, shipping and packages labor plus undue ESG benefit tracking when AI is fully engaged.
“Really, sustainability is all about efficiency, so if we can understand what demand looks like we can actually eliminate waste, eliminate inefficiencies and lower supply chain costs. And that’s really the game here,” Standish explained.
Energy efficiency was another subject Standish tackled in a pitch to convince retailers to go deeper than simply changing lightbulbs in storefronts as they target net-zero emissions.
The U.S. Energy Information Administration predicts wind and solar will cost anywhere from $30 to $35 per megawatt-hour by 2025, which would solidify renewables as the least expensive and greenest option for retail.
Retailers were, essentially, left with all the lights on at the crux of the outbreak, Standish said, where remote management of power in their facilities could have saved them in the long run.
Companies will have to be much better able to visualize existing and potential value chain disruptions, and to do so, they’ll need to have the right data and the right tools in place to deliver that data.
“If that’s the way we’re going to be living in the future, which is making decisions quickly, then we’re going to have to have as much information at our fingertips to actually do scenario planning,” Standish said. “And what is the impact of this to our people, our stakeholders, our investors? That with an ESG spin to it is really important.”