Photo: Zalando
Will a sustainability push drive sales growth for Europe’s largest fashion e-tailer?
Zalando has launched a new sustainability strategy, “do.MORE,” that includes an immediate commitment to carbon neutrality. While driven in part by corporate social responsibility, Europe’s largest online fashion retailer also sees a major “business opportunity,” hoping growth stemming from the do-good initiatives offsets extra costs.
“We see a clear link between acting sustainably and continued commercial success,” said co-CEO Rubin Ritter in a statement. “Only those who incorporate sustainability into their business strategy will stay relevant for their customers and we believe that it will be a competitive advantage in the future.”
The do.MORE program’s goals also include:
- Plans to eliminate single-use plastics by 2023;
- Applying principles of circularity to extend the life of at least 50 million fashion products by 2023;
- Zign, Zalando’s own sustainable flagship label, will feature a flag by spring/summer 2020 to indicate that it’s met one of the company’s sustainability criteria, which cover social, environmental and animal welfare standards.
In 2019, the German company switched to over 90 percent renewable energy across all locations. Carbon emissions that are not eliminated by operational improvements, such as renewable energy, order bundling or green delivery options, are offset.
The new program comes as online selling is being increasingly called out for the excessive packaging and carbon footprint impact that results from deliveries. A recent survey of European consumers from not-for-profit global movement Fashion Revolution found one in three consider the environmental impact when shopping.
Asked by analysts about the cost implications of the sustainability push, David Schröder, Zalando’s CFO, cautioned that the e-tailer wanted to advance targets around growth, profitability, customer satisfaction and sustainability “in parallel, and we are obviously not going to sacrifice customer satisfaction growth or profitability just to reach our sustainability targets even faster.”
Yet the sustainability emphasis is expected to drive sizeable top-line growth. Said Schröder, “We see that more and more customers take this topic seriously and also expect from destinations like Zalando, that we do more on this. And that’s why we also call our strategy do.MORE, actually.”
- Zalando Goes Carbon Neutral Starting Today – Zalando
- Zalando SE (ZLDSF) Management on Q3 2019 Results – Earnings Call Transcript – Seeking Alpha
- Zalando to push ‘sustainable’ fashion, cut emissions – Reuters
- Online Retailer Zalando Goes Green to Ward Off Amazon – Bloomberg
- Consumer Survey Report – Fashion Revolution
- Can we break our addiction to plastic? The future of packaging – Financial Times
Discussion Questions
DISCUSSION QUESTIONS: Do you see excessive packaging, the carbon footprint of deliveries or online’s other eco-challenges becoming increasingly important as a purchasing driver for consumers? Will Zalando benefit enough from a first-mover advantage with its commitment to sustainability to offset costs?
Poll
BrainTrust
Kevin Graff
President, Graff Retail
Oliver Guy
Global Industry Architect, Microsoft Retail
Europe does seem to be at the forefront of sustainability with a greater emphasis on social responsibility. I think it will be a competitive advantage, and eventually a retailer necessity. The prioritization of this here in the U.S.? … Sad.
Too many retailers (and manufacturers) are way behind where they need to be on the sustainability front. Take a look at the packaging disaster on your porch when Amazon delivers something to you (they’re not alone).
There are some good initiatives taking place, but not enough, and not fast enough.
Customers sentiment is moving to a stronger awareness of the sustainability issue. Once the leading retailers take a strong stance on this issue, customers will begin to demand it from everyone else too. It’s time to get moving.
I believe this is going to become a huge point of differentiation for retailers and companies with retail business models from 2020 onwards. Key however is for it to be genuine and not “just lip service.” There have been small moves by some retailers along similar lines over the past 10 years but often with little actual progress – suggesting it could well have been just a marketing gimmick.
It is my hope that at some point in the not-too-distant future, consumers everywhere will begin pushing retailers and brands to be more accountable for their environmental footprint. I definitely expect Europe to lead the way, and hence I suspect Zalando’s efforts will be well received by their customers. However, the popularity and growth of one-day deliveries from Amazon makes me think that consumer insistence on more sustainable practices is a long way from widespread…
Trust and transparency matter more than ever with the relationship between retailers/brands and consumers. The modern customer has high expectations for retailers around their stances on sustainability and environmental consciousness. It’s clear that Europe, with companies like Zalando leading the charge, has established tangible operational plans around sustainability and their commitment to reducing their overall carbon footprint.
The unfortunate reality is that while sustainability is at the forefront of plenty of conversations and PR announcements, it’s rare to see any North American companies truly committed to this extremely important initiative. The North American market could learn from Zalando’s experiences, how the company is executing its long term sustainability initiatives and operationalizing them, all while finding ways to drive profitability.
Of course, there are many whom favor retailers who employ sustainability efforts. However, the vast majority of shoppers couldn’t care less about being green, and simply want the lowest prices and free, on-time delivery. Sustainability is a “nice to have” but so far, not a “need to have” for the masses.
Let’s oversimplify things: can a company that wants to sell things make use of philosophy that (I would argue) must ultimately conclude consumption itself is bad? Not without a lot of either hypocrisy or inconsistency, some would argue. But I think that misses the point: marketing always involves a certain amount of … well let’s not call it “deception,” but rather “selective emphasis.” Eco-friendliness is no different, and as long as their efforts aren’t a complete fraud, then yes, I think they can gain a “first mover advantage” … how much, and how long (they can maintain it) remains to be seen.