sustainability and the future of retail - food marketing … and the future of retail tom berry head...
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Sustainability and the future of retail
Tom BerryHead of RetailForum for the Future
June 18 2008, FMI Summit
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today • a quick introduction
• why think about the future?
• future trends and challenges: Retail Futures 2022
• leading food companies today
• ten things to do now.
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who we are and what we do
• Forum for the Future is the sustainable development charity
• We aim to find practical ways public and private organisations can deliver a sustainable future
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JT GroupJT Group
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we create positivevisions of a
sustainable future
we deliver innovative and practical ways to help realise those visions
we trainleaders to bring about
change
we share success through our
communications
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sustainability as a route to profitability
A sustainable business delivers long-term value creation,
within environmental limits, whilst building human and social capital’
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there are limits and we are rapidly approaching them
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Why think about the future?
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Plausible Outcomes
“The future is already here; it is just not evenly distributed.”
William Gibson
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Multiple Futures and Uncertainty
“I think there is a world market for maybe five computers.”
Thomas Watson, chairman of IBM, 1943
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Positive visions
“The problems of the world cannot possibly be solved by skeptics whose horizons are limited by obvious realities.
We need men who can dream of things that never were.”
John F. Kennedy
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future trends
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Jan 07
Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun07 07 07 07 07 07 07 07 07 07 07 08 08 08 08 08 08
IPCC 2007 Report
A lot has been happening in food and retail‘The 11th Hour’film released
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So what’s next…
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a few drivers and trends
Some things we can be fairly sure of…
• Climate change and energy security
• Resource Constraints• Human populations
Some big, but uncertain issues…
• New technology• Government policy
Some critical but we just can’t predict…
• Changing lifestyles and the role of business in society
• A changing economy
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Climate change – adaptation and efforts to mitigate?
Human-induced global warming will likely lead to
problems like droughts in the US West and stronger
hurricanes
(Bush Administration, May 2008)
60-90% cuts in GHG emissions…
…a fundamental change to the way we live and do business.
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• Depleting fish stocks:“69%of the oceans' commercially targeted marine fish stocks are fished beyond ecologically safe limits”Greenpeace
• When will we hit Peak Oil?:“a barrel could fetch US$200 by 2010” Goldman Sachs May 2008
Resource availability
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Rising population and changing demographics
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New Technology
• New products and services?
• Consumer use?
• Business application?
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Changing government policy
• Long term carbon targets?
• Transport, planning and waste
• Standards and legislation (behaviour change).
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Changing economy
OECD sees slower economic growth through next year
Boom for world economyBBC News Online 30
thMay 2008
Good?Bad?
International Herald Tribune June 2008
Economic growth is Revised HigherNew York Times May 2008
Inflation fears fail to dent confidence about growthFinancial Times 2
ndJune 2008
Greenspan says probability of US recession is more than 50%Financial Times 27
thMay 2008
Lowest Reading since 1980 For Consumer ConfidenceNew York Times 17
thMay 2008
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What consumers want
65
84 86
20021999 2004
Corporate responsibility is key for buying decisions% of survey respondents
CAGR5%
Eco geek to Eco-chic…?
Buying decisions…
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some scenarios for retail
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what are scenarios?
• Scenarios are not predictions• All designed to be possible in 2022:
• Combination of good and bad• No expected scenario• No more sustainable scenario
• Deliberately provocative• Tools – to stimulate ideas,
challenge thinking and shape strategies
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• Individualistic • Technological• Dynamic economy • Entrepreneurial • Innovative• Localised government • Optimistic• Selfish• Divided society
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new products and services
online ethical comparators‘Stuffipedia’ is an online ethical comparator. Trust in brands decline, people want new ways to find products’ origins and ethics. Uses RFID chip technology and your mobile phone – to show the shadow of products and brands. Also shows what products your peers like and buy.
vertical farmingBuy shares in a new vertical farm converting unused space – multi-story car parks or old warehouses – into food production. Uses hydroponics, advanced glass technology, renewable energy and climate control to produce large amounts of high quality fruit, vegetables, or dairy in city centres and suburbs
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A more prosperous, DIY world
Sound-bite
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• Big business - Big retail dominates• Big investments - Centralised• Trusted business and brands• Consumer-based affiliations, High
spend, Identity through consumption• Personalised and customised -
retailers hold lots of consumer info, Shopper-tainment
• Income inequalities
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new products and servicesdiet managerAutomate your shopping and get healthy at the same time. You and your household database – no. of people, age, medical history, preferences – supply you with just the right amount of shopping when you need it.
Multi-order, shop and dropWhy shop on-line with a supermarket? DHL is an expert in direct delivery logistics and has become the trusted on-line service for multi-retailer deliveries
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A more prosperous, DIFM world
Sound-bite
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• subdued economy - nneglected public realm
• urban farming - Local and personal production
• artisan production• co-operative buying• repair, recycle, reuse• local, cheaper, more efficient, diverse• internet as a tool - peer-to-peer
services• well-being, family and community
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new products and services
U-grow – and the community farmFarm yourself or buy shares in a local farm and be the first to know when new produce is available. Come along to learn more about your food,how the farm works and be involved in its running. Sell your surplus on the exchange.
hyper-local productsThis new online filtering system allows you to set geographic limits to your purchasing.. Google maps applications allow you to track local food for sale. Our logistics advisory services are provided by experienced retailers ensure that products reach your door at minimal cost and minimal environmental impact.
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A less prosperous, DIY world
Sound-bite
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• tight regulation but consensus approach
• centralised• decline in globalisation• lower disposable income• efficiency, efficiency, efficiency• conservative• paternalistic, trusted brands• egalitarian community
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new products and services
cradle to graveIn association with your local Church, we look after all your lifelong service needs. Everything you want for a long and happy life, provided by a company you trust, including major purchase advice, energy and water services, insurance, pensions, healthcare and funeral care, wedding planning, Sign up at birth and get an extra discount.
retailer leased equipmentWhy spend money on a new washing machine when you can rent one directly from us? We provide cheap-to-run and efficient electrical appliances. Get an new machine every 3 years, plus service and upgrades to keep them running.
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A less prosperous, DIFM world
Sound-bite
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Questions and challenges
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Which do you think is most likely to happen in the future?
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In which would your business succeed?
And what would your business and sustainability strategy look like?
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key challenges from an sustainable development perspective
• Efficient local and global supply chains
• Customisation and efficiency
• Growing sales and reducing material impact
• High standards and good value
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Leader Business Strategiesprofitable today, sustainable tomorrow
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….and out soon:
Leader Business: Retail
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10 areas of business 72 hallmarks
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1. Environment: Cadbury –leadership, commitment and action
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1. Environment: carbon disclosure and life-cycle managment
… and will water be the next carbon?
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2. Supply chain: Waitrose -supporting supplier communities
• Started in 2005• Supports growers and pickers of South
African citrus fruit, avocados, stone fruit, grapes, mangoes, apples and pears.
• Funds social, educational and health projects for the workers, their families and their communities.
• Locally elected worker councils decide what the community needs most.
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2. Supply chain: Unilever - ensuring sustainable resources
• Marine Stewardship Council
• Rainforest Alliance Certified Tea
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3. Marketing: M&S - ‘Plan A’ 100 point plan making it easy for the consumer
• Climate change
Raw materials
Waste
Fair Partner
Health
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3. Marketing: M&S - simple messages, confident brand
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3. Marketing: Tesco - rewarding sustainable behaviour
Green Clubcard points awarded for:• Greener buying:
• e.g. on Fairtrade & Organic products
• More sustainable behaviours:• e.g. reusing carrier bags, customer recycling.
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what will leading companies be doing in the future?
And what can you do now?
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so tomorrow’s leading food companies will address key challenges…
• deliver locally and globally
• invest in innovation
• have an even closer relationship with the consumer
• recognise that the business model will have to change: new products, new partnerships
Leading companies will:
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10 things to do now… (1-5) – create momentum
1. understand your environmental and social issues and take responsibility
2. create a vision linking sustainability and value
3. take it to the ‘top’ and get business buy-in
4. train staff and start to re-orientate culture
5. use stakeholder engagement and reporting to drive performance and change
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10 things to do now… (6-10) – make some change6. promote product sustainability heroes, edit out the
sustainability villains
7. integrate sustainable development principles in procurement practices
8. incorporate sustainability into brands and marketing9. innovate for success – new products, new processes
10. work in partnership with government and other stakeholders.
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2009 headline?
US food companies set the pace of change in sustainability