By Shilen Patel, CEO of Independents United
Tesco last month announced it is doing away with the 5p carrier bag – an economically and environmentally sensible move – but how can big retailers ensure they stay on top in the war on waste? The answer lies in innovation.
The 5p bag charge has been an unequivocal success. Since its introduction on October 5, 2015, the charge has ushered in an 83% reduction in the number of single-use carrier bags issued by major retailers. And now Tesco, among others, is doing away with them altogether.
Passing such milestones demonstrates the genuine commitment of retailers and corporates on the serious issue of sustainability. Indeed, Tesco’s move falls in the same month that major US pharmacy brand CVS Health joined the nearly 200 influential members of the Sustainable Packaging Coalition, which already includes major brands Unilever, P&G and Kellogg’s.
Opportunities in a sustainable future
The business benefits of sustainability go beyond the core end-goal of protecting the environment. For example, the potential improvement in brand reputation might interest those who pride themselves on Corporate Social Responsibility.
Others may see packaging innovation as a tool to improve their service: examples such as FreshRealm’s reusable refrigerated takeaway delivery packaging or the ‘Milk & Flakes’ cereal solution both open doors for the likes of Deliveroo and on-the-go breakfast providers.
Crucially, there is a compelling economic case for an investment in sustainable packaging too, with research from the Ellen MacArthur Foundation claiming that applied circular economy principles would result in benefits totalling €1.8 trillion across Europe by 2030 – twice its current expected development path (€0.9 trillion).
Despite the various incentives, there is clearly more to be done. One often overlooked solution is the huge opportunity for large retailers to partner with nimble and innovative start-ups to fuel a potential sustainability revolution.
Start-ups keep on innovating
From Saltwater Brewery’s edible six pack can rings using the by-products of brewing to ifoodbag’s reusable, recyclable cooler bags made from laminated paper, legions of start-ups are masterminding a sustainable future through genuinely innovative packaging.
This isn’t to say innovation is absent among larger retailers but rather that start-ups are at an advantage because they are structured around innovation in a way it is difficult for corporates to replicate. Given their inherent entrepreneurial nature, smaller agile businesses are operationally more nimble and driven by an end-goal.
By tapping into these innovative solutions, larger retailers and corporates can introduce advantages across their supply chains, helping them deliver potential cost-savings. There is also the opportunity to improve their brand perception, given that 84% of global consumers seeking out responsible products.
But there are bumps in the road…
Carlsberg is an example of a housebhold brand showing how it can be done, having developed the ‘Green Fibre Bottle’ in partnership with startup Exopac. Yet, barriers persist to large retailers seeking to unlock at scale the full potential of packaging innovation, and these include culture clashes, structural issues, lack of budgetary forward-thinking, internal political forces and poor knowledge.
Likewise, large companies are forced over time to standardise processes, which can prevent innovation. Research from Accenture Strategy has shown that 54% of global business leaders prefer to be “fast followers” or take a “wait and see” approach concerning business strategies, which means the opportunities of innovation are not being fully exploited.
Partnerships can overcome many of these challenges, but must be managed appropriately.
Achieving a higher purpose
Firstly, the partnership must be able to help achieve that higher purpose. This is contingent upon finding the right fit. Not just any partnership will do, but one where the end-goal is mutually shared and agreed upon at the outset.
Secondly, if the large retailer is going to take a back-seat and avert going in-house for innovation, it needs a stake in the start-up. Whether that stake is money, time, resources or a combination of the above, large retailers need to be prepared to invest in the project as much as their smaller partners.
Thirdly, innovative start-ups need to be out there more, pitching confidently, reaching out to groups like the Sustainable Packaging Coalition, spreading word of how their ideas can be good for the brand and business as much as, importantly, the environment.
With the right partnership, large retailers and start-ups alike stand to share a slice out of a packaging market set to reach the heights of $440.3bn within the next decade. Over and above that, they will be able to reclaim some of the $80-$120 billion worth of plastic going to waste each year.