Sustainability in Store

Abstract: Popular Abstract in English Retailers are increasingly expected to use their market power to support the societal goal of sustainable consumption and production (SCP). For retailers, the challenge herein lies in the difficulty to translate the abstract societal discourse into concrete action in the marketplace. This thesis argues that retailers are well advised to give more attention to the individual retail store as place of stakeholder engagement and customer communication. To integrate SCP into their operations, retailers must therefore aim to better understand and address context-specific sustainability concerns. Sustainability is a disputed and poorly defined term and stakeholder concerns are manifold. Moreover these concerns are often only loosely connected to scientific evidence. Instead, stakeholder understanding of SCP is defined in social networks and through the societal norms stakeholders are exposed to. SCP therefore receives multiple meanings in the marketplace. Retailers are exposed to these different – and at times contradicting – understandings of sustainability. This makes it difficult for retailers to decide how to implement sustainability in their daily operations. For retailers to work with SCP therefore requires the ability to understand and adjust to this variation. Retailers have the ability to influence stakeholders’ understanding of SCP. Through their market communication and their assortment decisions they influence how stakeholders make sense of SCP. Sustainable retailing is therefore the process of identifying relevant stakeholder demands, and translating them into market action that meets market demand and is beneficial to the retail organisation. To study how retailers translate the sustainability discourse into market action, and how they could improve their work with SCP, this thesis builds on empirical work that included semi-structured interviews, observations, focus groups, the collection of grocery shopping receipts and the study of secondary literature such as corporate responsibility reports and reports from independent organisations. The results show that retailers are highly pragmatic in response to the sustainability discourse. They have developed strategies to deal with the changeability of the sustainability discourse and the multiple meanings of sustainability. Their response is topic-dependent and executed in line with stakeholder expectations. How a retailer works with organic food, for example, can look very different from the retailer’s strategy to deal with climate change. Retailers neglect topics their stakeholders do not value. The way they translate SCP into market action is thus determined by their stakeholders’ concerns, beliefs and values. A popular instrument for retailers to address various stakeholder concerns are retail brands. These brands have proliferated in recent years and indeed appear to support the integration of SCP in the food industry. Compared to independent 3rd party certification and labelling, retail brands offer the advantage of property rights for retailers. While 3rd party labels are non-exclusive, retail brands offer more incentive for retailers to invest into the development of one or several sustainability-oriented brands. Interestingly, such brands appear to mostly function in close cooperation with independent 3rd party certification and labelling. Retailers use such certification and labelling to increase trust and credibility in their own brands and to facilitate supply-chain management. This thesis also highlights the important role of retail stores in the retailer’s work with SCP. Retail stores are embedded in the same socio-cultural context as local stakeholders. This embeddedness allows stores to better understand and follow the concerns and preferences regarding SCP in a local context. In my research, I found multiple examples of in-store adaptation to the local context, with innovative and successful outcome. These observations were most prominent in ICA stores. The decentralized organizational structure of the ICA organization enables more decision-making in the retail store. This freedom gives store managers and staff the ability to react to local concerns. However, despite clear indications that stores’ involvement in the implementation of SCP leads to positive outcomes, my research also shows that retailers are underexploiting this potential. Work with SCP is concentrated on the central level (headquarters), with stores at the receiving end of the translational process happening in the retail organisation. This is unfortunate, as it reduces the ability of retailers to create value for consumers and other stakeholders in SCP. My research suggests that retailers will be more successful in implementing sustainable retailing where they give stores room to adapt to their local context. In cases where both a retailers’ headquarters and the store actively engage in the translation of the sustainability discourse into market action, this multi-layered process in which headquarters capture macro-influences, while stores embed sustainability into the micro-context, retailers are better able to find ways to translate the sustainability discourse into in-store action that matches the store-context and thus the localized understanding of sustainability. For retailers, these findings imply that rather than focusing on the overall sustainability of products and services, retailers should compartmentalize sustainability to match specific stakeholder groups in a meaningful way. Such a strategy enables variation and differentiation in sustainable retailing. This thesis describes how retailers in Sweden and abroad already develop such a compartmentalisation and segmentation strategy, primarily through retail brands. These brands often combine various third party labels to develop a more market-oriented approach to SCP. It is likely that this trend will continue and continue to gain importance in retailers’ work with SCP. Importantly, third party labels will more and more occupy the role of support agents for the credibility and logistics behind retail brands, rather than to act as independent actors on the market. To better align the sustainability discourse with market demand, it is further important to give stores a greater role in the implementation of sustainable retailing. Stores are embedded in the same socio-cultural context as their customers and therefore well suited for the task of operationalizing sustainable consumption and production in the marketplace. More active stores are more likely to create the right ‘habitat’ for consumers to buy into SCP. For policy-makers who would like retailers to take a more active part in SCP, the findings reported in this thesis imply that they must be careful not to over-regulate markets. The potential urge to introduce strict definitions of sustainable consumption and production and hold retailers accountable to them will potentially result in retailers only fulfilling the minimum requirements of the law as this might lead to a lack in incentives for retailers to innovate and actively develop the market and try to take advantage of the sustainability concerns among consumers. Policy-makers must be careful to regulate strictly based on scientific evidence and leave the translation of the scientific evidence into market action to market actors. The same logic applies to research, which has too often aimed for a standardized understanding of SCP. A more flexible and fluid understanding of sustainability could enrich studies that try to capture SCP. Thereby a bias for one interpretation of SCP could be overcome, which might help to understand research topics such the ‘attitude-behaviour gap’ in SCP.