The Path to ‘Purpose’ - Part 2

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05/31/2022
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NOTE: This is second part of a two-part report. 

In part 1 of this report in the March/April issue, we highlighted the fact that although most of us (96%) want to live and buy more sustainably, only about one-third of us actively do so.

Closing this intention-to-action gap presents the biggest opportunity for brands and retailers to find the moments that matter and deliver a win-win-win for people, planet and profit. But this kind of thinking only takes us halfway there. It doesn’t reflect the reality of the circular economy and how more brands and retailers need to factor reduce, recycle, reuse and resell into the value equation. 

Target is already taking huge strides in this direction with Target Zero. Shoppers can now buy products and packaging that have been designed to be refillable, reusable or compostable — made from recycled content or made from materials
that reduce the use of plastic. Hundreds of new and existing products from across Target’s beauty, personal care and household essentials categories are part of the collection.

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"Target Zero unlocks important progress toward our Target Forward ambitions, each of which require collaboration from our partners and action from our guests to be realized," Amanda Nusz, Target SVP of corporate responsibility and president of the Target Foundation, said in a media release. "By making it easier for our guests to identify which products are designed to reduce waste, Target Zero helps them make informed decisions about what they purchase and advances a collective impact across our brand partners, our product shelves, and within our homes and communities."

Amazon launched its Climate Pledge Friendly program back in 2020. It includes a dedicated online section that now lets consumers shop across 32 certifications.

Target Zero represents a big drive toward becoming the market leader for creating and curating inclusive, sustainable brands and experiences by 2030 — ultimately helping shoppers eliminate waste from their lives.

Reusing, recycling and reselling are the core components behind building a circular economy, which means brands and retailers alike need to reconfigure their supply chains, business models and shopping experiences to embrace it and move away from the current "take-make-sell-dispose" way of doing business. 

Our retail model, which predates even the industrial revolution, is predicated on sourcing products, selling them at a profit and then leaving the consumer to dispose of them to create demand for more. Infrastructure, supply chain, buying and merchandising simply aren’t designed to take things back into the system and then re-engineer value — even though that, in itself, represents a $4.5 trillion market opportunity. (That figure is taken from "The Circular Economy Handbook," a 2020 book by Peter Lacy, Jessica Long and Wesley Spindler.)

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And there are plenty of examples of brands, retailers and solution providers taking on the challenge — from Loop to IKEA, Patagonia, Levi’s, Fabletics, ThredUp and Trove (more about those later), along with more established and traditional retailers. ASDA and Waitrose in the U.K. have been experimenting with “refillable” stores for the past few years, and even Starbucks is planning to phase out its iconic cups, admitting that their ubiquity is also symbolic of a ubiquitous throwaway society. By 2025, Starbucks wants every customer to be able to either use their own mug easily or borrow a ceramic or reusable to-go mug from their local Starbucks, which would mean rolling out more borrow-a-mug programs that require a deposit along with incentives, activations and an entirely new way of thinking about the path to purchase.

Here at Grounded, we’ve been watching these developments with great interest. We’ve even published "Retail Activation for Good" with the Sustainable Brands community in partnership with Target, CVS, Johnson & Johnson, Clorox, General Mills and others. This collaboration has us thinking about a new "path to purpose" model that can help brands and retailers better understand how to balance purpose and profit and embrace the opportunity that circularity provides.

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For example: Think about it as a series of behavior changing loops that follow the popular trigger, activation, reward and reinforce model. Ultimately, systems change (which is what circularity demands) can only happen if the associated behaviors required are connected through a kind of support system that establishes, strengthens and then reinforces the relationship between attitudes, intentions and the desired behavior change itself. 

In other words, to change the system we need to close the gap between intention and action and then incentivize shoppers to keep repeating the same behavior (at least five to six times) to form the habit. For anyone who is a self-proclaimed shopper marketing and brand activation geek like me, this is the holy grail of activation.

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So let’s play out that Starbucks-cup scenario by way of example.

Look at the first loop: As you barrel out into the morning madness and stop by your local Starbucks for your usual caffeine fix, you realize you forgot your refillable cup. (But more likely, even if you own one, you probably didn’t want to bring it with you, because you have nowhere to put it, nothing to carry it in and you certainly don’t want to drag a dirty cup around with you for the rest of the day.) 

This is a classic case of resistance and inconvenience. Starbucks already knows this — so they sign you up for their "borrow-a-cup" program, where you pay a deposit for a durable cup and then you can either drop it back off on the way home or at another Starbucks that’s more conveniently located. You pay a $1 deposit, and then you return the cup to a smart bin located in the store to get your dollar back. And you can also earn credits and rewards for using the cup. Not bad, eh?

Third-party companies are hired on the backend to come and take all the used cups away, get them cleaned (or recycled) and then put them back into the supply chain (so that baristas don’t have to). This is a classic "closed loop" reuse and recycling model, and it’s a big first step.

The real commercial opportunity, however, resides in the second loop when you reframe value by helping the shopper discover new things and celebrate the win — i.e., when you can use the return behavior to create another trigger and encourage the shopper to trade up or across into something new.

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This is essentially what Loop is looking to do in partnership with brands and retailers such as Kroger, Walgreens, Burger King, Clorox and Gillette, to name a few, as it rolls out pilots here in the U.S. and around the world. By increasing the range of refillable and reusable packaging available across brands and categories, facilitating drop-off and pick-up stations and then cross merchandising them in-store, Loop, along with brand and retail partners, is proving that it can drive footfall and also cross-category purchasing.

The third, and arguably most advanced loop, is when brands and retailers are able to not only recycle or reuse, but also resell. And as shoppers are increasingly shopping for more value, the online re-commerce and second-life marketplace is taking off at an exponential rate. 

As of 2019, the resale marketplace was projected to grow five times faster than the broader retail sector over the next five years. Fashion is a good example. Eight-five percent of clothing eventually ends up in landfills. That’s the equivalent of about one garbage truck per second. 

In addition, today’s consumers are purchasing more clothing than ever before. In fact, at current rates and with projected population growth, resource consumption is set to triple by 2050. To support this level of consumption, we would need nearly three times the resources we’re using today. And, so, the industry has been forced to find a better way.

Take the longevity of a classic, well-made pair of jeans, for example. Levi’s is perfectly placed to lead the way when it comes to re-commerce, and this is exactly what they have done. Levi’s Secondhand is an in-house buy back and resell initiative that allows the brand to take responsibility and control of the lifecycle of its products. It is a breath of fresh air for conscious shoppers, as it not only attests to the quality of Levi’s products (confidently assuming you will tire of them long before they wear out), but provides reassurance that there is a ready-made market for their jeans when they no longer want them. 

It’s not just Levi’s that is responding to the demand for sustainability and launching resale programs for secondhand products either. ThredUp, a resale-as-a-service company that runs the logistics of brand resale programs on their behalf, is currently working with Fabletics to help customers turn lightly worn garments from any brand into Fabletics credit. 

The North Face has launched The Loop program, which buys back clothing from any brand — and in any condition — and gives it a new lease on life. Patagonia is working with Trove (which also manages the Levi's secondhand initiative) to run its resale program, encouraging customers to trade in their unwanted and worn out Patagonia items in exchange for credit that can be redeemed against new or secondhand Patagonia products. And there are many more.

In an environment where the retail sector is struggling on so many fronts, community-based resale platforms such as Poshmark, The RealReal and Depop are reporting real growth. New services such as Flyp are popping up in support of this booming industry, taking the hassle of listing products away from amateur sellers by pairing them with a pro to do it for them. This is helping to build a strong and resilient community of buyers and sellers as they go.

So, that's the shopper journey and the opportunity that circularity presents. To become a circular trailblazer, you can move along the path to purpose and master each loop at a time, or if you’re feeling particularly transformative, connect all three into a truly integrated and connected re-commerce model. 

As Greg Shell, managing director of Bain Capital Double Impact, says, "An economic model based on wealth concentration and resource extraction leaves most of the world overreliant on philanthropy and government" — and we're all witness to how well that’s all turning out. 

If the engine of capitalism — fueled by social innovation and kept in check by the ever-more conscious consumer — can help create scalable solutions to genuine market opportunities and deliver sustainable revenues, then brands and retailers, working in partnership, can (and ostensibly should) become the most powerful instruments for change the world has ever seen. IQ 

About the Author: Phil White is co-founder and chief strategy officer at New York-based Grounded World, an award-winning, B-corp certified brand activation agency that specializes in activating brand purpose, social impact and sustainability at retail.

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