This week, aligning with Earth Day on April 22, 2025, the Retaili$tic podcast focuses on sustainability in retail and its relationship with profitability. John Harmon, Managing Director of Technology Research at Coresight Research, discusses key technologies that can help retailers mitigate returns, improve sourcing and manufacturing processes, and address food waste. He also highlights the importance of the circular economy and clean energy innovations in driving sustainable practices within the retail sector. This episode concludes with actionable insights for retailers looking to embrace sustainability as a core business strategy.
Takeaways
Chapters
00:00 This Week in Research: New Reports and Data
02:58 The Intersection of Profitability and Sustainability
06:02 Technological Innovations in Returns Mitigation
09:00 Sourcing and Manufacturing for Sustainability
12:01 Addressing Food Waste in Grocery Retail
14:56 The Circular Economy and Its Impact
18:02 Clean Energy and Technological Advancements
For more on this topic, read the new report from Coresight Research, Keeping Green While Saving Green: Five Areas for Technology-Driven Sustainability in 2025.
Welcome to Retaili$tic, the official podcast of Coresight Research for April 22nd, 2025. On this Earth Day, we have a conversation with John Harmon, Managing Director of Technology Research, to discuss his report, Keeping Green While Saving Green, that is now available on Coresight.com. But before we talk sustainability, we have Steven Deemer from the editorial team with additional highlights of the research coming out this week. Hi Steven!
Hi Philip, as we covered last week, Coresight Research continues to keep a close eye on what's going on with tariffs in the U.S. and now we've just published an in-depth analysis of our U.S. consumer expectations are diverging from business confidence and what that means for retail. Drawing on the latest data, including proprietary survey findings, we unpack a growing gap in key sentiment metrics and highlight a crucial window for strategic adaptation. We also provide actionable recommendations on what smart companies should do now to enhance their product strategies, optimize their inventory management processes, and navigate this uncertain retail landscape.
In addition, our regularly updated tariff timeline summarizes the latest developments on the current administration's evolving trade policies, providing listeners with a go-to source for all of our tariff-related research, including proprietary survey analysis of consumer sentiment.
Now looking abroad, while the beauty and personal care sector has long been on a resilient trajectory in India, a noticeable shift is now underway. Indian men are increasingly embracing skincare products. So our recently published report on the flourishing men's skincare market in India examines the demographic drivers, product innovations, and cultural trends that are propelling category growth in the country.
Looking ahead to this week on Earth Day 2025, we'll publish a report exploring the key technologies that are currently driving sustainability in retail, from advanced sourcing and manufacturing tools to circular economy practices and more. We'll also present our outlook for U.S. retail and the broader consumer economy, leveraging proprietary data and analyzing retail sales growth, inflation and other macroeconomic metrics. Plus, look out for our latest installment of our U.S. retail sales outlook series, which tracks critical indicators of retail performance.
Finally, with the legalization of cannabis and psychedelic mushrooms spreading across U.S. states, Coresight Research will dive into how these emerging categories are reshaping consumer spending, focusing on proprietary survey insights. Of course, this is not a complete overview of our research, so please visit coresight.com for more. There you can find all of our research. can also explore our regularly updated data banks on corporate development, retail, real estate and consumer behavior.
Thanks, Stephen. And I'm glad to have John Harmon with us, our managing director of tech research. Today we're celebrating Earth Day with a deep dive into sustainability, but not just as a trend, as a smart strategic business move. John's got a new report coming out, Keeping Green While Saving Green. John, always great to have you with us.
Thanks, Philip. It's a pleasure to be here again.
So let's kick off with the big idea. Your report makes a compelling case, sustainability isn't at odds with profitability. What do mean by that?
Many of the things that companies and enterprises can do to be more efficient and do their business better can also favor sustainability. So it's not really an either or decision. It's an end-to-end decision.
So you're saying that the efforts pay off in more ways than one. Can be both.
Yeah, I yeah, I love the phrase doing good while doing well. So while furthering your business, you can help the environment and everyone else on the planet.
Great. Let's break down the five key technologies you highlight in the report, starting with returns mitigation. Why is that such a hot issue?
Returns are a super hot issue for retailers. They're expensive. They can make a sale unprofitable. They have to figure out what to do with the returned item. A lot of problems and potentially a big drag on the bottom line, you know, even dragging them into the red.
Have any specifics like how big is the problem.
Yeah, returns are huge. NREF, the National Retail Federation, estimated returns were $890 billion last year. Returns are expensive for retailers. This company, Narvar, estimated that a return can cost a retailer $25 to $30 to process, and that may be your whole profit margin on an item. And, you know, in addition to the financial cost, there's a burden on the environment.
To process a return, the customer has to send the item back or drive to a store to return it. The retailer may have to return it to a distribution center or the factory to refurbish the item. And if they can't sell it, then the returned item is going to go into a landfill. And again, you know, there's more carbon generation in putting the item on a truck to go to the landfill and items in landfills emit greenhouse gases, chemicals seep into the groundwater. It's a real mess for retailers and for the environment.
So are there any technological advances that help deal with the returns problem?
The best way to mitigate a return is for the return not to happen in the first place. Easier said than done, but if you look at apparel, there are body scanning platforms like 3D Look, where consumers can scan their bodies with their phone, get their accurate sizing information. Sizing is the number one reason that consumers return apparel. If you can get the size right, that'll eliminate a lot of returns.
There are other platforms that are based on what you've purchased in the past. It estimates your size and makes recommendations. And when we go into a retail store, we always have to ask the associate, so is this large, a large large or a small large? And these AI platforms can help find the best size for consumers, eliminating a lot of returns.
Well, that sounds like good news. Just have to get those tools deployed and in the marketplace so we can move forward in cutting down this huge burden. Next, you talk about sourcing and manufacturing in the report. What changes are we seeing there?
So I mean, there are a couple of things. One, picking the right factory can be better for the environment. We know that there are sustainable factories and unsustainable factories. There's software like PLM, product lifecycle management platforms, like from Centric Software, that helps you find the right factory to fit your own requirements and needs that has information on these factories. But also there's been a trend in manufacturing, particularly for apparel called micro factories.
As the name suggests, they're very small factories and smaller factories are more efficient, more energy efficient, and generate less waste. In this current environment where we're talking about tariffs and domestic production, having a small factory close at hand accomplishes lot of needs. It gets the goods to the consumer faster. These small factories can customize and personalize items. You can get a jacket with your name on it if you want. And they're more sustainable due to just smaller size, less energy consumption, and less waste.
That makes sense. So third on our list is food waste. Why should grocery retailers care about sustainability more than ever?
Well, I mean, for a couple of reasons. This nonprofit organization, ReFED, estimates that about a third of food in the United States, or 237 million tons, went unsold or uneaten. I mean, that's just a real shame when 13.5 % of US households or 18 million people suffered from food insecurity in 2023. But also food waste is a big drag on grocery retailers' earnings.
Grocery is notorious for having razor thin margins. Many major grocers have net margins of only 2%. If there's anything that they could do to reduce food waste, it could have a real big impact on their bottom line. And again, this is the category of doing good while doing well. You could give more food to people who are hungry and waste less food.
Food waste also has an environmental impact. I mean, as I mentioned before, you've to put it on a truck and take it to the landfill if you can't compost it or recycle it or reuse it in some way or donate it to a food bank. And as organic material, food in landfills does release greenhouse gases and get into the groundwater.
So it sounds like grocers really need help predicting what food to have and how much to have, getting the right food to the right place at the right time and the right volumes. Are there any technologies that can help them do a better job of prediction?
I mean, the first line of defense is accurate demand forecasting. If you could get it right, how much food you're going to need, there'll be less waste. It's very logical. And there are some vendors, like Afresh, Relex, and Up Shop, that really specialize in managing a grocery that helps them preserve their bottom line and minimize food waste.
You can imagine forecasting demand for grocery store where goods go bad in a couple of weeks for fresh food. Much different than if you're doing that for a hardware store where hammers don't go bad.
Yeah, with AI tools and all of the data that people are collecting these days, it seems like it's a no-brainer to just feed all of that data into an AI and let it tell you how much to send to which location.
To do that, you have to get the data. One way to do that is by tagging items. RFID tags are really good because they tell you what the item is and they tell you the location. We've seen some recent advances in RFID. The grocer Kroger is working with Avery Dennison recently to put RFID tags on bakery goods like muffins and loaves of bread, which has a lot of advantages. You can find items with RFID quickly. Find the items that are closest to expire and do something with them, you know, discount them or put them in front of the rack. So this really is the first step in collecting this kind of data for fresh food.
That's great. So let's talk about the circular economy. That's a little bit of jargon, but can you explain how the circular economy also helps the planet?
The circular economy is jargon, but the second-hand clothing market, resale, rental. Certainly if you're renting a piece of apparel, it doesn't need to be manufactured. And you know, when clothing hits the end of their lifetime, many of them go into landfills. It used to be that we could export a lot of clothing items to developing countries. We produce so much, especially in sectors like fast fashion, large amounts of very inexpensive clothing. There's no place to put it. No one to send it to anymore, so we would have to go into a landfill. And fortunately right now, resale is trendy, rifting secondhand.
A lot of major retailers have moved into it, opening their own secondhand stores because it drives traffic. It's what consumers are interested in. You know, it's yet another example of doing good while doing well, that you can satisfy consumer demand. You can help consumers find trendy merchandise. You know, from time to time, clothing from the seventies becomes in vogue again. And it's good for the environment because you're not producing clothing that may be surplus.
It seems under the current environment and with trade restrictions going in place, with China specifically which produces a lot of apparel, that in addition to it being trendy, it might also soon become rational.
Necessary, right. Yeah, if the current tariff situation continues, we may see prices of lot of pieces of apparel go up 145%. I mean, again, this would be a way to save money and do something for the environment.
It makes me wonder if you think about the United States as a container, how much clothing is actually already in the container or old clothes hanging in people's closets? Like, do we really need more clothes or can we just, you know, get the old stuff out and resell it or start reusing it?
People do that when they're in need of cash, vintage items or designer items. I mean, there is a lot of money locked up in our closets.
So are any major retailers really embracing this circular economy trend?
These are names you know, like Rent the Runway, which lets you rent designer clothing, or the RealReal, where you can sell your own items. Many major retailers are embracing this. At one point Target offered a denim take back event in 2024. Currently, the big and tall shop DXL is offering a 20 % discount to customers who bring an item of clothing in which will be donated to organizations.
There's also, of course, Goodwill. Goodwill, we all know that Goodwill has a very important social mission. They help people that the economy has forgotten. Sell-ins and people out of jail and running a charity organization. They sell a lot of items online, which funds their whole operation.
We donate to Goodwill all the time. Last but not least, clean energy and tech innovation.
There's really been a revolution in this area created by electric vehicles. As we know, battery technology saw massive improvements to be power electric cars. And that in turn has driven improvements in the electrical grid and in energy storage. I mentioned batteries.
Many cloud computing companies like Apple and Microsoft, they install solar panels on their new cloud server farm computing center and they're moving towards 2030 goals to be energy efficient. Microsoft is moving towards being water efficient. So this electrical economy is just growing and cars with a start.
We saw a keynote from Panasonic at CES two years ago and they're building a new facility in Germany that runs off clean energy cells. So there's really a lot going on in energy storage and energy efficient, energy generation and transmission.
Any tools out there to help retailers sort of keep track of their footprint?
Yeah, there are. They would generally be Internet of Things devices. For example, Microsoft is using IoT devices to manage its own facilities. You know, we're familiar, I think, with these sensors in offices where it turns off the light if there's a movement in the room for 30 minutes, but it's bigger than that. For example, on Microsoft's Azure platform, there are modules there that manage energy storage or conservation and reduction. So all of their clients are able to take advantage of that.
Is there a way that different brands can publicize their efforts in these areas to kind of use it as a marketing effort?
Definitely. mean, there are a couple of categories there. mean, for starters, there are sustainability-minded consumers. They're looking for green companies to do business with, and consumer surveys regularly show that consumers prefer sustainable brands, that they would pay more for sustainable products. So they say in surveys. But also there's another category of green investing.
During certain periods, these green stocks have outperformed broader market indexes. So kind of again, doing good while doing well, you know, and you can invest in green stocks and feel good about it and, you know, make money on your investment. Great.
So let's bring it home. If I'm a retailer listening right now, where should I start?
Returns are the biggest, most significant place to start because returns are so costly. The problem's only growing. But fortunately, there are tools out there. There's a variety of tools, and there many tools to manage returns. But there are also tools like this returns platform from SAP that will help you manage returns for profitability, but also for sustainability, for example. There's a difference in the carbon footprint from driving a return and dropping it off at the store or giving it to a shipper or doing a returnless refund, many retailers will tell the consumer, just keep it when they have a return.
So it sounds like sustainability is kind of moved from in the past maybe thought of as just nice to have. It's an actual revenue growth strategy.
That's one of our Coresight views, that sustainability is not hurtful to profitability, that you can achieve both at the same time. Certainly things you do to increase efficiency and artificial intelligence, AI, machine learning is a great efficiency booster. Things that you measures that enterprises undertake to improve efficiency ought to also help sustainability through lower energy consumption, less waste, more efficient delivery paths will be shorter and generate less carbon. So can really accomplish both ends at the same time.
Some retailers may be thinking going into this situation with uncertainty that they just need to freeze and not make any decisions. Do you feel like brands that ignore this new sustainability tech are at risk?
I'm thinking of the slogan from the Hitchhiker's Guide books that say, don't panic. I don't think retailers need to be overwhelmed with the concept of sustainability. Because of the outlines, there are several areas that make sense for their business that also improve sustainability, such as reducing returns, reducing food waste, embracing alternative energy, demand forecasting. All of those are things that really make good business sense in general, but are positive for sustainability.
Yeah, it occurs to me that it makes good business sense in general and may actually make even more sense in the current environment.
Well, yeah, I mean, especially in the environment, consumers may be seeing higher prices from tariffs. So anything that retailers can do to reduce their costs and improve customer service should help all of us get through this period.
So John, this has been incredibly insightful and we're very excited to have your report publishing today on Earth Day on CoreSight.com. So hopefully some of our listeners can log in and anyone who's a premium subscriber can get full access to that report. It's been a pleasure, so thanks for joining us today.
Thanks so much. Thanks everyone for listening.
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