In 2024, sustainability in retail supply chains is essential. Consumers are demanding ethically and sustainably sourced products, with 72% of Gen Z and 77% of Millennials willing to pay more, according to a McKinsey report.

This presents an opportunity for retailers to prioritize a more sustainable supply chain. But how can they do this while continuing to grow the business? Turns out that those goals aren’t mutually exclusive. Sustainability and business growth go hand in hand in today’s markets. 

Following are three key strategies that retailers should use to map a more sustainable future and begin greening their supply chains.

Minimize overproduction. Excess inventory and overproduction have long been a challenge for retailers. The fashion industry alone produces 100 billion garments each year, with 92 million tons ending up in landfills, according to Earth.org. Optimizing inventory levels by producing on demand is a critical component of a sustainable supply chain.

Brands like ALOHAS shoes embody the on-demand approach. By strategically managing inventory and aligning it with consumer demand, it avoids the risk of excess inventory and overproduced stock.

Once on-demand production is implemented, retailers can explore local warehousing to facilitate quicker deliveries, further reducing the necessity for excessive stockpiling. By collaborating with local partners for storage and distribution, they contribute to a more streamlined and sustainable approach to inventory management.

Strategies for enhancing operational efficiency include promoting product longevity, implementing recycling programs, and exploring partnerships with resale platforms — all of which contribute to a circular economy, wherein products have a longer lifecycle and waste is minimized.

Waste isn’t just bad for the environment; it’s bad for your bottom line. Minimizing overproduction saves money.

Purchase responsibly sourced materials. Gone are the days of turning a blind eye to how and where products are made. With a large buying generation able to search production facts on any manufacturer and call out negative findings on social media, transparency is key.

As we’ve seen with fast-fashion retailers, customers have questioned their ethical and environmental impact. As a result, some of the more notorious fast fashion brands have taken a significant hit over the last year. Today’s savvy customers want information about the origins of products, including details about raw materials, manufacturing processes and labor conditions. This is also increasingly becoming a legal requirement across countries.

In 2021, 73% of Fairtrade shoppers were willing to pay more for a product to ensure that farmers and producers were paid a fair price. Ethical sourcing, guided by international environmental and labor initiatives such as the Universal Declaration of Human Rights and Fair Labor Association, encourages responsible practices.

Similarly, British cosmetics retailer Lush has found success with customers who value the company's mission and dedication to people and the planet. Lush’s ethical considerations include workers’ rights, the environment and animal protection. Its primary target of young working women are motivated by ethical skincare and eco-friendly choices, according to this case study. 

Produce and ship locally. One of the primary steps toward sustainability is reevaluating and nearshoring a business’s sourcing and production processes. By prioritizing local suppliers and manufacturers, retailers can minimize transportation-related emissions, deliver to the end consumer faster, support the local economy, and have a reliable plan in case of supply-chain-related emergencies.

Retailers can do this by joining on-demand platforms and networks that link to local producers. In doing so, they can sell their products globally but produce more sustainably and locally. While most retailers haven’t embraced local production and shipping, lessons can be learned from apparel brand DIS-ORDER, which produces and ships locally.

Local shipping provides retailers with the following benefits:

Reduces carbon emissions. Local shipping means shorter transportation distances between distribution centers and consumers. Not only does this equate to faster delivery times, it also reduces carbon emissions associated with long-distance shipping, whether that be from cargo ships, semi-trucks or airplanes. Shorter travel distances also allow for the use of electric vehicles for the last mile.

Supports local economies. Prioritizing local shipping not only strengthens local communities but also boosts the economy by creating local jobs. Companies, meanwhile, can tighten their supply chains and save money on logistics. 

Builds resilience in emergencies. Local shipping helps build resilient and adaptable supply chains in case of emergencies. Global shipping issues aren’t going away anytime soon, and localized production acts as a support system that augments global shipping, and in some cases even replaces it.

A commitment to rethinking supply chains from a sustainability perspective positions retailers as leaders in an industry that’s demanding more eco-conscious supply chains. With consumers increasingly willing to pay more for sustainable products, retailers who embrace this shift stand to gain a competitive edge. By championing ethical sourcing, local shipping and responsible inventory management, they can weave environmental responsibility into the very fabric of their brands, one sustainable stitch at a time.

Rebecca Razulis is chief operating officer with Gelato.