3rd March 2020
By 2026 Generation Z will overtake Millenials to become the largest consumer population (1). The Generation that regard being able to vote in the Brexit poll as an epochal moment, have Greta Thunberg as a role model and due to their online ability are known as “Digital-ites”(4). Digital-ites are soon to become the biggest retail spenders.
Building brands for the YouTube generation who are reported to have the attention span of 8 seconds (some 50% lower than Millenials) means we need to be getting their attention straight away. Over half of whom in the last 6 months, purchased a product or service online using a mobile. Supply chains need to recognise Generation Z’s vision and values whilst focusing on supporting the sales channels dominated by this era following the millennial generation.
Here’s a great quote from Gen Z Insights(2):
“A recent UNiDAYS x Ad Age survey revealed that a whopping 82% of Gen Z students are more likely to buy a product if it’s environmentally friendly. And a separate study from Neilsen showed that 77% of Gen Zs are willing to pay more for those same environmentally friendly products, vs. just 51% of Baby Boomers and 66% of the overall population.”
We can remain sceptical about any consumer paying more for environmentally friendly products but this is definitely a step in the right direction. So, what supply chain initiatives can have the quickest lasting impact?
1. Really care deeply about where and how you source.
Some retailers ethical sourcing teams do a great job of auditing, checking and on-boarding suppliers to meet ethical standards, using portals to communicate information and procedures, but tracking raw materials origins is more of a challenge. Despite the best endeavours of sourcing office teams and agents, this is difficult without adequate investment. The 2019 Christmas Card incident where there was indication that prison labour was being used to pack cards just shows how brand-damaging sourcing failures can be. Was this fraudulent use of outsourcing? Was it a failure to vet suppliers thoroughly? Was it a failure to learn from other retailers’ dealings with that supplier?
For Gen Z it is about caring and being seen to care. Invest in tools to systematically record and analyse every detail about suppliers, invest in people, invest in training. With many retailers having thousands of suppliers, way too much data is held in spreadsheets that record and then hide information that could be vital in uncovering the next Christmas card fraud. Information needs to be available and analysed by stakeholders throughout the organisation, not just the sourcing teams.
2. Stop shipping air around the world.
In round numbers some 10 million containers are shipped to the UK each year but, as we know, they typically are between 75% and 90% filled. In recent projects, 2 of the top 5 UK clothing retailers improved their container fill by more than 10% through improved supplier engagement, world-class packaging expertise and by introducing a new system for ensuring packaging compliance standards are met. Applying the same process across the board would lead to around 1 million fewer containers being shipped each year and a material reduction in CO2 emissions from reduced shipping demand. These weren’t initially seen as major investment initiatives – actually the investment was very modest, but it did require a mindset of change throughout supply chain planning and operations.
3. Consider how you can implement reverse logistics into your existing supply chain.
Reverse logistics is a circular view of sustainability that spans the entire product lifecycle. It manages the return flow of goods and materials back to the manufacturer or the logistics network for correct disposal.
“Fashion generates 4% of the world’s waste each year, 92 million tons, which is more than toxic e-waste.” – Pulse Of The Fashion Industry
“Earlier this year, it was revealed that British luxury fashion house Burberry had been incinerating $40 million of unsold stock as a way of preserving product scarcity and brand exclusivity.” – Forbes
Essentially, it’s your supply chain in reverse, but the material flow runs from end consumers to suppliers. H&M’s garment collecting programme is a prime example of reverse logistics working in the supply chain, where unwanted clothes are returned in store and ‘either reused, reworn or recycled with 0% going to landfill.’(5).
The good news is that if you already execute a returns policy for your end consumers, then you have the capability to implement reverse logistics. Implementing reverse logistics into your supply chain is simple, by extending the product lifecycle post-purchase you can achieve a fully sustainable – and circular – supply chain.
So, as Gen Z, Greta Thunberg said “Humanity is now standing at a crossroads. We must now decide which path we want to take. How do we want the future living conditions for all living species to be like?” We must tune in to our emerging customer and align our visions and values so we’re able to invest and create lasting change to the supply chain. Tuning in to the Gen Z population will leave you in good stead for capturing the Digital-ites attention, and securing their brand loyalty whilst working towards your ethical values.
- The digital commerce and Gen report from business insider intelligence