Unilever has warned that it will sell off brands that do not ‘contribute positively to society’. Retail Week analyses what effect this will have on the wider retail sector.

Alan Jope, chief executive of Unilever, one of the world’s biggest consumer goods companies, made a shock announcement last month when he warned the group’s brands that it was no longer enough to merely make products that people wanted to buy – they need to have a “purpose”.

Of the more than 400 brands within Unilever’s vast stable of goods, Jope picked out just 28 he said were ahead of the curve in terms of sustainability.

“Principles are only principles if they cost you something”

Alan Jope, Unilever

Of the rest – including consumer favourites such as Marmite, Magnum and Pot Noodle – Jope asked: “Can these brands figure out how to make society or the planet better in a way that lasts decades?” Before he opined: “Principles are only principles if they cost you something.”

While Jope refused to put a timeline on when Unilever would look to sell off unsustainable brands, his comments will no doubt send some shockwaves through the industry.

Should retailers follow by jettisoning unsustainable products and, perhaps more importantly, will customers go where they lead?

A challenge to other brands

The Co-op director of delicious food Breige Donaghy believes Unilever’s stance will “help to instigate debate and challenge other brands and retailers to consider the impact of their operations on the environment to help develop sustainable solutions”.

“Brands and retailers understand the need to make sustainability a core part of their business and not just a corporate social responsibility plan,” she says.

Waitrose Botley Road 2

Waitrose is extending its refillable packaging trial to more stores

TCC Global global insights director Bryan Roberts says Unilever’s stand may have some ramifications for other consumer goods businesses, but argues it should keep unsustainable brands in house and work to improve them, rather than sell them to the highest bidder.

“Unilever selling Marmite to someone else doesn’t mean that whatever problem they have with that product goes away. Arguably they’d be better off keeping the brands they’ve got and making the processes, packaging and products themselves more sustainable.”

Roberts believes Jope’s comments were “a bit of grandstanding” and he is not sure Unilever will go through with his threat. He argues instead that the lesson for the retail sector from this is the need for wider collaboration with suppliers and merchandisers.

“I think we’ll see more collaboration on these kinds of issues between retailers and suppliers. I think, over time, retailers are going to become more vociferous in demanding that brands do more to make things like packaging less environmentally damaging and use more recyclable materials.”

The Body Shop global customer director Elen Macaskill says sustainability is “a complicated topic with a lot of delicate trade-offs” for retailers.

For example, she says rejecting the use of all plastic packaging might make sense from a sustainability point of view, but some recycled and recyclable plastic packaging can be appropriate in some cases. “It can extend the life of a product and reduce wastage,” Macaskill explains.

She says many suppliers are making “substantial headway” in addressing social and environmental issues and retailers need to really think about who they work with. “It would be a shame to exclude brands and suppliers who are committed to getting there,” she says.

Good work already underway

Many in the retail sector would argue the industry is already doing a lot of work around sustainability. The British Retail Consortium announced on Friday that nearly 30 retailers had signed up to its ’Better Retail Better World’ initiative aimed at tackling global challenges highlighted by the UN including modern slavery, sustainable economic growth and climate change.

A recent survey published ahead of fashion trade event Pure London found 73% of retailers have begun making changes to their operations in a bid to become more sustainable, while two-thirds believe they will achieve “true sustainability” within three years.

Last week, Waitrose confirmed it will be extending its refillable packaging trial to three more stores, after a successful pilot in Oxford, and Iceland became the first retailer in the UK to outright ban the use of plastic bags in one of its stores. The frozen food retailer has also been trialling reverse vending machines for plastic.

John Lewis BeautyCycle

John Lewis has started trialling a beauty product recycling service

Meanwhile, in the fashion industry, Inditex recently set out new goals in its “transformational” sustainability agenda aimed at cutting down on the use of non-recycled materials and eliminating single-use plastics. John Lewis has begun trialling a beauty product recycling service with members in a bid to up its sustainability credentials.

Roberts flags that governments are taking a carrot and stick approach. In Germany, for example, any retailer that sells plastic bottles must have a reverse vending machine in-store by law.

Donaghy believes there are many great examples of individual retailers aiming to address sustainability issues but she would like to see more collaboration between retailers across the sector.

“Cooperation and collaboration within our industry are vital and sharing ideas is positive when you’re moving in the same direction to bring change, at scale,” she says. “Continuing to innovate with suppliers and partners is central to bringing about long-term change.”

Morrisons head of corporate responsibility Steven Butts says the big-four grocer’s sustainability work has benefitted from an open dialogue with its customers. 

“Every year we do a fairly significant survey of things that our customers are worried about from a responsible business point of view,” he says. 

”We survey them and talk to them in all sorts of different ways, and we also get feedback from colleagues in stores and on various forums. It’s clear that sustainability is something customers are increasingly thinking about and expecting us to take action on.”

Are shoppers voting with their wallets?

While consumer sentiment is clearly swinging behind favouring sustainable products, there is less tangible evidence that spend is going the same way.

Speaking recently to Retail Week, Iceland managing director Richard Walker said despite its anti-palm-oil film being the most-watched Christmas advert last year, it did nothing to increase sales at the frozen food specialist.

However, Macaskill says The Body Shop has seen an uptick in sales of its sustainable products.

“Some of our most successful launches over the past few years have focused on a growing trend for vegan products and cleaner and more natural formulas,” she says. “Cruelty-free products have also definitely seen a big resurgence in recent years.”

Morrisons’ Butts says it’s “pretty clear to us that customers are prepared to invest in sustainable alternatives, as long as they are the right alternatives”.

“What is sure is that the next generation of customers are voting with their wallets. If retailers aren’t leading the way, customers will do so”

Elen Macaskill, The Body Shop

While modern consumer habits are changing, Macaskill believes the next generation of customers will be even more sustainably minded.

“What is sure is that the next generation of customers are voting with their wallets. If retailers aren’t leading the way, customers will do so,” she adds.

Unilever’s promised sale of unsustainable brands is not being driven purely by altruism. The 28 brands earmarked as being the most ahead in terms of sustainability also accounted for more than half of Unilever’s £46bn worth of sales.

Roberts says ultimately the push for sustainability will come down to money – both for retailers and consumers.

“Sadly, there needs to be an economic incentive for people to make the right choice,” he says.

Walmart said a few years ago that 90% of the environmental things it did were to improve the bottom line. The more efficient shops they had from an energy standpoint, the less money they were spending.”

Sustainability in retail may be driven as much by the bottom line as by benevolence, but as consumers become more concerned about green issues, businesses that fail to move with the times risk being left behind.