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Ethical eCommerce: the Retailers Cutting Supplier Ties

Ethical eCommerce: the Retailers Cutting Supplier Ties

With increased awareness of business practices, more and more consumers are shopping ethically – deciding to buy certain products that are sustainable, back by good labor practices, and organic. 

It’s not only consumers that are moving in this direction but also shops and retailers. 

When it comes to retailers in the UK, they have terminated contracts worth an incredible €8.3 billion ($9.1 billion) with suppliers during 2021 due to them not meeting specific ethical and sustainable standards. 

Because the demand is rising among consumers for more ethical and sustainable products, it has shaped the landscape for retailers and their supply chains. Ethical eCommerce: the Retailers Cutting Supplier Ties

Among 302 British-based retailers as well as 2,002 consumers, 2/3 of younger shoppers will abandon their retailer if they don’t highlight their commitment to sustainability and ethics, according to a new study. 

For businesses, they have realized this turn in mood, as 51% of the retailers stated that sustainability is more important now than 2 years ago. In addition, almost the same amount, 49%, stated that ethical standards are more important now than 2 years ago. 

Deeper into the survey, there are more insights to uncover. Among the more interesting stats include that 21% of retailers have terminated contracts from suppliers because they didn’t meet certain ethical and sustainable standards. 

This meant that on average, 6 contracts were ended per retailer at an average value of €364 ($402) per contract. When all added up, this amounts to €8.3 billion ($9.1 billion). 

Among those contracts that were ended, 39% of retailers said that they terminated them due to the use of unsustainable materials and 37% due to unfair working hours. And the absence of membership of an organization that monitors standards was cited by 32% of retailers. 

Interesting, 28% of retailers have signed up to a trade body that tracks supplier performance last year. And this costs them money to do so. While retailers are willing to pay more, so are consumers. 

Consumers don’t seem to mind paying more for more sustainable and ethical products, with research showing that they are willing to pay 4.55% more for an ethical product and 4.36% for a more sustainable product. Ethical eCommerce: the Retailers Cutting Supplier Ties

“We are seeing a marked acceleration and shift among retailers towards prioritizing sustainable and ethical standards in every part of their business operations,” said Karen Johnson, head of retail at Barclays Bank. 

“That is now starting to take its toll on retail suppliers with billions of pounds worth of contracts being cancelled every year. It’s being driven by increasing consumer demand and will rise even further as Gen Z enters the workplace and begins to earn their own money. 

“Retailers must continue to monitor and improve their ethical and sustainability standards if they are to appeal strongly to younger demographics.” 

PS: ArganoUV is one of the world’s leading digital products & experiences agencies. Contact us to see how we can work together. 

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