The green bottom line: How retailers are turning sustainability into a growth engine

Sustainability is no longer a cost center, but a profit driver.

For too long, sustainability was treated as an expensive compliance cost in the retail space. Today, that view is obsolete. It has rapidly evolved into a non-negotiable market differentiator and a potent engine for revenue growth.

Sustainability has become a critical conversation in nearly every industry. Global CxOs are prioritizing and increasing investments in sustainability, with 85% reporting an increase in 2024, up from 75% in 2023 according to Deloitte’s CxO Sustainability Report 2024. Retailers are now looking at sustainability as a priority alongside revenue and margin. The biggest driver is evolving customer interest - particularly among millennials and Gen Z, who place strong emphasis on the environmental and social impact of their purchasing decisions.

According to Forbes, 75% of American consumers factor sustainability into purchasing decisions. PwC research further shows that customers are willing to pay a 9.7% premium for sustainable products, which directly translates into increased revenue opportunities. Though upfront costs are involved in adopting sustainability initiatives, these investments can significantly enhance revenue, reduce operational costs, and increase profitability in the long run.

Sustainability: Retail’s new growth engine

Let’s explore some of the reasons why sustainability is fueling business growth:

• The billion dollar opportunity
  Retailers who champion sustainability are setting themselves apart by building reputations for their responsible business practices, driving consumer trust and brand loyalty.
• Futureproofing the customer base: Securing Gen Z and millennial lifetime value
  By aligning with consumer values, especially millennials and Gen Z, retailers can secure long-term loyalty and advocacy.
• Operational efficiency
  Initiatives like energy-efficient operations, optimized delivery routes, and packaging reuse/recycling reduce waste and costs.
• Regulatory compliance

Globally, governments are stepping up regulations around sustainability. Retailers that delay complying will risk fines, taxes, or legal challenges.

Adopting green business models: From design to delivery

So what are retail organizations doing differently today? Green business models leverage the following pillars in daily work to ensure a sustainable and profitable game plan:

Resale and reuse - One of the most commonly used sustainability practices by retailers is implementing circular economy models, which emphasize the reuse and recycling of materials. Retailers are coming up with their own channels for resale. Shopping for previously owned products, though they were earlier targeted at lower-income consumers, is now growing among higher-income and Gen-Z consumers.

Sustainable product designs - Products are being designed to be durable, repairable, refillable, and responsibly sourced. Consumer research highlights that manufacturing is now seen as the most critical stage to ensure minimal environmental impact, overtaking disposal considerations.

Renewable energy commitments - Retail leaders like Walmart, Target, Amazon, Tesco, and Ikea are pledging to achieve 100% renewable energy, reducing greenhouse gas emissions.

Delivery and logistics optimization - Route planning, pallet optimization, and adoption of electric vehicles for last-mile delivery are reducing fuel consumption and emissions.

Waste reduction - Going paperless, minimizing unsold inventory, adopting biodegradable packaging, and increasing recycling initiatives are becoming standard practices.

How technology makes green retail possible

While intention is the starting point, technology is the accelerator. The most impactful retailers are leveraging advanced digital solutions to move from pledges to verifiable progress.