More collaboration will be needed between retail boards and their suppliers if the sector is to overcome many of its biggest ESG challenges, according to industry experts.
Board Agenda recently hosted a panel of retail insiders to explore the priorities for boards in what has become a new era for consumer retail.
Ian Shepherd, chair of Bensons for Beds, one of the UK’s biggest manufacturers and retailers of beds and mattresses, said major issues such as finding a recyclable and sustainable replacement for foam, a major component in mattresses, would require government, regulators, suppliers and retailers to combine their efforts to find solution.
Reflecting on the challenge of managing ESG (environmental, social and governance) concerns, Shepherd said: “They’re not issues that are going to be solved by any one company acting by itself. So it’s an interesting challenge, as a board, that requires you to think about the community of businesses of which you’re a part, not just your own business.”
Accelerated digital development
Retail has undergone radical transformation since the pandemic caused a succession of lockdowns across the UK from the spring of 2020. The crisis caused retailers to accelerate business transformation, which panellists estimate pushed through five years of digital business development programmes in around 18 months. But retailers have also had to deal with shifts in supply chains, labour shortages and now inflation and the cost of living crisis.
Helen Dickinson, chief executive of the British Retail Consortium and also a panellist, said: “The job of retailers today is more challenging and more complex than it has ever been.”
Dickinson agreed that collaboration would be key to resolving many of the issues now facing retail. “Everybody you speak to would reinforce that and finding the forums and the communities, and the networks, that facilitate and enable is really important.”
For Matt Dalton, a risk expert and consumer sector leader at Mazars, the professional services firm, ESG is the big issue for retail to resolve, with the “S”—social—requiring the most work.
“It’s clear from talking to clients that not every element of ESG is progressing at the same pace. The ’S’ element, especially during the pandemic, gained additional weight as companies started to increase their activities in relation to employees and communities.”
Dalton added that part of dealing with the new retail landscape was having reliable internal controls. “Most companies have undertaken considerable transformation over the past two years and there is still a lot more we expect to see. In some cases controls haven’t always kept pace with change. So we need to ensure to build that in going forward.”
According to Dalton, controls become even more critical as retailers redraw their business models, including changes to supply chains and logistics.
Omni-channel models
Retail will not, however, function entirely online. Ian Shepherd stressed many retailers will be working through the development of “omni-channel” models using both an online platform plus bricks and mortar.
The omni-channel approach comes in response to consumers conducting research online but needing to see or experience products in-person, particularly large items, before making a final purchase. Many retailers are still struggling to come to terms with changing consumer habits and what it means for their businesses.
“My contention,” said Shepherd, “would be that few retailers could genuinely hold up their hands and say that they are omni-channel. It’s an interesting area where our customers are ahead of us.”
New skills and diversity in the boardroom, and at senior manager level, may be crucial to adjusting. And according to Dickinson, that presents retail with yet another challenge.
“The retail industry at senior levels, at least in terms of the standard ways of thinking about diversity—gender, ethnicity, sexual orientation, disability—doesn’t actually do well.
“There’s a real job to do in term of improving that diversity in the boardroom but even more so in the senior leadership levels across the industry.”
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