Insights on sustainable retailing from L’Oréal and Levi Strauss & Co.

Sustainability was part of the conversation on stage at NRF 2023: Retail’s Big Show, as NRF Vice President for Sustainability Scot Case led a discussion with Jeffrey Hogue, chief sustainability officer, Levi Strauss & Co., and Marissa McGowan, chief sustainability officer for North America, L’Oréal.

“Sustainability is so big, everybody has a different definition of it,” Case said. “If you’re new to it, where do you start?”

It’s contingent on the situation, McGowan said. An industry might concern itself with, say, water use; L’Oréal, for example, has over 36 cosmetic and fragrance brands in North America, ranging from cosmetics sold in mass market drugstores to fragrances sold in department stores. “We don’t take a big interest in gun rights,” she said. “We work on water, climate, packaging plastic — things related to what we do.”

“Sustainability is one of the largest culture change jobs in a company,” Hogue said. “If your company has a strong culture, you can use it to pull your strategy forward. Levi Strauss has been around for 170 years, and its culture and values were developed by the family founders. That kind of leadership is super important.”

Increasing sustainability also relies to a great extent on a given company’s relationship with its supply chain.

“In apparel, most production is the work of third-party vendors,” Hogue said. While Levi’s owns and runs two factories, it also uses the services of 500 other factories operated by third parties. Many of these factories do work for a wide variety of brands; Levi’s is important to them, but it doesn’t necessarily make the rules.

McGowan — who worked in apparel for 15 years before coming to L’Oréal — noted that in her current world, things aren’t like that. In the United States, 80% of the company’s offerings are produced in its own facilities. But that doesn’t mean a lack of difficulties.

One of L’Oréal’s brands, Kiehl’s, offers a wide range of products made with calendula leaves. The Kiehl’s team worked for five years to develop a hydroponic solution for the leaves that uses 90% less water. While successful, it created a new challenge, McGowan said: balancing the satisfaction of a new, less environmentally harmful solution against the loss of a long-term and valued supplier.

While the supplier end requires different sustainability approaches from different sectors of retail, the consumer level requires alternative methods for offering transparency into sustainability initiatives. McGowan offered three suggestions: demonstrate how a supplier is becoming known for sustainability; work to give consumers a choice of more sustainable options, thus raising the bar for the whole industry; and work the same virtuous cycle with potential investors in the company.

“This is the holy grail of this work,” Hogue said. “It’s highly complex and technical, and trying to translate it in a way that consumers understand, is kind of the art of marketing sustainability.” He mentioned three findings from a recent GlobeScan survey: Post-COVID-19, 72% of consumers are questioning their consumption habits and behaviors; eight out of 10 consumers consider sustainability when making a purchase; and most feel they don’t have the information they need.

It’s not just consumers that need information. “In business, business is part of the solution,” McGowan said. “To get to business goals, all parties need to work together — consumers, businesses, government agencies, everybody involved.”

Hogue agreed. “Balance aspiration with business processes and be who you are,” he said. “As Peter Drucker said, ‘culture eats strategy for breakfast.’”