Sustainability in Retail is becoming a growth driver
- Vinay Vaswani
- Oct 13
- 6 min read
Updated: Oct 20
Sustainability in Retail is quietly shifting from a responsible practice to a growth driver, delivering tangible returns and margin.
For years, “going green” was looked at more as niche. Then came the time when retailers were looking at it seriously, but struggled to turn it into a commercial imperative. And it’s fair, since the ROI from sustainability was never quite clear. For retailers who usually struggle with margin, not seeing the link and not being able to justify margin outcome of the investments forced them to put sustainability on the back foot. And then the pandemic happened which prioritised online shopping and many other things.
But now, sustainability has been quietly emerging as a real source of competitive edge for retailers.
Consumers Expect More, and They’re Willing to Pay
European shoppers are scrutinising the environmental impact of their purchases. According to a 2025 BCG report, 45 % of European consumers now factor sustainability into purchase decisions. That figure is five percentage points higher than in 2024, reflecting a rapid shift in mainstream expectations
What’s more, a PwC survey of more than 20 000 consumers across 31 countries found that 80 % are willing to pay a premium for goods that meet environmental criteria, with an average premium of 9.7 %. Despite the cost‑of‑living squeeze, the appetite for sustainable products is proving resilient.
The message is clear: consumers do take sustainability seriously. So, it's for retailers to tap into it. And most have seen the signs. Leaders at the world’s largest companies are signalling that sustainability is a strategic imperative. An Accenture survey of global CEOs revealed that 88 % believe the business case for sustainability is stronger today than it was five years ago.
This sentiment underscores a growing recognition that investing in sustainable practices is not a cost centre but a value driver.
Evidence from Retailers who are making returns from sustainability
Retailers that have focused on sustainability to drive revenues or cut costs, have seen significant benefits already.
Kingfisher: the UK home‑improvement retailer behind B&Q and Screwfix, has embedded sustainability into product strategy. Its Sustainable Home Products (SHP) programme has moved from niche to mainstream. In FY 2024–25, SHPs generated £6.7 billion in revenue, representing 53.4 % of Kingfisher’s group sales. By offering products that help customers reduce energy and water use - such as efficient boilers, insulation and low‑flow taps - Kingfisher has built a portfolio where sustainability and sales growth go hand in hand.
Primark: Fast fashion is often criticised for its environmental footprint, but Primark is proving that scale can be part of the solution. Through its Primark Cares initiative, the retailer has ramped up its use of recycled and responsibly sourced materials. Half of all clothing sold today comes from the Primark Cares line, according to the company’s own FAQ. That means sustainable clothing isn’t a peripheral capsule collection - it accounts for the majority of what Primark sells. The initiative leverages Primark’s buying power to keep prices low, debunking the myth that sustainability always costs more.
Decathlon: The French sporting‑goods retailer Decathlon has embraced circular business models - resale, rental, repair and recycling - to extend product lifecycles. In 2024, Decathlon’s circular sales grew 10.4 % compared to 2023, while rental revenue rose by 75 %, helping the business generate €36 million in rental sales. Second‑life products are now sold in 36 countries, and more than 1.35 million secondhand items were sold globally in 2024. Decathlon’s ability to incorporate repair workshops, buy‑back schemes and subscription rentals into its core offering demonstrates how circularity can deliver both new revenue streams and customer loyalty.
H&M: One of the world’s largest apparel retailers, has set ambitious targets to source all materials from recycled or sustainably sourced inputs by 2030. It’s nearly there: in 2024, 89 % of the materials used in H&M’s products were either recycled or sustainably sourced. The company has also increased the share of recycled materials in its products to 29.5 %, and aims to double that to 50 % by 2030. By tackling supply‑chain emissions and investing in textile‑recycling innovations, H&M is turning sustainability into a differentiator while keeping fashion affordable.
Energy Efficiency: The Hidden Profit Lever
For retailers, sustainability isn’t just about products - it’s also about operations. Energy efficiency projects offer some of the fastest returns on investment. Tesco, for example, partnered with Star Refrigeration to install an AI‑powered system that optimises refrigeration equipment. In a pilot across eight distribution centres, Tesco cut energy consumption by 10 %, saving 4 GWh of electricity and reducing CO₂ emissions by 835 tonnes. Those savings were achieved with a payback period of under three months.
Lidl’s Slovakian arm provides another example. Energy teams audited lighting schedules across 164 stores and removed an override function that kept lights on unnecessarily. Over 11 months, the project saved 6 240 MWh of electricity and generated €1.18 million in annual cost savings, all for an investment of about €100 000. The payback period was just one month.
These cases show that operational efficiencies can fund further sustainability investments and directly improve margins. In fact, the U.S. Environmental Protection Agency notes that a 10 % cut in energy costs can boost retail profit margins by 16 %, thanks to the razor‑thin margins typical of the sector.
What makes these retailers achieve those results?
Several themes emerge from these leaders, which we can learn from:
Embed sustainability into product design and sourcing. Kingfisher’s SHP guidelines evaluate each product’s environmental impact, ensuring that sustainable features are built in from the start. H&M’s focus on recycled fibres follows a similar logic
Use scale to make sustainability affordable. Primark’s ability to bring low‑cost sustainable basics to market shows that high volume can drive down cost premiums. Similarly, Decathlon’s global footprint allows it to expand repair services and rental schemes quickly.
Leverage data and technology to optimise operations. Tesco’s AI‑driven refrigeration programme illustrates how analytics can uncover energy waste and deliver rapid payback. Other retailers are adopting similar technologies for lighting, HVAC and logistics.
Communicate and educate. All of these companies invest in storytelling - explaining why their sustainable products matter, how their circular services work and what’s in it for the customer. Transparency builds trust and justifies the (often small) price premium that consumers are willing to pay.
Sustainability as Strategy, Not CSR
The examples above underscore a crucial insight: sustainability is not a sideline; it’s a strategic lever for growth and profitability. When retailers treat sustainability as a box‑ticking exercise, they miss the opportunity to innovate, attract new customers and reduce costs. When they embed sustainability into core processes - design, sourcing, logistics, marketing -the results speak for themselves.
Sustainability also serves as a hedge against regulatory risk and supply‑chain disruption. As governments roll out extended producer responsibility laws, carbon taxes and stricter reporting mandates, early adopters will find compliance easier and cheaper. Consumers, investors and employees increasingly reward companies that lead on environmental and social issues. Conversely, laggards face reputational damage and higher capital costs.
The Road Ahead
The retail sector is notoriously competitive, with thin margins and shifting consumer tastes. Yet sustainability offers a rare advantage: it addresses both cost and revenue drivers simultaneously. The 45 % of European consumers who consider sustainability in their purchasing decisions and the 80 % willing to pay a premium for greener goods are sending a signal. By listening to them, Retailers will enhance their competitiveness.
The next phase will be defined by scale and integration. Circular business models need to be rolled out across product categories, repair and rental services must become as easy as buying new, and supply chains must transition to renewable energy and recycled materials. Retailers that make these moves now will capture the loyalty of a generation that sees sustainability as non‑negotiable.
As we move into the latter half of the decade, one thing is certain: sustainability is not just an ethical choice - it’s a business imperative. The retailers profiled here are proving that when sustainability is treated as a profit lever rather than a CSR checkbox, sales grow, costs fall and brand loyalty increases. The question for every retailer now is not whether to embrace sustainability, but how fast and how far they can go.
If you would like to share your opinion on this topic or clarify any questions, please feel free to write to vinayvaswani@strivo.nl
Written by Vinay Vaswani for Strivo B.V (edited and source checked by AI)
Sources:
Accenture:
H&M:
