Retail

Retail

Opinions expressed on this blog reflect the writer’s views and not the position of the Capgemini Group

The eternal life of products… a heaven for retailers?

Author: Louise Horwitz

My resolution for 2017 is to be more environment-friendly by following the 80/20 rule and only doing what is both convenient and efficient. For example, I refuse to use disposable cutlery when I can use the metal ones from the office, and I buy loose fruits and veg rather than pre-packaged. This sounds straightforward, however, sometimes it’s not always easy to make the right choice for the environment.

When my husband’s phone screen broke last year, replacing it was just as expensive as buying a new phone – how was this even possible? Upon investigating how highly priced phone repairs were, it made ‘doing the right thing’ for the environment very difficult. After looking at the volume of Waste of Electrical and Electronic Equipment (WEEE), it seems like I am not the only one struggling with the cost of repairs, with 1.5 million tons of electrical equipment wasted in 2014 (23.5kg per inhabitant). The WEEE statistics made me think – are retailers helping to prevent goods being thrown away as waste?

Managing a product’s end-of-life

Sometimes, it is mandatory for retailers to deal with product end-of-life. Since 2003, European law has demanded that all retailers, including online retailers, take back WEEE[i]. Yet in 2015 only one-third of the WEEE collected in Europe was recycled through a recognised scheme. Two-thirds were suspected of being treated on sites that do not meet European stand­ards, in or out of the EU.

It is currently not profitable to safely dispose of WEEE as it requires an expensive process of extracting harmful chemicals. However, for products which can be easily recycled, retailers can be proactive to provide solutions. Many stores already offer recycling in one way or another, Marks & Spencer introduced their clothes recycling scheme 5 years ago and many grocery stores now offer Christmas card and battery recycling bins. These are very small steps in dealing with our wastage problem, but what else can retailers do to really make a difference?

Offering additional services in stores

With now more than 1100 Repair Cafés (providing free support to repair products) in Western Europe, it looks like there are opportunities for retailers to provide more than just new products. For example, the after-sales service counter is put to good use at Currys PC World offering customers a repair service for their electrical devices. Other retailers, such as Homebase, also offer renting services for many products from carpet cleaners to wallpaper strippers; this allows customers to avoid purchasing items they would rarely use.

It is easy to see what benefits these initiatives can bring to these retailers. Not only are these new services a source of revenue but they also bring the customer back into the store; offering a convenient and comprehensive solution to the customer’s needs and driving customer loyalty.

Selling spare parts at an affordable price

It turns out that it is often just a case of finding the right spare part, which is critical in the success of a repair. The London-based Restart Project claims that for objects listed as repairable but not repaired, 36% would have just required a spare part. The iFixit website identifies that for 17% of failed repairs, the reason given is that a spare part could not be found and 18% of failed repairs are said to be due to the prohibitive cost of the required spare part.

Today, the difficulty of finding spare parts varies widely according to the type of product. Some retailers such as IKEA already offer the possibility to acquire spare parts, but for most complex products that fall within WEEE, repair parts are an entirely new business. Due to the amount of references required, one has better chances of finding the right spare parts online. In 2015, more than 9.5 million mobile phone parts were sold through eBay’s UK and USA websites combined, partly reselling parts from China based online stores such as www.parts4repair.com.

Changing customer mindsets

With regards to mobile phones, UK consumers tend to upgrade theirs quickly, usually much earlier than the 4 years average life expectancy. Yes it is partly the consumer’s fault, but we can’t say retailers always help. When my current phone provider called me to offer a phone upgrade, I was quite surprised, having bought my phone and started my contract just 6 months ago!

Realising benefits; both ways

If a retailer can implement sustainable end-of-life approaches as mentioned above there are benefits to be realised not just on our wastage levels but also for the retailer’s costs, revenue and brand perception. For example, repairing goods onsite rather than sending them back to the manufacturer will not only save on transport costs and increase the speed of repair, it will also drive the customer back into store where they become exposed to the rest of the range and potentially make another purchase.

Organising a reverse supply chain in a way that is both profitable to retailers and the manufacturers will require a change in a retailer’s operating model and mind-set where new ways of working will need to be developed to ensure the benefits can be realised both ways. However, with global demand for the rare elements required to develop electrical goods growing at annual rate of 5%, it certainly becomes more strategic and profitable to be able to recover WEEE – and who better than retailers to support this transition?

About the author

Freddie Pragnell
Freddie Pragnell
Freddie is an Associate Consultant in the Operational Excellence Practice, with a focus on Performance Improvement. His experience lies within the Financial Services Industry, and he maintains an active interest in the Retail Industry.

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