Helen Dickinson on retail: Throwaway society, enduring impact

Whether it happens at a results presentation or during a conference speech, whenever a highly paid chief executive of a non-fashion retailer says they are wearing clothes that their company sells and that the whole suit cost them only a fiver, two conclusions can be drawn.

First, the chief executive will almost certainly look embarrassed, and second, it signals that we are living in a world where value pricing matters greatly - a world where T-shirts can be had for £2 and toasters for less than £5.

The big driver is the ultra-competitive retail market (largely a result of the supermarkets battling it out for supremacy) and retailers' ability to source goods much more cheaply from all corners of the globe.

This has been made possible by the development of technologies and manufacturing processes that enable many durable household goods and clothing to be produced far more cheaply than only a few years ago.

This has resulted in a sustained period of deflation across many sectors and in particular in clothing and electrical goods, which has gradually given consumers a disposable mindset. There is little doubt that we are living in a throwaway society where goods are on a quick-replacement cycle; consumers are unlikely to take a T-shirt to the dry cleaners to remove a mark or have their shoes re-soled if they cost only a few pounds.

What this means is that consumers need more T-shirts and shoes. And for retailers to achieve the same profits on a product that is four times cheaper than a few years ago, they need to sell four times as many.

Few people have probably thought about the implications this has on the supply chain, but as volumes go through the roof, logistics operators have to work out how to ship many more goods for a similar cost to before.

In other words, they have to develop more efficient supply chains.

Thankfully, as manufacturing processes have improved, so too have the abilities of the logistics companies. They have harnessed technology to create extremely complex programmes to work out how best to route containers around the world.

Go back 20 years and sourcing goods from countries such as China would have involved the retailer placing an order, then months later receiving a container and peering in to see what was inside before distributing the contents to the relevant stores around the UK. Now product is often packaged in the country of manufacture for specific stores, so that when the containers reach the UK, retailers know exactly what is inside and the contents can be seamlessly transferred to the relevant outlets, ready for staff to put the products straight on the shelves.

As well as having an impact on the supply chain, the availability of low-cost goods is also affecting other parts of the retail industry, as more disposable clothing will ultimately lead to less use of dry cleaners, tailors and shoe-repair shops.

The phenomenon has also had an effect on white goods: they are now much more likely to be discarded in favour of the latest model even if there is nothing wrong with them. Dealing with these growing numbers of unwanted goods - whether they be fridges, cookers, CD players or PCs - is becoming an important issue. So much so that Europe-wide legislation is being instigated that will demand manufacturers and retailers bear some of the responsibility for disposing of discarded items and, in some cases, achieving a certain level of recycling of components.

Consumers are becoming more aware of their responsibility to recycle goods - one example is old mobile phones that can be returned to retailers from where they are passed on for use in other countries.

So the next time you throw away your value-priced T-shirt because you have spilled something on it spare a thought for the implications it has for retailers, the supply chain - and the environment.

- Helen Dickinson is head of retail at KPMG

30 SECONDS ON ... WASTE

- More than 400m tonnes of waste is produced each year in England and Wales, 30m tonnes of it domestic waste.

- Rubbish is illegally dumped somewhere in the UK every 35 seconds and costs local authorities £100 a minute to clear up.

- About 28,000 fridges, freezers and washing machines were fly-tipped between July and December 2004.

- 99% of an old fridge can be recycled.

- The average UK household produces one tonne of rubbish annually.

- 25% of UK waste going to landfill sites and incinerators is paper, 35% kitchen and garden waste.

- England has the lowest rate of recycling rubbish in Europe, at 14.5% of all household waste.

- The UK recycled 45m Christmas cards last year, saving 15,000 trees.

- Every year in the UK, 8.5m new toys are thrown away.

Sources: Environment Agency, Flycapture, Norfolk Waste Partnership, East Sussex County Council.

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