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Retail survey highlights diverging sourcing and sustainability trends

A recent survey by Source, Europe's leading responsible sourcing platform, sheds light on UK retailers' evolving sourcing and sustainability practices. The State of Sourcing Report 2025, conducted with retail trend consultancy Insider Trends, reveals significant progress in global sourcing, alongside a fragmented and often hesitant approach to sustainability.

The survey illustrates that sourcing and sustainability are now central to retailers' strategies as they grapple with complex global challenges. Covering businesses of all sizes, from small enterprises to major players, it provides a clear view of where products are sourced, the reasons behind these choices, and how sustainability goals are influencing decision-making over the next 12-18 months.

The findings reveal that international sourcing is increasingly embraced, with 84% of businesses employing over 50 people and 71% of smaller firms sourcing globally. China remains the top sourcing location at 48.8%, reflecting its strong production capabilities, while the UK accounts for 41.6%, showing continued local relevance. India and Western Europe are also significant sources for 36.8% and 32.8% of businesses, respectively. Larger firms show a broader international reach, including Southeast Asia and Turkey.

However, the approach to sustainability within UK retail remains inconsistent. Just over a quarter of respondents have a dedicated sustainability department, with larger firms more likely to have structured teams (35.14%). Smaller businesses often integrate sustainability within other teams, reflecting limited resources. Despite this, over half of smaller firms report some dedicated sustainability leadership, demonstrating a commitment to environmental issues. Interestingly, smaller enterprises are just as committed as larger ones to establishing Net Zero targets.

The survey reveals cost as the primary driver for sourcing decisions (45.6%), followed by innovation and risk mitigation. Smaller businesses prioritise sustainability more than larger firms, under pressure from consumers demanding eco-friendly products. However, barriers to sustainability persist, including limited resources, competing priorities, and concerns about greenwashing. For businesses that have not progressed, small firms cite a lack of consumer pressure and task scale, while larger businesses struggle with the absence of clear strategies and authentic leadership.

Sustainability funding remains a contentious issue. Approximately 54% of larger businesses plan to increase investment in sustainability over the next 12-18 months, compared to 46% of smaller firms, who may lack the financial justification. The survey stresses that individual efforts are insufficient; collaboration is crucial for scaling sustainable practices. Upcoming regulations, like the UK's Digital Markets, Competition and Consumers Act, set to take effect in April 2025, may further complicate matters by imposing strict penalties for misleading environmental claims.

Retailers call for clearer industry-wide guidance, financial incentives, and collaborative partnerships to foster meaningful change. The UK Competition and Markets Authority has already introduced updated guidance to help businesses navigate sustainability claims, underscoring the importance of industry-regulatory cooperation.

As the sector approaches 2025, the need for systemic change is evident. Businesses must collaborate, innovate, and embrace transparent, practical strategies to balance sustainability with profitability. This approach could enable the UK retail sector to shift from isolated efforts to collective progress, potentially marking a turning point for sustainability in the industry.

More information:
Source
www.source-homeandgift.com

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