A
study conducted by Source, Europe's premier forum for ethical sourcing within
the fashion, home, gift, and garden sectors, sheds light on the shifting
paradigms of UK retailers' and brands' sourcing strategies.
The report, titled “The State of Sourcing Report – Sourcing and Sustainability in 2025,” was produced in collaboration with retail trend experts Insider Trends, a retail trend analysis firm. The report reveals a landscape marked by significant progress in global sourcing methods but also indicates a disjointed and cautious stance toward sustainability initiatives.
The survey provides insights into the
strategic considerations of UK brands and retailers, ranging from small to
major enterprises to established conglomerates, as they confront an intricate
international environment.
It examines the origins of product sourcing,
the rationale behind regional selection, the influence of sustainability
objectives on business planning over the next year to year and a half, and the
factors driving these shifts.
The survey draws attention to the intricate nature of sourcing
determinations. While certain retailers are expanding into international
markets, others prefer to stay local due to factors such as cost
considerations, available capacity, or specific strategic
objectives.
For those contemplating cross-border
sourcing, there is no universal strategy; each company must weigh its
individual challenges and prospects.
International Sourcing: A pivotal
element in retail tactics
The survey indicates that 84% of businesses
with a workforce exceeding 50 employees and 71% of smaller ventures engage in
international sourcing.
Prominent sourcing hubs identified include
China accounting for 48.8%, the UK at 41.6% and India and Western Europe at
36.8% and 32.8% respectively. .
For larger entities, areas such as Southeast
Asia and Turkey also stand out as key sourcing locales, signifying an extensive
international presence.
Sustainability Leadership:
Fragmented across organisations
The survey also underscores a lack of
cohesion in sustainability approaches among businesses:
– Roughly 27.22% of participants have
established a dedicated sustainability division led by a chief sustainability
officer who delineates targets and directives.
– Approximately 27.8% incorporate
sustainability within another department.
– Amongst larger corporations, a distinct
sustainability department is more common (35.14%), with 21.62% having a
sustainability or ESG figurehead orchestrating efforts across departments with
overt support from upper management.
Factors influencing retailers’
sourcing decisions
The survey illuminates the complex reasoning
behind sourcing selections:
– Production Costs: A primary concern for
45.6% of respondents, underscoring the imperative of cost-effectiveness.
– Innovation: The pursuit of novel product
categories is particularly important for larger firms at 35.48%.
– Risk Mitigation: A focal point for 32.26%
of larger entities, reflecting insights gleaned from recent global supply chain
upheavals.
– Smaller ventures place a higher emphasis
on sustainability (29.79%) compared to their larger counterparts (19.35%),
indicative of escalating consumer demands for environmentally conscious
products.
Unique hurdles faced by smaller
enterprises
Among respondents who cited “other” as their
reason for not engaging in international sourcing (15.91%), small businesses
were predominant. Feedback revealed a preference for local goods, capacity
limitations, and financial hurdles as reasons for staying domestic.
Sustainability initiatives halted by
complexity and ambiguity
Despite rising consumer expectations and
regulatory mandates, sustainability initiatives appear uneven across the
sector:
– Nearly 69.23% of all companies reported
advancements in sustainability over the previous year; this figure climbs to
78.38% among larger firms due to increased resources.
– Principal obstacles encompass scant
resources, conflicting priorities, and apprehensions about the reputational
dangers linked to greenwashing.
– One participant remarked on the challenges
faced by small teams in addressing sustainability concerns amidst other
pressing responsibilities.
Drivers propelling progress are
identified as:
– Consumer Influence: Noted by 11.61% across
various company sizes.
– Defined Strategy and Objectives: A
systematic approach was mentioned by 10.71%, with performance tracking being
significant for 14.29%.
– Genuine Leadership Commitment: Small
businesses surpass larger ones in reporting executive backing (28.57% vs.
21.43%), likely due to tighter internal relationships.
– Notably, small firms demonstrate equal
commitment to establishing precise goals aligned with Net Zero ambitions
(3.57%) when compared to larger organizations (3.93%).
Moreover, the sole B-Corp respondent was a
micro-enterprise with fewer than ten employees, accentuating the potential for
leadership in sustainability among small-scale ventures.
Obstacles to advancement
– Progress has been made, yet hurdles
remain. The reluctance of businesses to embrace sustainability varies based on
their size:
– Small Enterprises: The absence of
consumer demand for sustainability (50%), other pressing business matters
(32.14%), and the overwhelming nature of sustainability initiatives (42.86%)
are principal concerns.
– Larger Corporations: A deficiency
in explicit strategies or objectives (75%) stands as the primary impediment,
with other business priorities and insufficient consumer demand each accounting
for half of the responses (50%).
– Notably, a lack of genuine leadership is
seen as a shortfall among major companies, with 50% recognizing it as an
obstacle.
Investment in Sustainability: An
industry at a crossroad
The textile and apparel sector appears
divided on the matter of ramping up sustainability investments within the next
year to a year and a half:
– 53.62% of those surveyed are gearing up to
escalate their funding, while 46.38% do not intend to increase their
sustainability budgets.
– Larger corporations are notably more
inclined to augment their investment, with over 12% set to double their
expenditure on sustainability initiatives.
– Smaller firms remaining on the sidelines
attribute their decision to several factors: over half (54.9%) believe their
current sustainability measures suffice, while others point to the absence of
financial benefits (17.65%) or other pressing concerns
A strategic outlook for 2025
As the retail industry looks toward 2025,
the survey emphasises the necessity for comprehensive transformation in
sustainability practices. Effective collaboration, decisive leadership, and
forward-thinking partnerships will be crucial in aligning environmental
objectives with commercial imperatives.
The survey also reveals the shifting
priorities of retailers as they navigate 2025, influenced by factors such as
cost management, innovation, and the imperative to confront global
challenges.
While smaller enterprises often lead the
charge in sustainability initiatives, larger corporations are increasingly
focused on risk mitigation. This dynamic sets the stage for substantial changes
in both sourcing methods and sustainability strategies within the retail
sector.
Source sourcing director Suzanne Ellingham
said: “This is an incredibly important piece of work and one that offers a
comprehensive look at sustainability practices and challenges across UK
retailers, providing insights into the current state and future trajectory of
the industry’s environmental efforts. A diverse range of UK retailers, from
micro-businesses to large enterprises, offer their insights into the sourcing
practices providing a snapshot of the barriers and motivations shaping the
industry today.
“As the retail industry heads into 2025,
collaboration, transparency, and innovation will be essential for achieving
meaningful sustainability progress. By pooling resources and sharing
strategies, businesses can move beyond individual efforts to create systemic
change. Brands and retailers must also embrace partnerships with government and
regulators to develop practical, scalable solutions that balance environmental
goals with business realities. With the right guidance and collaboration, 2025
could mark the turning point for sustainability in the retail industry.”