Sustainable Sourcing: Why Small Batch is Big Business

A differentiated merchandise assortment is one of the top ways retailers can remain competitive in an economic downturn. Retailers that offer unique, exclusive or sustainable products become differentiated shopping destinations unto themselves.

However, as consumers demand more authentic, responsibly made products that either improve communities or better the planet, retailers need to expand their wholesale sourcing reach to include small batch producers which offer the distinct wares that consumers are demanding. Working with the creative manufacturing and handmade sector requires a mindset shift for mid to large retail enterprises. Moreover, they need a willingness to adopt legacy corporate compliance policies — traditionally designed for assembly line factories — in order to accommodate informal and distributed workforces. We're witnessing this sea change now and the retailers and brands that are making this investment are improving customer acquisition, engagement and loyalty.

A key to attracting new, younger consumers — and keeping them engaged — is by supporting the values they align with. Younger consumers, specifically millennials and Gen Z, are using their increasingly vast purchasing power to patronize brands with social impact. Supporting small batch manufacturing over mass production is one way that these demographic groups participate in more conscious consumerism.

A study by First Insight and the Baker Retailing Center at the Wharton School of the University of Pennsylvania revealed that more than half of its Gen Z respondents believe “sustainability” means sustainable manufacturing, not merely eco-friendly materials as older generations define the word. This nuance will increase in importance as Gen Z’s impact on the evolution of a more sustainable way of life grows. Brands and retailers, such as West Elm and Ikea, have a sustainability strategy that goes beyond organic cotton, recycling and "recommerce." Understanding how artisanal or small batch manufactured products can and should become an important part of a merchandising strategy is critical.

Farfetch, the online luxury marketplace, reported that sales on its website of “Conscious products grew 1.8 times faster than average” in 2021. In order to be considered “conscious,” these products are required by Farfetch to meet a variety of criteria, including that at least 50 percent of the finished product be assembled from material or production that's “independently recognized as being better environmentally, socially or from an animal welfare perspective …” The report further noted that 53 percent of its respondents want greater visibility into their products’ origins — i.e., where and how they were created.

Supply chain transparency will become a greater imperative for retailers as more and more consumers question how the products they're buying are made. Today, many retail buyers include handmade products in their assortments, but the truth is that most of these aren't from small batch manufacturers but instead come from mass assembly-line factories. This underserved sector is dominated by a distributed workforce of women, young people, and rural populations. Despite being the second-largest employer globally, just behind agriculture, small batch producers have difficulty scaling due to a lack of investment, digitization, and access to global markets.

How can buyers change this paradigm?

• Rely on Tech: Utilize emerging sourcing tools and B-to-B marketplaces to help aid discovery.
• Leverage Flexibility: Recognize the benefits small batch offers, such as lower minimum order quantities and greater product customization.
• Celebrate the Makers: Create authentic storytelling for higher customer engagement.
• Accommodate New Ways of Working: Corporate compliance standards need to evolve with the times to help drive more direct social impact and enable small batch producers to compete in the global economy.
• Think Outside the Box: Recognize that sustainability goes beyond certifying bodies that are designed for large factories, not small batch manufacturers.

Alison Phillips is co-founder of Powered by People (PBP), a B-to-B wholesale marketplace on a mission to take small batch manufacturing mainstream. PBP enables independent brands and small batch makers by providing access to global markets, financing and digital tools across its technology platform.