Conscious consumption did not decrease with inflation, says CEO of Riachuelo

Inflation may have reduced Brazilians’ purchasing power, but not their concern with the sustainable origin of products. According to Oswaldo Nunes, executive president of Riachuelo, customers are increasingly aware of what they are consuming — and this habit has not been changed by the country’s current economic challenges.

“I believe that this process, in which more people make consumption decisions based on beliefs and convictions, remains even in the face of an adverse scenario. What can happen is the consumer reduce their purchases a little”, he says.

In an interview with leafNunes announced that Riachuelo will commit to reducing its carbon emissions by 30% in 2022. He cites as an example the production of jeans, which uses an average of three liters of water per piece, while traditional processes reach over 40 liters.

Faced with the social challenges that exist in the textile industry and the successive episodes of racism in retail companies, the executive highlights the company’s history.

“Fortunately, Riachuelo has never been involved in any demonstration of racism, prejudice, or in denouncing slave labor, precariousness”, he says.

As the popularity of ESG [ambiental, social e de governança, na sigla em inglês] has impacted fashion retail?

Grupo Guararapes has been operating in Brazil for over 74 years. We are the largest fashion group in the country when you consider the textile, clothing, retail and [empresa] financial. You can’t build a trajectory of development and growth if you don’t have good management practices and transparency in everything you do.

It is clear that society evolves, so do people, and behaviors have changed. At the end of 2018, we revisited the company’s entire strategic planning to address the issue in a more structured way. Making it clear which directions sustainability would take within the company, which are the main guidelines for our priorities and actions.

What exactly is this behavior that is more in line with sustainability that you see among consumers?

There is an important portion of consumers who still have a low level of awareness on the subject, but we noticed that there are more customers who are concerned about what they are consuming. Increasingly, customers want to know where the products come from, who produced them, under what conditions the parts were manufactured…

Therefore, the need for us to bring more transparent communication and inform our customers about the initiatives we have taken. For four years, for example, we have been on the Fashion Revolution transparency index, so that consumers can learn about our work and the care we take with the production chain.

Since 2017, Riachuelo has supported the National Pact Institute for the Eradication of Slave Labor, and we are also on the Moda Livre app, which monitors the textile industry.

We are going through a moment in which purchasing power has been decreasing, with inflation increasing. Does the consumer remain conscious despite these factors?

Inflation and high interest rates are issues that affect the economy as a whole and bring an additional concern, because they reduce the budget available for purchase after basic needs are met. But I believe that this process, where more people make consumption decisions based on beliefs and convictions, remains even in the face of an adverse scenario. What can happen is that the consumer reduces his purchases a little.

What is Riachuelo’s sustainability strategy?

Given this evolution of society and consumers, we revisited the topic so that it could be dealt with in a more structured way. Our strategy made it clear that the main guidelines would be linked to the materiality of the topic within our value chain.

We know how challenging it is for the fashion industry to have to deal with an extensive and complex chain, but we have an important comparative advantage. We are the largest fashion group in Brazil and we have the largest industrial park [da América Latina].

More than 60% of the women’s, men’s and children’s clothing that we sell in our 330 stores are produced in our own factories. For this reason, we can have greater control of the production chain, closely monitoring each step of the process. Every year we have business partners like Disney, Warner and Universal who audit all of our factories, and we achieve scores of 100% or something very close to that in all of them.

In the textile industry, water consumption is also a relevant issue. Does the company have initiatives to circumvent this?

We do. Regarding our own factories, we have a unit in Fortaleza that is dedicated to jeans, and the activity of the jeans industry is one of the most polluting the environment. In this unit, which produces more than 5 million pieces a year, in addition to using energy from 100% renewable sources, we treat 100% of the water in production processes.

Half is reused within the production lines, 30% is returned treated to the state water company and 20% we use in the garden areas and in the factory restrooms. Our production process uses an average of three liters of water per piece, while traditional processes use 40 liters or more.

Does Riachuelo have socio-environmental goals?

We are setting a target of reducing our CO2 emissions by 30% by 2022 [em comparação com 2019].

That would be the environmental goal, right?

Yes, but just as important as the reduction of impacts on the environment is the social side, which involves all aspects of diversity, inclusion and equality.

Today we have four groups established to work on issues of gender, race, LGBTQIA+ and PCD. So much so that in our latest engagement survey, more than 93% of our employees considered Riachuelo a diverse and inclusive company. This is important data, after all we are a labor intensive company, we employ more than 38 thousand people.

In Brazil, it is not uncommon for episodes to be considered racist in retail establishments — and not just in fashion. How can a company avoid this kind of case?

First is setting an example at home. It all starts there, with the mindset [mentalidade] from top management, behaviors… This is what determines the real culture that permeates all levels and areas of the company and is reflected in the relationship between employees and customers.

Brazil is a diverse country, and you have to respect that. Fortunately, Riachuelo was never involved in any demonstration of racism, prejudice, or in denouncing slave labor, precariousness…

You replaced Flávio Rocha, who left office to run for president [em 2018], but later gave up. He is currently chairman of the board of directors of Grupo Guararapes, but maintains a certain proximity to the government Bolsonaro. Does this political involvement affect business?

No way. Flávio currently plays a role on the company’s board of directors, which is also made up of independent directors. Management has an executive board, of which I am the chief executive. So it doesn’t affect our decisions at all, which have a clear vision of the future, development, business growth, evolution of our model.

That’s what we, with a team of directors, think about every day. Of course [isso ocorre] within a very high internal governance and that, in 2022, will gain more strength, because we are making the move to go to the [índice de] New Market [da Bolsa de Valores]where we will operate at the highest level of corporate governance.

How do you see the future of sustainable retail?

I see the private sector increasingly involved with sustainability issues. The more alignment between civil society, the private sector and all spheres of government, the better for everyone. Of course, this is a journey, and there are challenges that need to be overcome. One of them is to expand knowledge on the subject before the majority of the population.

X-RAY

Oswaldo Nunes

Executive President of Riachuelo since April 2018, he has already held the positions of vice president, director of operations and commercial director at the company. Graduated in Business Administration, he has worked at Riachuelo for 39 years.