The Lewis Group is a retail furniture company operating in South Africa that sells its furniture to low-income customers. Notably, approximately 60% of the company's merchandise is being imported from some countries in Brazil and China. As the leading retailer of household furniture, home electronics, and electrical appliances, The Lewis Group sold its products mainly on credit through Best Home and Electric, the Lewis, and My Home Brands. The success and profitability of the Lewis Group is associated with the scope of its business and its business model. Currently, the company has more than 600 stores throughout the main metropolitan areas and has a strong presence in the rural areas in South Africa. Moreover, 56 of the firm's stores are located in the neighboring southern African nations like Namibia, Botswana, Swaziland, and Lesotho.
The Lewis Group Business Model:
The Lewis Group business model basically revolves around creating value for its stakeholders in order to promote its productivity and success in the market ("Integrated Annual Report," 2012). As a result, the firm has an increased commitment to a decentralized and store-based business model that helps in ensuring sustainable performance through every market condition. The company's business model is based on the principle that furniture sale and provision of credit are mainly interdependent. Notably, the Lewis Group has adopted and implemented this model since the inception of the business. However, every aspect of customer relationship is handled by the stores' staff while provision of credit is handled centrally in order to promote consistency decision-making and wise credit risk management.
Through the business model, the Lewis Group personal and relationship-based interaction with consumers produces trust and confidence. In addition to this, it also creates high levels of loyalty and recurring sales. During the recent economic slowdown in the past few years, Lewis Group's business model has proved to be resilient and suitable for the firm's target market since customers are increasingly attracted by the merchandise offering and then depend on credit provided by the retailer. Together with its clear strategic focus, the proven and resilient business model of the Lewis Group has facilitated its positioning in the growth section of the South African consumer market. Consequently, the group continues to be attractive to potential investors who are looking for equity exposure to the local retail sector.
Lewis Group's Position in the Sustainability Space:
According to its annual report, the Lewis Group has not yet done enough or a lot to ensure sustainable operations since it has mainly focused on carbon emission reporting. The company's position in the sustainability space is reflected in its report on environmental sustainability. In this case, the company recognizes the need to launch and maintain environmentally sustainable business practices to ensure that it meets its responsibilities in sustaining the environment where it operates ("Environmental Sustainability," n.d.).
The Group achieves this objective through executing an Environmental Management System that helps in identifying the direct and indirect environmental impacts on the company. The system is also critical in development of an environmental policy that is achievable and relevant, creating stakeholders' awareness through suitable level of reporting, and improving the direct effect of business activities where it's economically feasible. Through environmental principles, economic pillars, and commitment to being a responsible corporate, the Group's environmental practices will evolve.
The relatively poor position of the Lewis Group could be partly attributed to the fact that South Africa's retail sector does not perform well in terms of sustainability ("Supermarket Sustainability," 2012). This is despite of the fact that this sector is located at the center of consumer goods value chain, which gives the industry players the power to influence the other elements of the value chain. There are huge differences in the quantity and quality of information in the sustainability reports of many companies since they use different metrics that make it difficult to compare information. Therefore, there is an increased need to report various aspects that give investors a clear view of a company such as environmental and social impacts of the firm, governance process, risks, strategy, and financial data and results (Merwe, n.d.).
Similar to the largest retailers in South Africa, the Lewis Group does not perform well with regards to sustainability. The inability of the firm to perform well in sustainability measures is partly attributed to the fact that it does not have warehouses given that every store holds its stock in the outlet or in a central warehouse store that is usually located close to various outlets around it.
As one of the major players in the retail industry, sustainability of the Lewis Group in South African operations is one of the fundamental needs of accountability. According to Chamberlain (n.d.), distribution of products is a basic process in the retail sector that requires fuel-efficient and improved low-pollution methods. This is primarily because of the risk that retailers pose to the environment, which increases their responsibility to nurture it.
Incorporating Sustainability in the Lewis Group's Business Model:
Since the Lewis Group performs poorly in relation to sustainability, there is need to incorporate sustainability in its business model. This can be achieved through implementing sustainability strategies that delve into the challenging industry. Morton (2012) states the need to know that green furniture is a vague term that incorporates everything such as recycled content, lifecycle and durability considerations, and low-VOC finishes. These eco-friendly measures provide several benefits including durability and longevity, no or low-VOC levels, easy replacement and serviceability of major parts, and ability to be modified or reconfigured.
The Lewis Group can incorporate sustainability into its business model through positioning itself in four quadrants i.e. eco-efficiency, eco-branding, beyond compliance, and Environmental Cost Leadership to place itself at a competitive advantage. These four quadrants are vital and important to transform a firm's environmental investments into sources of competitive advantage. The Lewis Group can position itself in the four quadrants by adopting them as part of its environmental policy in its corporate strategy. These quadrants should be included in the environmental policy and business model based on the structure of the industry, organizational capability, and its position within the industry structure (Orsato, 2006). Moreover, Lewis can position itself in the four quadrants through conducting a comprehensive analysis of the components in competitive environmental management in order to find opportunities. This will enable the company's management to identify areas with which the company can focus its environmental initiatives in pursuit of competitive advantage.
The Lewis Group can also incorporate sustainability in its business model through framing sustainable development as a multi-dimensional opportunity. Many organizations have been unable to deal with sustainable development in a strategic way because of focusing on it as a one-dimensional opportunity (Hart & Milstein, 2003, p.56). In most of its sustainability operations, the Lewis Group has mainly focused on eco-efficiency, Beyond Compliance, and Environmental Cost Leadership. Throughout its history, Lewis has been able to transform its costs into profits through identifying hidden environmental opportunities. Secondly, the group has also focused on increasing the efficiency of its organizational processes by involving customers and the society to recognize their efforts. Third, the Group's environmental cost leadership has involved obtaining premium for ecologically-focused products. However, the firm can create more sustainable value by focusing on eco-branding, that involves managing the entire lifecycle of the product and involving stakeholders. This is primarily through product stewardship that ensures the integration of stakeholder views into the business and is mainly driven by transparency, civil society and connectivity. This strategy could be beneficial to the firm in its sustainability initiatives since it extends beyond the company's boundaries unlike pollution prevention that focus on internal operations.
This strategy creates more sustainable value, especially shareholder value since it involves integrating the voice of the shareholder and other stakeholders into business practices through increased interaction with…