Key insights into the changing sourcing habits of UK retailers and brands have been revealed by a recent poll by Source, one of Europe’s top responsible sourcing fairs for fashion, home, gifts, and gardens. The State of Sourcing Report: Sourcing and Sustainability in 2025, which was produced in collaboration with retail trend consultancy Insider Trends, reveals a disjointed and frequently hesitating approach to sustainability while highlighting notable developments in global sourcing.
Sustainability and sourcing are now essential components of retailers’ strategies as they traverse a more complicated global environment. The realities of sourcing practices and sustainability priorities in 2025 are revealed by a recent poll of UK brands and retailers, ranging from tiny firms to huge corporations. The results provide a thorough examination of product sourcing, the factors that influence these shifts, the rationale behind the selection of these areas, and how sustainability objectives will influence business choices over the next 12 to 18 months.
The Impact Of Sourcing And Sustainability In Retail In 2025 is an online panel discussion webinar that Source, in partnership with Insider Trends, will host on Tuesday, December 10 at 10 a.m. to examine the report’s main conclusions. To register visit Webinar: The Impact Of Sourcing And Sustainability In Retail In 2025 by Hyve.
The poll emphasizes how difficult sourcing choices can be. Due to factors like cost, capacity, or strategic interests, some retailers choose to stay local, while others seek international markets. There is no one-size-fits-all approach for companies thinking about foreign sourcing because each one faces different opportunities and obstacles.
International Sourcing: An Essential Part of Retail Strategy
International sourcing is becoming more and more popular among retailers of all sizes in order to satisfy the needs of a cutthroat industry. The results of the survey showed:
Global sourcing is not limited to larger companies, as evidenced by the fact that 71% of smaller businesses with 0–50 employees and 84% of businesses with 50 or more employees source globally.
Important sourcing areas consist of:
China (48.8%): The most popular option, indicating its proven production capacity.
UK (41.6%): Showing that local sourcing is still relevant.
Western Europe (32.8%) and India (36.8%) are competitive choices for a range of demands.
Southeast Asia and Turkey are also important locations for larger companies, demonstrating a wider global reach.
Sustainability Is Whose Property?
The survey emphasizes how businesses lack a cohesive strategy for sustainability:
With a head of sustainability establishing goals and objectives, 27.22% of respondents had a dedicated sustainability department.
Among small enterprises (31.06%) with limited resources, 27.8% handle sustainability as part of another team.
Larger businesses are more likely to have a specialized sustainability department (35.14%), whereas 21.62% have an ESG leader or head of sustainability who works across departments with obvious executive support. The resources and demands put on larger shops are reflected in this methodical approach.
Surprisingly, smaller companies are committed to addressing environmental challenges despite their low resources: more than half have some kind of dedicated sustainability leadership.
The Reasons Behind Retailers’ Source Selection
The survey shows that careful consideration goes into sourcing decisions:
45.6% of all respondents cited cost of production as the most important aspect, underscoring the significance of cost effectiveness.
Innovation: Researching new product categories is highly regarded, particularly by big businesses (35.48%).
32.26% of larger companies prioritize derisking operations, which reflects the lessons learnt during the pandemic’s worldwide supply chain disruptions.
Contrarily, smaller companies place a higher priority on sustainability (29.79%) than do their larger competitors (19.35%), which reflects the rising demand from customers for environmentally friendly options.
Particular Difficulties for Small Enterprises
The majority of respondents (15.91%) who chose “other” explanations for not sourcing abroad were small enterprises. Many people choose to stay local, according to comments, citing limited capacity, budgetary restrictions, and a preference for UK-based items.
Amid complexity and uncertainty, sustainability efforts are stalling.
Industry-wide sustainability initiatives seem erratic in spite of customer demand and legal pressure:
In the past year, 69.23% of all businesses said they had made progress toward sustainability. This percentage increases to 78.38% for larger companies, indicating more resources and pressure to take action.
Among the main obstacles are a lack of resources, conflicting goals, and apprehension about the reputational harm that comes with greenwashing.
“We are a small team, and we just don’t have the time or headspace to tackle sustainability yet,” said one reply.
The following are important forces behind progress:
11.61% of responders of all sizes reported experiencing consumer pressure.
Clear Strategy and Goals: 10.71% of respondents mentioned a systematic approach, and 14.29% mentioned progress measurement.
Authentic Leadership: Perhaps as a result of their more intimate internal structures, small organizations reported higher levels of top-level support than bigger ones (28.57% vs. 21.43%).
It’s interesting to note that smaller companies are just as dedicated to establishing specific goals related to Net Zero (3.57%) as larger ones (3.93%). Furthermore, the survey’s sole B-Corp was a microbusiness with 0–10 employees, underscoring the potential for small businesses to take the lead in sustainability.
Obstacles to Advancement
Despite progress, problems still exist. The following factors differ depending on the size of the company:
Small Businesses: The biggest worries were the overwhelming size of the task (42.86%), competing priorities (32.14%), and lack of consumer pressure (50%).
Large Businesses: The biggest obstacle was the lack of clear strategy or goals (75%), which was followed by conflicting priorities and customer pressure (50%).
Half of respondents said that authentic leadership was difficult to find in big businesses.
Funding for Sustainability: A Diverse Sector
The sector is almost evenly divided on sustainability investment during the next 12 to 18 months:
Of those surveyed, 53.62% intend to boost funding.
46.38% do not intend to increase their spending.
More than 12% of larger companies intend to double their sustainability spending, making them twice as likely to increase investment than those that are staying the same.
Lack of financial justification (17.65%), conflicting priorities (11.76%), and trust in current efforts (54.9%) are the reasons given by smaller enterprises for not investing. The main causes of large firms’ deprioritization of sustainability (36.36%) and investment competition (36.36%) are as follows.
Individual Methods impede the advancement of the industry.
The survey emphasizes how ineffective it is for retailers to focus just on sustainability. The industry finds it difficult to scale breakthroughs like sustainable materials as so many companies are creating their own solutions. The creation of bio-based synthetic materials is costly and slow, according to one reply. To get this process started, the industry requires legislation.
Retailers need to collaborate both inside and between industries in order to pool resources, optimize processes, and promote significant change. This change is especially necessary because new laws, including the UK’s Digital Markets, Competition and Consumers Act, will make greenwashing more serious and may discourage companies from establishing ambitious sustainability targets. This law, which will go into effect in April 2025, would provide the Competition and Markets Authority (CMA) the authority to impose fines for false environmental claims of up to 10% of worldwide turnover.
The rule may unintentionally deter retailers from making public sustainability pledges, even though its goal is to shield customers from greenwashing. In order to reduce risks, 52% of businesses are already reducing their sustainability goals, per a DLA Piper report.
Call for More Explicit Direction and Assistance
Retailers are requesting workable, sector-wide solutions, such as:
financial rewards to help defray the expenses of implementing sustainable practices.
streamlined and uniform rules to encourage adherence and openness.
cooperative alliances to promote innovation and expand sustainable substitutes.
To assist retailers in navigating sustainability claims, the UK Competition and Markets Authority (CMA) has released new advice under the Green Claims Code. These initiatives emphasize how crucial it is for regulators to collaborate with companies in order to promote advancement.
Statements from Leading Industry Figures:
The survey also documented the difficulties and annoyances faced by merchants negotiating the sustainable environment:
The phrase sustainability has grown ambiguous, and consulting firms have made it a profitable venture. Real change necessitates having an entrepreneurial mindset without ruining your company.
“When done correctly, global sourcing is fantastic, but the costs are very high.”
“A lot of things are promoted as sustainable, but depending on the research, there is frequently no data to support them or even evidence to the contrary.”
“The State of Sourcing report clearly highlights the tension between the cost of sourcing responsibly and sustainably, which is stretched in tougher times,” says Anna Berry, co-founder and director of Retail 100. While protecting earnings is important, it’s equally important to have sustainability as the major priority. The environmental agenda needs to be given serious attention right now. It must be integrated into every company; the challenge will be to preserve profitability, which is difficult for smaller companies, but increased cooperation could result in cost savings. How can your business prioritize people and the environment? One important question to pose is, “What would customers do if they knew what you were doing in your business?”
A Way Ahead for 2025
The poll emphasizes the necessity of systemic change in sustainable policies as the retail industry moves closer to 2025. To strike a balance between environmental objectives and commercial realities, cooperation, strong leadership, and creative alliances will be crucial.
According to the survey, retailers’ objectives will change in 2025 due to factors including cost, innovation, and the desire to solve global issues. The retail industry is set to undergo major changes in sourcing and sustainability tactics as smaller enterprises promote sustainability and larger corporations concentrate on risk mitigation.
“This is an extremely important piece of work 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,” says Suzanne Ellingham, Sourcing Director at Source. A wide variety of UK retailers, ranging from small startups to major corporations, share their perspectives on sourcing procedures, giving an overview of the obstacles and driving forces influencing the sector today.
“To make significant sustainable gains as the retail sector enters 2025, cooperation, openness, and creativity will be crucial. By combining resources and exchanging tactics, companies can go beyond individual initiatives to bring about systemic change. In order to create workable, scalable solutions that strike a compromise between environmental objectives and commercial realities, brands and retailers must also welcome collaborations with the government and regulatory bodies. In the retail sector, 2025 may be a watershed year for sustainability if the proper direction and cooperation are given.
