Will going green put retailers in the black?
Earth Day is getting a bit old — 45 years to the date to be exact — but the goal of reducing waste and costs is alive and well in retailing. Today, seemingly every business has a story to tell about its use of renewable energy, waste reduction and other initiatives that fall under the broad sustainability umbrella.
Many companies today release sustainability reports, and using power from renewable and green energy sources is high on many priority lists. Today, retailers including Kohl’s, REI and Whole Foods supply 100 percent of their electricity needs using renewable power, while many others have pledged to reach that goal by 2020.
The Environmental Protection Agency publishes a list of the top 30 retail green power users within its Green Power Partnership program. While many such as Best Buy (13 percent), Macy’s (23 percent) and Walmart (3 percent) are far shy of supplying 100 percent of their power using green sources of energy, the size of these companies still make them among the largest users in the U.S.
Water conservation is also a high priority for companies such as Starbucks, which has cut consumption by 23 percent, just shy of a 25 percent corporate goal set in 2008. Extended drought conditions, particularly in California, has brought the issue to the forefront in recent months. In January, the state declared a state of emergency to deal with shortages caused by four years of drought.
Discussion Questions
How have green priorities evolved for retail companies in the last decade? What are the biggest environmental challenges affecting retailers’ ability to operate profitably today?
I’m impressed at how much “green” there is in retail even though overall it amounts to next to nothing. It seems that there are only two motivations for the majority of the retail landscape to look towards green solutions: money savings and PR. Other than that, almost no retailers have had an earnest interest in the environment, green practices, animal rights/testing and the like.
In terms of going green, energy use has to be the number one cost to retailers, so those that look at programs with the best long-term savings (like photovoltaics) will gain the most financially, as opposed to those that buy wind energy (a greener option) but pay nearly the same as dirty electricity. However water reduction is not costly at all, just requires commitment and training.
As green priorities have grown for consumers, they have grown for retailers. Some retailers have jumped ahead of consumer interest to accelerate green initiatives. When a retailer like Walmart decides to cut waste by demanding leaner packaging from suppliers, it echoes throughout all manufacturers and benefits everyone.
The biggest environmental challenges today are cutting water use and finding alternative energy sources. Both, if done well, can save retailers money, which boosts profits while creating a positive story for consumers.
Being perceived as a net contributor at retail by having green priorities is a positive step for any retailer. However, doing this and operating profitably is often more difficult than anything else.
Kermit the Frog (Sesame Street) said, “It’s not easy being green.” It takes work and may even cost money. However, it shows that a company is community-minded, and that’s important. A “Green Initiative” is a safe bet. There is typically a group of cause-minded consumers that will spend more money and go out of their way to do business with the retailer that is in alignment with their cause.
Let’s put the PR aside because it is B.S. and most often transparent. Let’s look at energy. Alternative energy for site-based use is getting more and more efficient and less and less expensive, and the efficiencies are accelerating. As a matter of fact, in many areas, site-based alternative energy is creating problems for the power companies as site-based energy enters the power grid and actually makes money for businesses and homes that use it.
No matter what they say in their ads and social media , or how much of their energy use is from “green” sources, until retailers quit dumping perfectly good food in their dumpsters and dumping unwanted hard packaged product in their dumpsters, I will not think they are serious about “green.” The things that get thrown out instead of being composted or recycled is a travesty. Breaking down cardboard shipping boxes is not enough.
I have to agree with Liatt. There are so many easy opportunities to reduce waste at retail, and so few of them are taken advantage of by retailers, brands, or consumers. The green movement is growing, but it’s too little, way too late.
While the market for less dangerous content in the things we use and consume will continue for many decades to come, there are several newer concerns with much more opportunity. The packaging and storage industries should begin to see a lot more pressure as landfills reach capacity. Another industry under scrutiny is the paper products industry which may not be able to do much more in creative recycling technologies. There is a lot of room for change and plenty of surprises on the way for some time to come.