By Nikki Baird, Managing Partner
10/20/2009
Last week I attended SAP's Retail Forum. There were a lot of good sessions, but beyond great implementation stories and some future-looking panels, there was also a solid dose of “green” - sustainability green, not greenbacks.
My colleagues Steve Rowen and Paula Rosenblum have written a lot on the topic, including what has become a watershed report on retailers' continued dedication to green initiatives despite economic troubles. Sitting in on the two sessions I attended at SAP's Retail Forum, I realized a couple things about my views on green in retail. While both are born of skepticism, they present some important things for retailers to watch.
First, on a personal level, as a consumer, I'm skeptical. Deloitte's Chris Verhouvel presented some research the company did, surveying consumers on topics related to green brands and branding. The research found that out of their population of consumers, only 5% don't use “green” as a purchase attribute, either because they don't care or they just don't think about it when they purchase. Twenty percent would be interested in buying green products, but don't know enough about the topic to feel comfortable purchasing, so they don't. Another 12% weren't looking for a green product, but another 16% want to buy green products, but don't know which products are green so they don't buy. Finally, 25% of consumers found green products that they were looking for, but didn't buy them - meaning that some other attribute got in the way, like concerns over price or quality. Taking out all of these consumers net out only 22% of this population actually buying green products - out of a much higher potential.
Fascinating. But I don't fit into any of these categories. I simply don't trust the information out there, and even companies that are not greenwashing and genuinely care about sustainability make big mistakes. For example, I saw a "green" decorating show that used pillows made from the woven castoffs of some agricultural product from Africa. The designer crowed about how these plant fibers would have ended up in a landfill in Africa somewhere. Meanwhile, all I see is the carbon footprint required to ship the things halfway across the world. What is the true net impact of that pillow? It didn't seem very green to me. Or try an example that Chris mentioned in his session: bottled water companies have rapidly adopted bottle designs that reduce the plastic used by up to 30% - how environmental! But it's still bottled water that's still in a plastic bottle that will end up in a landfill. Or how about some estimates that say that a Hummer H2 actually has a smaller net environmental impact than a Toyota Prius, if you take into account the entire product lifecycle. Apparently, the Prius has some pretty nasty parts to it that don't recycle so easy - like its batteries.
As a consumer trying to navigate this confusing, conflicting, bewildering world of what is actually "green," it's no wonder I haven't changed many of my household’s habits drastically. There are a few things I know to be undeniably beneficial without fear of unforeseen repercussion. We recycle, take shorter showers, turn off the water while brushing teeth, carpool whenever possible, turn off unnecessary appliances and lights, replace incandescent bulbs, turndown the thermometer at night, use cloth reusable bags at the grocery store, only run the dishwasher and laundry when they are really full, use re-useable aluminum water bottles, maintain proper tire pressure on vehicles, opt for the less-packaged among similar products whenever possible, and right now, I’m trying to figure out if I can build a compost heap in my backyard without violating my homeowners' restrictions on nuisances (compost doesn't smell very good). Apart from those, I'm worried that I might end up doing more harm than good! Even retailers have to watch out: on the panel session that followed at the Retail Forum, one panelist shared a story about a retailer who had turned up the temperature in stores by 1-2 degrees, thinking he would save energy costs, only to suffer from the law of unintended consequences. The warmer stores made the refrigeration units work harder, and they were far less efficient than the HVAC - in fact, stores ended up consuming more energy as a result.
What does this have to do with retail? If you want to brand yourself green, you better do your homework. I actually think this is more important than practicing what you preach. Consumers will cut you some slack if you're not 100% compliant in your own operations as long as you're transparent and you're showing that you are trying to fix things. But if you go out on a limb about what is "green" and it turns out the unintended consequences are far worse, then you've broken trust. That will be far more difficult to regain.
Here's the second issue I have with sustainability initiatives, but it's one that I think should spur more action, not less. It's the cost-saving aspects of green. It's a terrible thing that it comes as a revelation to many people that green initiatives have a hard dollar return on investment. One panelist shared a story about bicycles. Her company found a way to repackage bicycles so that they used less packaging, occupied less space overall (reducing the freight charge per bike), and increased re-use (packages could be leveraged more easily both from overseas to the DC as well as from DC to store, also reducing packaging requirements). It's ironic that this is something along the lines of out of the box thinking. Anyone familiar with Lean and total quality practices will know that waste is a huge focus. Waste is not just about not creating waste by having to scrap the product you're manufacturing. It's about waste in all of the pieces that support the manufacture of that product. That applies all the way until the product's life is ended and disposed of.
Here's another example to think about. Another panelist talked about how his company uses tin boxes for its products, which theoretically are better because they can be reused. The boxes have value in and of themselves. But what is the landfill lifetime of a tin box vs. say, a post-consumer recycled cardboard box or one that could be recycled or is rapidly biodegradable? How many customers pitch the boxes vs. keep them? On the surface, it's a great idea - but only if you're sure you can take it all the way through to the end of the product's life and be assured that the net impact is better than the original alternative.
Again, what does all this mean to retail? Simple: don't get suckered into easy "green" branding without examining the full impact of a product or process change. Something is going to have to be done eventually to standardize how these things are calculated and how to capture the full consequences of what you're doing, or consumers won't trust your green claims.
Second, don't think about it as "getting greener." Think about it as your net impact on the environment. As one panelist shared, it wasn't stores or products that were the company's biggest contributors to its carbon footprint. It was their adventure travel business - hello airplanes - followed by employees' commutes. But the bike packaging story shouldn't have been a "green" one, it should have been a standard business process improvement one.
Reducing waste reduces costs, no matter where you find it. And it just happens to contribute to a company's overall sustainability practices. That's green - both environmentally, and monetarily.
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