By Steve Rowen, Partner
6/10/2008
The film industry doesn’t really fall into our wheelhouse of retail coverage, but we have a suggestion for Hollywood nonetheless. Every few years, the major studios release a burst of disaster-related movies, but it’s fair to say we’ve all seen too many films about volcanoes, tidal waves and tornados. Aren’t we due for a new summer blockbuster that tackles the day we run out of oil?
While our silver screen script gem may not get picked up (if it does, the last name is spelled r-o-w-e-n), in reality, public behavior to environmental realities is forcing policy and product changes throughout our industry.
Certainly the American automakers are feeling it. The sharp and almost overnight decline in demand for gas guzzlers, like General Motors’ Hummer brand, saw Chairman/CEO Rick Wagoner announcing last week that “We are considering all options, from a complete revamp of the product lineup to partial or complete sale of the brand.” What makes this statement made so much more powerful is that just over a month ago, when oil was trading at “only” $118 a barrel, Chief Financial Officer Ray Young publicly announced that GM had no intention realigning any of its eight vehicle brands in North America.
In those five weeks, it has become nearly impossible to trade in an SUV. I know, because my brother, Chris, has tried. At the same time, my brother-in-law, Michael, has received several cash offers for his 48 mpg Volkswagen Golf diesel at a price point higher than what he paid - 5 years and 158,000 miles ago (VW has been restricted from selling any more diesel vehicles in the United States this year). Meanwhile, Paula would like to add that if any automakers are reading this, she’d like to see a hybrid convertible, and is actually ready to buy.
But what are general merchandise retailers seeing in the way of customer demand?
From our recent What Can Green Do for You? Benchmark Study, we found that the best performing retailers are already evaluating both how seriously and how soon the customer will demand more environmentally conscious behavior. In particular, Winning Retailers are “hedging their bets” on elevating their green profile in anticipation of greener customers who will vote with their wallets. Our 76 respondents (20% coming from FMCG, 47% from General Merchandise, 29% from hardware/DIY and 4% from Food and Hospitality), reinforced that there is a genuine divide in how retailers - based on their financial performance - view the true value of ecological sustainability in both products and services.
For Winning Retailers, only 24% identified cost-savings as a motivator, compared to laggards’ 76%. Instead, 57% of Winners are flaunting any (even insignificant) green initiatives they’re involved in (compared to laggards’ 38%) for one very simple reason: If we can learn one thing from our friends in Detroit, it is catastrophically bad to be seen as “Hummer-esque” in any way shape or form to the consumer right now.
The entire What Can Green Do for You? Report is full of facts and figures about where our respondents see the greatest green opportunities in retail, and is available for free to anyone interested by clicking here. Oh, and if Miramax does decide to do the picture, can we try to get someone a little less mainstream than Will Smith to play the lead?
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