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The green retailing revolution

The green retailing revolutionThe next big thing, green retailing means much more than just using paper bags, but the perceived costi appears to be holding many retailers back. However it might not be as time-consuming or expensive as you think. Nina Hendy investigates.

Retailers who think going green is just another fad or marketing gimmick should think again. As shoppers become increasingly aware of a business’ overall impact on the environment, retailers would be wise to make sure they measure up.

The truth is that green retailing (or ‘greentailing’) is here to stay, with the threat of global warming, and increasing concern about the impact businesses make on the environment, only set to build.

Consumers willing to spend more for green
The growing anxiety about the environment has also created a new niche market of consumers who hold grave concerns for the future and are willing to spend more to buy environmentally-friendly products.

According to new research from the Australian Centre for Retail Studies, green consumers are most concerned about reducing their own carbon footprint, with increasing numbers demanding greener products from retailers and brands that have adopted green practices throughout the entire supply chain.

The report, titled Environmentally Friendly Retailing says while 2007 saw high-level sustainability commitments from the retail sector, 2008 was more about the delivery of more efficient operations and stores, better supply chains and changes to product ranges.

The report also documents the plethora of green announcements by retailers around the world in recent months, with Ikea, Wal-Mart and Tesco among those demonstrating the most serious commitments by focusing their business around green goals as they work to maintain green credibility.

But the report also says that while large corporations are pushing to take responsibility for environmental issues, Australian retailers are lagging considerably when it comes to committing to green retailing.
“However this gap is set to narrow as Australian retailers acknowledge their impact on the environment, devising policies to reduce energy, the use of plastic bags and the amount of waste going to landfill. The major trends in global best practice green retail include energy efficient stores, offering energy-efficient products, reducing packaging, green marketing and merchandising as well as green sourcing and distribution,” the report continues.

Putting your best green foot forward
Consultants like Melbourne-based business Village Green are popping up all over the country to advise businesses on how to put their best green foot forward. Chief executive Doug Smith says Village Green, which has been around since 2002 and has since expanded into five countries, has helped more than 3,000 companies ‘green’ their business. “There’s a lot of debate around green initiatives now, but back in 2002 when we started we were busting a lot of myths,” he says.

But peak retail industry body the Australian Retailers Association (ARA) doesn’t want retailers to ultimately be backed into the corner by the Federal Government when it comes to greener retailing. ARA executive director Richard Evans called for retailers to get involved in environmental debates with the Federal Government, including plastic bag bans, late last year. Evans raised concerns that Federal Government legislation could burden retailers with unaffordable compliance costs. “Whether you agree with the science or not, there is no doubt the environment is a priority right now. The message from the ARA is to engage in active political debate regarding environmental legislation while reducing our carbon footprint,” Evans says.

Save money and headaches

But greener retailing doesn’t necessarily cost more money — it can actually save money, according to Smith, who says financial savings are often identified during an audit. He points to a retailer that had refused to fix a leaking cistern, but after the Village Green audit he agreed to do so, which in turn saved $2,200 a year on water bills for a new part that cost him $3.20.

And many retailers don’t realise that lighting can often generate heat, which in turn decreases the effectiveness of an air conditioning unit; a problem easily solved. “We came across a large fashion retailer who had 150-watt halogen lighting above the cash register, which meant staff were getting very bad headaches and having sick days. I’d recommend avoiding halogen lighting at all costs.”

Smith says even retailers operating in large shopping malls can take responsibility for their own in-store lighting, which could save hundreds over a year. “A business can start being greener by simply creating a checklist of all their devices and make sure they’re turned off when not in use, which is a simple place to start.”

He says turning green presents a raft of new opportunities for a retailer. “There’s an opportunity to get some market leadership once you’re a green company. You can market yourself as being green, which in turn attracts new customers.”

If a business takes on board all recommendations made by Village Green consultants, the cost will be recouped within approximately seven months, he says.

Beware the greenwash

One major precaution that needs to be taken if a business is going to make a successful transition to being a green retailer, is to avoid greenwash. This term refers to misleading consumers over your business’ environmental practices, a practice which is currently on the increase. And the backlash from consumers can be hard to recover from. In the past year or so, the Australian Competition and Consumer Commission (ACCC) have been cracking down on dubious green claims, catching more than a few companies off guard.

Woolworths, Goodyear Tyres, Origin Energy and Coopers Brewery have all made misleading green statements in their advertising, packaging or promotions. So, unless a company is completely confident that its green claims are true, they run the risk of the wrath of the ACCC, a consumer backlash, incurring fines, having to make public apologies, legal fees and the costs associated with scrapping marketing campaigns.

To ensure you’re not greenwashing consumers, make sure all claims can be substantiated, that they are clearly defined and relevant for your consumers.

Five quick steps for greentailing success
What steps can a retailer take to move toward a greener business model?

1. Eco-packaging
Packaging companies have developed more environmentally-friendly packaging, which is recycled, biodegradable, reusable and less bulky in recent years, in response to consumer demand. In Australia, both Bunnings Warehouse and Ikea charge an extra 10 cents for plastic bags, which Bunnings claims has resulted in a 99 percent reduction in plastic bag usage. An increasing number of retailers are expected to adopt similar strategies as the Federal Government considers a ban or levy on plastic bags. One option is to consider selling reusable bags in your store at cost.

2. Expanding the green offer
Growing numbers of mainstream retailers are increasing their range of organic, fair trade and eco-friendly products. It’s important to note, however, that there is no hard and fast definition of what makes a product green, with all products requiring ‘un-green’ elements such as transport, manufacturing and packaging.

3. Inside the store

The days of flooding a retail environment with energy-guzzling lighting are gone, with designers and lighting consultants opting for more environmental options. The Building Code of Australia outlines a maximum wattage for retail shops of 25 watts per square metre in shopping areas, which varies depending on ceiling heights. Also consider opting for low wattage lighting options.

4. Decrease your waste

Consider the environment when purchasing office supplies and go for Energy Star appliances. Also make sure you keep up with regular maintenance on mechanical equipment and use only recycled paper and ink cartridges. You could also consider enforcing two-sided copying among employees and keep a stack of used paper by the printer for rough drafts. When shipping, use shredded paper rather than plastic products such as Styrofoam pellets or bubble wrap. Also, consider designing marketing material which doesn’t require an envelope and can be folded and mailed.

5. Green marketing

Once you’re in the swing of things, don’t let your green status go unnoticed. Consider a marketing campaign to let consumers know you’re committed to saving the environment and are making responsible choices, which is likely to attract environmentally-aware customers into your store.

According to the Australian Centre for Retail Studies (ACRS), there are a number of factors driving the green movement. They are:

  • Government — introducing green legislation, national green targets and tax incentives to consumers
  • Companies — greening operations due to legal obligations or as a marketing tool
  • Non-government organisations — placing pressure on consumers to boycott companies with bad environmental records and encouraging consumers to recycle or save energy
  • Consumers — wanting to do their bit to save the planet, as well as ‘greening up’ being seen as trendy

Source: ACRS Environmentally Friendly Retailing Secondary Research Report 2008

This article first appeared in the March/April 09 issue of Giftrap, the official magazine of Gift and Homewares Australia (GHA).

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Nina Hendy

Nina Hendy

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