Next time you go shopping, take a minute to see how many different and unique reusable bags other customers are 
toting around. These days, it’s not just grocery retailers offering an assortment of reusable bags. And they all make it interesting. Half Price Books has a “Bag Refusal Program.” Kroger held a contest for a new bag design. PetSmart sells reusable bags that give all the profit to PetSmart Charities.
Such green gestures by retailers will seem commonplace to Wendy Evans, who recently coauthored a research study identifying some of the best sustainability practices in place by retailers all over the world. The report, Greening Retail, is based on surveys and case studies of retailers leading the way in sustainability. I was lucky to catch up with Wendy after she presented report findings during a webinar hosted by NRF’s Sustainable Retail Consortium. (If you missed it, the webinar can still be viewed.)
Here’s what Wendy had to say about changes in sustainability programs, if “going green” is expensive, and how retailers can measure sustainability:
These case studies and the subsequent research report have been in the works since 2006. What has been the most significant change you have observed in your analysis of the research?
While the Greening Retail program began in 2006, and much of the early work involved identifying sustainability standards, scanning over 200 top retailers regarding their sustainability best practices with a goal to select the top 15 companies, the in-depth cases were actually conducted during 2008 and early 2009.
Over the last 3 to 4 years, sustainability has become much more important for retailers. One of the biggest changes is from the demand side, in terms of consumer awareness and expectations. Four years ago, environmental issues were not a priority for consumers in North America. An Ipsos Reid study in Feb. 2009 showed that Canadians’ concern over the environment ranks almost as highly as their concern about economic issues. In that survey, 75% of respondents said the government should only adopt stimulus measures that are environmentally sustainable.
In the research, you report that the grocery sector has led the way in sustainability efforts. What’s pushing the grocery industry even further now that they are out in front?
A leadership position in the market is not always easy and requires continuous improvement. Competition among grocery retailers is high, margins are thin and it is a constant battle for market share and bottom line results. More companies are selling groceries. The great strides that Wal-Mart (specifically its Supercenters) have made over the past four years in terms of environmental practices is dramatic. It has paved the way toward lower costs and greater efficiencies and has acted as a catalyst for change in the grocery and other sectors.
How important is communicating a retailers’ environmental strategies to customers? Have you seen any retailers do this effectively?
It is important to communicate with and educate consumers about environmental issues and programs that are underway. However, retailers must take care not to over-promise and under-deliver. They must assess their readiness and be able to show their successes. The stakes are high and there can be liability issues. Many of the energy and waste-reducing programs are invisible to consumers, so retailers can communicate through brochures, signage, websites and sales associates. For some retailers, sustainability is integral to the brand such as with Alliance Boots drugstores, LUSH cosmetics and Mountain Equipment Co-op, among others.
Going green often has a connotation of being expensive. Is this the case? How quickly into a green initiative can a retailer see cost savings?
There are varying costs depending on the activities undertaken. Some, such as changing habits like turning lights out, turning heat down, recycling and reducing waste at head office and store level–try taking away all employees’ waste bins–have virtually no cost and yield high savings in terms of energy reduction, while others, such as on-site green energy are very costly.
Many energy-saving activities such as lighting reduction and some retrofits can yield a return within three months to year, while others may be 2 to 3 years. Some retailers regard a two-year payback as a threshold for decision-making and undertake initiatives that have a two-year ROI. Others take a longer view and will, if the environmental benefits are sufficient, make an investment that may not realize an ROI for seven years.
What do you think are the most important metrics that retailers should be looking at in measuring their own sustainability efforts?
If I had to choose two, the most important areas that retailers should be measuring are energy and waste. Within energy, the most common metric would be kilowatt hours per square foot or cubic foot; some measure this in terms of $1000 of sales. For waste, the most significant measure is number of tons sent to landfill and percentage diverted from landfill. There are myriad other measures that retailers use. These are included in a chart that can be found in our report online.
In which part of the world do you feel sustainability efforts at retailers are the most advanced?
Sustainability efforts in Europe and parts of Asia, specifically Japan, are generally much more advanced. Possibly because costs for energy, space, and waste have traditionally been much higher than in North America, so those countries have more incentives to cut costs and be more sustainable. In addition, these countries are signatory to the Kyoto agreement requiring them to reduce carbon output dramatically over the next few years. The threat of regulation has spurred action by retailers, as well as other industries, throughout Europe and parts of Asia.