Reducing retail’s carbon footprint

In the US, UK and Australia this week, sustainability and the genuine desire to lower our carbon footprint was evident at many levels.

In the US Wal-Mart followed through with its clear and consistent message that sustainability matters, a mantra that will define the tenure of Mike Duke’s CEO-ship and that of his leadership team around the world. The swiftly implemented decision to prevent large amounts of disposable cardboard point-of-sale (POS) being used in any Wal-Mart was met with shock by some manufacturers in the crucial run up to Christmas as it was implemented in the DVD category, an area where Wal-Mart accounts for one third of all DVD sales in the US.

However Wal-Mart wasn’t saying: “let’s remove cardboard POS and see sales of DVD drop like a stone.” What it was saying was: “it’s not acceptable to print, freight to store, then only use for four weeks and throw into landfill thousands of tonnes of cardboard.” The message was “help us design and maintain reusable POS that helps the shopper buy DVDs; just think about the environment while you’re doing it.”

In the UK, the 2009 Climate Change Act, which aims to lower carbon emissions by up to 80% of 1990 levels by 2050, is starting to appear on the agenda of publicly listed companies, retailer and manufacturer alike. To achieve these levels companies will need to put in steps to deliver a 4% annual reduction in carbon emissions if they are to have any hope of complying (there’s that word again!) with the Act.

The Carbon Reduction Commitment, being introduced in April 2010, will reward organisations that reduce emissions and penalise those that don’t. Retailers like Asda (Wal-Mart’s UK subsidiary), Tesco and Morrisons are all working with manufacturers to shape plans, and in some cases roll out already successful initiatives, to deliver these savings.

In Australia a brief headline about the shortfall in carbon reduction reporting ran in The Australian Financial Review, but the theme at the Food and Grocery Council conference on the Gold Coast last week was absolutely emphatic that all Australian retailers and manufacturers must work towards lowering their carbon footprint.

In Australia, as in Europe and the US, the response to this “greening” of our shopping habits is, like the Curate’s Egg, “good in parts”. There is still a healthy level of cynicism and a degree of amusement in some quarters of business, sadly and most predominantly among males of my era…that’s over 40… and “complying” (second time) or better still being seen to “comply” (third time) is what it’s actually about. It’s a game that must be played and a fad that will pass.

However, discuss the issue with a 20-something single shopper, or a 30-something mum in retail stores across Australia, and the issue is very real and very high on their agenda. Joke about the environment or try to explain that it doesn’t really matter how we ship/pack/service at retail a loaf of bread/chocolate bar/roll of toilet paper, as the real culprit in the damaging of our environment is the car/airplane/power generators – and you are likely to lose a shopper from your store or consumer from your product line.

What’s more, they will tell other 20-something singles and 30-something mums about their uncaring environmentally poor experience with your brand, not because they are being spiteful, but because how you address environmental issues today and into the future actually matters. They, and their unborn children, are going to live for longer than you or I.

So how can we help? Well, there is already a lot of good “shared service” work being implemented around the world and in Australia, aimed at lowering carbon footprints and, as a pleasant unintended consequence, of lowering costs too. Those lower costs feed into slower price rises in retail, so it helps our pockets today and tomorrow, as well as our environment.

Pie in the sky? No, very real. Working with forward-thinking manufacturers and retailers, my company has delivered a shared service model with just two manufacturers, Sony and Paramount, calling on Big W, Kmart and Target. By adopting the model, together we have removed over 500,000 kilometres of duplicated travel and removed 40,000 duplicated car journeys a year. The dollar savings from unproductive and duplicated costs with a large carbon footprint are enormous. The carbon footprint is better, retailer store staff, our clients’ staff and our own staff are all rightfully proud that they are taking steps to make a difference.

In December last year I picked that the real productivity gains in retailing in 2009 and 2010 would be via retailers and manufacturers working together to wash out unproductive costs in the external supply chain as all the internal supply chain gains had been made. And a mea culpa I didn’t pick that a shopper demand for a more thoughtful approach to our environment, and a corresponding reaction from thought leading retailers and manufacturers, would accelerate those productivity gains. It’s happening and we’ll all benefit from it as shoppers and shareholders.

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In his role as CEO of CROSSMARK, Kevin Moore looks at the world of retailing from grocery to pharmacy, bottle shops to car dealers, corner store to department stores. In this insightful blog, Kevin covers retail news, ideas, companies and emerging opportunities in Australia, NZ, the US and Europe. His international career in sales and marketing has seen him responsible for business in over 40 countries, which has earned him grey hair and a wealth of expertise in international retailers and brands. CROSSMARK Asia Pacific is Australasia’s largest provider of retail marketing services, consulting to and servicing some of Australasia’s biggest retailers and manufacturers.