This article appeared in Issue 3#2 (January/February 2009) of Business Franchise Australia & New Zealand
There is no doubt concern is mounting over the environment. Everyday we receive messages that our rivers are drying up, temperatures are rising and plastic bags are littering our waste streams.
Australia’s market is consumer-driven and if consumers are concerned about the environment then it is in industry’s interests to answer. Rather than seeing this imperative as a burden, savvy businesses will view this as an opportunity.
Point of Purchase Advertising International (POPAI) recently held its inaugural The Future’s So Bright Green Sustainability Conference featuring industry leaders, to discuss the challenges and opportunities of businesses pursuing sustainability initiatives.
POPAI is a global not-for-profit association with over 1700 members in 45 countries across the globe representing the interests of the retail marketing industry. The organisation exists to promote the importance of marketing at retail in the total marketing mix, improve education levels in the sector, promote industry views and develop improved standards of practice.
Attracting over 300 delegates from various businesses and business groups, POPAI’s The Future’s So Bright Green Sustainability Conference, featured 13 keynote speakers from leading companies, industry associations and retail academics and experts. The objective of the conference was to facilitate the exchange of ideas between business decision makers on strategies to meet consumer demand with more environmentally-sustainable practices.
One of the key messages that came out of the conference was consumers do favour businesses demonstrating leadership in sustainable practices. Jeff Rogut from Monash University’s Australian Centre for Retail Studies said in his speech to delegates that 58 percent of consumers are more likely to buy a company’s product or services if they are perceived as more “environmentally friendly” than the competition.
The Centre’s research appears to be corroborated by a number of international studies including a survey conducted by Canadian research firm, Globescan. According to Globescan’s survey, more than one in five consumers reported having either rewarded or punished a company for its environmental or social performance and there is evidence indicating this trend could be on the rise.
So this begs the question – what can retail franchises do to improve their environmental sustainability?
A number of the Conference’s speakers provided some excellent insight into practices retail businesses could adopt to reduce their carbon footprint and satisfy consumer demand.
Monash’s Jeff Rogut spoke about a number of retailer initiatives overseas including Tesco, Marks and Spencer and Walmart.
Walmart is an interesting case, as it has a significant track record of being at the forefront of sustainable initiatives. In 2006 Wal-Mart partnered with suppliers to improve packaging labels on its private Kid Connection toy line. By reducing its packaging on less than 300 toys, it saved 3425 tons of corrugated materials, 1358 barrels of oil, 5190 trees, 727 shipping containers and saved itself $3.5 million on transport costs. Now it plans to measure its 60,000 suppliers worldwide on their ability to develop packaging and conserve natural resources. Wal-Mart expects to cut its packaging by five percent and save 667,000 tons of carbon dioxide from entering the atmosphere. It is predicted the initiative will cut overall costs by $10.98 billion and save Wal-Mart alone $3.4 billion.
Walmart might have immense resources at its disposal and therefore the capacity to implement such gargantuan changes. However, there are many things smaller businesses can do to reduce their carbon footprint and as a result improve their kudos in the marketplace.
David Gittus, Tools Committee Team Leader from Active Display Group, said that recycling point of purchase displays, taking responsibility for displays throughout their entire life cycle and becoming a voluntary member of the National Packaging Covenant can make a significant impact on a business’ carbon footprint.
Telstra’s Hugh Saddington highlighted a range of telecommunication solutions which could reduce a business’ energy consumption by lowering transportation (road or air) and electricity usage. Some of these solutions included video conferencing, flexi working, web contact centres, extended enterprise and desktop virtualisation. These solutions also had the added benefit of lowering a business’ running cost after the establishment phase has been covered.
Dr Caroline Noller of CPT Group demonstrated that in the future, retailers might be able to reduce their carbon footprint by simply choosing where to establish their businesses. Dr Rouse spoke about the Rouse Hill Shopping Centre development where 30 percent of the centre’s design budget was allocated to social and environmental design. During the development phase the centre engaged tenants on the ecological aspects of lighting, water, materials used, transport and waste. The final result was a reduction in the centre’s ecological footprint of 41 percent.
Adval’s Paul Hone spoke about some research the organisation had been conducting into overseas trends of labelling and verification schemes such as Going Green and Good Environmental Choice. He also put forward the idea of a local accreditation initiative where businesses can use a logo on their products or services if they meet particular criteria. The benefit of this type of initiative is it sets a benchmark for what can be defined as “environmental”, while at the same time it enables the business to adopt sustainable practices of their own accord. In turn, consumers can make an educated choice and chances are they will reward the business with their wallets.
A recurrent theme was that businesses, working together with their stakeholders, can voluntarily take a variety of steps to improve their environmental standing, and, in turn, the benefits will come.
Having the privilege to speak at this inaugural conference, my aim was to drive a message of “engagement”.
Indeed, retailers who are truly committed to the premise of a greener planet must encourage federal, state and local government responsibly.
The key is to work together with key stakeholders to achieve workable solutions by:
- Engaging with local Retail Trader Associations
- Forming retail working groups and task forces
- Submitting to government inquiries
- Engaging local media
- Demanding acknowledgment and reward for environmental sustainability innovation
- Demanding knowledge and education from government to retailers and consumers regarding environmental science and sustainability.
Consumers drive retailing and retailers need to respond to the revolution in consumer behaviour and mirror the societies they serve. And right now customers are telling us they are concerned about the environment. They are concerned about global warming. They are concerned about reducing energy use. They are concerned about the number of non-biodegradable plastic bags entering our waste stream. And, they are concerned about the retail sector’s environmental footprint. And therein lays the opportunity for retailers to become examples of best practice.
Right now, the pursuit of excellence in environmentally sustainable retail activity is not just desirable; it is a compelling business imperative. Build a sense of commonality with your consumers. Create a partnership with local communities by showing you understand what the environmental issues that are important to them and then incorporating this understanding into your retail brand.
Whether you agree or disagree with the research and science, no one can question the fact that right now the environment is priority. If these are issues your consumers are concerned with – this is a great opportunity to act as a pillar of the community by showing leadership and best practice.
Right now, many retailers are responding to issues in their communities by working towards becoming carbon neutral, using new energy efficient technologies, or offering alternate ‘green’ bags.
One of the most influential examples of voluntary best practice in retailing relates to environmental sustainability.
In 2003 the ARA created the Voluntary Code of Practice for the Management of Plastic Bags. The Code contained strong targets to reduce the number of plastic bags issued by supermarket retailers. The Code also aimed to encourage non-supermarket retailers to commit to the principles of the Code.
The final report provided to the Department of Environment and Heritage outlined significant and promising results by both supermarkets and non-supermarket retailers. This is what retailers voluntarily achieved:
- A 45% reduction of bags issued by supermarkets. This equates to three billion bags over two years.
- A 14% recycling rate of bags issued by supermarkets.
- Over 90% non-supermarket retailers indicated they had reduced the amount of plastic bags issued.
- 24% of non-supermarket retailers reported they had completely removed plastic bags from their business.
Signatories to this voluntary code showed they were part of the community by listening and acting upon issues that were important to their customers. And all of this happened through voluntary self-regulation.
Managing the industry’s carbon footprint is a challenge for retailers, but without challenges there are no opportunities. Right now, there is a real opportunity to create brand leadership by demonstrating best practice. Research has shown that businesses that take initiative on implementing better environmental practices are usually rewarded by consumers.
What the POPAI conference demonstrated was that businesses are not only getting active and taking the issue seriously, but they are working together with other stakeholders for better outcomes. The key to getting started is to become engaged. Participate in initiatives, build working relationships with key partners and most importantly, assess information discerningly.
Richard Evans is Executive Director of the Australian Retailers Association – the leading voice in retail. To find out more call 1300 368 041 or go to www.retail.org.au