2Sustain

A new study from Retail Systems Research (RSR) and the Retail Industry Leaders Association (RILA) found that top retailers have integrated eco-friendly practices into their business operations, and that they remain committed to these sustainable practices despite the downturn in the economy. According to the report, “green” is rapidly creating a strategic advantage throughout the retail sector and has reached enterprise status among industry leaders.

The 28-page benchmark report, titled “Real-World Green: The Role of Environmental Savings in Retail,” offers insights about how top-performing retailers (“winners”) differ from industry laggards in terms of both green motivations and execution.

For example, when asked to rate their motivations for adoption of sustainable practices, more than half of the retail winners cited factors such as brand identity, industry image, and ethical obligation. By contrast, the retail laggards tended to focus on cost reduction as a key driver of sustainability. Winners, it appears, are taking a more holistic approach, incorporating green throughout their organizations and realizing its potential as a strategic differentiator.

The report also includes a comprehensive discussion about the ROI of green initiatives.

Interestingly, no winners expect an ROI in less than a year, although 9% of laggards do.

In addition, a year ago, only 11% of RSR’s survey respondents strongly agreed that a commitment to green practices is not just a good PR initiative, but rather a genuine opportunity for cost savings. This year, that number jumped to 30%.  An overwhelming majority (92%) pointed to a reduction in energy consumption at the store level (92%) and throughout the supply chain (88%) as key opportunity to realize cost savings. Many also cited packaging (89%), product design (84%), and new store construction (79%) as areas for potential high ROI.

I thought the conclusion of the report summed up the results quite well:

“Winners aren’t suffering any illusions about the difficulty in justifying green projects. They acknowledge that investments are very hard to quantify. Given their hypersensitivity to consumer expectations and the strategic value of green initiatives, it is no surprise that they also exhibit a reasonable expectation of an ROI. But many Winners would consider adding to our overall cost structure if the imitative has other brand-related benefits. Retailers should consider the strategic Brand value of their green positioning, and not merely the short term tactical cost savings that might be won with targeted “green” projects. Adoption of eco-friendly practices is not “if” but “when.” Early adopters may incur risks that late adopters could avoid, but they gain leadership position in the eyes of consumers who want and expect change.”

You can download the full report at www.retailsystemsresearch.com/_document/summary/958 (registration required).