Retailers are in the front line of the drive to go green, and IT has a major part to play
There is a growing recognition among retailers that green initiatives can save companies money – a particular concern given current economic pressures.
Given the fact that damage to a brand’s image may lead to immediate and sustained loss of income, it is unsurprising that the idea of a ‘triple bottom line’, whereby companies take into account ‘people, planet and profit’ to run a successful and enduring business is gaining momentum.
In fact, 49% of the UK’s top 100 retailers are in the process of undertaking ‘significant’ changes to their businesses to make them more environmentally sound, according to a report by retail analyst Martec.
Alongside the identification of increased profit and enhanced brand image, increasing pressure from government legislation to dispose of waste responsibly is an added incentive for retailers to take a proactive approach to waste management. The introduction of last year’s waste electrical and electronic equipment directive (WEEE), put in place to reduce and manage the amount of electronic waste being produced and recycled, highlighted this issue.
While some retailers are taking radical measures to improve their green credentials, including building “eco-stores” that can recycle rainwater and even using the Thames to transport goods to stores, it is important to note that changes do not need to be on such a dramatic scale to have a significant impact on cutting down on waste and reducing energy consumption.
Aspects such as the options offered to consumers at point of service (POS), the route that deliveries take to arrive at a store and the packaging containing goods can all be examined and improved from an environmental perspective and there certainly exists the technology available to help retailers do this.
Overstocking is one example of a problem that affects many retailers. Excess stock often has to be returned by truck to the warehouse, and then out again, resulting in an excessively large environmental impact and higher staff costs.
With more accurate and up-to-date stock control functions, stores can reduce both avoidable transportation costs and the associated carbon footprint, as well as benefiting from gains in productivity.
To help avoid this, retailers can work together to ensure that stock is not making unnecessary journeys. Business analysis technology can provide retailers with detailed information about the number of orders they require, which can then be transmitted to a supplier, who could arrange to make deliveries to multiple outlets, rather than having each retail outlet pick up its stock separately.
The country of origin is also an important consideration for retailers in reducing their supply chain. Clothing retailer, George, for instance, has taken a very forward-thinking approach with plans to stock one million garments designed and produced in the UK.
The proactive decision to support the UK economy and cut down on ‘clothes miles’ is a strong positive message to send out to customers. With this type of strategy in mind, technology companies have built in planning functions to retail software to allow retailers to analyse the journeys products are making from one country to another and their impact on the environment.
For retailers who cannot afford to ensure that all their supplies are locally sourced, dual-sourcing is a useful alternative, whereby retailers source the first batches of a garment from a supplier outside of Europe but source additional stock of the same product from Europe, cutting down on their carbon footprints but still keeping costs low.
The simple alteration of packaging can also impact the transportation of goods. Packaging analysis technology can inform retailers of the most efficient way for items to be packed using the least amount of resources. A decade ago, for example, Nike decided to reduce the number of different box styles it had from eighteen to two, reducing their use of raw material fibre by 8,000 tons per year.
Pioneered by Walmart, the concept of cross-docking reduces the amount of packaging as items are packed to be delivered directly to the store, rather than unpacked and repacked at a warehouse.
Surprisingly, it is currently more common for retailers’ stock to make multiple journeys to and from warehouses, due to inefficient planning. If more data is tracked and communicated regarding purchases then retailers can better inform suppliers regarding the number of products needed for each individual store.
Further improvements can be made on the shop floor. Advanced point of sale (POS) systems have features that can help stores improve their green credentials in a number of ways.
For instance, many retailers have improved their fresh food management process through using POS to provide detailed tracking information regarding the types and quantities of products being sold, so that discounts and offers can then be applied to products in a more targeted and timely fashion.
There is a great deal of interest in this type of technology at the moment, not only due to its green credentials, but also the fact that it can help companies identify the areas where they are wasting produce and money, particularly crucial in this difficult economic period.
Printed receipts are another potentially wasteful element of shopping that retailers can reduce.
A feature in new POS systems can give stores the ability to offer “paperless” transactions. At the point of service, the cashier is able to offer the customer the choice of a traditional printed record of the transaction or the alternative option of automatically sending an electronic version via one of a number of websites offering an interface for paperless receipts.
This may not seem like a major step towards greener retail but according to electronic receipt providers AllEtronic, it takes 15 trees, 19,000 gallons of water, and 390 gallons of oil to make a ton of paper. When it is considered that stores use approximately 600,000 tons of thermal receipt paper every year, the amount of waste created by paper receipts is put into perspective.
Monitoring the amount of waste saved by removing plastic bags from transactions is another way for stores to better quantify their efforts towards environmental sustainability.
M&S recently announced its success in reducing plastic bag waste by 80% by charging a small fee per bag used and was able to pass the information regarding this green initiative and its subsequent reduction in waste onto the customer resulting in positive publicity for the company.
Advanced POS systems have features that can help stores achieve similar results. It is possible, for example, for cashiers to record whether customers re-use their bags at the point of service, and award loyalty scheme points accordingly.
With the idea of a tax on plastic bags gaining momentum in other European countries such as the Netherlands, retailers may want to consider taking action sooner rather than later as it is possible this could eventually spread to the UK.
Reducing waste from plastic bags and receipts are effective and visible steps stores can take towards become more eco-friendly.
With waste management controls in modern retail systems managers can also keep track of the environmental impact of each product brought to market.
They can record factors such as the quantity of materials used in packaging, whether those materials can be recycled or are biodegradable, and the carbon footprint involved in producing and shipping them. This provides retailers with a powerful tool to help target where environmental savings can be made.
Stores such as WalMart, John Lewis and M&S have enjoyed considerable positive publicity by presenting their green initiatives in a simple, direct way to consumers, no doubt improving their brand image.
Adapting to respond to environmental concerns doesn’t have to be a dreaded task retailers are forced to undertake. Indeed, as I hope some of the examples above demonstrate, changes to the POS and supply chain can present an opportunity for stores to both enhance the customer experience and improve the bottom line.
Doug Hargrove is Chief Marketing Officer, of Torex, a leading supplier of retail technology systems. Its customers include Argos, McDonald’s, Tesco and Selfridges.