Green

Retailing
lobal warming, water crisis, food
shortages, increased frequency of
Gdisasters are all indications that
humans have mishandled nature. According to
Dr R. Pachauri (Coca-Cola Research, 2008), the
climate change is likely to have some
irreversible impact on ecosystems, food
shortages, coastlines and health. The significant
sustainability issues that should be the concern
of every stakeholder are
- Climate change
- Waste management
- People and community
Both as responsible businesses and consumers,
there is a strong need to mitigate and work
towards stabilization of the natural
environment. In the past decade,
environmental concerns have gained priority in
the agendas of most businesses the world over.
Responsible business organizations are
exploring and implementing possibilities of
producing goods in an environmentally safe
way.
Responsible consumers are concerned about
the broad macro aspects, like the global
warming as well as how their purchasing
choices affect the livelihood of people in other
countries. The consumers, awakening to
sustainability issues is impacting their
April 2012 15
RESEARCH
Smitu Malhotra
shopping habits, just as it is impacting
other aspects of their life, especially in
the developed world (Ipsos Mori
Report, 2007). Consumers are also
concerned about the environmental
impact of products they buy as well as
of the organizations they shop at.
The organizations that often form the
link between the businesses and the
consumers are the retailers. The role of
retailers is pivotal as they are the
intermediaries between the producers
and consumer. Retailers can contribute
towards climate change, waste
management and people and
community - by analyzing their
business processes and addressing these
issues.
Retailers can have an impact on both
consumers and suppliers by
- adopting green business practices
themselves,
- providing better choices to
customers in the form of green
products thereby, influencing
consumer behavior and
- influencing suppliers to adopt
fair trade and green practices to
supply environmental friendly
products.
This paper argues the case for giving
importance to developing practices for
sustainability in the retail sector.
Adoption of green practices at retailers
end can build a multiplier effect of
environmental pressure on consumers
and suppliers. It is imperative to adopt
and enforce these practices now,
especially in developing countries like
India, as organized retailing is still in its
nascent stage. Creating systems at this
stage would lead to the development of
an environment friendly retail system
from the very beginning, save a lot of
time, finances and energy and
ultimately contribute towards a greener
planet.
Retailing sector is one of the largest
private sectors of the world with
almost 47 per cent of Fortune 500
companies in retailing. Global retail
sales were estimated to be around US $
13.9 trillion in 2009 (IMAP Retail Report,
2010). Given the large size of the global
retail business, any change, even a very
small percentage, will have a huge
Need For Green Retailing
impact to an unlimited degree. For
example as illustrated later in this
article, implementation of some features
like the waterless urinal in one mall,
results in an estimated annual water
savings of over 20,000 m3 per year,
equivalent to 10 Olympic-size
swimming pools! Imagine the savings in
water if all stores were to implement
this one change!
Also, we believe that, the starting point
to adopt green practices should be the
retailers as they are best suited to cajole
customers, on one hand, and force
suppliers, on the other, to adopt
sustainable processes.
The retailers can have an impact on
consumption habits of consumers by
offering them the right choice of green
products and, thereby, play a dominant
role in facilitating right consumption
and production patterns.
The retailers' impact on supply side has
been illustrated by Ytterhus, et. al.,
(1999). They state that, if one thousand
firms are supplying to a large retailer
and ten firms supply to each of those
thousand firms, the effect of
environmental pressure will be on
11,000 companies (1,000 + (1,000 10)).
This leads to a multiplier effect of
environmental pressure.
In todays globalised world, retailers
often operate across the boundaries,
buying and sourcing from one part of
the world and selling in another. They
can act as change agents taking their
knowledge of processes and practices
from the one part of the world to
another and hence, help shape practices
that encourage sustainability in the long
run. Durieu, as quoted in Jones, et. al.,
(2005), recognizes the pivotal role of
retailers. He argues that they can
greatly influence changes in production
processes and consumption patterns
and are well positioned to exert
pressure on producers in favor of more
sustainable consumer choice
American Marketing Association,
defines Green Marketing as follows-
1. The marketing of products that are
presumed to be environmentally safe
(Retailing definition).
2. The development and marketing of
products designed to minimize
What It
means
A me r i c a n Ma r k e t i n g
Association, defines Green
Marketing as follows-
1. The marketing of products
that are presumed to be
envi r onment al l y s af e
(Retailing definition).
2. The devel opment and
marketing of products
desi gned t o mi ni mi ze
negative effects on the
physical environment or to
improve its quality (Social
marketing definition).
3. The efforts by organizations
t o pr oduc e, pr omot e,
package, and r ecl ai m
products in a manner that is
sensitive or responsive to
e c o l o g i c a l c o n c e r n s
(Environments definition).
April 2012 16
Smitu Malhotra is presently an
Assistant Professor, Marketing
Area, at XLRI, Jamshedpur. Her
area of specialization is organized
retail. Her other areas of interest
include Green Marketing, Rural
retailing and Services Marketing.
negative effects on the physical
environment or to improve its quality
(Social marketing definition).
3. The efforts by organizations to
produce, promote, package, and
reclaim products in a manner that is
sensitive or responsive to ecological
concerns (Environments definition).
However, Green Retailing or
Greentailing as aptly stated by Stern
(2008), is conscientious retailing built on
environmentally sustainable, socially
responsible and economically profitable
business practices. Such practices
explicitly consider the impact of a
retailers actions on the environment
and community, customer perception
and behavior, and employees, suppliers
and, ultimately, shareholders returns.
The pressure on the retailing industry to
adopt green practices has increased
significantly in recent times. Internally,
the employees expect fair labor
practices, healthy working environment
and competitive wages and benefits.
External drivers include the
communities that expect organizations
to behave as responsible citizens,
consider local impact of their practices
and engage in community development.
Competitors act as another driver for
change, viewing to position themselves
as leaders to initiate sustainability and
gain brand strength and reputation.
Retailers, who adopt green practices,
can gain a competitive advantage in the
market place not only in the eyes of the
customer, but also among legislatures
and regulators. Media, another
stakeholder, also put pressure on
businesses to adopt green practices by
highlighting current sustainability
issues.
Thus, the retailing industry faces a
marketing pull from the customers and
competitors and a legislative push
towards adopting green as a way of life.
Given this concern for environment by
consumers, communities, government
and regulatory authorities, NGOs and
others, the question is not if but
how to adopt sustainability practices.
As Prakash (2002) points out Firms can
green themselves in three ways: Value-
addition processes (firm level),
management systems (firm level)
and/or products (product level)
Business Process Breakup and Scope of
Adopting Green Practices
April 2012 17
Figure: The Value Chain in Retailing
Source: The Coca-Cola Retail Research, 2008.
THE OPPORTUNITY AREAS
Retailing
Operations
Loading
Dock
Warehouse
Storage
Back of Store
Shelf
Front of
Store
Loading equipment
Storage
Lighting, heating, cooling, ventilation
and energy use
Company business travel
Carbon footprinting
Reduced packaging
Efficient unit loads
Alternative transport
Better logistics
Low carbon fuels
Vehicle efficiency
driver training
New Stores
Renewable energy
Technologies for
emission reductions
Efficiency specifications
Existing Stores
Energy saving
technologies
Employee training
Refrigerants
Home transport/
delivery
transport
Store location
and siting
Low carbon
Products
products
Labeling-carbon
& energy efficiency
Education
Energy efficient
TRANSPORT SHOPPER
SOURCING/
SUPPLY CHAIN
Measure energy use and set reduction targets
Carbon
emissions
generated
Possible
emissions
reductions
Source: Sancroft/CCRRC
Retailers, actually, use a combination of
all the above, for example a value
addition process could be using motion
lighting to save energy; a management
system could include creating a
conducive process to facilitate incurring
costs on eco-friendly lighting system
now to gain future benefits; and, a
product level initiative could be
sourcing green products with the help
of suppliers and highlighting them in
the store to encourage consumers to
purchase them.
The Figure illustrates the value chain in
retailing, and also highlights the
opportunity areas where green practices
could be adopted.
The value chain could be broken up into
three major parts:
- Back-end processes (Supply chain,
Transport and others)
- Retail operations
- Customer interface
At each part of the value chain, there
exists a possibility of contributing
towards -
- Climate change by reducing
carbon emissions.
- Waste management by
encouraging recycling and reuse of
material.
- People and community by
following fair trade practices and
pressurizing suppliers to follow
the same.
Some international practices and
examples in the developed world that
illustrate the application of sustainable
practices in each area are discussed in
the next section.
As mentioned earlier, since retailers act
as a channel between consumers and
suppliers, their environmental concerns
closely impact their suppliers.
Internationally, large organizations like
Wal-Mart, Tesco, Marks and Spencer,
and Target are taking various initiatives
to encourage their suppliers to adopt
green practices, helping them develop
processes to produce green products,
pressurizing them to use fair trade
practices and cajoling them into using
recyclable packaging. Some of these
initiatives are:
Screening suppliers
A few, large retail chains have started to
introduce procedures for screening
suppliers as well as products. Screening
could be based on changes brought
about in the purchasing policies of the
organization or scanning the suppliers
environmental and management
policies along with the product quality.
Marks and Spencer established a set of
global sourcing principles in 1999 that
set down supplier requirements relating
to working hours and conditions, rates
of pay, minimum age of employment,
etc. All of their direct suppliers of
finished goods are expected to meet
these principles (Jones, et. al., 2008).
Rethinking products
Working with suppliers for new
product development that is green and
based on fair trade practices is another
initiative retailers are taking. Especially
in food retailing, co-coordinating and
co-operating with farmers, help them to
provide fresh produce using sustainable
Supply Chain and Transport Initiatives
April 2012 18
An example of green
architecture is City Square
Mall in Singapore. Since
inception, City Square
Mall has been
conceptualized with
environmental
sustainability in mind,
from the construction
process to all the building
features.
practices with long-term benefit and
impact on the climate. Retailers are
encouraging suppliers to use eco-
friendly raw materials which may
sometimes lead to altering formulation
of the product An example of a new
and unique branded ingredient is
EarthGrains, new formula, which uses
20 percent Eco-Grain wheat that is
grown using sustainable farming
practices, reports Green Retail
Decisions. Development of concentrated
detergent, for example, has lead to
significant savings in water.
Green infrastructure
Helping suppliers build and work with
eco-friendly infrastructure - Tesco, for
example works closely with its suppliers
to create green factories where water is
recycled, uses solar energy and help,
them develop packaging that is
environment friendly.
Fleet upgrades
Upgrading and maintaining the fleet of
trucks not only reduces carbon
emissions but also enhances efficiency.
Using alternative ideas for fuel (Ukrop,
a Virginia based retail chain, is
converting soya oil used to fry chicken
in their stores into biodiesel for their
trucks.), working with fleet
manufactures closely to design fuel
efficient mechanisms, like Wal-Mart is
exploring new design with their truck
and trailer manufacturers among the
modifications they are testing are the
electric diesel hybrid engine (Coca-
Cola Research, 2008) are some of the
initiatives that have already been
operating.
Rethinking fleet routes leads to
significant reduction in empty miles
travelled. Collaborating with suppliers
to manage journey routes could enable
fleets to reduce delivery time and
increase efficiency.
Waste management
Working closely with suppliers to
reduce waste, Wal-Mart is focused on
the corporate goal of zero waste by 2015,
said Guy McGuffin, vice-president of
sustainable packaging for Wal-Mart
Canada, at the companys fifth annual
Sustainable Packaging Conference held
in Toronto 2011 (Green Retail Decisions,
2011). Wal-Mart goals for waste
reduction are

Eliminate landfill waste generated by
their US operations by 2025.
Reduce global plastic shopping bag
waste by an average of 33 per cent per
store by 2013 (January 1 - December
31, 2007, baseline).
Focus on the three R's when
thinking about waste reduce, reuse
and recycle.
Retail operations
This is by far the area that has the
largest scope of reducing carbon
emissions and controlling waste -
building architecture, store design,
lighting systems, refrigeration systems,
display fixtures, processes and practices
to reduce waste, water management
all fall under the purview of retail
operations.
Architecture
The focus on sustainability starts at
construction and continues through the
stores daily operations at Kum & Go
stores. (Green Retail Decisions, 2011).
Today, LEED (Leadership in Energy and
Environmental Design) certification for
buildings is gaining acceptance and the
governments of some countries are
looking for such certifications before
granting permits. Maximizing usage of
natural light through the design of the
building is another option that leads to
power saving.
Efficient lighting and refrigeration
systems
Using more efficient lighting systems
like LED and new technology in
refrigeration systems can go a long way
in carbon reduction. Motion lighting
system allows full light, when motion is
detected and switches off automatically
when the usage is negligible.
Using alternate sources of power also
reduces carbon imprints, for example,
Tesco uses wind power to supply
directly to its stores. Saving and
recycling water, using Green Shelves,
usage of recyclable packaging material,
efficient and technologically advanced
refrigeration systems could reduce
greenhouse emissions and result in
significant cost reductions too.
An example of green architecture is City
Square Mall in Singapore. Since
inception, City Square Mall has been
conceptualized with environmental
sustainability in mind, from the
April 2012 19
construction process to all the building
features.
Green Roof is shaped like a green leaf
designed with five distinct
environment friendly features to
reduce temperature, harness solar
energy, allow lighting, collect rain
water and promote cross ventilation.
Eco-Playground is made of child-
friendly conditioned wood, and it
uses wood certified by the forest
stewardship council (FSC), which
promotes responsible forest
management worldwide.
Environmental Construction Material
like eco-tiles and recycled wood are
used.
Waterless urinal - Estimated savings
of 3,000 m3 of water annually.
Various screens around the mall to
display the building's real-time
performance in terms of energy
consumption, carbon dioxide level,
solar energy amount, humidity level
and temperature, etc., for shoppers'
information.
Driveway motion sensor to control
lighting level at B4 car park -
Estimated electricity savings of 51,300
kWh per year.
Use of pre-cooled air in air-
conditioning system to reduce overall
energy usage.
Annual electricity savings: Over 11
million kWh per year, equivalent to
the electricity consumption by more
than 2,000 4-room Housing
Development Board flats.
Reduction in CO2 emission: Over
5,000 tonnes per year, equivalent to
1,40,000 trees required to absorb the
amount of CO2 emission.
Annual water savings: Over 20,000
m3 per year, equivalent to 10 Olympic
size swimming pools.
If one mall built on eco principles, can
result in such massive savings in power,
water and energy, one can just imagine
the magnitude of the collective gains if
all retailers follow suit!
It has been noticed that though
customers support eco-friendly
products in principle, they are not
willing to pay a higher price for them or,
given options, do not always choose the
green product owing to various
Innovative Features of the Mall
Consumer Initiatives
reasons other than price. Often, they
may feel that the eco-friendly products
do not perform so well as the other
products, or may find that, in using
green products, they have to give up a
bit of convenience and packaging
facility. There is a need to raise
awareness and educate the customers
on this issue. This is of critical
importance to build and influence the
mindset of consumers to opt for greener
products. Enabling customers to make
informed choices by engaging them
through communication, giving
information on whether the product is
organic, uses recyclable packaging ,
whether producers use fair practices,
etc., would help customers opt for the
right products. This would also require
the tough task of changing customer
attitudes about consumption, usage and
disposal of products in their daily lives.
Educating employees on all the above
issues too is important so that, at every
touch point with the consumer, the
sustainability issues could be reinforced.
Helping consumers adopt green
technology in their lives, even if it is
outside the direct purview of retailing,
reinforces the brand image in the eyes of
the community. For example,
Walgreens, a drug retailer in the US,
plans to offer electric vehicle (EV)
charging stations at approximately 800
locations, making it the nations largest
retail host according to Mark Wagner,
Walgreens president of Community
Management and Operations. As more
Americans embrace environmentally
sustainable technologies, our convenient
locations make us uniquely positioned
to help address the concern around
accessibility or range confidence."
(Green Retail Decisions, 2011).
Encouraging customers to move away
from plastic bags, redesigning recyclable
packaging selling loose wherever
possible, thereby, reducing the amount
of waste packaging taken home by
customers - are some initiatives that can
be and are being implemented all over
the world. A step in this direction could
be rewarding customers that adopt
green products could be done by
loyalty points on the cards, etc.
Ninety six per cent of
the retail market
consists of large
number of
unorganized players -
some reports suggest
the number to be 12
million - with the
average size of the
shop less than 500 sq
feet.
April 2012 20
Case For Going Green in India
The Indian organized retail story has
just started unfolding. India is set to
become a $450 billion market by 2015
comparable to the market in Italy ( US $
462 billion ) and much larger than that
of Brazil (US $ 258 billion) according to
a McKinsey Report (2008). Domestically,
it is one of the fastest growing sectors
that accounts for 22 per cent of the
country's gross domestic product (GDP)
and contributes to 8 per cent of the total
employment (Ibef, 2011).
Ninety six per cent of the retail market
consists of large number of unorganized
players - some reports suggest the
number to be 12 million - with the
average size of the shop less than 500 sq
feet. The unorganized players the
kirana shops as they are called in
India, are run by small business men
with very less working capital. Given
the situation, where most players are
unorganized, illiterate, follow primitive
methods, and are in a perpetual cash
crunch, the onus lies on the organized
players to lead the way. And, at this
stage, where, within the 400 odd billion
dollar market, the share of organized
retail is expected to grow from 4 per
cent presently to 14-18 per cent by 2015,
it becomes all the more significant to
create awareness and consequent
policies on sustainability in retail. As
this sector grows, as organizations grow
and consumer concerns about the
environment grow, it will be prudent to
incorporate policies and practices at an
early stage so that green practices
become a way of life.
Indian retail has not been given industry
status yet, and the allowing of FDI of 51
per cent in multi-brand outlets is on the
anvil. Given the developments, the
industry is at the crossroads. The earlier
it enforces green practices, the better it
would be. Once the FDI regulations are
relaxed, the country would see an
inflow of foreign retailers who have
been eyeing the Indian terrain for a long
time. They would be setting up their
businesses virtually from scratch
enforcing/legalizing green strategies at
this stage would be far easier than
changing them at a later date.
Today, businesses have a choice about
going green, but ten years down the
lane it may not be so. Businesses that
are well prepared, probably, will be able
to put up shop at the best locations and
start operating while the competitors are
still waiting to get clearance for the land
(Miologos, 2008).
It is always prudent to start correctly
rather than implement changes at a later
stage, which then might be time
consuming, costly and difficult.
As mentioned earlier, the organized
players will have to lead the way for
implementing Green Retail in the Indian
context. However, support from the
government and the civil society/
consumer will be critical in this regard.
All three will have to work in unison to
get us towards a greener planet. At the
business level, Stern & Ander (2008)
introduce a T.A.S.C. model where
Incorporate
Green into the company mission and
appoint people responsible for looking
at the business comprehensively.
Build green
practices as to how the organization is
managed, from how the buildings are
built to how fleets are managed.
Natural
products, organic products, fair trade
products are all ways of ensuring
green products reaching the customer.
Work
towards educating the customers,
employees on green aspects and how it
is incorporated in the companys
processes.
Building environmental
sustainability in the vision mission
statement of the organization is the
starting point. Developing processes
and culture in the organization that
accepts sustainability, developing
transparent standards and measuring
their impact, setting concrete
sustainability targets to be achieved,
will send a message in the organization
about the seriousness of the
commitment of the top management.
Unless sustainability is ingrained in the
culture of the organization, it has little
chance of success.
All organization processes
and acts - Green buildings with LEED
certification, retail operations and back-
end processes need to be aligned with
What Needs to be Done?
T stands for Think green
A stands for Act green
S stands for Sell green
C stands for Convey Green
Think Green -
Act Green
Green practices
can be adopted
at every point
in the retail
value chain
backend processes,
retail operations
and consumer
initiatives.
April 2012 21
reducing carbon emissions , waste and
poverty. Strict and transparent
measuring systems have to be
developed for accountability. Investing
in smart technology for improving
efficiency would also help.
There is an urgent need to
collaborate with suppliers to develop
and procure green products. New
formulations with eco-friendly
ingredients, monitoring fair trade
practices at the suppliers end and
highlighting / promoting green
products in the store, are all examples of
selling green.
As the economies of
India and China are growing, there is a
pressing need to educate customers
about usage and awareness of
sustainable products. Retailers can have
a direct impact on the consumption
patterns in these economies. By
educating customers and making green
products available, retailers can
influence the choices the customers
make. However, adoption of eco-
friendly products is the direct fallout of
becoming conscious about the
environment and the impact our
activities as consumers have on it.
Therefore, for an emerging economy
like India, the challenge, first, could be
to guide and influence adoption of
sustainability practices in the consumer
habits in their daily lives, which may be
a tall order. Media help, NGOs and, of
course, retailers too could play an
important part in this. The Government
support in the form of fiscal policy that
encourages low impact products, tax
rebates on using renewable energy
sources, simplifying process
requirement for Green licenses and
regulations, incentivize all business to
use recyclable packaging, are initiatives
that could encourage and expedite the
adoption of sustainable practices by all
stakeholders.
Paradox of Going Green Going Green
promises future savings, but going
green also affects present budgets. It
will have an impact on savings, but that
does not show in the short run.
Therefore, the present financial
implications act as a hindrance. Then,
what is the way out? Firm commitment
Sell Green
Convey Green -
Blocks to Adopting Green Practices
of the organization and top
management to going green portrays
that all are in it together and shall make
the present higher costs and future
gains to the bottom line acceptable.
Low political priority of sustainability
and mixed messages from the
government create a mindset of "I will
go green when I have to". True,
presently going green is a choice, but, a
few years later, it may not be so.
Organizations that are well prepared
with certifications and green processes
may leapfrog far ahead in a very short
time, gaining the best locations and a
strong green image that will act as a
competitive advantage over those
organizations that leave it to the last.
The perception of retailers that using
eco friendly material for store interiors
is not only expensive, but may also lead
to a compromise on the store experience
of the customer a high-powered light,
for example, vis -a -vis the natural
sunlight, may not showcase the product
in the same appealing manner . All that
can be said is that technology is
changing at a fast pace. Many options
are available now than before, for
example, the LED lighting systems are
not only powerful but also result in
huge energy savings. The world is
adapting, and rejecting green materials
may not be sensible any more.
Changes in the environment are
impacting all. It is our duty as
responsible businesses and consumers
to take steps and mitigate the situation.
Retailers are the link between
consumers and manufacturers. They can
influence the consumption patterns of
the consumers as well as the production
processes of the suppliers and, hence,
are best suited to initiate sustainable
practices.
The future of retail can be shaped by
changing
- Collaboration with the suppliers,
- Store operations moving towards
green practices, and
- Relationship with the customer.
Green practices can be adopted at every
point in the retail value chain back-
end processes, retail operations and
Conclusion
April 2012 22
...the organized
players will have to
lead the way for
implementing Green
retail in the Indian
context. However,
support from the
government and the
civil society/ consumer
will be critical in this
regard. All three will
have to work in
unison to get us
towards a greener
planet.
What
needs
to be
done
consumer initiatives. They could be an
opportunity area and green practices
could be incorporated at each level
leading to management of carbon
emissions, efficient use of resources and
reduction in poverty the three main
concerns today. There is an urgent need
to adopt these practices in emerging
economies like India as the retail is in its
nascent stage and expected to grow
exponentially. Creating policies now
would save a lot of time, finances and
energy and, ultimately, contribute
towards a greener planet.
American Marketing Association.
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Shaheen (2010). Retail A sustainability
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June 30, 2011.
Duff, Mike (2007, August 13).Staying
Ahead of Green Regulations. Retailing
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Green Retail Decisions (2011).Wal-Mart
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011/07/28/walmart-canadas-long-term-
sustainable-packaging-vision accessed
August 2011.
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Sustainability Issues in Retail Sector,
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