How Retail technology can aid retailers' green initiatives
Recent years have seen a significant rise in consumer awareness of the environmental impact of their shopping habits and the business activities of the stores they visit. Increasingly, customers' purchasing decisions are influenced by the environmental provenance of a product as well as its cost and quality.
A recent survey conducted by MORI found that 44% of British consumers have rejected a product on ethical grounds. Faced with this change in the priorities of their customers, stores may feel unsure what to do. Yet technology can help retailers make positive steps towards ensuring their businesses are more environmentally sustainable.
As green issues move up the consumer agenda, it becomes more important for retailers to reflect this in their product ranges and operations. Concepts like the triple bottom line (TBL) have gained popularity over the past 15 years, where companies have been measured in terms of their economic, environmental and social responsibility. However, companies can no longer focus exclusively on delivering profits to shareholders. Accounting for social and environmental impact is now a board level concern.
49% of the UK's top 100 retailers are in the process of making 'significant' changes to their businesses to make them more environmentally sound, according to a report by retail analyst Martec. It is not only pressure from consumers, but also a recognition that green initiatives can save money that is driving these changes.
This vast array of initiatives to reduce their environmental impact ranges from tracking product air miles and reducing waste from packaging, through to building 'eco-stores' that can recycle rainwater. One recent initiative involves delivering goods to central London-based stores along the Thames.
Not all measures have to be as costly and dramatic as this. There are some very effective and economical retail technology solutions retailers can introduce into their business.
M&S recently announced its success in reducing plastic bag waste by 80% by charging a small fee per bag used. 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.
By monitoring the amount of waste saved by removing plastic bags from transactions, stores can better quantify their efforts towards environmental sustainability, and can pass this information directly onto the customer. 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.
Printed receipts are another potentially wasteful element of shopping that retailers can cut down on. 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 sites offering an interface for paperless receipts.
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.
It is not just at the point of service that companies can measure their sustainability. Business analysis and information management tools now also exist that allow retailers to accurately track data related to their environmental impact and present it in a clear and meaningful way to management and customers. With the ability to quickly identify potential areas of waste within the business, such as a delivery route that creates an above-average level of pollution, managers can more effectively target improvements.
This has an important additional benefit: these changes and their impact can then be conveyed to the public with greater clarity. Stores such as John Lewis and M&S have enjoyed increased customer loyalty by presenting their green initiatives in a simple, direct way to consumers. By producing better information about the advances they are making, more retailers can improve their public image.
Further improvements can be made away from the shop floor. Overstocking is a problem that affects many retailers. Excess stock often has to be returned by truck to the warehouse, and then possibly back again, resulting in an unnecessarily large environmental impact and higher staff costs. With more accurate and up-to-date stock control functions, stores can reduce both unnecessary transportation costs and the associated carbon footprint, as well as benefiting from gains in productivity.
With the right technology, retailers can make simple and positive steps towards reducing their environmental impact, at a pace that best suits them and their business plans. As well as benefiting from increased customer trust and loyalty, retailers also stand to benefit from increased profits as a result of reducing inefficiency and waste. 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, this can present an opportunity for stores to both enhance the customer experience and improve the bottom line.
It is not only increased profit and enhanced brand image that should encourage businesses to improve their eco-credentials. Increasing pressure from government legislation to dispose of waste responsibly is an added incentive 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. This pressure to reduce hazardous waste will only increase over the next few years, as green issues remain at the forefront of the Government's agenda. It is therefore imperative that retailers recognise how technology can help them keep track of and reduce waste within their business.
Doug Hargrove is Chief Marketing Officer at Torex.
Article Date: 30 September 2008
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