by Garrett Kephart

Today's Environment

Mounting consumer pressures; supply chain risks; existing and impending regulations; volatile energy, resource, and materials costs—together, these forces contribute to an uncertain business atmosphere for retail and consumer packaged goods companies and their manufacturers. Within this context, sustainable practices have emerged as a strategic imperative for retail success. Companies throughout the retail value chain are increasingly using the lens of sustainability to drive innovation, reduce and avoid costs, manage risk, and increase employee engagement and customer loyalty.

Point B’s Perspective

Doing business in a sustainable manner is not just a good feeling; it’s good business. Corporate sustainability programs should provide a return on investment for your business and your clients, and they can be started simply, leveraging existing resources.

In working with a variety of leaders in retail and consumer packaged goods to design and deploy sustainability initiatives, we find that sustainability efforts can facilitate success in unanticipated ways. They can create a more innovative, adaptive and forward-looking organization that keeps in closer touch with its supply chain, marketplace and customers, while minimizing its impact on the natural environment.

Here are just some of the benefits that can come from a sustainability program that fits your enterprise plan, aligns with your culture, and enhances your brand.

Sustainability looks good on the bottom line.

Many retail operations are energy-, water- and waste-intensive. Pursuing energy and resource productivity can yield cost savings that flow directly to the bottom line, while reducing environmental impacts. For example, ENERGY STAR estimates that the average supermarket (50,000 square feet) spends over $4 per square foot on energy costs, 60 percent of which is from refrigeration alone.  By comparison, the average commercial building spends around $2.27 per square foot. Smart refrigeration, efficient heating, ventilation, and air conditioning systems, and state-of-the-art lighting and controls systems can help. 

Build a more resilient supply chain.

In a world where the costs of goods sold (COGS) can exceed 75 percent of gross revenues , and where global value chains are vulnerable to multiple points of potential failure, supply chain resilience is a critical business driver. Sustainability initiatives pursue clear lines of sight through the enterprise value chain, highlighting energy and natural resource productivity opportunities, while identifying financial, environmental, health, and labor risks.

Use this opportunity to innovate.

Resource scarcity is driving new opportunities for innovation, growth and profitability in retail. Many retailers and their manufacturers increasingly view waste as potential value streams, leading to materials recycling, organics sourcing, composting initiatives and the use of distributed renewable energy.

For instance, Canadian Tire reduced material use in its packaging of a folding table, saving over $375,000 annually on freight and material costs. Similarly, a Point B client in the outdoor apparel industry identified about $4 million in savings over four years through process improvement and waste-stream optimization, increasing its capacity to build bikes and drive sales. And in 2013, Walgreens opened the first net-zero retail store in the United States. Sustainability invites you to challenge conventional thinking, question old assumptions—maybe turn things on their head.

Be better prepared for turbulent markets.

Together, increased demand for raw materials, rising energy and water costs, natural disasters, extreme weather and changing regulations are intensifying the uncertain business atmosphere for retailers and manufacturers. Assessing your vulnerabilities head-on can help anticipate and prepare for change.

Increase employee engagement.

Corporate sustainability initiatives are proven to attract and retain talent. They also encourage connection and constructive competition among existing employees, leading to increased loyalty and satisfaction among your people and the customers they serve. In Japan, McDonald‘s participated in the government‘s “Team Minus 6 percent” program to reduce carbon dioxide emissions by 2.2 pounds per person, per day, by offering a discount to consumers who participated in the program. McDonald‘s and its employees raised the number of participants from 40,000 to 380,000, reducing CO2 by over 3 million pounds.

Engage customers in what matters to them.

Consumers increasingly show a preference for brands and products with sustainability stories—stories that are authentic, not just marketing veneer. A recent Ernst & Young survey put it bluntly, “For shoppers, sustainability translates…into three basic categories: good for me (e.g., natural or organic products), good for the community (e.g., foods produced locally, sponsors programs in local community) and good for the environment (e.g., recycles, has a small carbon footprint).”  In a consumer-centric world, retailers must demonstrate a commitment to sustainable goals through measurable, transparent progress.

The Bottom Line

Sustainability initiatives have the power to benefit your organization in many ways, from improving the bottom line to attracting top talent and building brand loyalty. As a result of their deep and wide value, sustainability efforts are changing in spirit and scope. What used to be considered a moral obligation is now actively embraced as a real business opportunity.

When it comes to sustainability, Point B walks the talk. And we’ve learned a lot along the way—both within in our own firm and in our work with leading organizations in diverse industries around the country.