From supermarkets to big-box discounters to specialty apparel stores, retailers across the spectrum are “going green.” But going green means different things to different people and different companies, according to Craig Hale, principal, VP and national director of retail, Carter & Burgess, who spoke with Chain Store Age executive editor Marianne Wilson about sustainability.
Chain Store Age: How do you define green?
Craig Hale: Green means different things to different people and companies. Traditionally, green had environmental connotations and often excluded the “total cost of ownership.” Too often the focus centered on design and construction only. Sustainability is the real goal, which is a balancing of environmental stewardship with economic considerations through the entire life cycle of the built environment.
CSA: While there is no set playbook for a green strategy, are there some basics that all retailers need to consider?
Hale: Different brands elicit different expectations from customers and shareholders. Consequently, the retailer needs to define these expectations. The first step is strategy mapping (visioning, best practices and “success metrics”). The second step is program development (analyzing conditions and identifying opportunities, setting stewardship strategies and establishing standards and practices). The final step is implementation and support (implementing the sustainability program and the support structure). At the end of the day, the customers and shareholders will judge the initiatives and decide if they are authentic and genuine or just green wash.
CSA: How can a green advocate win upper-management support for sustainability initiatives?
Hale: An advocate would be best served by focusing on the initiatives and tying them to positive outcomes. Some management teams will respond better to a pragmatic approach; where the financial benefits can be shown with a positive return on investment. Others respond to an emotional appeal that shows a positive “Return on Perception.” By focusing more on the initiatives, the chances to win support become a byproduct of the efforts. The chance for success is greatly increased if you can show a positive impact in both areas.
CSA: How does LEED certification play into sustainability?
Hale: Pursuit of LEED certification alone is the wrong approach. Total cost of ownership needs to be included as well. Much in the same way that dieting alone doesn’t make you physically fit. That’s why you need to include exercise. Obtaining LEED certification is documentation that a prescribed sustainability checklist was successfully used during design of the project. The benefits derived by using the checklist are independent of obtaining LEED certification. The bottom line is that LEED is good, but it is only part of a sustainable solution.
CSA: Are there any advantages to be had for a retailer in being LEED certified?
Hale: Yes and no. Obtaining the certification can benefit the retailer economically with incentives, credits and inducements. It can also benefit the retailer through industry recognition. But there’s no significant proof that there’s a “Return on Perception” with customers or shareholders, because the general public doesn’t fully understand what LEED certification represents. This is somewhat like the general public’s lack of understanding about ENERGY STAR. Even today many people don’t fully understand the combined dollar, energy, and environmental savings that ENERGY STAR-qualified products offer.
CSA: How does a retailer promote to the public they are sustainable if they are not LEED certified?
Hale: There are many ways and they can be as creative as your culture and budget allow. A “green” section can be created on the retailer’s Web site. Information can be added to receipts. Signage can be strategically placed throughout the store, at point of purchase or even in restrooms. There are many others. Consideration should be given to using everyday examples that explain the benefits in terms the general public can understand and appreciate. For example, some hotels place signage in the restrooms that asks the guest to consider reusing their towels. They appeal to the guest’s environmental sensitivity to save water and lessen the amount of detergent that enters the environment.
CSA: What do you see as the most common errors made by retailers with respect to incorporating sustainability into the store-development process?
Hale: Some retailers make short-term economic decisions without taking into account the total cost of ownership. Others have tunnel vision, where they focus on only one aspect rather than the comprehensive view. Some find they go too far without a plan and discover that they can’t deliver what they promised on a continuous basis. When sustainable initiatives are simply “tacked on” to standard practices they tend to look artificial and rarely last. Truly sustainable strategies tend to be those that are embedded in both the built environment and the day-to-day operation of the business.
Winn-Dixie team honored for turnaround
JACKSONVILLE, Fla. The team that lead Winn-Dixie Stores’ successful turnaround initiative is being honored by the Turnaround Management Association for the best ‘Mega Company Turnaround’ for 2007. Comprised of financial experts from The Blackstone Group, Skadden, Arps, Slate, Meagher & Flom and Smith Hulsey & Busey, the team helped Winn-Dixie regain the market share and profits it started to lose in the mid 1990s and early 2000s to competitors Publix and Wal-Mart.
Winn-Dixie filed for Chapter 11 bankruptcy in early 2005 after reporting year-to-date losses of $552.8 million or $3.93 per share of common stock and a decline of 4.9% in identical-store sales in its second fiscal quarter over the same period in 2004.
Despite the difficulty of achieving a succesful turnaround, Winn-Dixie began its reorganization effort, while still continuing to operate its core business and preserving jobs. According to the Turnaround Management Association, it created new common stock for five classes of unsecured creditors, with recoveries ranging from about 96% to 53%. The company emerged from bankruptcy on Nov. 21, 2006.
For its fiscal year ended June 27, Winn-Dixie reported adjusted EBITDA of $85.9 million compared to a loss of $27.8 million last year and an identical-store sales increase of 1.6%
Sears ends deal with maternity retailer
PHILADELPHIA Sears and Mothers Work, the world’s leading maternity apparel retailer, will not be renewing their agreement, Mothers Work announced today. Under their current agreement, Mothers Works operates the maternity apparel department in 502 Sears stores through the sale of its Two Hearts Maternity branded merchandise.
Mothers Work said it expects its partnership with Sears to end on June 20, 2008, when it current deal with the company is expected to expire.
Rebecca Matthias, president and ceo of Mothers Work, noted, “While we are disappointed about the end of our relationship with Sears, we feel the decision not to proceed with a renewal is in the best interest of our stockholders since we were unable to reach terms on a renewal which would be favorable for Mothers Work and our stockholders. “