Going for the Green
Anew study reveals that the overwhelming majority of consumers believe that the business sector is not doing enough when it comes to protecting the environment—and they aren’t letting retailers off the hook. Three out of four consumers feel that retailers could do more in their efforts.
“The survey makes clear that the public is looking to business to be proactive about the environment and energy conservation—and retailing is not exempt. What’s so surprising is that the expectation for retailers with regard to the environment is nearly the same as it is for manufacturers,” said George Rosenbaum, chairman, Leo J. Shapiro & Associates, Chicago, which conducted the study with Chain Store Age.
The report, “Green Retailing,” surveyed 822 U.S. consumers age 16 and older. It provides insights as to what “green” means to the consumer and how it is best translated in retail. It is designed as a guide for retailers in prioritizing actions taken to achieve “greenness,” and consumers’ expected responses to their efforts. It also details consumers’ personal priorities with respect to the environment and how they match with retailers.
Overall, the study suggests that retailers cannot ignore the green movement and, if acted upon correctly, a retailer’s environmental quotient—or greenness—can become a significant factor in growing market share.
“I think over the next three or four years there will be changes in market and brand shares as a result of how a company responds to the green movement,” Rosenbaum said. “Retailers are going to come under increased pressure to act and look green.”
Priorities: The study shows that consumers have very distinct ideas about what retailers can do for the environment. Their prescription for greenness most often focuses on four key areas: protecting foods from pesticides, making waste sites biodegradable, protecting forests and conserving energy.
Consumers attach different degrees of importance to the various eco-friendly components used to build and operate stores. They rated solar power and daylighting as the most compelling strategies, followed by energy-efficient heating, air-conditioning and refrigeration, and energy-efficient lighting. Consumers were least impressed by the use of recycled construction materials and bio-diesel fuel usage in retailers’ trucks.
In a finding with broad implications, many consumers associate a green store with one that is also more comfortable (51%) and easier to shop (46%).
“The findings indicate that consumers do not expect the shopping environment of a store to be compromised in any way by its greenness,” Rosenbaum explained. “In fact, it’s just the opposite. Over a third of consumers expect a store that is environmentally friendly to also have an environment that is better and easier to shop.”
Rosenbaum cautioned that retailers should, at the very least, make sure that by going green they don’t make it harder for customers to shop.
“And if possible, they should make some changes that will improve the experience. Because that’s what many customers will be expecting,” he added.
Green stores also elicit some suspicion, most notably when it comes to price. Sixty percent of consumers think prices in a green store will be higher, and 29% feel they will find less of what they want in a green store. If retailers confirm these reservations as they become more eco-friendly, the competitive advantages of being green will be neutralized, or may even backfire, Shapiro said.
“Green is a double-edged sword in that price and the perception of a compromised merchandise assortment can blunt its appeal for all but the most dedicated green consumers,” he added. “As retailers go green, they should be very careful that they don’t violate consumers’ expectations of ease of shopping and comfort, and they should be very sensitive to pricing and assortment.”
Overall, however, green stores have considerable consumer appeal. Seventy-percent of consumers said they would go two to three miles out of their way to shop at a green store.
Going forward, Rosenbaum said, it is likely that claims of green and green features will become increasingly commonplace in retailing.
“The retailer who plays the green card right—who avoids the downsides by being sensitive to price and the store environment—is going to have a significant competitive advantage,” he added.
To obtain a copy of the 184-page report, “Green Retailing,” visit www.chain store age.com/specialreports.
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. “