Are green stores becoming fashionable among retailers?

Once the preserve of niche eco-conscious brands, 'going green' is becoming increasingly mainstream in the retail industry.

April 22, 2016

As consumer interest around sustainability grows, retailers are responding. A growing number are now taking significant steps to create a more environmentally friendly future – not just in terms of the products they sell but also in how they run their operations. And this greener way of thinking and doing business is often reflected in their physical stores.

Following the Paris climate talks in December 2015, global retail giant Gap announced its intent to halve its greenhouse gas emissions from over 3,000 stores, but not its factories, by 2020. Using smart thermostats and switching to LED lights has already helped the company reduce emissions over the past several years.

It joins the green charge of Swedish flat-pack furniture giant Ikea, which has over 500,000 solar panels on its buildings and aims to produce as much energy as it consumes from renewable sources by 2020. Elsewhere, British high street stalwart Marks & Spencers staked its claim to being a leader in sustainable retail when it unveiled its first “eco-store” in Newcastle, England in 2015 with energy efficient features like high velocity air curtains, intelligent door sensors and a heat pump along with a 167-foot-long outdoor living wall. It now intends to kit out all of its stores with LED lighting by 2025.

They’re far from being the exceptions to the rule. Members of the British Retail Consortium, which includes some of the biggest names in the UK such as Asda, Sainsbury’s and Argos, have put in place measures to help cut their carbon emissions and water usage in stores in line with voluntary targets. And they’re making progress.

Landlords leading the way

It’s not just retail brands who are thinking ‘green’: landlords also have a part to play in sustainability initiatives. Take Frasers Property Australia which launched a design contest as part of its plans to construct a 12,000 sqm retail complex according to one of the world’s strictest sustainable building principles – the Living Building Challenge (LBC). The completed retail project, Brickworks, will be the first retail building in the world to achieve LBC status, which requires net positive water, energy and waste, and a healthy indoor environment, to name a few criteria.

Duncan Gilliard, a director in the London Retail team at JLL, explains: “Sustainability is high up on the corporate retail level, but this sometimes doesn’t filter down to the local or manager level. What we have seen in some instances in the UK is the landlords taking control of this by incorporating green leases and increased monitoring of utilities consumption.

“We believe that those retailers who can adopt, embrace and shout about their sustainability advances will benefit from enhanced perception with the increasingly ethically savvy consumer.”

On London’s world famous shopping street, Regent Street, which is owned and managed by The Crown Estate in partnership with Norges Bank Investment Management, retailers have been encouraged to take bold steps to display their eco-friendly attitude. The communication of sustainability efforts to the customers is itself an important step for a brand, says Gilliard. “Overall, we are seeing a higher level of communication in stores to customers,” he adds.

With a key store on Regent Street, Banana Republic is one brand that’s been very public about its push to go green, leaving messages on its shop windows that inform passersby of their switch to LED lights and use of recycled materials.

The green future is near

When a brand’s store or a retail building is energy efficient, it’s not only good for the planet – but increasing it can be good for the retailer’s bottom line. A new report from the World Green Building Council says that retailers can seriously boost profits by creating “healthier” stores and buildings that offer a more pleasant and greener shopping experience. Integrating green walls, more daylight and fresh air into a mall or store space can boost profits for retailers, it claims, because “better environments lead to better experiences for people and that leads to better economics for retailers.”

Although the green credentials of the retail industry are still very much a case in progress, Gilliard believes there will be a very noticeable increase in eco-friendly stores during the next five years. “When a brand makes that effort, word of mouth from consumers will bring a positive reputation to the brand. And more of these brands’ peers are being public about their sustainability efforts, so that will spiral,” he concludes.