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Retailers Shrink Stores to Save Energy, Report Finds

Big-box retailers are gravitating towards smaller stores and distribution centers as they seek to reduce energy use, create transportation efficiencies and support communities, according to the first Retail Sustainability Report from the Retail Industry Leaders Association.

RILA said the trend is for smaller, more efficient stores on brownfield sites. For example, Petco’s Unleashed stores cater to urban areas and offer a high-end selection, while Best Buy Mobile specializes in shopping center locations. Online shopping, smaller volume packaging and direct-to-store logstics, which bypasses distribution centers, are all enabling the shift to smaller stores.

Meanwhile IKEA, after calculating that seven percent of its carbon footprint arises from customers’ travel to and from stores, is working with the World Wildlife Fund to develop a consumer transportation strategy.

RILA collected data for the study from the 2011 sustainability reports of 30 of its member companies, representing a variety of store types and sizes. It also compiled information through surveys, industry meetings and interviews with the following companies: Belk, Best Buy, Gap, H-EB, Home Depot, IKEA, JCPenney, Lowe’s, Meijer, Petco, PetSmart, Publix, Safeway, Sears, Staples, Target, VF Corporation, Walgreen, Walmart and Whole Foods.

RILA, which describes itself as the trade association of the world’s largest and most innovative retail companies, has over 200 members including retailers, product manufacturers, and service suppliers, which together account for more than $1.5 trillion in annual sales. The association said it was not feasible to report on the performance of all members, due to the size and dynamism of the industry.

According to the report, retailers tend to encounter several obstacles that reveal the need for working in partnership. For example, retailers depend on local recycling infrastructures, and must coordinate with landlords and fellow tenants to maximize recycling. Some companies also partner with municipalities to develop recycling and composting infrastructure, or to expand the types of materials that can be recycled.

Retail spaces in shopping centers are often not submetered, and energy is billed based on average use. This makes it difficult for individual tenants to track energy use or to benefit from energy efficiency measures. But RILA says a trend towards green leasing practices is making it easier to share the benefits of conservation.

Retailers are also working with manufacturers to reduce the environmental impacts of products, packaging and shipping, partially through groups such as The Sustainability Consortium, the Sustainable Apparel Coalition, the Global Social Compliance Program, the Sustainable Packaging Coalition and the Global Packaging Project

In one example of supplier coordination, Best Buy held a summit with its Chinese manufacturers to discuss packaging requirements and to reinforce the company’s packaging material guidelines, which restrict the use of certain materials, including heavy metals.

Some methods of engagement that retailers are using to address their product supply chain are:

  • Codes of conduct
  • Restricted substance lists
  • Vendor surveys
  • Building manufacturers’ management capacities
  • Technical assistance and financing to retrofit plant systems
  • Supplier forums, conferences and meetings
  • Reporting impacts, goals, and progress
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