A recent analysis by Retail Systems Research (RSR) sheds some light on how sustainability fits into corporate strategy at top-performing companies.
Retailers no longer think environmental responsibility is a passing fad, according to the 95 survey respondents, who are primarily executives and managers. Most of them (61 percent) believe green initiatives make business sense.
But an intriguing difference also surfaced in how the most successful companies (as measured by annual store sales growth) approach sustainability compared to others in the industry.
The study found that during the past two years, most retailers—reading mixed signals from consumers—de-emphasized a greener product mix in favor of internally focused initiatives, such as making store operations more energy-efficient. But even though less-successful companies were more likely than industry leaders to think that deploying new, energy-efficient IT devices was a worthy initiative, the top performers were more likely to identify a big potential return from investing in IT.
One explanation, says RSR Managing Partner Steve Rowen, is that successful companies have a corporate culture that supports experimentation. “Winners are seeing more ROI because they’re trying more things,” he says. They’re testing green solutions, he adds, because they’re more aware of both the business risks of doing nothing and of the opportunities for improving the bottom line.
Scouting for Opportunities
Top performers are also more likely to have clear expectations for what kind of results new initiatives should produce. Among winning companies, only 10 percent of respondents either didn’t know or couldn’t say how much time they would allow for a green investment to pay off, compared to 31 percent of laggards. The successful retailers, then, aren’t more profitable because they’re good at running their businesses sustainably (although green initiatives do cut costs); their returns from sustainability come from making it a real part of their business strategies.
If that sounds familiar, that’s because it’s the same lesson that companies have learned about investing in IT—and it applies across industries. Companies may use IT to differentiate themselves from competitors, improve workforce productivity, engage customers or keep costs down. Getting a payoff from investments in sustainability requires framing them the same way.
There’s bad news and good news here. The bad news: If other industries are like retail, CIOs who want to advance sustainable business practices have their work cut out for them. More than half (53 percent) of retailers said existing technology and infrastructure is one of the main obstacles to taking advantage of green opportunities. On the other hand, IT leaders are spending again—not only on hardware and infrastructure, but also on mobile technologies. (See “IT Budgets Will Get Bigger in 2011.”)
RSR predicts that energy efficiency will become a feature of future IT initiatives as top retailers deploy new systems to support mobile customers and the mobile workforce. Rowen and report co-author Nikki Baird offer some classic advice for advancing green business practices: Identify processes that you’d like to make greener so you’ll be ready with a solution when a business driver for changing that process appears. That’s no different from the strategy for scouting for opportunities to introduce new technologies. It might even be the same thing.
Follow Executive Editor Elana Varon on Twitter: @elanavaron.