Retailers Going Green, But Customers Remain Apathetic

You have to feel bad for most retailers: The global economy tanked in 2008, sales plummeted and many well-known chains went out of business. Today, shoppers have come to expect half-price sales on nearly everything in stock.

All the while, retailers have had deal with perceived consumer demand for “green everything”: environmentally friendly products and stores as well as transparent sustainability efforts to reduce power consumption and harmful waste in their operations and supply chains.

These extreme green makeovers haven’t come without expense or headaches for retailers—technology-related challenges being chief among them.

A fall 2010 RSR Research survey of nearly 100 retailers finds that they are struggling with quantifying ROI and rationalizing green-related capital expenditures, and making their existing IT and infrastructure work with new green technologies.

[ Who’s tops in retail IT? Check out CIO.com’s list ]

Nevertheless, retailers surveyed say they remain committed to green principles. “More retailers than ever believe that environmentally responsible initiatives are born of good business sense,” notes the RSR report, Lean and Green: How Sustainable Practices Are Changing Retail. In fact, 61 percent of retailers surveyed feel that green initiatives make good business sense, which was up from 49 percent just one year ago.

But what if customer demand toward green initiatives is actually more apathetic than enthusiastic—that some of the perceived demand for “all things green” is just a perception?

That is precisely the situation that retailers are facing, write RSR managing partners Nikki Baird and Steve Rowen, in the report.

“Consumers have not been forth-coming in letting retailers know what they want around sustainability and brand,” Baird and Rowen contend, “and in fact some evidence has started to show that for certain categories, demand has completely failed to materialize, or backlash is emerging against unproven or unregulated claims about the environmental benefits of products.”

In response to the significant customer apathy and demand confusion, the survey results show that retailers are not as willing this year to pursue green initiatives as a result of consumer demand: Just 52 percent say “our customers expect us to act,” which is down from 62 percent in 2009, notes the report.

“We believe this data is the direct result of the fact that retailers have gotten tired of waiting around for the customer to tell them how to handle environmental sustainability,” Baird and Rowen write.

In turn, the smart retailers are focusing their green attention inward at in-store opportunities: striving for savings in energy consumption, packaging and materials costs, new store construction, sourcing and product design, and in-store and corporate IT.

But to Baird and Rowen the biggest opportunity right now for retailers is in being transparent.

“Winners recognize that consumers give props for green processes, not just green products, but they need help accessing and understanding the information about sustainability initiatives that retailers should be sharing,” they write. “Absent standards or consistency in standards or branding, retailers need to do a better job in store and on product pages of communicating their efforts and their successes, and in showing how it impacts consumers’ own lives. Consumers need voices they can trust.”

However, according to the RSR report, confusion still reigns in the retailing marketplace.

“Nearly all retailers agree that green is important,” the analysts state, “but beyond the cost-savings leveraged from being increasingly clever with energy usage in-stores, there is little consensus as to why or how.”

Thomas Wailgum covers Enterprise Software, Data Management and Personal Productivity Apps for CIO.com. Follow him on Twitter @twailgum. Follow everything from CIO.com on Twitter @CIOonline. E-mail Thomas at twailgum@cio.com.