Two things for 2012: Energy and Community

(Originally published in the January 2012 issues of Merchant Magazine and Building Products Digest.)

It’s January, a time when we’re all staring into the headlights of an oncoming new year bearing down and wondering how it’s all going to turn out.  Perhaps you’ve had the same premonitions I’ve had about 2012.  Clearly, there are going to be some rough patches.  It’s an election year and the electorate seems in a bad mood.  The economy seems in a bad mood, too, with high unemployment, rising foreclosures, and little building activity. 

Some dealers will do well and some won’t – it’s going to be a mixed bag.  So what can you do to put yourself in the former category?  It all depends, of course.  Do you serve mostly pros or consumers?  Are you are a chain or a locally-owned indy?  There is no one size fits all strategy.  I’ve said it before and I’ll say it again, green dealers seem more buoyant, more resilient.  But I think this year’s going to take a little more effort.  What’s my advice for taking your green strategy to the next level?  Two things:  energy efficiency and community.

First and foremost, make energy efficiency job one.  If you’re a dealer in this channel this needs to be top of mind for everything you do.  I’m talking about the whole picture – operations, products, merchandising.  If you can find a way to pay for it, do a lighting retrofit, install solar panels, insulate every building you’re heating. This is going to reduce your operating expenses and demonstrate your leadership.

Stock products that will save money for your customers:  insulation products that meet LEED or other green building program criteria, triple-glazed windows, insulated doors, LED lighting.  Finally, do your homework on rebates and other incentives and plaster the information everywhere.  Label products that are energy efficient and can reduce bills.  Stocking the right products and merchandising them effectively will help maximize your sales.

(Besides, if you don’t who will, BestBuy?  Yes, apparently.  They’re piloting a new home energy retail concept.)

Secondly, do everything you can to get closer to your community – customers and other stakeholders, too.  Whether you’re primarily serving pros or consumers, be energetic in learning about your customers’ needs and finding ways to serve them.  Who is building houses?  Who is remodeling?  What are homeowners doing on their own?  Host events in your store that bring your buyers and customers together and get them talking.  Walk the aisles and the yard with your customers and listen carefully to their feedback.  If you’re getting this information from manufacturer reps you are listening to the wrong people. 

Don’t be afraid to leave the comfy confines or your store, either.  Attend local USGBC meetings.  If your community has a “shop local” campaign or a business alliance, such as a chapter of BusinessAlliance for Local Living Economies, for example, join it.  And don’t forget other groups who are active in your community.  Forging these links may make all the difference this year.  It will keep you from stocking useless inventory and will identify the products and materials your customers need.

Energy and community.  It’s simple and clear.  It provides a solid mission for your staff that’s imbued with optimism.  It can provide the basis for a marketing campaign.  And if you follow through, if these are truly priorities for your organization, you will be doing all the right things to appeal to green builders and remodelers, home owners and DIYers.  Certainly, you’ll learn about other needs, products and opportunities along the way, too.  And whatever turmoil the year may have in store, I believe, you’ll find that energy and community will see you through.

Hot Cities and Cool Roofs

(Originally published in the September 2011 issues of Merchant Magazine and Building Products Digest.)

This summer’s heat waves have been horrendous.  Hot weather is known as a silent killer and is responsible for more weather related deaths than tornados, hurricanes and blizzards, combined.  Summer days are hotter than they used to be, setting all kinds of records, but even worse are the hot nights.  Overnight lows are also setting records for high heat, making it much more difficult for at-risk populations, such as the very young and very old, to recover. 

In cities, the problem is worsened again by something called the Urban Heat Island Effect.  Cities are paved with asphalt and built up with concrete and other materials that absorb solar radiation during the day and re-radiate it during the night.  Cities can be 15° F hotter in the daytime and 22° F warmer overnight than neighboring suburbs.  More city heat means more air conditioning and more electricity consumed, leading to blackouts and, of course, more carbon emitted into the atmosphere. 

The heat island effect has been understood for a long time – I first learned about it in high school.  But more recent scientific knowledge indicates that we should expect more extreme heat waves like those this summer.  I’ve argued in this column and elsewhere (see our in-depth report, The Future of Home Improvement, here: www.williamverde.com), that dealers and distributors have an obligation to learn to anticipate changing climate and weather patterns in order to serve their communities, as well as boost their revenue.  In fact, as purveyors of building supplies, we are in a prime position to take the lead on mitigating the effects of hot summer nights and urban heat islands.

There are a variety of ways we can make our cities cooler, simply and affordably.  Replacing high thermal mass materials with trees and green space is one effective strategy and where we need to go, long term.  Living roofs are being boosted in major cities for just this reason.  But there’s another strategy that can deliver results in the short term, is less expensive, and offers opportunities for most dealers and distributors right now. 

Increasing albedo, or the ability of surfaces to reflect solar radiation, using special paints and coatings, or reflective roofing materials can dramatically reduce heat gain and electricity demand.  A white roof, for example, can reflect almost 90% of the sun’s radiation, reducing interior heat and the need for air conditioning.  And the savings are not trivial.  The White Roof Project (www.whiteroofproject.com) reports that about 10% of electricity produced by cities is used to compensate for the urban heat island effect.  If enough roofs were painted white, the nation could be saving billions of dollars and hundreds of lives.  And dealers could be doing well, while doing good.

Two excellent resources to help you stock appropriate roof coatings for your community, or improve your existing product mix, are Energy Star (www.energystar.gov) and Cool Roof Rating Council (www.coolroofs.org).  Keep in mind, reflective shingles and roofing tiles offer effective solutions for residential applications, too.  But don’t stop there.  Develop a promotional strategy that combines in-store materials with larger-scale efforts in the community.  In-store signage should educate customers, highlight rebate opportunities, and promote city-wide campaigns.  Get involved and get your manufacturers involved.  New York area dealers might ally themselves with the White Roof Project, for example.  Dealers in other sizzling cities might think about creating their own “white roof projects” in conjunction with local city agencies or non-profit organizations.  Last but not least, teach your staff about the urban heat island effect and the importance of taking measures to reduce it.  It can literally save lives.

The New Paradigm: Zero-Carbon Shelter

(This was originally published in the August 2011 issues of Merchant Magazine and Building Products Digest.)

In this industry, there are three areas of opportunity that remain relatively bright given otherwise stagnant economic conditions.  Obviously, one is green building.  The other two are renewables and retrofits.  These three areas are deeply interrelated and will continue to grow, working to reconfigure the supply chain.  Dealers who ignore this fact, waiting for the old days to return, do so at their own peril.  On the other hand, given the buoyant performance of these sectors, dealers that develop and expand their core competencies to incorporate one or more of these areas will likely thrive.

The question of how one should go about approaching these opportunities remains.  Clearly, the pursuit of these opportunities must eventually translate into products on the shelf, retail floor or yard, or in services.  But should dealers expand current categories, diversify into new categories, or streamline operations down to one speciality?  All good questions every dealer must judge based on their own set of circumstances.  But even more fundamental, dealers must once and for all abandon the old “sticks and bricks” paradigm and adopt a new way of thinking about their business.

I mentioned above that green building, renewables and retrofits represent the brightest sectors in the supply chain.  At the core of each is energy - reduction of energy consumption and/or the generation of energy from carbon-free and renewable resources.  In fact, what they represent is the new paradigm that will dominate this industry for the rest of the century:  zero-carbon shelter.  When dealers comes to grips with what that means in terms of the products and materials they stock, the services they provide, and what their customers need, the proverbial LED lightbulb goes on and the path forward is illuminated.

Translating the “zero-carbon” view into products and services that may benefit dealers and their customers becomes straightforward.  For example, analysts project that demand for insulation and installers is going to grow by leaps and bounds in the coming years, whether or not new homes are built.  The existing housing stock – millions of homes - will remain standing and occupied for decades to come and most need improved insulation in order to survive rising heating and cooling costs, especially in the context of weather extremes. 

There are now many formaldehyde-free, recycled, and natural products already on the market which can be stocked or drop shipped.  Big companies like Johns Mansville, Knauf and Bonded Logic provide a range of these products and will serve the needs of production builders and retrofitters.  For those looking for natural products, smaller companies like Oregon Shepherd and their wool insulation, or Ecovative Design (www.ecovativedesign.com) and their rigid panel Greensulate products, which is made from mushrooms, can round out an insulation merchandise mix. 

Even if demand for insulation is apparently strong, it doesn’t hurt to have the tools to sell it.  Thermal imaging cameras, such as those from Leica and Flir, can be used to create a picture of where a house is leaking valuable heat.  This technology is indispensable for installers and retrofitters, and should be for dealers, too.  Stock these devices; sell, loan, or rent them, and sell more insulation as a result.

There’s much more that goes into a zero-carbon shelter and many more opportunities to expand, diversify or specialize.  In the building shell, super efficient windows and doors are important energy-conserving components.  Inside, LED lighting and ground source heat pumps can also be part of a zero-carbon building system; on the roof, thermal solar and PV.  Of course, sticks and bricks will remain part of the picture, but now the context has changed.

Practical Green Merchandising

(This piece originally appeared in the April 2011 issues of Merchant Magazine and Building Products Digest.)

Choosing winning product lines and getting them into the hands of customers is an art that, when practiced well, makes good merchants great.  The last few years, there’s been a rush by manufacturers to get their green innovations to market.  Many are going to be clear winners and will make a difference in transforming the built environment.  Unfortunately, along with the rush has been the slapdash - products presented as earning LEED credits, or being less toxic, or ecologically benign, when they are not.  Whether by deliberate deception or honest mistake, green washing has created confusion and skepticism in the market. 

It’s not so easy to pick green winners, but there are practical steps that merchandisers can take to reliably evaluate the green-worthiness of any product.  In general, the goal is to identify merchandise that meets certain criteria, both yours and your customers’.  There are a variety of product certifications and, of course, LEED and other green building rating systems provide relatively clear criteria.  But there is no master green products list to go by, and no matter how comprehensive, certifications and building rating systems are not going to cover all the product categories stocked in most stores and yards. 

But if you’re willing to roll up your sleeves and “green it yourself”, there’s another way to look at whether the merchandise you choose to sell is green worthy.  Start by asking:  Does it harm or benefit the environment? Does it pose health risks or promote healthy lifestyles?  Are communities positively or negatively affected in its manufacture?  Does it work?  Will it sell?  These questions should take in the entire lifecycle of the product, which includes looking at the impacts relating to raw materials, manufacturing process, distribution, use and disposal. 

The broad categories addressing human health and safety, ecological safety, and social responsibility provide the background for more specific product criteria and attributes – a partial list:

• Energy – products that conserve energy, produce renewable energy or are made from renewable energy sources. 
  
  
• Water – products that conserve water usage, especially the use of fresh, potable water, also product alternatives that don’t pollute water sources or aquatic eco-systems.
  
  
• Toxic chemicals – products that are made with non-toxic or least toxic, low risk chemicals and other components.
  
  
• Healthy and sustainable practices – products that contribute to healthy and sustainable practices, such as rainwater harvesting, composting, etc.
  
  

The evaluation process starts with the manufacturer who should provide credible product information, preferably with third-party documentation supporting their green claims.  That may not be enough.  Consult with independent experts and review third-party information on the internet, too.  There are several helpful databases online that will show what’s known about specific chemicals.  Comparing products in the same category will help to identify the “greenest” in class.  Finally, there must be a judgment about whether or not the product does the job and will sell – get a sample, take it for a test spin.

If the green merchandiser is defined by product selection, he or she is also defined by products not selected.  There are plenty of useful products for which there may be better or greener options.  But there are also junk products for which the only “green” option is that they simply not exist.  Every dealer in this supply chain has experience with junk, if only by accident.  These are products so poorly designed, manufactured so cheaply, and are so obviously heading straight for the landfill that they cannot be justified no matter how low the price point.  Eliminating the worst junk from inventory is not only practical, it’s also a virtuous step toward sustainability.

8 Great Projects for Greening Operations

(This article originally appeared in the March 2011 issues of Merchant Magazine and Building Products Digest.)

Want to be leader in the green building arena? There’s no better way than to demonstrate your commitment and know how by actually implementing projects on your own facility. Anyone can stock certified merchandise. And it’s easy to put out a few green hang tags on the shelf or signage proclaiming your eco virtues, too. But to really set yourself apart from the “me too” crowd, build valuable relationships with other leaders in the industry, and save money in the process, you’ve got to walk the walk. These days, it’s a little easier than it used to be. Depending on the type of project there may be government incentives available or a relatively motivated local bank ready to finance something with a solid green profile.

1. Energy retrofit – Make your facility energy efficient with better lighting, insulation, and mechanical systems. Then add renewable energy generation, too. Undertaking this kind project will pay dividends for decades to come. In the short run, build valuable relationships with those firms doing the work. In the longer term, as energy prices continue to rise, enjoy predictably lower costs.
   
   
2. Living roof and/or living wall – Installing a living roof delivers multiple benefits, including saving energy and giving your team experience in a young, fast growing market segment. Combine with water recycling systems for additional “wow” factor.
    
3. Cool roof – If you’re not ready for solar panels or a living roof, think about this: if the roof isn’t white, you’re might be paying too much for air conditioning. Paint it white, save energy – it’s that easy.
    
4. Water recycling – At first glance, conventional financial models may not make the quantitative case for water efficiency projects – water prices are kept artificially low. But if you’re operating in a region with stressed water resources, taking steps to reduce your demand can set a powerful example for your community. There may even be rebates available. Install HET toilets, rainwater harvesting and gray water recycling systems, and gain valuable experience you can use to promote these green practices to your customers, too.
    
5. Recycling for batteries, fluorescent lights, paint, electronics, etc. – This may prove to be more difficult than it sounds, especially if there’s no local, infrastructure, but will be well worth it in the end. These products contain toxic heavy metals and other components that pollute ground water. There are a variety of programs available benefiting a range of non-profit activities.
    
6. Zero waste – Reducing the waste generated at your facility will engage both staff and customers, and may reduce your waste haulage bills, too. Remember the Three Rs will help you get there – Reduce, Reuse, Recycle.
    
7. Replace portion of parking lot with community vegetable garden and bicycle racks – Don’t discount this project as being impractical or too costly. There will be plenty of people in the community willing to lend a hand. Encouraging bicycling reduces the carbon footprint associated with your facility. Planting instead of parking does the same and can provide fresh vegetables for employees, customers, or members of the community in need.
    
8. Shorten supply chain – Sourcing product and materials closer to home reduces transport costs. Depending on where manufactured, imports may already carry a high carbon footprint because of inefficient coal-fired electricity generation. On the other hand, local products can earn LEED credits for local building projects and, generally, will appeal to a growing number of customers preferring products and materials made in the USA.

Making Energy Efficiency a Growth Engine

(Published in the September '09 issue of Merchant Magazine and Building Products Digest.)

It’s been said that there are no certainties in life except death and taxes, but I propose that there is at least one more – energy efficiency. At least, in the realm of residential construction and the retail supply chain there is no doubt that both market and government requirements for energy efficiency will continue to grow for the foreseeable future. There are several drivers, and suppliers who understand them can shape their retail strategies and tactics to maximum benefit.

Let’s start with the macro-economic trends. Regulations are toughening energy efficiency requirements in building codes and making green building guidelines mandatory. Nascent energy retrofit programs will likely continue for years, supported by rebates and other incentives. Carbon regulations coupled with supply and demand issues ensure that the long-term trend for fossil fuel prices is rising. Home buyers are seeking, and will continue to seek, more energy efficient homes, and home builders are learning that energy efficient homes are easiest to sell and at premium prices. Lastly, product manufacturers will continue to rollout technology innovations that make it easier to build energy-efficient homes and retrofit existing ones. The upshot of all this is that there will be a growing number of pros and homeowners looking for options that contribute to energy efficiency.

For dealers and distributors, the obvious strategic play is to position the firm as an authority on energy efficiency. The key to making this work is finding ways to build energy efficiency knowledge into the fabric of the organization, and this requires an investment in people. Involve everyone at the beginning. Identify key management and staff, send them to training, and make them responsible for creating a plan for including additional staff, identifying key products appropriate for your region, creating effective merchandising programs, and reaching out to key customers. While LEED seems the obvious choice, I recommend having a look at the Passive House Institute, (www.passivehouse.us), which promotes the most innovative approaches to energy efficient building design.

While there are a growing number of product and material innovations, it’s important to choose products that work in your region and clearly demonstrate that you’re on the leading edge. Energy lost through windows is enormous, so why not stock the most efficient options and make them the centerpiece of your merchandising effort? Serious Materials, (www.seriousmaterials.com,) a Silicon Valley producer of insanely efficient windows, is a good place to start.

With organizational knowledge in place and innovative products on the shelf, the next step is connecting with customers. Signage in your store and yard should be a given, and the overall message hierarchy should emphasize staff expertise, low cost of ownership, rapid payback, rebates and incentives. There should also be plenty of opportunities for customers to educate themselves, therefore hangtags, booklets, kiosks, and other ways of offering customers more “drill down” are key. Most product manufacturers will gladly help with this task, so don’t be shy about asking them to contribute. Finally, host energy efficiency workshops led by your most capable staff and invite local weatherization and retrofit firms, (keep in mind there are a growing number of non profits doing this work, too,) as well as city leaders, green building experts and, of course, your best customers.

From new home construction to home improvement projects, the leading priority is, and will continue to be, energy efficiency. Dealers that invest the energy in making themselves experts, will have created a growth engine that will carry them through the next business cycle and beyond.