Green Spring Training

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

March is my favorite month.  Why?  Spring is in the air, at least in some parts of the country.  And baseball is just around the corner.  And now, some market research has come out demonstrating that green building is poised to lead this industry out of the doldrums.  Things aren’t back to normal, or back to a new and different normal, not just yet.  But if you’ve been working to bring your retail or wholesale operation into the green big leagues, this could be your breakout season. 

The study from McGraw Hill reports some interesting numbers that should inspire optimism.  The share of new single family homes built to a LEED or equivalent standard reached 17% and rising to about a third of the market in five years.  Builders report that marketing green homes is easier and the majority of customers are willing to pay a little more.  Among builders who are doing some green projects, 39% report that green work is having a positive impact on their bottom line, compared to 90% of builders who are fully dedicated to green.  There were similar results for green remodelers.

I want to focus on one takeaway from this.  The reason dedicated green builders and green remodelers report better results – and are looking forward to better prospects, too, I might add – is because they are focused.  They have the knowledge and skills, and therefore the credibility.  They know what they’re doing and they believe in it.  These are the companies driving green forward and these are the companies getting the bigger share of the projects.  If you’re looking to grow your green business, these are the pros you want on your team.

Given the strength of this trend, making green building an increasing focus of your own business is an obvious forward thinking strategy.  Equally important is building strong relationships with the leading green builders and remodelers in your market area.  This may seem obvious, too, but to build productive relationships these four key points are worth repeating.

First, be prepared to walk your talk.  No amount of schmoozing will win customer loyalty in this arena without expertise and knowledge to back it up.  Don’t rely on manufacturers and product knowledge to see you through.  Go the extra mile and develop internal expertise in LEED or other residential green building programs.

Second, go to them.  Don’t expect them to come to you.  Visit them at their office, their job site, green building association meetings, trade shows and conferences.  Most regions have a USGBC chapter or equivalent – join it.

Third, bring value to the relationship, right away.  If you can help them win a new project, introduce them to a talented new sub, point them to an innovative new solution, they will come to see you as vital part of their business ecosystem.  When this happens, they will start bringing value to you.

Fourth, dig deeper and find expert builders, remodelers, retrofitters with specialisations that make sense for you and your region.  Energy retrofitting, rainwater harvesting, green roofs, and solar are all hot areas – maybe they’re ripe for building new relationships, too.  Develop the right product categories they need, host in-store events, and develop referral programs.

At the end of the day, it’s the customer relationships that sustain any business, especially during lean times.  This industry is adopting green building at an accelerating pace and demand is showing signs of picking up.  It’s the leading builders and remodelers who are winning an increasing share of the business.  By getting together you can build a solid team and make this a winning year.

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.

The Long View

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

“In the long run, we’ll all be dead.” That unfortunate utterance from a now dead economist has provided a handy excuse for shortsighted business planners focused only on extracting the maximum profit from the here and now. That kind of thinking is responsible for many business failures, yes, but also many environmental problems more daunting even than the federal deficit. Failure to consider the future implications of decisions made today virtually guarantees a legacy of difficulty and hardship for the next generation.

Taking the long view, on the other hand, is at the heart of green thinking. Therefore, this January, I encourage you to forget about 2011’s top trends for a moment and invest some quality time considering the next decade and the opportunities and threats it will present to your business and community.

The best place to start is at the end – what will your business look like in 2020? Has it been passed down to your children? Acquired, shut down or thriving with you securely at the helm? Is it connected to the same old supply chain? Is the local economy vibrant and strong, or struggling along? Most importantly, what do you want your business to look like and what sort of realistic scenarios will lead you there? To answer these questions one must first consider the long term forces reshaping our industry.

The next decade will see plenty of change and probably as many surprises as the last. Obviously, “green building” is on its way to becoming the new normal, whether it’s LEED or another approach, creating new opportunities for growth. Transport fuel prices are trending higher with the very real possibility that periodic episodes of price volatility will devastate marginal businesses. Households, businesses and governments will continue to shift purchasing to less toxic and more eco-efficient products from socially responsible producers. Competition between “big box” chains and independent dealers will continue, with increasing activism from localization groups. The green DIY and urban agriculture movements will continue to take root across the country. And a host of global and domestic macroeconomic factors will attenuate or amplify these opportunities and threats.

But underlying whatever scenario one wants to envision for the next ten years, there is the inescapable reality that the global climate system is changing, most likely due to human activity. The last decade was the warmest on record, but more important to consider are the local and regional impacts. Damaging and costly extreme weather is becoming more common. NASA has published a slideshow depicting the number of temperature anomalies each decade going back to 1880, (earthobservatory.nasa.gov/Features/WorldOfChange/). The trend is unmistakable, which should be cause for concern, especially in the context of the massively destructive heat wave that hit Russia last summer.

Regional climate patterns are changing in ways that dealers and distributors should understand and anticipate. The US Global Change Research Program, (www.globalchange.gov), provides useful analysis for each region of the country. Depending on your location, expect more drought, more fires, more floods, more heat waves and cold snaps, and more precipitation when it comes. And when these “anomalies” occur, they will probably be at the wrong time, disrupting water supplies, agricultural harvests, supply chain logistics and more.

These broad trends suggest that merchandising and business model innovations will be required to sustain a successful business. Households, businesses and governments will be forced to invest in mitigation and adaptation strategies. Dealers will, too. But those long-term planners among them will be prepared to weather whatever the decade has in store, with solutions that will help their customers and communities, too.

Thinking Globally, Building Locally

(This article was originally published in the November '10 issues of Merchant Magazine and Building Products Digest.)

The green building movement is rooted in big thinking, but the USGBC is beginning to think small and local. Their mission is to transform the built environment – that’s thinking big with over 125 million buildings in the US, most of which are energy and water hogs. Considering that buildings account for a third of the US carbon footprint, success is of global importance. After over a decade of leading the commercial building revolution, USGBC has become a transformative force with a valuable brand. But there still remain 120 million less than efficient residential buildings, which is where action must now be focused. This is why the USBGC is putting considerable effort into boosting residential green building in concert with local leaders, which is good news for LBM dealers.

In residential building, there was already a green building movement well under way by the time LEED for Homes arrived on the scene two years ago. Local and regional residential programs have existed for years in progressive cities like Austin, Texas, whose Austin Energy Green Building program was the first in the nation. LEED for Homes shares many similarities with these programs, even though each reflects its own local conditions, both in terms of content and approach. In addition, there are alternatives to LEED, including EnergyStar, NAHB’s program, the new, (to the US,) PassivHaus approach, the International Living Building Institute, the NauHaus Institute, and a host of natural building organizations.

Given these realities, I really like the USGBC’s collaborative approach. They recognize that they’re part of a budding community of green building leaders and that there’s more than one way to build a green home. So, rather than attempt to impose their rating system, they launched the LEED for Homes Affiliate Program with the pragmatic aim of forging working relationships with many green building organizations and local green building leaders, thereby promoting the broader movement in the context of local needs.

“We’re market oriented and are looking to support and promote what’s working in each community,” Nate Kredich, USGBC’s VP for Residential Market Development, told me recently. For example, they’ve been working with North Dallas Green Built and the NAHB, developing educational materials for production builders, dealers and distributors. They’re even helping to produce a “mini GreenBuild” in the area. (By the way, USGBC’s GreenBuild is November 17-19.) In Minnesota, they’ve joined a coalition with Minnesota GreenStar, with its new-build and remodeling rating systems, and Minnesota Green Communities, which advocates for healthy, affordable housing. They’ve also launched the Green Home Guide (www.greenhomeguide.com), a website to help connect homeowners, builders and dealers with trusted information, and with each other.

In terms of economic clout, green residential building is only just finding its feet and, in any case, current economic conditions have strangled most building of any kind. But when homes start to be built again, it’s likely a great percentage will be guided by a national or regional program. “We recognize that for green home building to scale rapidly, it’s important that everyone in the value chain understand the rating systems and are well-connected with their local green builders,” said Kredich, emphasizing the value of education. They’re reaching out to support interested independent dealers, like Shaw Stewart in Minneapolis, as well as the big chains. With many more new green residential products and materials coming to market in 2011, it should be easier for proactive dealers and distributors to rise with the green home building market. If that’s true, then the USGBC’s big thinking could very soon be taking root in a community near you.

Green Building and Greenwashing

(Published in the August '09, Merchant Magazine and Building Products Digest.)

The green building movement continues apace and more LBM dealers continue to ask how they can prepare. One of the best things a dealer can do is get their key staff trained in the most relevant programs in their area, whether it’s LEED or a regional program. Developing this knowledge base in the organization can only be a positive and, if pursued intelligently, can be leveraged for competitive advantage. But knowledge of guidelines is only half the battle since, as a merchant, the bottom line is still the bottom line – you have to stock and be effective at selling the green materials and products that green builders want, or should want with the proper education. And education is, of course, one of the most important aspects of selling. Which brings up the question – how do you know which products to stock?

The first part of the answer should be obvious - ask your customers. You have to get close to your customers, learn about the projects they're working on, and for goodness sake, ask them what kinds of products you should stock for them. Having some background in green building guidelines will help you ask the questions intelligently, but even so, a green builder who encounters an interested, responsive retailer is practically a customer for life, so go do it!

But relying on your customers to tell you what they want is, again, only half the battle. Developing expertise in your product categories and discerning the “real deal” from the “greenwash” requires some study of product certifications and getting to know the manufacturers.

Product certifications exist to protect against false claims and many are so good that green building rating systems like LEED incorporate them as standard. Among them, for example, are GreenSeal’s GS-11, the standard for low-VOC paint and coatings, and FloorScore, for low-emitting flooring products. But for uncertified products, the honus is ultimately on the merchandise manager to determine whether the product is truly green, is good enough to stand behind, and whether customers actually want it. After all, if a product fails to satisfy, for whatever reason, the dealer’s reputation can suffer right along with the manufacturer. And reputations are damaged most when the charge is “greenwashing.”

In short, greenwashing is the false or exaggerated claims about a product – that it’s “LEED certified” (LEED is a building rating system, not a product certification) when it’s not, or that it has any number of “green” qualities that are vague, untrue and/or unverified. In the realm of green building, the merchandise manager can help him or herself tremendously by asking manufacturers for 3rd-party LEED credit analysis or other documentation that demonstrates the veracity of the claims being made. A manufacturer that has gone the extra mile to produce an environmental product declaration (EPD), for example, demonstrates not only that the product qualifies for LEED credits, but that they take green building seriously. That’s a good sign.

It’s also a good idea to attend the green building expos and talk to manufacturers directly – there are regional shows in almost every part of the country with the USGBC GreenBuild show being the largest national show. This is where you’ll find the best information on new products and their performance characteristics short of trying them yourself. And why not try them yourself. Only with this kind of commitment will you find those gems that your customers should be using and when that happens your green building reputation will be golden.

Get Ready for Green Home Builders

(Published in March '09, Merchant Magazine and Building Products Digest)

This year may be remembered for its gargantuan financial meltdown and economic crisis. It may also be remembered as a foundational year for green home building for two big reasons. First, energy and water conservation are more important issues than ever before. With government incentives, such as rebates and weatherization financing, and water rationing looming in some regions of the country, energy and water efficiency are top of mind concerns for home owners and new home buyers. Second, green homes are selling faster than non-green homes. This has been borne out by research conducted by various local green home building programs, but a recent press release from the US Green Building Council indicates that new homes meeting the LEED for Homes standard built by Pulte in Las Vegas, are selling about twice as fast as their conventional homes. The LEED for Homes program is barely a year old and already there’s a ten-fold increase in new homes slated to be certified this year. With production home builders now taking notice, you can bet that a dramatically larger percentage of new housing starts will be green.

If a rebound in new home construction will be led by green, how can retailers position themselves to benefit? To get a broader perspective on this question, I organized a virtual roundtable discussion with some green building professionals. It seemed everyone wanted to talk about LEED for Homes and rising consumer demand. Why? While it’s not necessarily a good fit for every project, it’s a national standard and a strong brand, which is especially good for production builders. New home buyers are already looking for energy efficiency and healthy indoor air quality, so a credible national green certification for homes will help builders sell their green homes quicker, which is what we’re already seeing. And to meet the growing demand for green homes, the new professional credential, LEED AP + Homes, is rolling out this year, which will dramatically increase the number of professionals working in the area. This is precisely where retailers should take notice.

“Retailers who are serious about serving their pro customers need to get themselves educated about the changes transforming the home building industry,” says Michael Strong, president of GreenHaus Builders (www.greenhausbuilders.com) of Houston, Texas. He was one of the first to build a LEED for Homes project, 2008 NAHB Green Building Advocate of the Year, and has been building green for years. He recommends retailers have at least one staff member go through the LEED AP + Homes training and to bring the rest of the staff up to speed – floor staff and buyers. “Nothing’s more frustrating than to spec a product, educate my supplier, only come back for a second purchase to find they no longer stock the product because they didn’t understand it,” says Strong.

Education and training was also a main theme for Heather Gadonniex, LEED AP, and president of sustainability consultancy Green it Group, (www.greenitgroup.com.) “When I meet with major retailers or distributors looking for help in getting into the green building market, I find there’s enormous confusion about green building guidelines and product certifications,” she says. Part of the blame must go to product manufacturers whose sales and marketing people often add to the confusion. But retailers must ultimately know about the products their pro customers want and develop the expertise to anticipate their needs as technologies, green building guidelines and product certifications evolve. “Retailers should look for products from manufacturers who provide back up documentation to support the validity of their green product claims and, when necessary, obtain third party certification,” says Gadonniex.

While LEED for Homes is a national standard, it includes credit for locally produced materials and innovations appropriate for local conditions. Of course, there are also local and regional green building programs that very often offer a simpler alternative for local builders. According Clarke Snell, author and principal of Think Green Building, (www.thinkgreenbuilding.com), a green and natural builder in North Carolina, thinking local is the right approach. “Building for local climate conditions with locally produced materials is what builders should be focused on, therefore it should be the focus for retailers, too,” says Snell. “Selling FSC certified lumber products from the other side of the planet just doesn’t make sense.” While sourcing locally might be hard for big box chains, it could be a valuable differentiator for knowledgeable independents.

GHG and Retail

(This article appeared in the September '08 issues of Merchant Magazine and Building Products Digest.)

When the topic of green building comes up in our industry, it usually starts up the debate about certified lumber. SFI or FSC? Which is better? Is chain of custody certification worth the trouble? The questions are valid, but the debate is essentially over and has become a distraction from understanding the real issue driving the green building movement. Carbon. It may bring as much change to the hardware and building materials channel as the “big boxes” did decades ago. Let me explain.

The green building movement continues to gain solid support from state and local governments. Solid? San Francisco recently passed mandatory green building guidelines that are the most stringent in the nation, but it’s not another example of West Coast eccentricity. What’s driving the green building movement on the West Coast and the rest of the country isn’t some “tree hugger” ideology, but a science-based approach to curbing green house gas (GHG) emissions, which includes carbon dioxide.

The building industry accounts for nearly half of all green house gas emissions, which includes both embodied energy – the energy required to produce the building materials and move it to where its needed – as well as the energy required for operations, such as lighting, heating and cooling. (See www.architecture2030.com for more information on this, as well as really nice graphics that illustrate the depth of the issue.) Cities and states are focusing on green building related policies as one strategy for limiting GHG emissions because that’s the sweet spot.

A major component of every green building program concerns energy usage. Adding renewable energy, like solar or wind, can earn a building project lots of green points. So too, can adding a host of energy saving features. While federal rebates for solar may end soon, most pundits predict a future that includes more rebates for renewables and energy saving products, coupled with ever stricter building codes. In fact, there is a movement afoot to set the green building standard at carbon neutrality, or zero-energy, well before 2030.

This increasing focus on energy and carbon reduction will create business opportunities and threats. Ikea recently announced their intention to sell solar panels and other home energy products in the next five years. Is this a sign of some big changes headed for this retail channel? Could be. New products in the pipeline will make it easy for do-it-yourselfers to install small-scale solar and wind systems for room additions, out buildings, etc. There’s lots more new energy saving products coming our way, too. Because these products deliver big margins, it’s attracting the attention of retailers like Ikea. And because “alternative energy” is becoming mainstream, established “alternative energy” retailers, such as Northern California’s Real Goods, are seeing tremendous growth opportunities. It’s a sure bet that in the years ahead there will be new retailers focused on meeting the demand for carbon-free energy and challenging traditional home improvement/hardware dealers in that category.

What will all this mean for traditional home centers and building materials retailers? For those that are energy savvy, the new wave of carbon-busting products will add growth to the bottom line. Retailers today that have a solid lineup of Energy Star products and, perhaps, a relationship with a solar installation outfit, have a head start and will be well positioned to take advantage.

Merchandise and Merchandising

(This appeared in the August '08 issues of Merchant Magazine and Building Products Digest.)

As far our industry is concerned this economy is absolutely abysmal, but there is a silver lining. The only aspect of our little corner of GDP that seems to be moving in the right direction is green building, both in terms of projects in the works and the products that go into them. In past columns, we’ve talked about a variety of things you can do as a retailer to take advantage of this growth. Now, we turn our attention to the core issue: selecting and selling quality green products.

If the goal is to stock green building products your customers want, it will help to know a little about green building guidelines. For our purposes here, we can generalize what guidelines call for and categorize the products according to resource, energy and water conservation; and indoor air quality. Sourcing products and materials locally is also a plus.

Here’s a short list of green building products everyone should probably stock:

• GreenSeal certified, low-VOC paint
• Low-VOC, formaldehyde-free adhesives, caulks and sealants
• Formaldehyde-free, recycled content insulation
• Energy Star lighting – fixtures, CFLs and LEDs
• EnergyStar ventilation
• High-Efficiency Toilets (HET) – more than one model!
• Tankless water heaters

One can go much farther, of course. There are hundreds of green building products one could put on the retail floor, too many to talk about here. And probably you already have many of the less obvious ones, such as pipe insulation. But once you’ve source them, you have to sell them.

The first big question most merchandisers pose is whether or not to put green items in their own section, end-caps, or mix products in with the rest. It’s a good question and generally the answer is, “Yes!” A large home center in Northern California, Friedmans Home Improvement, has 20 feet of shelving at the front of the store with a broad sampling of green products, in addition to end-caps, and mixing the green products in with their conventional brethren. Since most people shop by category, the green products must be found with the other product in their category, along with appropriate signage. Segregating green products into green-only section is a recipe for failure. On the other hand, adding end-caps to highlight a product line or a solution, such as green paints, recycled rags, and recycled paint rollers, is generally good retailing practice for promoting any sort of product.

I mentioned signage above, and there’s more to say about that. Since we’re talking about selling green building products, it’s important to identify them on the shelf for your customers. Shelf talkers that indicate whether a product meets green building guidelines are simple enough to produce. Adding posters and banners that call attention to green building products, the fact that you have them, where they can be found in the store, prompting questions, etc., all contribute to creating a positive selling environment.

Finally, if you have contractor sales desk there are several little things you can do here that will make a big difference. First off, educate your sales staff about the guidelines in your area and the products you sell. Have them ask each customer that comes to the desk about their interest in green building and what you’re doing to help them. Second, have at least one binder at the desk with product literature for each of the green building related products you stock and those you can source through special orders. Third, have signage on the desk that talks about what you’re doing, brochures about the local green building program.