Is Less Consumption Good for Retail?

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

The confluence of the Great Recession with growing awareness of how “consumerism” contributes to climate change, has led to a surging movement of people simplifying their lifestyles and sharing more of the things they need, rather than blindly acquiring more stuff.  In other words, more people are becoming more conscious consumers or disavowing the “consumer” label entirely. 

This is disaster for retailers, right?  Not necessarily.  For retailers committed to green business practices, it’s just another opportunity to serve their community.  And there are several ways that less consumption can be good for your bottom line, as well as for the planet.

As for the planet, it’s clear that there’s a broad spectrum of negative environmental impacts associated with manufactured products, which the short internet video, “The Story of Stuff” (www.thestoryofstuff.com), does a good job explaining.  It takes energy to make things and move them from one side of the planet to the other.  Then there’s disposal and the potential for toxic leachates to pollute groundwater.  The more we consume the greater the impacts, so obviously, the less we consume the fewer the impacts.  That’s the 30,000 foot view. 

Understanding this system is the first step in developing green business models that replace these inherent negative impacts with profitable, regenerative outcomes.  All well and good, but how can a merchant make money by selling less stuff?  One strategy is rethinking goods in terms of services, i.e., selling fewer goods, but selling more of the services those goods provide.   

While this has been a recent innovation in industries such as flooring (see InterfaceGlobal.com) or in extended producer responsibility (EPR) policies, the idea’s been around for a long time in our industry in the form of tool and carpet shampoo rental.  It makes sense to rent something that won’t get used very often.  And growing household preference for just that kind of economic conservatism is reshaping the kinds of relationships people are having with their stuff. 

A well known example is Zipcar.  For decades, no product/consumer relationship was as intimate (and Freudian) as the one between people and their cars.  But today, people are leaving that paradigm behind for the planet-friendly and economical choice of car sharing.  It is, perhaps, a new kind of “consumer” status symbol, but it is emblematic of a deeper movement that is redefining the role of manufactured goods in people’s lives and what it means to “consume”. 

People are looking to share almost everything:  cars, bikes, tools, and even skills.  The magazine, Shareable.net, tracks this growing phenomenon and reports about the rise of neighborhood work groups – neighbors organizing themselves to help one another tackle home projects.  That kind of thing recalls the days when communities came together for barn raisings.  Meanwhile, professional trades people are branching out into new kinds of projects and are looking for short-term rentals of specific tools, rather than having to invest in “retooling”. 

If customers want and need less stuff, then retailers must adapt.  Begin marketing your rental department’s green virtues.  For those not yet renting tools and equipment, now’s the time to start.  Talk to your pro customers and ask them what they need.  And I suggest diving even deeper.  Facilitate neighborhood work groups in your area and help create local tool lending libraries.  Rent space in your parking lot for Zipcar or other car-sharing.  Think outside the box, too.  Rent electric cargo bikes (www.cargocycling.org) or portable solar power generators for off-the-grid construction projects (www.portablesolarpower.net).  Getting into the shareable mindset will not only lead to more innovation, but will unlock new income streams and forge new customer relationships.

Adam Smith and Green Capitalism

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

In this column, we’ve talked quite a lot about the implications of green building and the wider sustainability movement for LBM dealers and distributors.  For the most part, the conversation has focused on evolving market opportunities, merchandising appropriate products, and creating operational eco-efficiencies.  But are the pursuits of “green” market opportunities and cost-saving efficiencies sufficient to make a business “green” or its leaders green capitalists? 

Devotees of Adam Smith might answer, “yes”, as long as such activity maximises profit. It’s the result that counts and if “the invisible hand” does its job, then what’s best for society will emerge naturally through the activities of masses of economic decision makers, each pursuing their own self interest. 

Of course, the economic world Smith inhabited was quite different from today’s global corporate economy.  But in at least one respect, the reality for a merchant capitalist two hundred years ago is very nearly the same as for many dealers in today’s LBM supply chain.  In Smith’s day, the merchant was intimately woven into the fabric of local society and “the invisible hand” operated within an ethical framework that assumed as given the interests of a wide range of stakeholders within the community. 

So, was Adam Smith the first “green” economist?  No.  But notions of green capitalism are becoming just as mainstream, being taught in leading business schools and adopted by leading corporations and green building companies.  For locally-focused members of the LBM supply chain, these new articulations of capitalism may already seem familiar.  But delving deeper and adopting new approaches to business leadership may hold long term strategic value.

For many, the term “triple bottom line” (TBL) has become the short-hand definition of what a green business is all about.  It was coined by John Elkington in the 1990s as a way of joining the concepts of “sustainable development” and “corporate social responsibility”.  The idea is that if businesses tracked their performance in the realms of social and environmental impacts, as well as profits, they might then be accounting for their full cost of doing business.  And in so doing, would seek to improve where performance lagged, ameliorating social and environmental problems along the way. 

Though this sort of formal accounting may be problematic at the moment, there are advantages for LBM dealers who adopt TBL principles or a similar approach.  Perhaps the best place to start is with a book that’s required reading for every Green MBA.  “Natural Capitalism”, by Paul Hawken (co-founder of Smith & Hawken), Amory Lovins, and L. Hunter Lovins, identifies the four principles of “capitalism as if living systems mattered”: radical resource productivity, biomimicry, service and flow economy, investing in natural capital.  In short, by reducing resource use, eliminating waste, rethinking the provision of goods in terms of services, and by treating sources of natural capital (such as local wetlands that naturally purify water, for example) as real sources of wealth to be restored, nurtured and grown, businesses can lower costs, maximise profit, and solve many of the world’s problems. 

This alternative vision of capitalism, and others like it, offers a useful strategic framework, especially in light of economic and social challenges we’re sure to face in coming decades.  This kind of thinking has already helped companies like Interface in the carpet industry and Steelcase in office furniture, lead their respective industries.  In any case, adopting a “natural capitalist” framework will lead a business toward best green and most economic practices as a matter of course.  For dealers seeking to win in the green building arena, becoming a green capitalist seems like an important and natural next step.

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.

Universal Green Product Database? Yes, Please!

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

I sound like my grandpa, but today’s green merchandisers never had it so easy. Back in my day – 2005 – there were few residential green building programs or product standards to consult. Online lists and databases of verified products were sparsely populated and behind the market. When I was asked to develop a green merchandising program, it was a challenge we met only by doing lots of extra work vetting products ourselves and assembling our own database. Though our methodology would be easy for non-experts to implement, the burden on a typical merchandising department is simply too great.

Thankfully, the last several years have seen tremendous maturation in the green building sector. The trails have been blazed and today’s merchandise managers have a growing number of information resources at their disposal. But trails are trails, and until sustainability is a fully mature, mainstream superhighway, (ironic choice of metaphor, I know), successful merchandisers must still invest time in evaluating their green product choices. There is still no universal green product database. On the other hand, there are a small number of valuable online resources that make the process of identifying “greenest in class” products a little easier.

The GreenSpec database from BuildingGreen.com has been one of the most trusted sources of green product information for years. The editors evaluate products against their own stringent criteria and avoid accusations of favoritism or bias by not accepting advertising or listing fees. It’s not a comprehensive list, but the products listed are often best in class. BuildingGreen offers news and analysis, too, and is a valuable resource that every dealer and distributor in the green building space should utilize regularly.

In the recent past, a common criticism of green building rating systems organizations is that they failed to provide relevant product information, also. Wisely, both national residential green building programs are developing their own green product information resources. The NAHB is creating a database of products that the NAHB Research Center has evaluated and approved for use in their National Green Product Standard program. However, it is virtually useless at this stage with a clunky interface and only a handful of products listed.

Alternatively, the GreenHomeGuide.com, founded in 2003 and acquired by USGBC in 2008, is not a simple directory of products. The site is based on expert advice delivered as focused “Know How” pieces or as answers to inquiries in the “Ask a Pro” section. Providing this kind of contextual information about products and materials can be extremely valuable for gaining knowledge about the category, alternatives, performance, and installation issues that simple databases will not provide. While it offers no product directory, per se, it does link to the GreenSpec directory.

There are other product lists and directories worth a look, too. Product certifying organizations, such as Scientific Certification Systems (www.scscertified.com), list certified products on their websites. But the need for reliable, transparent product information is huge and still largely unmet. New online directories have emerged to try to fill the gap. One of the best designed attempts to provide a LEED-oriented directory of products is EcoScoreCard.com, but it’s still too young to be comprehensive.

Green building culture values transparency and third-party verification, which has led to greater focus on life cycle analysis (LCA) and environmental product declarations (EPD) as a standard method for manufacturers to communicate the sustainability profile of their products. If widely adopted, such standardized product data would make development of a universal database feasible. That’s exactly what’s needed in order to create mainstream scale at the retail end of the green building supply chain.

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.