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GREEN ON THE INSIDE

RETAILERS LOOK TO INCLUDE MERCHANDISE IN THEIR COMMITMENT TO SUSTAINABILITY

By Jesse Serwer

Historians are likely to recall 2006 and 2007 as the years America went “green.” Going green — whether describing the explosion of LEED-certified development projects or the waves of energy-saving initiatives at nearly every Fortune 500 company — has grown from a phenomenon associated with tree-hugging environmentalists to a corporate and government imperative.

To be sure, many retailers tout the use of day-lighting or wind-generated power in their stores and declare their undying commitment to eco-friendly practices. And yet, the Whole Foods and Lululemons of the world aside, major chains are not necessarily making green products a major part of their in-store sales pitches.

“I don’t know of any store that is displaying their green items together,” said C. Britt Beemer, chairman of Charleston, S.C.–based America’s Research Group. “If companies are really committed to selling something, the way to show that is through a quantity where a consumer can see they’re really serious.”

One national chain that has been greening its inventory of late is Office Depot, which carries some 3,500 items with post-consumer recycled content (materials from used consumer products diverted from conventional disposal) of 10 percent or more, up from 1,300 such products in 2003. But consumers might not notice the Delray Beach, Fla.–based chain’s efforts on the shelves of their stores. “In many cases, we haven’t made a big splash about the green-ness [of products],” said Yalmaz Siddiqui, an Office Depot environmental strategy adviser. “Our inkjet paper is a top-selling paper that has 35 percent recycled content, but that’s just mentioned in a small way [in the packaging].”

Instead, Office Depot has looked to its catalog and online retail divisions to convey its eco-friendliness. In 2004 the chain launched its “Green Book,” a catalog spotlighting green products delivered to contract customers, and last year it introduced “Buy Green,” a Web storefront directing consumers to sticky notes from recycled paper and battery-charging messenger bags powered with solar energy.

“We recognized there was an interest in these types of products being generated by blogs, social networking sites and other online media that are talking green so, partly in response to that, we extended the Green Book notion into an e-tail play,” said Siddiqui, referring to Buy Green. “We’re seeing a significant month-to-month increase in traffic to that storefront even without a large marketing push.”

The Home Depot rolled out a line of about 3,000 eco-friendly products it calls Eco Options and an Internet storefront similar to Office Depot’s Buy Green. Home Depot plans to be offering some 6,000 such items by 2009, which would represent about 12 percent of total sales.

Wal-Mart, too, is promoting eco-friendly products in its stores and online. Wal-Mart draws attention to these offerings through seasonal displays. “At times when we believe our consumer is most open to hearing about eco- friendly products, like Earth Day, we have more of a push,” said Wal-Mart spokeswoman Tara Raddohl. “Earth Day has turned into Earth Month for us. This year we had signage pointing out certain eco-friendly options in our ‘action alley,’ where the customers enter the store, and many of our stores did programs highlighting green products for their community. Around Christmas we have a huge point-of-purchase display for LED [light-emitting diode] lighting, showing how it has a potential to save you money, and this is why.”

Consumer education is the key to moving eco-friendly products, Raddohl says. “The obstacle is making the consumer aware of the benefits and why these products are better not only for the environment but also for their bank account,” she said. “We really got behind compact fluorescent lightbulbs recently and set out to sell 100 million over the course of about a year. It was an ambitious goal based on the sales we had one year prior, but we achieved it three months early through advertisement but also through interactive point-of-purchase displays. You could enter how many sockets you had in your house, and it would show you the energy savings you could achieve by switching to CFLs.”

More consumer education is necessary, particularly because “green” is still an undefined and nebulous term, says Mark Delaney, director of home improvement research at NPD Group, a Port Washington, N.Y.–based retail consultant firm. “There are no standards out there for green [retail products], so a manufacturer or retailer can put green on their advertising or packaging without illustrating to the customer what this means,” Delaney said. “So there’s a skepticism among consumers. It’s one thing for [a retailer] to say these products are green at the point of sale, but they need to take the next step and say, ‘This is why it’s green, and this is what we mean when we say its green.’ ”

The general consensus among consumers is that they want to do better by the environment but are not necessarily willing to pay extra for that, says Beemer. “So far I don’t see any real evidence that people saying they want green products equates to a change in their behavior,” Beemer said. “About 16 percent of consumers say buying green is important to them, but only 10 percent of that group says they’ll pay anything additional for green [products]. In the last survey I did regarding green, I asked consumers if they could tell me three green products they bought this year, and they could only give me one or two. So I’m skeptical. I think green will be a bigger category then it is and the 16 percent will get to 22 to 28 percent in five years, but I don’t think it will ever be more than 30 percent, and I don’t expect more than half of that 30 percent will pay any more for it.”

Customers will do what retailers make it easy for them to do, says Candace Corlett, a partner at New York City–based WSL Strategic Retail. “There’s only a very small audience that will go out of their way to shop at the retailer that doesn’t use cardboard. The opportunity is for larger retailers to give this consumer, who is ready to be eco-friendly, more ways to do that where they shop.”

Wielding their huge buying power, Wal-Mart has pushed for greener options from manufacturers, says Raddohl. Though she is unable to name any green products that outsell their nongreen competitors, she does cite reduced-packaging laundry detergent as an example of an innovation that is phasing out the less-eco-friendly alternatives.

“We announced a few months ago, along with our supplier partners, that our shelves would be converted to entirely reduced-packaging laundry detergent by the end of April 2008, and that’s now taking place not only in Wal-Mart but in many of the major retail chains across the U.S.,” she said. “There’s less liquid and less packaging, and you’re able to ship more efficiently, save on fuel costs and pass that savings along to the customer.”