I recently had the opportunity to take a behind-the-scenes sustainability tour of the recycling facilities at a shopping mall. Many members of the Retail Industry Leaders Association -- national retail companies with both large- and small-format stores -- are mall or strip center tenants. Therefore, it is helpful to see the on-the-ground challenges they face in implementing sustainability programs in those locations.
For retailers, the store should be a representation of the company’s values and best qualities, including a strong product assortment and a commitment to more sustainable operations. The latter can be tricky with the limited control as a tenant.
The mall we visited has composting, a food donation program and cardboard and poly bag plastics recycling. There also is an ongoing effort to decrease store energy use and talks of a mall-wide LED retrofit.
The general manager noted that tenant participation is largely driven by ease of implementation rather than the retailers’ corporate objectives. At the end of a long workday, the average store employee just won’t trek across the property to drop off recycling if the trash is easier to access, regardless of any corporate goals they read in an onboarding booklet. Not surprisingly, the highest recycling participation is from tenants closest to the collection areas.
Further, not every mall has this level of sophistication with sustainability initiatives. The property we visited and the property manager we met were undoubtedly leaders in the industry.
Retailers are beginning to overcome even these significant challenges. In short, what is required is communication and engagement. These practices can help to achieve strong performance in any store:
1. Get to know your landlord and store managers
Tenants do not have direct control of certain features. Further, they often do not have incentives for sustainability investments -- individual stores in certain properties may not be submetered, meaning that they cannot track energy savings. In those cases, the utilities are billed on a per-square-footage basis rather than on actual consumption, so if one store decreases its utility use, the savings are shared across all of the tenants. This is generally called the “split incentive” issue.
To overcome this, retailers are beginning to open the sustainability dialogue with their landlords. Find your corporate counterpart with your key landlords to discuss the possibilities. Identify opportunities for property-wide initiatives and solicit buy-in from other tenants. Try to kick off pilots and develop case studies to share with other properties. And to overcome the “split incentive” issue, consider new shared cost financing mechanisms or rewards for projects that save costs.
2. Communicate with your store managers
We often see that a store manager knows about a recycling, composting or energy efficiency program at the shopping center while the corporate sustainability or energy manager doesn’t. Or perhaps even vice versa. So be sure you are communicating with key store managers, and that they are aware and taking advantage of any programs that already exist at their location.
3. Empower your associates
Engaged sales associates are the crux of sustainable stores. While not all are mindful of sustainability issues, others may be the strongest advocates. The fact is that the corporate office functions are removed from individual store operations, and therefore, it’s impossible to police every store. So it is important to find ways to communicate the value of sustainability to the stores.
Enable store green team programs and host competitions. And develop feedback channels between the stores and the corporate office. Use meetings or store visits to solicit information about property sustainability efforts and to improve practices. And potentially organize a rewards program to seek out and recognize top performing employees or stores.
4. Consider other corporate functions
Stores are the convergence of many retail functions -- such as store operations, real estate, distribution, facilities and design and construction. Map the functions that have a hand in store operations and determine their top priorities. Then tell stories about energy and waste reduction opportunities in ways that resonate with multiple internal stakeholders. For example, a lighting system upgrade might save money through reduced energy use, but it also might improve the light quality and the in-store experience -- that might appeal to sales, loss prevention, store design and potentially other functions.
5. Think proactively
Whenever possible, integrate sustainable technologies and practices into processes from the beginning, starting with a “green lease" that enables and promotes sustainable operations. RILA and the Institute for Market Transformation (IMT) created a Green Lease Primer with some suggestions.
Then integrate sustainable operations into the company’s build-out guidelines. Learn from previous energy retrofits by installing the best performing technologies and employing the strongest processes at the beginning. Use “avoided costs” to tell the financial story -- there’s added value to tackling operational savings opportunities from the start.
Encouraging shopping center managers, store managers and employees from across the business to improve the facilities they manage, design and build can create a culture for continuous improvement.
Top image of shopping bags by Jon Nightingale via Shutterstock