How retailers can harness green buildings to boost profits

How retailers can harness green buildings to boost profits

Black and white draft image of a storefront
ShutterstockIevgen K
You can't color a building green if it's unhealthy for the people inside.

Shopping can be a miserable experience. Dragging handfuls of heavy shopping bags (and perhaps a child or two) into a store that has no natural light and no fresh air, but plenty of loud music and too-warm changing rooms, is enough to make anyone pack up and go home.

On the other hand, a shopping environment that is calm and spacious, with plenty of natural light and greenery, can tempt shoppers to linger longer  and spend more  in store.

New research released Monday by the World Green Building Council suggests retailers around the world are missing a big opportunity to understand how the physical retail environment can affect the enjoyment of both staff and customers.

It draws together key research into the impact of retail environments around the world on the enjoyment and satisfaction of customers and retail staff, concluding that greener buildings often equal happier customers, and therefore greater revenues.

The study focuses on a broad definition of "green buildings" to encompass the health and wellness of its occupants. This is an essential measure of a building's success, explained Jonathan Laski, director of global projects and partnerships at the World Green Building Council. "You can't have a building that's green and does not support the health and well-being of the people inside it," he told BusinessGreen.

However, the study pulls together numerous case studies that show that an environmentally friendly store often draws some of the highest consumer satisfaction ratings. For example, in 2011 retailer Marks & Spencer set out to design a "Sustainable Learning Store" in Sheffield, England, which aimed to create the most environmentally friendly store possible for the brand.

It employed a range of strategies, including maximizing daylight and LED bulbs to cut the use of lighting energy by 20 percent, rainwater harvesting to slash water use by 30 percent and a waste heat recovery system to ensure below-average energy consumption for the building. The store also featured electric vehicle charge points and real-time public transport information to encourage greener transit to and from the store. M&S has been monitoring the performance of the store since 2011, and has found that it enjoys some of the highest customer satisfaction levels across its portfolio.

Similarly, the WGBC report also cited a 2012 (PDF) study that compared the performance of 494 retail bank branches of the PNC Financial Services Group. It compared the performance of 52 LEED-certified branches with 442 non-certified branches to assess whether there was any sales uplift at the greener sites.

It found that the LEED facilities opened 458 more consumer deposit accounts and had more than $3 million more in consumer deposit balances every year than the non-certified branches. In addition, utility costs per employee were on average $675 lower in certified branches than non-certified branches.

"There is this research base growing that shows when you improve daylight, or you improve the access to views and biophilia [plants and wildlife], then actually those stores start to perform better and they start to be perceived better by customers," Laski said. "It is the case that in most of the case studies, providing for the health and well-being of people is also going to be resource efficient."

The report noted that "one of the criticisms most often levelled at sustainability is that it is potentially expensive without necessarily delivering value, or that the benefits of environmental actions are not clear to the bottom line."

It aimed to provide a solution to that by proposing a framework for retailers to link these environmental factors with the financial performance of stores — a strategy that it claimde will add more weight to the case for sustainability projects such energy efficiency upgrades.

"What the Framework does, which is critical for moving sustainable decisions closer to business strategy, is provide a set of sustainability criteria that are aligned with company mission: profit [...] Energy efficiency and reduced carbon emissions, as critical as they are, are not what bring people through the doors. But if lower energy and carbon are associated with a more pleasant retail environment and fewer costs and higher returns, then more players will be motivated to act."

The framework encouraged retailers to gather data across three categories  the physical characteristics of a building, the employee and customer experience of the space and its financial performance  to help retailers better understand how they can improve the sustainability of their store.

Retailers should identify a project lead for this task, said Laski, someone who can take ownership of data which often may be siloed across multiple departments. It also can be helpful for retailers to choose outlier stores to start off with  locations performing out of step with the average (either better or worse) — to try to quantify what is different about that store than the others that is driving those results.

And while the data, and resulting recommendations, may vary according to the type of retailer, there are some safe bets for popular store design, Laski said. He pointed to plentiful daylight and greenery as consistently delivering higher customer satisfaction across all types of shopping environments.

So next time you find yourself spending more than you planned to in your favorite store, take a moment to look around you and consider how much the store's environment may have influenced your behaviour. This research suggests that the smarter retailers will have recognized that the greener the store, the healthier the bank balance.

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