How Target Can Leapfrog Walmart on Sustainable Products
Target's announcement last week of its first comprehensive, companywide sustainability commitments was treated by the mainstream media like a display of last year's hot toys. It was largely ignored.
Granted, half of Target's announcement focused on well-worn initiatives to increase efficiencies in the company's supply chains. This work will help Target simply catch up on sustainability issues, and hardly merits front-page news.
But the second half of the announcement is much more interesting, and points to commitments that could drive real innovation around the environmental impacts of Target's products. Based on an optimistic reading of the company's announcement, Target may now be positioned to do for sustainable products what it did for well designed, yet affordable, consumer products.
Put simply, the innovations that earned Target the nickname "Tarjay" could now be leveraged in the interests of sustainability.
So what did Target commit to?
- To eliminate waste in supply chains and minimize their carbon footprint.
- To implement smarter design and better locations for stores to improve their sustainability.
- To expand Target's selection of sustainable products that "effectively balance price, performance, and convenience."
- To provide "the right information, tools, and incentives" for "guests and team members to easily lead a more sustainable lifestyle."
Commitment No. 1 on eliminating waste and carbon has the most specificity. By 2016, Target says it will:
- Reduce the percentage of operating waste sent to landfills by 15 percent;
- Reduce water usage by 10 percent per square foot;
- Reduce greenhouse gas emissions by 10 percent per square foot and 20 percent per dollar of retail sales;
- Earn the Energy Star label from the Environmental Protection Agency for at least 75 percent of buildings;
- Improve the efficiency of transportation inbound to distribution centers by 15 percent and outbound by 20 percent and support the adoption of cleaner and more fuel-efficient transportation practices.
These goals are all clear win-win opportunities for Target. They will be good for the environment and save Target money. Reducing energy, water, materials, packaging, and waste are all smart to do. And don't get me wrong, there is hard work ahead to identify inefficiencies in supply chains and then to innovate them out.
But in 2010, pledging to eliminate waste is like pledging to close the refrigerator door. You aren't going to win any awards for it. And in fact, Walmart not only made much more ambitious goals a few years ago -- setting a target of zero waste and 100 percent renewables -- but that company has already shown that there are literally hundreds of millions of dollars to be saved in rooting out energy, water, packaging, and transport from supply chains.
Target's commitment on smarter design and better locations of stores is code for smaller urban stores. Again, this is both good for the environment and likely will help Target expand into urban areas that have previously not wanted big-box stores. Smaller format, urban stores with energy efficient and environmental designs is just smart business.
So if these initiatives are really just getting Target to a baseline of logical and profitable sustainability opportunities, then how can the company leapfrog other retailers and become a real leader in sustainability?
Target's commitments to expand its selection of "sustainable products" and to provide "the right information, tools, and incentives" to help customers choose these products, is where the real opportunity lies. Ninety percent of a retailers' impact is in the products they sell, not the environmental footprint of their stores or operations. Since Walmart's announcement of plans for a Sustainability Index back in July 2009, we have seen very little progress among retailers to actually deliver better information, better products, or better incentives for consumers to live more sustainably.
Target is well positioned to leverage its existing information tools -- barcode scanners in stores, its iPhone app, the information provided on Target.com -- to provide customers with much richer information about the sustainability of the products. Target could leapfrog the entire industry by working with suppliers and independent organizations to provide full transparency into the sustainability of the products the company sells.
By providing sustainability information and tools to customers, Target could become the most transparent, credible and sustainable retailer in the world.
Target should also be providing sustainability information to its buyers -- the people who select the products we see on the shelves. Target's buyers need better tools to evaluate "hot spots" in product supply chains, to learn where sustainability opportunities exist, and to identify potential risks for brands. Target's buyers need to know both what matters most for the sustainability of the company's supply chains, and what matters most to consumers.
Finally, Target should aggressively expand its portfolio of sustainable products. There is a huge opportunity for Target to do for sustainability what it has done for affordable design. The Target private label brands should come to be known for their "Sustainable Design" as much as their design esthetic.
Target's initiative on sustainable seafood is an interesting example of this. The company has eliminated farmed salmon from stores, making it affordable for almost anyone to buy sustainable wild salmon. Target has also seen huge success with efforts to feature natural beauty products.
The market is simply wide open for sustainable products that work, look good, taste good and don't cost a fortune. Or as Target says, products that "balance price, performance and convenience."
If Target takes these actions, building on its announcements to really lead on sustainable products design, Tarjay could someday be known as Targreen.
Image CC licensed by Flickr user j.reed.