Green Retailing

Green Retailing:
FACTORS FOR SUCCESS
Kee-hung Lai T.C.E. Cheng Ailie K.Y. Tang
he era of green retailing (GR) has come. While the philosophy of environmental managementwhich helps rms reduce waste, increase efciency, cut costs, and protect against environmental liabilities1has been known to business for years, its benets are increasingly visible in the retail sector. Wal-Mart, for instance, estimates it could save around 3,800 trees and 1,000 barrels of oil with an economic saving of $2.4 million by reducing unnecessary packaging of its private-label toy products.2 In addition, the rm has procured hybrid diesel-electric trucks and refrigerated trucks that feature a small power unit for cooling, so the engine could be turned off when the truck is stopped. The logistics network of Wal-Mart has achieved roughly a 25% improvement in fuel efciency, amounting to almost $75 million in annual savings and a reduction of 400,000 tons of carbon dioxide emissions per year.3 Retailers have traditionally been regarded merely as distributors of merchandise, adding little value for consumers or suppliers. However, now they play a signicant role in various aspects of the value chain, such as offering more services and a broader range of products to customers, setting product standards, promoting products, and generating and disseminating information on consumer tastes and behaviors in support of their suppliers response to customer demand.4 Retailers are increasingly expected to mitigate environmental damage and are urged by regulatory forces, customer expectations, as well as community group pressures to embrace green practices for improving their value chains. Meanwhile, there are increasing environmental regulations exerting greater
The authors are grateful to Sara Beckman and three anonymous reviewers for their constructive and insightful comments on earlier versions of this article. This research was supported in part by the Research Grants Council of Hong Kong (GRF 5434/08H) and The Hong Kong Polytechnic University under a research studentship to Tang.
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Green Retailing: Factors for Success
pressures on retailers to emphasize environmental protection in their operations. For instance, New York Governor David Paterson signed legislation that requires large retail stores to recycle plastic carry-out bags. Should they fail to comply, the New York State Department of Environmental Conservation will penalize them with a ne starting from January 2009.5 Non-compliance with environmental regulations can be expensive. For example, in 2008, Home Depot agreed to pay a $1.3 million penalty and implement a nationwide comprehensive, corporate-wide program to prevent storm water pollution at each of its new store to resolve alleged violations of the Clean Water Act at more than 30 construction sites in 28 states where new Home Depot stores were being built.6 A similar consent decree was reached with Kmart. This retailer was sentenced to a ne of $102,422 to settle self-disclosed violations of federal environmental regulations discovered at 17 of its distribution centers in 13 states. The company reported violations of clean water, hazardous waste, and emergency planning and preparedness regulations to the U.S. Environmental Protection Agency.7 In addition to regulatory forces, community group pressures have fostered the adoption of GR. B&Q, a British-based do-it-yourself retailer, was criticized by non-governmental organizations (NGOs) for its sourcing of tropical hardwood in the early 1990s. To resolve this crisis, B&Q shifted to purchase certied wood conforming to the requirements and standards of the Forest Stewardship Council (FSC), a non-prot organization devoted to encouraging responsible management of the worlds forests.8 Retailers, on the other hand, are under the inuence of consumers evolving preferences for environmentally friendly merchandise to adopt GR. Environmentally conscious customerswho have at least some knowledge of, and a willingness to buy, environmentally friendly productsrepresent 87% of the adult population in the USA.9 Information Resources, Inc. found customers are actually maintaining or increasing spending on green products despite the economic downturn.10 On the other hand, The Natural Marketing InstiKee-hung Lai is an Associate Professor at the Department of Logistics and Maritime Studies, The Hong Kong tute expected the green consumer Polytechnic University. <lgtmlai@polyu.edu.hk> marketplace to reach $845 million by 2015.11 It is appealing to this large T.C.E. Cheng is Chair Professor of Management at the Department of Logistics and Maritime Studies of The Hong customer segment if environmental Kong Polytechnic University. <lgtcheng@polyu.edu.hk> attractions are developed in product/ Ailie K.Y. Tang is a doctoral student at the Department service offerings. While the segment of Logistics and Maritime Studies, The Hong Kong is expanding, consumers are increas- Polytechnic University. <ailie.k.y.tang@polyu.edu.hk> ing their expectations, requirements, and standards in evaluating the green practices of retailers. As stated by Stuart Rose, CEO of Marks & Spencer, Customers care more than ever how products are made.12 This expanding customer segment is exerting greater inuence and driving retail chains to raise their environmental standard and quality. An increasing number of retailers (e.g., The Body Shop, Carrefour Group, and Metro Group) have emphasized protection of the natural environment as one of their company missions.13 GR is set to be the way forward, as declared by Sir Terry Leahy, Chief Executive of Tesco, We Must Go Green.14
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The benets of GR are attractive to retailers seeking cost and service improvements. Pressures from regulators, community groups, and customers also prompt retailers to pursue green practices. However, there is no universally accepted denition of GR despite the growing numbers of business articles and publications on this important topic. Conducting a cursory search of business articles published between May 2001 and June 2009 using ProQuest, a research engine, we found different management issues associated with GR ranging from green procurement, green product design, green store design, green transportation, green packaging, green technology investment, through to energy and water conversation of retailers, and cooperation with suppliers, NGOs, and customers for waste reduction (see Table 1). The lack of a consensual denition of GR provides no clue for retailers to understand let alone implement GR, despite increasing market expectations of environmental protection in the retail sector. Existing environmental management studies have been conned to the manufacturing context15 and various industries such as the pulp and paper industry, furniture industry, and computer industry.16 Environmental research dedicated to the retail sector is relatively scarce, although there were studies sampling retailers as one of the study groups.17 Unequivocally, the role of retailers as an intermediary between suppliers and customers in coordinating and fostering green practices across their value chains has been largely ignored despite the call for life-cycle consideration in all the stages of the value chain.18 There are plentiful studies in the environmental management and industrial ecology literature covering a broad range of related topics on green practices. These include the adoption of the environmental management system19 and investigation of individual green practices such as eco-design, voluntary environmental code, sustainable logistics, and green marketing.20 This study focuses on examining the green practices in the retail sector with a systematic analysis and categorization of these practices grounded in management theories. Practitioners are keen on understanding how GR can be successfully implemented. However, a similar GR program can end up with different results in real life, as illustrated in the cases of Tesco and ParknShop, each being one of the largest retailers in the UK and Hong Kong, respectively. In November 2007, ParknShop put a halt on distributing free plastic bags to its customers. Shoppers would instead be required to donate HK$0.2 (approximately US$0.025) for each plastic bag demanded. Such a policy triggered a ood of customer complaints against the retailer. ParknShop was criticized for a lack of transparency in the use of the customer donation. Customers were skeptical as to whether the donation would be used to support the Hong Kong Community Chest (a local charity organization) or environmental groups as promised by the retailer. There was also criticism of a lack of consistency in policy implementation whereby customers were asked to donate in some outlets, while other stores continued to distribute plastic bags free-of-charge. Customers also lodged complaints that the policy was implemented on short notice and they found it difcult to cope with the change. Subsequently, ParknShop lifted the policy, aborting a well-intentioned environmental campaign only ve days after its launch.21
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TABLE 1. Review of Topics Related to Green Retailing Practices (from Business Articles
Published between May 2001 and June 2009) (continued on next two pages) Publication Title
Buildings Chain Store Age
Authors
Amanda B. Piell (2009)a Marianne Wilson (2009)b Marianne Wilson (2009)c Ike Wilson (2009)d
Document Title
A Closer Look at Green Retail Facilities The Future Looks Green The Power of Green
Scope of Green Retailing Examined

Green store design for energy conservation and green energy utilization Energy conservation and greenhouse gas reduction Green store design for waste reduction, water and energy conservation; Green energy utilization
Chain Store Age
McClatchyTribune Business News
Green Retail Tips Discussed
Waste reduction; Green store design for waste reduction, water and energy conservation; Green design Green human resource development
Chris H. Sieroty (2008)e Katherine Field (2008)f Katherine Field (2008)g
The Business Press Chain Store Age
Coachella Valley to Get First Green Retail Centers Starbucks and REI Share Environmental Commitment Sustainable Principles Guide Building Development Focus on Solar Power Sustainability Translates into Protability
Green store design for water and energy conservation Green store design for energy conservation
Chain Store Age
Green store design for waste reduction and energy conservation
Marianne Wilson (2008)h Marianne Wilson (2008)i
Chain Store Age
Green store design with green energy utilization
Chain Store Age
Green store design for energy conservation
a. A.B. Piell, A Closer Look at Green Retail Facilities, Buildings, 103/6 (2009): 88. b. M. Wilson, The Future Looks Green, Chain Store Age, 85/6 (2009): 12. c. M. Wilson, The Power of Green, Chain Store Age, 85/6 (2009): 32. d. I. Wilson, Green Retail Tips Discussed, April 22, 2009, McClatchy-Tribune Business News. e. C.H. Sieroty, Coachella Valley to Get First Green Retail Centers, November 3, 2008, The Business Press. f. K. Field, Starbucks and REI Share Environmental Commitment, Chain Store Age, 84/9 (2008): 19A. g. K. Field, Sustainable Principles Guide Building Development, Chain Store Age, 84/9 (2008): 12A. h. M. Wilson, Focus on Solar Power, Chain Store Age, 84/9 (2008): 20A. i. M. Wilson, Sustainability Translates into Protability, Chain Store Age, 84/9 (2008): 2A.
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Published between May 2001 and June 2009) (continued from previous page) Publication Title
Business Week
Authors
Heather Green and Kerry Capell (2008)j Marianne Wilson (2008)k Mike Duff (2007)l
Document Title
Carbon Confusion

Supplier and NGO cooperation in carbon labeling
Chain Store Age
Going Green
Reducing energy consumption in stores and the supply chain; Green packaging
Retailing Today
Carefully Organizing Green Efforts Is Key to Reaping Rewards
Energy conservation; Green procurement; Considering customer feedback in waste reduction
Bob Thompson (2007)m Erica L. Plambeck, (2007)n
Journal of Retail & Leisure Property Supply Chain Management Review
Green Retail: Retailer Strategies for Surviving the Sustainability Storm The Greening of Wal-Marts Supply Chain
Green store design for energy conversation; Green energy utilization; Green transportation Green transportation; Green packaging; Green product design; Green procurement; Cooperating with suppliers and nongovernmental organizations
Anonymous (2007)o
Business Wire
City of Miami and Staples to Break Ground on First LEED-Registered Green Retail Building in City
Green store design for waste reduction, water and energy conservation; Providing channels for customers to recycle products; Investing in energy efciency and renewable energy; Green procurement
Dees Stribling (2007)p
National Real Estate Investor
Green Design Goes Mainstream
Green store design for waste reduction, water and energy conservation
j. H. Green and K. Capell, Carbon Confusion: To help shoppers make green choices, companies are slapping carbon labels on products. But even if the public can interpret the information, will it help reduce greenhouse gas emissions? Business Week, 4075 (2008): 52. k. M. Wilson, Going Green, Chain Store Age, 84/6 (2008): 12. l. M. Duff, Carefully Organizing Green Efforts is Key to Reaping Rewards, Retailing Today, 46/11 (2007): 3-4. m. B. Thompson, Green Retail: Retailer Strategies for Surviving the Sustainability Storm, Journal of Retail & Leisure Property London, 6/4 (2007): 281-286. n. E.L. Plambeck, The Greening of Wal-Marts Supply Chain, Supply Chain Management Review, 11/5 (July 2007): 18-25. o. City of Miami and Staples to Break Ground on First LEED-Registered Green Retail Building in City, Business Wire, September 24, 2007. p. D. Stribling, Green Design Goes Mainstream, National Real Estate Investor, 49/5, (2007): 43-46.
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Published between May 2001 and June 2009) (continued from previous page) Publication Title
The Daily Record
Authors
Jen Degregorio (2007)q Tim Craig (2007)r
Document Title
Carroll County to Get Mid-Atlantic Regions First Green Retail Center Green Is the New Black

Green store design for waste reduction, water and energy conservation
Retailing Today
Green building techniques; Green procurement; Green products
Jenny McTaggart (2007)s
Progressive Grocer
Green Is the New Black
Green store design for energy conservation Green packaging; Green transportation; Cooperating with suppliers and nongovernmental organizations
Marianne Wilson (2006)t Marianne Wilson (2006)u Barry Seifer (2006)v
Chain Store Age
Sky Gardens
Green store design for energy and water conservation Green store design for energy conservation
Chain Store Age
Going Green Gets Easier Consumers and the Future of Green Retail
Environmental Design + Construction
Green Store design; Helping customers to conserve fuel
Eric Brill and Gary Saulson (2005)w Alan Knight (2004)x
Environmental Design + Construction Consumer Policy Review
The Paradox of Green Retail
Green store design for energy conservation and waste reduction
Sustainable Consumption: The Retailing Paradox The Rewards of Green Retailing
Green procurement; Green packaging; Green policy development
Anonymous (2001)y
Building Design & Construction
Green store design for energy conservation
q. J. Degregorio, Carroll County to Get Mid-Atlantics Regions First Green Retail Center, The Daily Record, 1 (2007). r. T. Craig, Green is the New Black, Retailing Today, 46/1 (2007): 8. s. J. McTaggart, Green is the New Black, Progressive Grocer, 86/4 (2007): 18-20. t. M. Wilson, Sky Gardens, Chain Store Age, 82/13 (2006): 118-119. u. M. Wilson, Going Green Gets Easier, Chain Store Age, 82/1 (2006):112. v. B. Seifer, Consumers and the Future of Green Retail, Environmental Design + Construction, 9/7 (2006): 51-52. w. E. Brill and G. Saulson, The Paradox of Green Retail, Environmental Design + Construction, 8/6 (2005): 30-33. x. A. Knight, Sustainable Consumption: The Retailing Paradox, Consumer Policy Review, 14/4 (2004): 113-115. y. The Rewards of Green Retailing, Building Design & Construction , 42/5 (2001): 12-13.
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In comparison, Tesco cut the number of plastic bags without adding a bag tax or levying charges on the bags. They launched the Green Clubcard Point in 2006, through which customers collect points by reusing bags and redeem the points for such things as gift vouchers, magazine subscriptions, and insurance. This campaign allowed Tesco to save two billion plastic bags in about two years, and the plastic bag usage by its customers was down 40% compared with the same period two years before.22 These two cases highlight the performance contingencies of retailers environmental efforts despite similar endeavors to pursue GR.
Methodology
Following the guidelines on conducting case-based research,23 we took the steps illustrated in Figure 1 to identify the different dimensions of GR and examine the roles of retailers in greening the value chain. We rst established a preliminary framework grounded in the natural resource-based view of the rm (NRBV) and Porters value chain to provide theoretical guidance for our subsequent categorization of GR practices. We then employed theoretical FIGURE 1. Research Process sampling to select cases to examine the theoretical issues of our research questions rather than using statistical sampling, which is designed to be representative of a population.24 We sampled the retailEstablish a preliminary ers Wal-Mart, Carrefour, Tesco, Metro, Kroger, framework for GR grounded in NRBV and Porters value chain Target, Costco, and Sears25 for the following reasons: they are leaders in a variety of operating formats, including Apparel/Footwear Specialty, Cash & Carry/Warehouse Club, Convenience/Forecourt Perform theoretical sampling Store, Discount Department Store, Discount Store, Electronics Specialty, Home Improvement, Hypermarket/Supercenter/Superstore, Supermarket, Collect data through annual Non-Store, and Other Specialty;26 their operareports/ environmental reports/ tions cover 64 countries in the world, which helps ofcial websites enhance the generalizability of the ndings of this study;27 and they are all publicly listed companies, so the information gleaned from their ofcial Analyze data with open and annual reports and web sites is expected to be true axial coding for categorizing green retailing practices to guard their corporate reputation. It is possible that green practices are claimed for public relations purposes. To reduce the threat of self-report bias, Identify the green retailing we took further steps to ascertain validity. The dimensions information we adopted must meet at least one of the following criteria to ensure data integrity and validity.
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Precise Figures
We selected only information containing precise gures showing the results of green practices by retailers. For example, Carrefour stated that We collect waste, such as neon tubing and cooking oil used at stores. 449,172 tons of waste was recycled thanks to the implementation of waste sorting and recycling at Group stores in 2007.28 In contrast, Costco claimed that We have an extensive recycling program that includes the efcient and environmentally protective recycling of cardboard and paper, photo lab silver, junk tires, and broken pallets.29 Due to the absence of exact gures in support of this claim by the latter, this piece of information was taken out from our subsequent data analysis to control for the potential bias problem.
Dates of Implementation
The exact date of implementing the green practices was provided. For example, Target stated that in 2006, we introduced a kids meal box in our Food Avenue restaurant at all Target stores that is made from 100 percent recycled content, with a minimum of 40 percent post-consumer ber.30 In another piece of information from Kroger, it was stated that we are installing variable-speed drives in air-handling fans and evaporative condenser fans that use a fraction of the energy of older equipment.31 In our data analysis, we excluded the latter because it did not provide the implementation date.
Third-Party Data for Verication

We examined retailers green practices that can be validated, which include the procurement of Marine Steward Council (MSC) and FSC certied products, as well as partnerships with environmental groups and government agencies. We veried the practices by checking the partner websites/business presses/reports of environmental groups to ensure the validity of the data before analysis. After information screening, we analyzed the data qualitatively using the techniques of open and axial coding to categorize GR practices.32 Open coding is the process of identifying central concepts or categories and their properties, while axial coding is to relate categories to their sub-categories.33 Based on the sub-categorization derived, we modied our preliminary framework and identied the dimensions of GR.
Conceptualizing Green Retailing

The natural resource-based view of the rm (NRBV) stresses a rms relationship with the natural environment and highlights three strategic capabilities of the rm, namely, pollution prevention, product stewardship, and sustainable development. These strategic capabilities are built upon bundles of resources that are rare, socially complex, and causally ambiguous. Green practices, involving these resources and strategic capabilities, are valuable to rms in gaining sustainable cost and service advantages.34
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Reducing waste is fundamental to pollution prevention, which focuses on minimizing waste in internal operations (e.g., the use of pollution control equipment).35 In general, opportunities for waste reduction can be identied through a life-cost analysis to determine ways for eliminating waste at all the stages of the retail value chain, from raw materials acquisition through to waste reclamation from customers.36 The concept of waste reduction is also central to product stewardship, which entails integrating external stakeholders into product design and process development for eliminating waste and reducing life-cycle environmental costs such as greenhouse gas emissions. For example, the amount of carbon dioxide emitted from containerboard packagingthroughout its production, use, and disposalis one of its life-cycle environmental costs.37 Hart asserted that activities at every step of the value chainfrom raw materials access, through production processes, to disposition of used productsbring environmental impacts.38 Consistently, Porter and van der Linde considered pollution as a form of economic waste and pointed out that every step of the value chain can damage the environment.39 As the NRBV suggests, waste reduction in the value chain is helpful for rms in gaining competitive advantage through cost saving.40 Relating the NRBV to Porters value chain, we see that pollution prevention calls for waste reduction in the primary value chain activities such as operations and logistics, which are the rms internal practices; whereas product stewardship is oriented towards procurement, as well as marketing and after-sales activities, involving cooperation with suppliers and customers. The third strategic capability advocated in the NRBV, namely, sustainable development, demands rms to make a commitment and take a long-term orientation towards reducing their environmental burden with a view to attaining sustainable organizational growth and development. Supportive activities in the value chain such as shared top management commitment to environmental policy formulation, green technology development, and employee training on environmental protection are necessary for nurturing organizational growth. As seen in Table 2, the three strategic capabilities from the NRBV perspective are congruent with the value chain concept in terms of how it takes place, where it takes place, and who is the key party involved. The analytical framework integrating NRBV with Porters value chain is useful for conceptualizing GR, as retailing is viewed in a value chain as the set of business activities that add value to the products and services sold to consumers for their personal or family use.41 Given the fact that environmental practices often span across functional areas in organizations,42 it is appropriate to examine the underlying practices of GR and their performance implications by analyzing the retail value chain.43 Table 3 identies three mutually exclusive dimensions of GR activities, namely, internal-improvement-based GR, externalcoordination-based GR, and supportive-development-based GR. The attributes end, mean, key party involved, and function in the value chain are used for comparisons and contrasts among these three dimensions of GR. These three dimensions enable us to categorize the GR practices reported in the archival documents of the sampled retailers. The categories and sub-categories of GR practices with illustrative examples are summarized in Table 4.
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TABLE 2. Linking NRBV with Porters Value Chain

Strategic Capabilities in the Value Chain
Pollution Prevention
How It Takes Place

Improving efciency by minimizing emissions, efuents, and waste in operations Coordinating with stakeholders to minimize life-cycle costs of products
Where It Takes Place

Internal Activities: Operations, Logistics External Activities: Procurement, Marketing, After-Sales Service
Who Is the Key Party Involved

Employees
Key Elements Summarized

Internal Improvement
Product Stewardship
Stakeholders
External Coordination
Sustainable Development
Developing technology and human resources to support green primary activities and further growth of the rm
Supportive Activities: Firm Infrastructure, Technology Development, Human Resource Management
Top Management
Supportive Development
Discussion: Dimensions of Green Retailing and Retailers Roles

Internal-improvement-based GR practices are central to minimizing emissions, efuents, and waste in operations, which in turn helps retailers reduce costs and gain in environmental performance. This is consistent with the philosophy of total quality environmental management (TQEM), which focuses on improving the efciency of production, minimizing waste, and reducing costs throughout the entire corporate system.44 Congruent with the zero-defects goal of TQEM, internal-improvement-based GR demands continuous improvement at every step of the operations process with a view to attaining total elimination of waste.45 Continuous improvement is concerned with constant evaluation and improvement of the operations process for enhancing efciency.46 There are several ways to gain efciency through process improvement and innovation. They include minimizing materials input, reducing energy consumption, maximizing the use of renewable resources, and extending product durability.47 Since continuous improvement of the process is helpful for mitigating the environmental damages caused by the process activities, eco-efciency (i.e., simultaneously maximizing productivity and environmental performance) can be improved.48 Consistent with the notion of eco-efciency that environmental impact should be reduced throughout a products life cycle,49 external-coordination-based GR focuses on coordinating with related parties to minimize the life-cycle cost of the product. This includes the environmental impact of the product from the
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TABLE 3. Attributes of the Dimensions of Green Retailing Practices

Dimensions of GR Practices Attributes End Internal-ImprovementBased GR
Minimize waste in internal operations Continuous improvement in operations Employees
External- CoordinationBased GR
Minimize life-cycle costs of products Stakeholder Integration
SupportiveDevelopment-Based GR
Minimize environmental burden to sustain rm growth and development Long-term commitment and mission in environmental protection Top Management
Mean
Key Party Involved Function in the Value Chain
Suppliers and Customers
Primary Internal Activities: operations and logistics
Primary External Activities: procurement, marketing, and after-sales service
Supportive Activities in the Value Chain: rm infrastructure, human resource management, and technology development
TABLE 4. Dimensions of Green Retailing Practices (continued on next page)

Dimensions of GR Practices InternalImprovementBased GR
Green Store Utilization
Descriptions
Examples
Minimizing Emissions, Efuents, and Waste in Internal Operations

Utilize system or device in the store which helps energy conservation or reducing/recycling wastes Through the devices such as energy efcient HVAC Roof Top Units (RTU), T12 uorescent lighting with energy efcient T8 or T5 uorescent lighting, the reduction of energy usage in 2008 is 438 million kWh on a comparable store basis (Sears Holdings Corp.) Have used river transportation since 2004 between Anvers and Villvoorde (Brussels) to transport 3,000 containers per year, allowing a reduction of CO2 emissions by 54 tons. (Carrefour)
Green Transportation
Transport goods with reduced consumption of materials or energy/ increase in effectiveness
ExternalCoordinationBased GR
Green Procurement
Coordinating with Stakeholders to Minimize Life-Cycle Costs of Products

Purchase goods from, or develop partnership with, a council which supports sustainability; purchase goods with eco-labels such as FSC, MSC, showing the environmental impact Purchased MSC and FSC-certied products (e.g., Wal-Mart, Tesco, Carrefour)
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TABLE 4. Dimensions of Green Retailing Practices (continued from previous page)

Dimensions of GR Practices
Green Product Design
Descriptions
Cooperate with suppliers in designing products with environmental considerations
Examples
Developed Extended Roll Life products that condense several rolls of either toilet paper or paper towels into one Extended Roll Life roll. By selling twice as many Charmin 6 Mega Roll packs, twice as many units can be shipped. WalMart eliminates 89.5 million cardboard roll cores, eliminates 360,087 pounds of plastic wrapping and reduces diesel consumption by 53,966 gallons. (Wal-Mart) Saved 2,600 tons of glass from one supplier by lighter glass packaging; imported New World wines in bulk and bottling them in the UK has saved around 4,100 tons of carbon emissions; removed 24.8 tons of plastic packaging for electrical products (Tesco) Launched Green Clubcard Points in August 2006, and since then saved over 3 billion bags. (Tesco) Helped customers recycle their bottles and cans. Provide and staff the machines servicing the need of residents to return their used bottles and cans for refunds. In 2006, nearly 207 million cans and bottles were recycled at Fred Meyers 50 stores in Oregon.(The Kroger Co.)
Green Packaging
Cooperate with suppliers to develop packaging which can be reused and recycled or waste can be reduced
Green Promotion
Educate/train/encourage customers for their participation in recycling/ reducing waste/ reusing products Provide channels for customers to participate in reducing waste and reusing products; collect disassembled product from individual customers and return them to suppliers
Green After-Sales Service
SupportiveDevelopmentBased GR
Green Policy
Furnishing Supportive Activities to Sustain Environmental Protection Efforts

Develop missions and visions on green commitment Costco has always sought to be a good steward of the environment, and we continue to pursue new initiatives and implement new polices that enhance our performance in this important area (Costco) Target has been a member of the U.S. Green Building Council (USGBC) since 1997, and participating in the USGBC Pilot Portfolio Program to explore retailers unique sustainable design needs and advance the use of LEED standards. (Target) Organized energy saving weeks to show employees options for lowering energy consumption. Motivate employees to reduce energy use as much as possible by measuring the energy consumption since 2002. (Metro Group)
Green Technology Development
Support research, investment or co-operation with other agencies for developing technology to reduce environmental impact
Green Human Resource Development
Promote employee participation for green development
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production, usage, and disposal processes.50 The retailers role as a coordinator in the value chain is critical for a green practice to succeed. The environmental efforts of retailers in the value chain can be compromised when there is no coordinated supplier and customer involvement to lessen the environmental harms caused at the different stages of a products life cycle.51 Supportive-development-based GR practices refer to the research and support activities developed in support of environmental preservation for retailing. Firms need to develop a long-term vision and a commitment to environmental protection. As stated by Tesco, We are committed to cutting our carbon footprint in every area of our business. And we want to make it easier for our customers to do the same by offering greener, more sustainable choice.52 Target says, We are committed to providing our guests with great design, which is consistent with protecting and managing our environmental resources. Target encouraged manufacturers to remove harmful Peruorooctanoic (PFOA) chemicals from products used in fabric and garment processing and to develop PFOA-free chemical alternatives.53 These examples demonstrate that the environmental goals stated in the retailers policy can inuence supplier and customer behaviors by controlling, organizing, and managing resources and knowledge across the value chain. Such inuences can be reinforced by the supportive-development-based GR practices whereby retailers furnish supportive activities to sustain environmental protection efforts in their value chains. Coordination theory 54 is useful in explaining how retailers perform GR practices and the distinctive roles they play in the greening of their value chains. GR requires the act of managing three generic kinds of interdependence between value chain partners to achieve an environmental goal: prerequisite interdependence occurs when output of one activity is required by the next activity; shared resource interdependence refers to the situation where a resource is required by multiple activities; and simultaneity interdependence is when more than one activity must occur at a time.55 The interdependent nature of GR practices highlights the distinctive roles of retailers in greening their value chains.
Retailer Role 1: Provide an Environmentally Friendly Physical Retail Environment to Facilitate Interaction with Customers
Transactions involve the simultaneous processes of selling and buying. Coordination theory suggests that when more than one activity must occur at a time, synchronization is needed to manage interdependence. Retailers thus provide a physical place for synchronizing transaction activities. Store design has long been recognized as a major element of a retailers operations56 and the required energy consumption is fast becoming a cost concern for retailers. A survey revealed that 87.5% of retailers experienced energy cost increase and 64% indicated taking actions to create more efcient stores for reducing energy expenses.57 For example, Targets stores in California use rooftop solar panels to supply 20% of their electricity needs, and Fontana stores use skylights to provide up to 100% of the stores lighting needs for six hours a day.58 When a retailer utilizes the green store, it is essential to consider customer comfort. Metro Cash
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& Carry has installed walk-in freezer rooms as an energy-efcient alternative to separate refrigerated display cases with constant temperature maintained at zero degree Celsius segregated by glass walls. Considering the need for customer comfort, eece jackets are available upon request. This solution allows its stores to save up to 30% on electric power consumption for refrigeration.59
Retailer Role 2: Transfer Goods from Manufacturers to Consumers in an Environmentally Friendly Way
Retailers take part in coordinating transportation logistics, where products are interdependently transferred from the point of production (manufacturers) to the point of consumption (consumers).60 Retailers seek to ensure product availability with efcient material ows.61 Zara, a Spanish apparel retailer, adopts automated routing systems for delivering electronically tagged garments to appropriate loading bays in its logistics centers. Such technological adoption is helpful for reducing shrinkage levels with a 98.9% accuracy in distribution.62 Eco-efciency is thus improved where the goods are delivered with less consumption of materials, hence helping preserve the environment. For food items, different kinds of food ingredients require storage under different temperaturecontrolled environments and separate delivery. MOS Burger, a Japan-based burger chain, has utilized trucks equipped with three temperature belts to serve the need for freezing, refrigeration, and normal temperature.63 It is an example of green transportation whereby eco-efciency is improved by consolidated shipments, thus reducing fuel consumption.
Retailer Role 3: Disseminate the Voices of Customers and Provide Feedback to Suppliers
Wal-Mart noted that 8% of its environmental footprint comes from direct operations while the other 92% is attributable to its products sold.64 Therefore, green procurement, green packaging, and green product design are instrumental in greening the value chain. The coordinator role of retailers in these practices is essential to connecting customers with suppliers and passing along customer needs to the latter. Environmentally conscious consumers prefer products with eco-design that have been development with input from customers.65 Several studies have identied classications of green consumers (see Table 5).66 These classications highlight the differences in consumers green interests and motivations. The supply of products to retail outlets has long been initiated by manufacturers.67 Recently, the domain has shifted to retailers to gauge customers needs and wants with the market intelligence disseminated to suppliers for their responsive actions. The two actors (supplier and customer) require the intermediation of retailers as an information processing mechanism (resource) to transmit the information (task) to achieve the environmental goal from the coordination-theoretic perspective. As stated by Kroger, We recognize that our customers are increasingly interested in making a difference when it comes to their individual efforts and choices. Our efforts in helping them extend to the products customers nd on
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TABLE 5. Examples of Studies on Segmenting the Green Consumers

Studies
Finisterra do Paco et al. (2009)
Segments
The Green Activists
Characteristics, Interest and Motivation of the Segment

Develop a favorable position in relation to all environmental aspects, particularly towards perceived efciency, environmental friendly buying behavior, recycling, sensitivity to the economic factor and resource saving; Question the promotional and advertising claims made by rms.
The Undened
The environment does not occupy a prominent position among their concerns; Their individual actions are considered not directly relate to the improvement of the environment. Hold a negative position in relation to some environmental aspects (activism, environmental friendly buying behavior, recycling, resource saving, and willingness to pay more to preserve the environment) despite they claim to have knowledge about the environmental issue. Values-driven trend predictors who are driven by personal and planetary health; Exhibit high inuence on others, are the highest buyers of green, healthy, and socially-conscious products, and are less price sensitive; Prefer companies practicing corporate social responsibility (CSR) and boycott those who do not adhere to their standards.
The Uncommitted
Natural Marketing Institute (2008)
LOHAS
Naturalites
Driven by personal health and wellness and adhere to a healthy lifestyle; High purchasers of eco-consumables, want to do more for the environment; Loyal to those companies/brands practicing credible CSR.
Drifters
Driven by trends; Currently engaged in sustainability though their behaviors are not deeply rooted; Price sensitive and are more likely to be eco-concerned if affected personally.
Conventionals
A practical segment without green attitudes but demonstrate some municipal environmental behaviors such as recycling and energy conservation; Driven more by cost savings or a desire to reduce waste than by environmental consciousness.
Unconcerned
Not necessarily against the environment but is not actively engaged in protecting it; Other priorities in their lives simply take precedent.
Yahoo! Green Study (2008)
Deeply Committed
More educated; Higher percentage live in metropolitan areas; Respond most to the positively impact the environment message.
Trendy
More ethnically diverse; Respond to messages about everybody else is doing it, and newest technology.
Practical Passive
Motivated to be green by immediate benets such as saving money or improving health. Respond to messages about providing a better life for their family.
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our store shelves. We recently teamed with one of our suppliers, Tetra Pak, to use its Tetra Recart recyclable paper cartons for our Kroger brand tomato sauce and other tomato products instead of cans.68 This statement illustrates customers desire for protecting the environment and retailers response in green packaging. On the feedback reector role of retailers, Wal-Mart introduced a new square-shaped design for milk jugs in 2008 that require no crates or racks for shipping and storage. Trucks can accommodate 4,704 more gallons per truck or 9% of their capacity. The jugs are thus cheaper to ship and better for the environment with a saving of $0.10 to $0.20 a gallon. However, customers complained that it is very hard to pour the milk, resulting in spills everywhere.69 Similarly, customer satisfaction is the key to determining whether Wal-Marts effort in developing recycled yarn socks and bamboo ber long-sleeve T-shirts are successful or not.70 Making continuous improvement by reecting on and addressing customer feedback is essential for green product design. A further step is to acquire merchandise through green procurement or develop partnerships with NGOs (such as FSC and MSC) for certicating that the products on the shelf are sourced from an environmentally sustainable forestry and shery.
Retailer Role 4: Economize and Stimulate End-of-Life Product Stewardship

The end-of-life product stewardship path begins with customers. Scale economy is critical for the success of end-of-life product stewardship. In particular, manufacturers nd it difcult to collect waste from widely dispersed individual customers, and small-scale recycling can be costly for them.71 This illustrates the dependency of suppliers and customers on retailers in take-back efforts and green after-sales service. Wal-Mart has formed a partnership with Samsung Electronics America. Through the Samsung Recycling DirectSM program, customers can recycle Samsung consumer electronics for free (as well as those from Wal-Marts former private brands Durabrand and Ilo, which are no longer sold at Wal-Mart) at numerous xed drop-off locations in all the 50 states of the USA.72 The retailers role as coordinator is helpful to collect disassembled products from individual customers and return them to the original supplier. Carrefour has developed environmental awareness for its customers in stores during events such as World Environment Day.73 A retailers coordinator role in educating or training customers to participate in green initiatives is reective of green promotion.
Retailer Role 5: Inuence and Support the Entire Value System

The coordinator role of retailers in green technology development is to facilitate knowledge sharing and resource monitoring among the involved parties in greening their value chains. Besides technologies such as solar power systems and energy efcient uorescent lighting, which are devices to help save resources directly, technological deployment has the broad power to reduce the costs of coordination, communications, and information processing,74 beneting
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the greening of the entire value system. As advocated by Porter, gaining competitive advantage requires exploiting a systems interdependencies, and it usually requires information or information ows that allow optimization or coordination to take place.75 Information technology serves this purpose for retailers. For example, through a program called efcient consumer response, retailers checkout scanner data are directly transmitted to the manufacturer. Ordering, payments, and invoicing are fully automated through an electronic data interchange so that products can be continuously replenished on a daily basis.76 This helps prevent stockpiling of products, which in turn minimizes waste from excessive stocks. Further derived benets are reduction in paper usage in transactions, decrease in labor cost from manual data-entries, and enhancement of customer service by reducing the cycle time from order to delivery.77 In particular, retailers development of a green policy should not be conned to coordinating environmental management practices within organizational boundaries but should be extended to encompass all parties in the value system. Wal-Mart, the largest retailer in the world, announced a green policy in 2007 that they would sell only concentrated liquid laundry detergent at U.S. Wal-Mart discount stores, Supercenters, Sams Clubs, and Neighborhood Markets starting from May 2008.78 One of its suppliers, Unilever, developed its all small-and-mighty detergent, which is one third the size of the 100-oz bottle but can wash just as many loads of laundry and is easier to carry. Wal-Mart expects this move to save 430 million gallons of water in the production process, 80 million pounds of plastic resin, and 125 million pounds of cardboard during the rst three years of selling only liquid laundry detergent. P&G, Unilever, Dial, Huish, and Church & Dwight responded by transforming their facilities and offering their own concentrated laundry detergent.79 On the other hand, customers can only buy these environmentally friendly laundry detergents without other choice in the store. Customers are directed to use environmental products with less water. Natural resources are thus saved not only at the production stage, but also at the consumption stage of a product fostered by retailers.
Strategic Recommendations for Green Retailing Success

Cooperation and shared vision in the value chain are closely linked to continuous improvement, which is the fundamental resource of success in GR. Consistent with studies in the environmental literature, continuous improvement has been highlighted as the core element in environmental management processes that enable organizations to continually mitigate their environmental damage.80 To provide practitioners with strategic recommendations organized in a logical sequence of implementation steps, we propose a strategy loop (Figure 2) grounded in Demings Plan-Do-Check-Act model.81
Identify Waste Reduction Opportunities throughout the Retail Value Chain

With the objective of achieving zero waste, the key to GR success is to identify waste reduction opportunities along the retail value chain. An
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FIGURE 2. Continuous Improvement for Green Retailing Implementation
4. Measure and control environmental performance
1. Identify waste reduction opportunities
3. External involvement and communication
2. Internal involvement and communication
illustrative example is Starbucks Coffee, which began a comprehensive energy audit in 2007. This energy audit involves 24-hour monitoring of all the aspects of energy usage among a representative sample of 19 Starbucks stores in the USA over a six-month period. The stores selected for the audit vary in store design, size and age, as well as climatic regions. In identifying ways to use water and energy more efciently and reduce operations costs, Starbucks distributes resource report cards to approximately 350 store managers in six regions for them to provide feedback on store energy and water use. The data collected are then analyzed to identify conservation opportunities. The results provide a basis for specifying the environmental design of new stores in collaboration with the U.S. Green Building Council.82 Tools like energy audits and managers feedback reports help pinpoint where waste is generated in the retail chain and aid in the formulation of future environmental policy. Thus, it is the rst critical step of successful GR.
Internal Involvement and Communication

To fully execute GR throughout the retail chain, every employee should understand their role and participate in the process. Internal training and education can nurture a green culture and create awareness of green practices for implementation in each of the retail chain activities. IKEA, for example, educates its employees on the green concept. They offer environmental training, the opportunity to participate in the environmental committee, and part-time environmental coordinator positions. As mentioned by Anders Berglund, the co-owner of IKEA, We believe education is a large part of our role, certainly, which is why we offer environmental training for coworkers.83 Whole Foods Market, as another example, conducts Green Mission Training for employees about recycling.84 Internal involvement requires cooperation and cross-functional liaison among employees for better organizational learning about GR adoption.
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Through cross-functional liaison, an understanding of environmental issues, high technical skills, and detailed policies and procedures, rms can identify ways to reduce waste and mitigate the risk of causing environmental damage.85 The Carrefour Group created its Sustainable Development Department in 2001. This department involves a functional organization of dedicated people and a sustainability network. Each year, the Sustainable Development Report summarizes the initiatives and progress accomplished during the year. The department denes indicators that are measurable for evaluating the evolution of its environmental performance, such as energy consumption and waste management of the Carrefour Group. It also provides support for cross-departmental operational networks (spanning Human Resources, Merchandise, Assets, and Logistics) for better environmental achievement.86 GR practices are especially amenable to the benets derived from learning because of their people-intensive nature and their dependence upon tacit skill development via employee involvement and coordination of team efforts and shared expertise.87 Coordination ensures that GR is integrated into all the stages of the retail value chain and facilitates the implementation process with the participation of various departmental functions along the retail value chain.
External Involvement and Communication in the Value Chain

A carbon labeling programwhich states the quantity in grams of carbon dioxide equivalent put into the atmosphere during the manufacture, distribution, and disposal of productsis now being introduced in many parts of the world by companies such as the UKs Tesco, Frances Casino, and the U.S.s WalMart.88 However, there has been controversy regarding the use of carbon labels; for instance, the complexity of counting carbon along the entire supply chain89 and confusion for customers who do not understand what the gure means.90 It cannot be denied that the carbon labeling program still has a long way to go. Yet it illustrates the importance of external involvement and communication in executing green practices. The efforts of suppliers, NGOs, and governments are essential to the success of the program. For example, Wal-Mart has asked its 60,000 suppliers to take part in measuring their carbon footprint,91 Tesco is now working with Carbon Trust to complete and verify the calculation within a few months 91and establish a website explaining the carbon label to customers;92 and Japans trade ministry has drawn up a uniform method of labeling carbon emissions to avoid fears among some rms that their competitors may use in-house calculations and produce the lowest possible emissions data.93 Green practices may fail due to a lack of proof and third-party verication. For example, Kmart recently was slapped with fake green charges by the U.S. Federal Trade Commission for making false and unsubstantiated claims that its American Fare private-label paper products are biodegradable. Kmart was required to remove the biodegradable claim from the product.94 Lifestyles of Health and Sustainability (LOHAS) is a progressive segment of consumers focusing on health and tness, the environment, personal development, sustainable living, and social justice.95 More than 40% of the members of LOHAS look for proof and third-party verication when a company makes a claim that they
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are embracing green practices.96 NGOs thus play a vital role in promoting green practices in the retailing industry by recognizing sustainable products with their certications. Stocking products with these globally recognized certications can help reduce the criticisms by environmentally conscious customers or other environmental groups. A number of leading retailers such as Sainsburys, Waitrose, Marks & Spencer, and ASDA have started stocking goods with MSC eco-labels.97 Giant retailers Home Depot, Lowes, and IKEA, three of the ve largest wood buyers in the world, are now active buyers of FSC labeled products.98
Measure and Control Environmental Performance

If you cannot measure it, you cannot control it. If you cannot control it, you cannot manage it. This saying illustrates the importance of measurement and control to ensure the success of GR. In 2005, the Carrefour group engaged a new management system that enables Carrefours 200 users all over the world to manage standard and customized environmental performance across the whole enterprise. Such a tool offers the retailer a user-friendly way to input, access, consolidate, and analyze data in a multi-lingual format and enables its staff to compare current performance with that in previous years. This tool helps Carrefour measure and control the rms environmental performance and allows it to establish clear and objective goals to reduce its carbon footprint. The Carrefour group reduced energy consumption by 9.2% in 2007.99
Conclusion
GR has become popular among retailers who are striving to balance economic gains with environmental performance in the face of growing pressures from customers, regulators, NGOs, and other stakeholder groups. The three dimensions of GR identied hereinternal-improvement-based GR, external-coordination-based GR, and supportive-development-based GRhighlight the implementation requirements for retailers trying to reduce waste and improve environmental performance along their value chains. As retailers vary in business scope and scale, there is no single universal solution for GR. It is important for retailers to carefully design and prioritize the GR dimensions to address the specic needs of their business segments. They should also prioritize the three GR dimensions for improvement actions based on their contextual situations and resources. For instance, large retailers may benet from establishing their own research department to develop green technology to take advantage of scale economy, whereas those with fewer resources may nd it economical to collaborate with suppliers and NGOs to develop means to reduce the life-cycle costs of their products. Fashion retailers that require frequent stock replenishments may take the advantage of green transportation such as using double-decker trailers that carry more products per delivery journey to improve eco-efciency. Electronics retailers may favor green after-sales service such as providing trade-in
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services for new electronics to facilitate end-of-life product stewardship. Grocery stores seeking to minimize the environmental footprint of their merchandise may nd green product design and packaging worthwhile to pursue. Home furniture and furnishings retailers can contribute by partnering with suppliers to nourish the development of sustainable forestry. To determine what GR practices can serve their best interests, practitioners can follow our proposed strategy loop, which provides a roadmap for GR success. Following the steps in the strategy loop, retailers will be able to evaluate their own situations, formulate action plans for GR, and make adjustments in their value chain activities to improve performance outcomes in both economic and environmental aspects. Policy makers should formulate proper environmental regulations and voluntary measures to green the retailing industry. Complying with regulations is not the only consideration for retailers who embrace GR. Leading retailers often move ahead of legislation to adopt GR in order to reap the benet of cost saving and serve as role models for others. Legislation should not be taken as the sole mechanism to promote green behaviors in the retail sector. Government policies can be helpful in providing an aid for supportive development-based GR, e.g., allocating research funds for green product design and green technology development. Notes
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Green Retailing:

FACTORS FOR SUCCESS

Kee-hung Lai T.C.E. Cheng Ailie K.Y. Tang

CALIFORNIA MANAGEMENT REVIEW VOL. 52, NO. 2 WINTER 2010

Green Retailing: Factors for Success

CALIFORNIA MANAGEMENT REVIEW VOL. 52, NO. 2 WINTER 2010

Green Retailing: Factors for Success

UNIVERSITY OF CALIFORNIA, BERKELEY VOL. 52, NO. 2 WINTER 2010

Green Retailing: Factors for Success

Scope of Green Retailing Examined

Chain Store Age

McClatchyTribune Business News

Green Retail Tips Discussed

Chris H. Sieroty (2008)e Katherine Field (2008)f Katherine Field (2008)g

The Business Press Chain Store Age

Chain Store Age

Green store design for waste reduction and energy conservation

Marianne Wilson (2008)h Marianne Wilson (2008)i

Chain Store Age

Green store design with green energy utilization

Chain Store Age

Green store design for energy conservation

CALIFORNIA MANAGEMENT REVIEW VOL. 52, NO. 2 WINTER 2010

Green Retailing: Factors for Success

Scope of Green Retailing Examined

Chain Store Age

Carefully Organizing Green Efforts Is Key to Reaping Rewards

Energy conservation; Green procurement; Considering customer feedback in waste reduction

Bob Thompson (2007)m Erica L. Plambeck, (2007)n

Journal of Retail & Leisure Property Supply Chain Management Review

Dees Stribling (2007)p

National Real Estate Investor

Green Design Goes Mainstream

UNIVERSITY OF CALIFORNIA, BERKELEY VOL. 52, NO. 2 WINTER 2010

Green Retailing: Factors for Success

Scope of Green Retailing Examined

Green building techniques; Green procurement; Green products

Jenny McTaggart (2007)s

Green Is the New Black

Marianne Wilson (2006)t Marianne Wilson (2006)u Barry Seifer (2006)v

Chain Store Age

Chain Store Age

Environmental Design + Construction

Green Store design; Helping customers to conserve fuel

Eric Brill and Gary Saulson (2005)w Alan Knight (2004)x

Environmental Design + Construction Consumer Policy Review

The Paradox of Green Retail

Green store design for energy conservation and waste reduction

Sustainable Consumption: The Retailing Paradox The Rewards of Green Retailing

Green procurement; Green packaging; Green policy development

Building Design & Construction

Green store design for energy conservation

CALIFORNIA MANAGEMENT REVIEW VOL. 52, NO. 2 WINTER 2010

Green Retailing: Factors for Success

UNIVERSITY OF CALIFORNIA, BERKELEY VOL. 52, NO. 2 WINTER 2010

Green Retailing: Factors for Success

Third-Party Data for Verication

Conceptualizing Green Retailing

CALIFORNIA MANAGEMENT REVIEW VOL. 52, NO. 2 WINTER 2010

Green Retailing: Factors for Success

UNIVERSITY OF CALIFORNIA, BERKELEY VOL. 52, NO. 2 WINTER 2010

Green Retailing: Factors for Success

TABLE 2. Linking NRBV with Porters Value Chain

How It Takes Place