Retail

Why retailers should be tickled pink about going green

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Like it or not, sustainability is a priority for today’s consumers.  Almost 75% of all Millennials and Gen Zers are willing to pay more for sustainable products, according to survey data from Nielsen. But, don’t make the mistake of thinking that sustainability is only important to those aged 35 and under.  50% of Baby Boomers also expressed the same sentiments, and their numbers are growing year over year.

Increasingly, consumers across all demographics expect sustainability to be a core attribute of the brands they trust. But they expect more than just sustainable product offerings. They take it as a given that these companies will have sustainable values; for example, environmentally friendly business practices and a penchant for giving back to the community.

IoT and sustainable retail operations

Given this trend, many retailers have sustainability on the agenda.  But with retail profits on the decline, a mad scramble to keep pace with rapid technological change, and encroaching competition from other industries, they might be thinking more about the long-term sustainability of their business models than they are about their environmental footprint.

Well, I have some good news. Profit growth and environmental sustainability aren’t at odds with one another – they can actually work hand in hand.

Let’s take a look at this in the context of retail store operations. With expansive square footage, bright lights, temperature controlled interiors and a parking lot full of gasoline-loving cars, the average big box store is not the spitting image of environmental friendliness.

But by instrumenting the store with sensors that monitor attributes like temperature, occupancy and natural light, and feeding this data to an IoT platform that is connected to a store’s operational systems, retailers can begin to more intelligently control how resources within the store are used.

IoT and smart energy management

Consider your HVAC as an example.  It’s summer, and you’re expecting a heatwave. In anticipation that customers will flock to the store to get out of the sun, you crank the air conditioning. However, customers don’t show up as expected until mid-afternoon, when the sun is the hottest.

In your baseline scenario, you’ve over-cooled the store for several hours, wasting resources…and money. However, with IoT-enabled smart HVAC management, you can account for the store’s actual occupancy, as well as ambient temperatures, and feed short term insights to the building management system, which can adjust the HVAC in real-time.

The same goes for lighting use.  Your light levels fluctuate daily, and even seasonally, based on factors like cloud cover and the angle of the sun. Some areas of a store near doors or windows may have significant levels of natural light, while other areas may not.  And yet, the typical approach to lighting a store is to keep all the lights on, at the same levels, all day.

With IoT-enabled smart lighting, you can use real-time insights to adjust light levels dynamically based on ambient light, weather patterns, and the location in the store. But there’s also another benefit to having this vast pool of IoT data. Over time, predictive analytics and/or machine learning can be applied to historical data across a portfolio of stores, further optimizing energy use patterns over time.

Energy use benefits from IoT

Recent research from IEEE revealed that IoT solutions, like the ones discussed above, are much more effective at reducing energy consumption than “green by design” building construction alone.  In fact, McKinsey estimates that the total economic impact of IoT driven energy management is somewhere in the neighborhood of 18-36 billion dollars annually for the retail industry alone, with potential energy efficiency improvements of up to 20%.

But retailers are not only able to reduce their environmental footprint with IoT-enabled energy management, they are also able to save on energy costs, thereby reducing operating margins.  And that means you can adopt greener, more sustainable operations while improving profitability at the same time.

Saving some green while going green?  I’d say that’s something to be tickled pink about.

Learn more

For more information about how IBM is helping retail retailers rethink store operations with IoT, visit ibm.com/iot/retail.

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