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Special Issue
WWD Green issue 10/30/2007

Recognizing the potential for cost savings and new markets, European retailers are taking a leadership role in the green movement.

This story first appeared in the October 30, 2007 issue of WWD.  Subscribe Today.

There are rumblings of a green retail revolution in Europe.

Retailers are going beyond just stocking environmentally friendly and ethically oriented products and are repositioning themselves as completely eco-conscious from the factory floor to the eco-friendly store. From introducing organic private label apparel collections to reducing their factories’ carbon footprints, retailers are polishing up their ethical credentials, often on several fronts at once.

PPR, which owns Gucci Group and the La Redoute catalogue, recently introduced a new department grouping environmental, social and diversity initiatives. The department — the first of its kind for a French company listed among the country’s 40 biggest publicly traded firms, according to its chief executive officer Laurent Claquin — underscores a general move toward a more holistic view of ethical concerns.

For retailers, that means going beyond just offering the token handful of ethical apparel lines they’ve made available to their customers up to now. German department store Karstadt, for example, plans to introduce its own sustainable label next year. Also, according to industry sources, Galeries Lafayette will debut an eco-fashion concept, including a private label ethical clothing line, in the spring.

“There’s no point offering a pair of organic socks, if 99 percent of the offer isn’t [organic],” said Hélène Sarfati-Leduc, head of textile projects for Yamana, a sustainable development consultancy.

Similarly, some stores are delving deeper into environmental issues and ensuring their work practices reflect a renewed commitment to green matters.

In the U.K., this month Marks & Spencer unveiled its first green store, which uses energy-efficient appliances, while Tesco began opening stores with carbon footprints some 60 percent lower than its traditional outlets.

“Retailers can’t compete on price alone anymore with Asian imports bringing prices down,” Sarfati-Leduc said. “They have had to find another way.”

More executives are realizing that communicating a meaningful message to customers can only be achieved by tackling environmental and social issues together.

“It’s not one versus the other,” said Karstadt’s ceo, Peter Wolf.

Marks & Spencer’s five-year eco-plan, dubbed “Plan A” and announced in January, was a catalyst for that approach.

“While some organizations were very cautious about making high-profile claims, a ceo like [Marks & Spencer’s] Stuart Rose really took a leadership stance and broke ranks,” said Rita Clifton, chairwoman of New York-based branding consultancy Interbrand Corp.

Such major players throwing their weight behind ethical and environmental issues is key to the trend becoming mainstream going forward, according to executives.

“The more companies — Carrefour, for example — with huge power that get involved, there’s a competition effect, encouraging others to do the same,” said Olivier Ven, apparel quality manager for La Redoute. The retailer carries its own fair trade cotton lines and supports ethical designers through its annual prize “Tackling Ethical Fashion with La Redoute.” The winner gets to design a collection exclusively for La Redoute.

While big business may make the difference in the future, it’s the demands of individual consumers that are bolstering the ethical movement today, according retailers. A TNS Worldpanel Fashion study this August found about 7.1 million British consumers feel ethical issues are important, but that availability of products is poor.

Executives hope to tap that market.

“We keep our fingers on the pulse of what customers want,” said Allan Wragg, category technical manager of Tesco’s clothing division, which is expanding its fair trade and organic brands. “If we give [consumers] a T-shirt that looks good and that is also a positive and environmentally sound product, it makes the customer feel that they are doing their bit.”

And consumers increasingly want to get involved.

“Twenty or 30 years ago if you were interested in ecology, people looked at you like you were a hippie,” said PPR’s Claquin. “The phase we are in now is the realization that global warming is something we can’t avoid, we can’t pretend it does not exist and even on our own scale, on a daily basis we can change what we do.”

Unpredictable weather, such as the poor summer in the U.K., has brought the issue of climate change even closer to home, added Jane Shepherdson, who introduced fair trade brand People Tree at Topshop when she was buying director there.

“It’s now much more immediate,” she said. “People are thinking about their choices a little bit more.”

“No retailer can sensibly ignore that sort of market as they did for most of the 1990s,” said Richard Perks, senior retail analyst at London-based Mintel.

Although Perks found the core of green consumers has grown only slightly in 20 years, retailers are hedging their bets on its future importance.

“It’s like the Internet,” said Karstadt’s Wolf. “In the beginning, everyone said it wouldn’t amount to much. The question is: Do you want to be a late follower or a first mover?”

While green approaches are costly — Marks & Spencer’s Plan A weighed in at 200 million pounds, or $410 million at current exchange — executives say such strategies can reduce long-term costs.

“If you do things right, you can actually make cost savings on things like packaging,” said Tesco’s Wragg.

Some companies are still taking a soft approach when it comes to communicating on green issues, as they’re wary of seeming hypocritical if they vaunt their positives, while ignoring areas yet to be improved.

“They reason is that if I speak about some good actions I’m taking, people will try to find what I’m doing that’s bad,” said Yamana’s Sarfati-Leduc.

Tesco was recently lambasted by the media for not fully backing collections by Katharine Hamnett, amid speculation the eco-fashion designer had stopped working with the retailer.

Consumer polls have so far been kinder. Earlier this month, the U.K.’s first Climate Brand Index, which grades consumer perception of brand performance on climate change run by London’s The Climate Group, ranked Tesco as number one. Marks & Spencer and Sainsbury’s were also in the top five.

Social responsibility claims are met with more skepticism, however. Forty-five percent of Brits don’t believe the ethical claims made by high-street fashion stores, according to TNS.

“They need to be able to prove what they say and be more transparent to consumers,” said Katharine Hamnett, who declined comment on her Tesco deal.

Companies can boost credibility by taking a long-term approach.

Marks & Spencer is working on a lingerie factory in Sri Lanka that will run on renewable energy, while Tesco is helping build lower-energy factories in East Africa, Sri Lanka and Bangladesh. Retailers are already influencing the supply chain.

“You even see farmers saying, ‘We need to get more organic [or fair trade] cotton to fill our Marks & Spencer orders,'” said Shepherdson. Marks & Spencer will introduce 20 million fair trade cotton garments over the next year.

“When companies like Inditex are asking their suppliers to respect environmental and social aspects, it’s affecting the whole supply chain,” said Gildas Minvielle, head of the Economic Observatory for the Institut Français de la Mode.

And future shoppers seem set to be even more demanding when it comes to ethical and environmental issues.

“In the U.K. there’s a lot of pressure in education to make kids more green and ethically aware,” said Mintel’s Perks. “That should work into attitudes as they get older although how much that sticks, whether they rebel against it, remains to be seen.”

Future rebellions aside, businesses are responding to today’s already demanding consumer.

“We’ve got to do this because it’s good for the planet, it’s what our customers expect of us,” said Tesco’s Wragg.

— With contributions from Lucie Greene, Tosin Mfon and Melissa Drier


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