October 23, 2012
IKEA Declares Energy Independence
The discussion of different types of energy and how best to use them has been central to many of the debates this political season. In the contest between President Obama and former Massachusetts Governor Mitt Romney, the mix of various sources of energy has been discussed at length with both men making the case for a U.S. that is less dependent on other nations for its power.
In the U.S., retailers and consumer products companies are among the leaders in using what once was described as "alternative" sources of energy, primarily solar and wind. A recent report published by the Solar Energy Industries Association (SEIA) listed Walmart, Costco, Kohl’s, IKEA, Macy’s, McGraw Hill, Johnson & Johnson, Staples, Campbell’s Soup and Walgreens as the top retail companies in terms of energy capacity.
Yesterday, IKEA announced plans for the home furnishings retailer to become energy independentby 2020 through its use of solar and wind power. The company plans to install more rooftop solar panels, build wind farms and switch from incandescent light bulbs to significantly more energy efficient LEDS.
IKEA currently has solar panels on 34 of its 38 stores and distribution centers in the U.S. "Each roof is a power station in the making," Steve Howard, IKEA Group’s chief sustainability officer told USA Today.
For retailers today, the use of solar and wind aren’t just seen as a nice thing to do, but a competitive necessity.
"Sustainability will decide the winners and losers in the business community," Mr. Howard told USA Today.
BrainTrust
Recent Discussions
Discussion Questions
Do you agree that sustainability will determine the winners and losers in business? Is energy independence in the next decade an achievable goal for IKEA and other retailers focused on the goal?
Poll
Sustainability is of interest to only a very small portion of shoppers. Using alternative energy sources makes sense if it’s cheaper — otherwise, they are just adding cost to the bottom line.
I really doubt retailers will be energy independent. It’s mostly symbolic, which is fine. If it helps businesses attract customers who believe in it, then a few windmill props is the way to go.
Sustainability may not determine the winners and losers in business, but it will help companies save money and become less susceptible to price fluctuations in the energy markets.
Utilizing visible forms of alternative energy also makes a statement about the company: we care about the environment. And while sustainable energy may not translate to lower prices for consumers, it does strike a positive note.
Sustainability continues to be an important initiative for businesses, including retail. IKEA’s energy independence initiative is impressive and should be recognized and applauded.
But as many retail companies struggle to survive and compete effectively in today’s omni-channel marketplace, I think that, unfortunately, sustainability initiatives could take a back seat to other priorities.
The initiatives that win will be those that deliver cost savings, first and foremost. Additionally, if retailers can succeed in effectively promoting their initiatives to customers, then they also could win by improving their brand image among shoppers and potentially increasing long-term customer loyalty.
Energy independence for these big box retailers is all about cost savings. They typically have 100,000 square feet of roof real estate that is prime real estate for solar panels. It is a perfect synergy of practical cost savings and ecological and environmental responsibility. I suspect someone did the math and realized that the use of solar and wind energy was extremely cost effective. Great! The retailer and all of us benefit at the same time.
There’s money to be made in going ‘green’. Studies show that a 10% reduction in energy costs is equivalent to boosting sales by $25 to $45 per square foot, which is the same as a 2-15% jump in net profit margins. LED bulbs cut consumption by 90%.
So the bottom line benefit is obvious that going green is good for business. But let’s not forget that consumers and staff alike are now both expecting that a retailer be about much more than just making money. Doing the ‘right’ thing is now expected. As so it should be. Retailers, with their thousands and thousands of locations, have the opportunity to take the lead on sustainability issues. The good news is that retailers like Walmart and IKEA (and many more) totally ‘get it’.
Actually, no. It’s not about sustainability alone. But I do believe that businesses that consider any and all ways to achieve efficiency — including sustainability — will be successful. I think it’s more a statement about how far alternative energy sources have come that they can now be considered part of an efficiency initiative. And while this may not be the most popular opinion, energy independence — provided it can be done cost effectively — makes a lot of sense, and renewable sources as the majority of that independence makes long term sense. That includes geothermal, by the way, which powers IKEA’s store in Colorado.
Short of total economic collapse, the growth of India and China promise that oil and gas will never get cheaper — demand will, in this century, outstrip supply. A business that plans for that contingency is one that will have protected itself from energy price shocks and the ultimate inevitable rise in prices.
Sustainability will not determine the winners and losers at retail. Certainly those who subscribe to alternative energy will have a cost advantage over those who do not. However, winning and losing at retail will still have to do with execution of the core business.
Where will it make a difference? In the world. Those countries that become the most energy efficient will be the winners. Those who fight for the status quo will be left behind. The 20th Century was called the American Century. The 21st Century will belong to the country that can develop energy for its people and businesses at little cost.
The word “determine” is a little strong, but a smart energy strategy is certainly helpful for business operations and costs, and can influence some customers’ choices.
Maybe in future, retailers will move into energy products and services for consumers and/or local communities?
In short, no; in long, a rule of thumb is: don’t hold out much hope for something which would be defined in 7 different ways by 6 different people. Of course the example given mixes sensible, modest proposals like use of CFLs with more esoteric ones…let Mr. Howard come back to us after half his panels have been buried under six inches of snow all winter.
Great business move simply because IKEA’s core demographics, young people, are very much concerned with sustainable business practices and renewable energy. For IKEA, what’s good for the earth is also good for the wallet.
Sustainability is critical to the long term growth of retailers — people, planet and profit — which fits IKEA to the core. They have made sustainability goals part of their strategy, from minimal packaging and in-store display materials to efficient supply chain practices and energy initiatives, while delight shoppers and growing the business. Energy independence can be an achievable goal, and will be top-of-mind for them as part of the total equation.
No it will not determine the winners and losers. It is the merchandise in the store, the price, and the shopping experience that decides the winners and losers. At this time, alternative energy has a higher capital cost that could be used to build more stores. The cost per kWh is higher than most grids. Long term, there could be a lower energy cost for retailers, but only time will tell. There is a very small group of customers that find this of interest, but if you don’t have the right product, they will not care.
Yes, absolutely. Both because of growing interest in responsible environmental actions for both customers and employees, as well as the cost effectiveness of modern sustainable energy management systems. No it doesn’t work in some locations, but in most it does. This is the ‘new normal’ and has reached the tipping point in which most new development will include this in the cost of new projects as well as renovated existing properties.
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Sustainability is of interest to only a very small portion of shoppers. Using alternative energy sources makes sense if it’s cheaper — otherwise, they are just adding cost to the bottom line.
I really doubt retailers will be energy independent. It’s mostly symbolic, which is fine. If it helps businesses attract customers who believe in it, then a few windmill props is the way to go.
Sustainability may not determine the winners and losers in business, but it will help companies save money and become less susceptible to price fluctuations in the energy markets.
Utilizing visible forms of alternative energy also makes a statement about the company: we care about the environment. And while sustainable energy may not translate to lower prices for consumers, it does strike a positive note.
Sustainability continues to be an important initiative for businesses, including retail. IKEA’s energy independence initiative is impressive and should be recognized and applauded.
But as many retail companies struggle to survive and compete effectively in today’s omni-channel marketplace, I think that, unfortunately, sustainability initiatives could take a back seat to other priorities.
The initiatives that win will be those that deliver cost savings, first and foremost. Additionally, if retailers can succeed in effectively promoting their initiatives to customers, then they also could win by improving their brand image among shoppers and potentially increasing long-term customer loyalty.
Energy independence for these big box retailers is all about cost savings. They typically have 100,000 square feet of roof real estate that is prime real estate for solar panels. It is a perfect synergy of practical cost savings and ecological and environmental responsibility. I suspect someone did the math and realized that the use of solar and wind energy was extremely cost effective. Great! The retailer and all of us benefit at the same time.
There’s money to be made in going ‘green’. Studies show that a 10% reduction in energy costs is equivalent to boosting sales by $25 to $45 per square foot, which is the same as a 2-15% jump in net profit margins. LED bulbs cut consumption by 90%.
So the bottom line benefit is obvious that going green is good for business. But let’s not forget that consumers and staff alike are now both expecting that a retailer be about much more than just making money. Doing the ‘right’ thing is now expected. As so it should be. Retailers, with their thousands and thousands of locations, have the opportunity to take the lead on sustainability issues. The good news is that retailers like Walmart and IKEA (and many more) totally ‘get it’.
Actually, no. It’s not about sustainability alone. But I do believe that businesses that consider any and all ways to achieve efficiency — including sustainability — will be successful. I think it’s more a statement about how far alternative energy sources have come that they can now be considered part of an efficiency initiative. And while this may not be the most popular opinion, energy independence — provided it can be done cost effectively — makes a lot of sense, and renewable sources as the majority of that independence makes long term sense. That includes geothermal, by the way, which powers IKEA’s store in Colorado.
Short of total economic collapse, the growth of India and China promise that oil and gas will never get cheaper — demand will, in this century, outstrip supply. A business that plans for that contingency is one that will have protected itself from energy price shocks and the ultimate inevitable rise in prices.
Sustainability will not determine the winners and losers at retail. Certainly those who subscribe to alternative energy will have a cost advantage over those who do not. However, winning and losing at retail will still have to do with execution of the core business.
Where will it make a difference? In the world. Those countries that become the most energy efficient will be the winners. Those who fight for the status quo will be left behind. The 20th Century was called the American Century. The 21st Century will belong to the country that can develop energy for its people and businesses at little cost.
The word “determine” is a little strong, but a smart energy strategy is certainly helpful for business operations and costs, and can influence some customers’ choices.
Maybe in future, retailers will move into energy products and services for consumers and/or local communities?
In short, no; in long, a rule of thumb is: don’t hold out much hope for something which would be defined in 7 different ways by 6 different people. Of course the example given mixes sensible, modest proposals like use of CFLs with more esoteric ones…let Mr. Howard come back to us after half his panels have been buried under six inches of snow all winter.
Great business move simply because IKEA’s core demographics, young people, are very much concerned with sustainable business practices and renewable energy. For IKEA, what’s good for the earth is also good for the wallet.
Sustainability is critical to the long term growth of retailers — people, planet and profit — which fits IKEA to the core. They have made sustainability goals part of their strategy, from minimal packaging and in-store display materials to efficient supply chain practices and energy initiatives, while delight shoppers and growing the business. Energy independence can be an achievable goal, and will be top-of-mind for them as part of the total equation.
No it will not determine the winners and losers. It is the merchandise in the store, the price, and the shopping experience that decides the winners and losers. At this time, alternative energy has a higher capital cost that could be used to build more stores. The cost per kWh is higher than most grids. Long term, there could be a lower energy cost for retailers, but only time will tell. There is a very small group of customers that find this of interest, but if you don’t have the right product, they will not care.
Yes, absolutely. Both because of growing interest in responsible environmental actions for both customers and employees, as well as the cost effectiveness of modern sustainable energy management systems. No it doesn’t work in some locations, but in most it does. This is the ‘new normal’ and has reached the tipping point in which most new development will include this in the cost of new projects as well as renovated existing properties.