Ikea Views Energy Independence with 2020 Foresight
In recent years the branding of green has become very popular commercially, often seemingly as the latest promotional badge of honor for businesses across the board. Many companies boast of the green related products they offer, no matter how remotely these actually benefit the environment or relate to sustainability efforts. Some companies boast of minor green offerings or efforts almost in the same manner in which they publicize charitable donations or sports sponsorships.
Make no mistake about it, there is a very financially practical and serious side to the green movement. Many of our most successful retailers have been seeking green efficiencies and sustainability for years as a matter of improving their bottom lines and enabling expansion and growth.
Years ago Walmart announced a plan to increase the efficiency of their growing fleet by twenty five percent. At the time this was pitched both as a part of an early green strategy and an attempt to significantly reduce short and long term costs. This, even before industries were commonly fearing European style fuel prices. Walmart’s goals were met on time.
Earlier, Walmart had begun to work closely with manufacturers to reduce and eliminate packaging. A famous example of Walmart’s leadership here can be seen in its efforts with deodorant and other HBC manufacturers to essentially eliminate paper based packaging to create a more compact and lighter shipping presentation. This effort succeeded over the loud but hollow roars of the paper packaging industry.
Clearly the results of this effort resulted in significant savings to all parties affected by the supply chain including manufacturers, distributors, retailers and most importantly the consumers who make this all possible and profitable. Since these efforts succeeded beyond the imagination of any critics at the time, their results are taken for granted. Shoppers no longer expect to see any packaging wrapped around most HBC products and assume most smart companies are doing what they can to reduce virtually all costs including those involving fuel for transportation and energy.
Many of Walmart’s most noteworthy competitors have independently used green ideas to reduce costs and improve efficiencies in varying ways. One of our most admired and innovative retailers is Costco. In addition to complex innovations such as establishing local food sources ever closer to its supply chain in order to increase the freshness of offerings while decreasing distribution costs, Costco was an original in designing natural light sources for its stores as a means of reducing the cost of electricity while offering customers a more comfortable shopping ambiance. Again it seems that companies which bought into the value of green well before it became fashionable are those which have established reputations for sharp financial prudence over all.
Now a globally admired retailer, one based in the home channel, which has long displayed a passion for a rich green agenda as a spur to steady international growth, has announced a comprehensive plan to become energy and resource independent by the year 2020. Ikea has just begun to embark on a plan the company terms People & Planet Positive. The plan includes provisions to focus $2.4 billion in resources to finance elaborate wind and solar projects. The company plans to install more rooftop solar panels, build wind farms and switch from incandescent light bulbs to significantly more energy efficient LEDS.
The company expects to produce as much renewable energy as is consumed in its stores and buildings. Ikea also plans to improve energy efficiency in all of its operations by at least 20 percent and similar to Walmart’s efforts to gain cooperation from manufacturers and suppliers to reduce inefficiencies in packaging, Ikea will strongly encourage its suppliers to follow its lead. The company also plans to make the products it sells more sustainable by using materials which are renewable, recycled or recyclable. As with Walmart’s HBC example this aspect of the Ikea initiative includes packaging. Ultimately Ikea hopes to inspire and encourage customers to increase sustainability at home by offering efficient home appliances and fixtures at low price points.
Harkening back to the Costco example, IKEA currently has solar panels on 34 of its 38 stores and distribution centers in the U.S. The company views each rooftop as a power station in the making. Ikea views its ambitious plans towards energy independence as much more than braggadocio or the right thing to do. Ikea management sees its plans as a competitive necessity.