It seems the retail sector is experiencing something of a step change when it comes to the development of in-house waste handling systems, believes Jonathan Oldfield. But what are the drivers?
There’s no disputing that the retail sector has had its fair share of turbulence in recent years. The prolonged recession and lack of disposable income saw consumers begin to retreat from unnecessary spending several years ago, for instance. And many household and independent brands are yet to fully recover. Add to this the fact that an estimated 3 million shoplifting incidents cost UK retailers £603m₁ in the 2013-14 financial year, and it makes for grim reading indeed.
Very few people would therefore blame retailers for ‘batting down the hatches’ with a focus on survival. Exerting efforts on the development of more environmentally responsible waste handling practices is surely the least of their worries. Isn’t it?
Well, as understandable as this would be, it actually seems, from first-hand experience, that more considered approaches to waste handling are in fact being witnessed across the board. And not just amongst the bigger brands. So what is the reason for this?
In some instances, the motivation is reputational; consumers are becoming ever-more discerning after all. Trade Extensions reported in July 2014 that, whilst price does largely influence decision making, 80% of consumers believe it is important for companies and brands to behave ethically₂. Furthermore in June 2014, global retail analysis from information and measurement company Nielsen found increased sales for brands with sustainability claims on packaging or active marketing of corporate social responsibility₃. Even the wider supply chain is becoming more scrutinising of retailers’ environmental stance.
And of course there is the matter of it being the right thing to do. We all have a moral obligation to ‘do our bit’ to better protect the future resource security of the world in which we live. But, in many cases, following a sustained period of squeezed margins, it has to be commercially feasible for retailers to behave in a more environmentally responsible manner.
If analysing an organisation’s approach to waste handling purely in terms of pounds and pence, the business case for ‘greener’ thinking becomes clear.
To illustrate a very simple, recent scenario, ‘Top Retail’ handles 13 tonnes of loose cardboard packaging waste per month. Incurring fees of £325 a month for skip collections, and with no material rebate, the ‘waste’ is purely a commercial expense.
However, to focus on the use of a waste baler – given this is where my personal insight lies – a machine suitable for this material stream could be leased for £229.88 per month. In that time Top Retail could produce 26 mill size bales, which, even at a conservative estimate could be sold for £45 per tonne. The £325 per month skip savings, less the cost of the baler, leaves £95.12 per month spare. When added to the newfound revenue yield of £585, Top Retail is £680.12 a month better off. The waste handling process is no longer a financial drain.
If the baler was purchased outright at £7,750, the £325 monthly skip lift savings and the £585 per month cardboard rebate would mean the machine has paid for itself in only eight and a half months.
The bigger the waste volumes and the more frequent the skip lifts, the greater the savings. If the resources can be reinserted into the retailer’s business model under the mindset of the circular economy, the benefits are even more multifaceted.
With such financial incentives clearly apparent, it perhaps comes as no shock that retailers are doing more to process their materials internally, before a waste management contractor gets involved.
And such simple maths goes some way to explaining why it isn’t just the big brands that are thinking smarter. Yes, there is some fantastic closed loop thinking being witnessed amongst the household names. For example, McDonalds’ cooking oil – which represents 10% of the fast food giant’s total waste – is recycled into biofuel which ‘powers’ the restaurant’s fleet. Sainsbury’s is reportedly the first UK retailer to recycle its old food crates into more efficient ones made from 100% recycled material. And on a comparatively more basic level, Boots removes much of its suppliers’ transit packaging at its warehouses, before the goods are sent to store. This heightens the retailer’s ability to better recover, reuse and recycle materials.
But we do see some great common sense examples amongst smaller retailers too. One of our clients, for instance, is an independent family-run supermarket chain in North Yorkshire. With deep-rooted ethical values, this business has won several awards for its energy-saving initiatives and the eco-friendly design of its outlets and headquarters. It’s perhaps unsurprising that they own their own baling technology, to compact their dry cardboard and plastic packaging waste on site, for recycling. We’ve even recently supplied an incredibly compact hand baler to a small local convenience store. Located neatly in their back office, this low-cost equipment is so straightforward it does not need a power supply.
Thankfully ongoing technological innovations, and the range of procurement options now available in the marketplace, mean waste handling equipment is more accessible to retailers, regardless of their size.
Such innovations make a wider range of in-house waste handling activities possible too. A shredder-baler combination machine for instance, is of immediate interest to retailers handling customers’ personal details, either on paperwork or product returns packaging. They have a legal obligation under the Data Protection Act (1998) to safeguard the privacy of such information. The ability to destroy and then compact potentially data-sensitive materials on site, without breaking the bank, heightens the confidentiality of their practices, and reduces the reliance on a third party.
Tighter legislation would undoubtedly drive even further improvements. The Producer Responsibility Obligations (Packaging Waste) Regulations₄ require businesses handling more than 50 tonnes of packaging a year, and with a turnover in excess of £2million, to be accountable for the recycling of their packaging materials. But there is comparatively less legislative pressure placed on businesses handling smaller volumes.
The introduction of European legislation in January 2015 – which began to call for the separate collection of paper, plastics, metals and glass where technically, environmentally and economically practicable (TEEP) – had the potential to encourage additional progress. Indeed in September 2014, the Every Can Counts initiative urged retailers to prepare for the segregated collections that were anticipated. But the fact that nobody has defined TEEP in England means it is up to waste management companies and their business customers to interpret the requirements. With so much ambiguity surrounding the movement, this legislation alone is not yet having the impact it potentially could.
Whilst not solely limited to the activity of retailers, Defra published a report₅ in February 2015 which stated that, with better regulation, resource management could generate an extra £3.85bn for UK businesses by 2020. And I think retailers are really working hard to contribute to that staggering figure.
When a more significant level of buoyancy returns to the retail sector, goodness knows what will be possible then.
₁ – Figures according to the British Retail Consortium.
2 – The Nielsen Global Survey on Corporate Social Responsibility
4 – Resource Management: A Catalyst for Growth and Productivity