If you could dramatically decrease your operating costs, increase your revenue, and appeal to the sought-after Millennial and Gen Z markets, would you?
When independent grocers implement specific sustainable practices throughout their stores, they can reduce costs and maximize revenue by bringing in the equivalent of $1 million+ in sales in one to two years. Add to that the marketing appeal, especially to your younger shoppers who will drive nearly 11 extra miles to a store exercising more sustainable practices, and you're not only doing your part for the environment but helping your bottom line.
"Grocery stores use the most amount of energy per square foot than any other commercial building out there. On top of that, they have a massive flow of materials from cardboard and plastic to food waste," says Peter Cooke, co-founder of Ratio Institute, a nonprofit focused on sustainability for food retail. "But with access to tools, best practices, and unbiased recommendations to practice more sustainable solutions, they will see more business success."
Independents now have access to those tools and resources, thanks to the Independent Grocers Alliance's new sustainability certification program in partnership with Ratio Institute.
Ratio Institute has worked with 1,000+ grocery stores and chains to create store-level and enterprise sustainability solutions that reduce costs, shift internal cultures, and improve overall performance through their Sustainable Food Retail Certification. The program includes self-assessments, certifications, online training, and more for grocers who are ready to get started.
And with 73 percent of global consumers saying they would definitely or probably change their consumption behavior to reduce their impact on the environment, retailers who start with this program can attract those consumers, make them happy, and gain a loyal following, all while engaging your employees in a store they'll be proud to work for. And, of course, help your bottom line exponentially.
How Does Sustainability Help My Bottom Line?
With razor thin profit margins—Cooke says the average U.S. grocery store (44,000 square feet) sells about $18 million in product annually but is left with only $260,000 in profit (a margin of 1.45 percent)—efficiency should be a top concern for all independent retailers.
"Grocery store owners realize they need to be resourceful if they want to survive on a 1.45 percent profit margin," Cooke says. "They can’t afford to be wasteful but they can’t afford to take risks on innovative strategies either."
By putting efficient practices and equipment in place—many of which are simple and inexpensive—Cooke says a “ratchet” effect happens. Even small changes can improve an independent store's efficiency.
“It allows retailers to maximize bottom-line profits. It’s that multiplying benefit that you get with efficiency, it’s not a 1:1 ratio. It’s actually an 18:1 ratio for electrical use. And a 14:1 ratio when it comes to food waste at a grocery store,” Cooke says. “Since energy and waste bills are paid out of gross profits, a store must sell many dollars’ worth of product to produce $1."
In other words, because efficiency boosts a store's revenue, one dollar of energy efficiency will generate significantly more dollars of revenue. Cooke explains, "Every dollar of energy costs reduced is equivalent to $18 in revenue." That means that by implementing small practices that can save your store $15,000 a year, the potential revenue benefits could be $270,000.
What Does A Sustainable Store Look Like?
Bob Rybick, president and CEO of Geissler’s Supermarket, worked with Cooke for Ratio Institute’s in-store assessment for sustainability to learn how his stores could be more sustainable. As part of the process, Cooke toured all seven of the Connecticut and Massachusetts’ stores, which took about 45 minutes per store, and provided Rybick a platform to manage every sustainability-related aspect of the business. This helped reveal operational savings through refrigeration, lighting, and HVAC, among others.
The value of sustainability for Geissler’s in February 2022 was $624,000 per year, in terms of reduced cost. That’s equivalent to $11 million in sales each year after implementing the operations efficiencies suggested by Cooke and his team.
Rybick has already begun implementing some of the recommended sustainability measures, including: LED lighting, retrofitting doors on all dairy cases, and packaged meat for his Connecticut locations.
“Peter was a pleasure to work with, his knowledge of facts and figures regarding every aspect of sustainability is tremendous,” Rybick says. “He can rattle off simple facts that really highlight how important maintenance items that save money and can have a big effect on the environment and out sustainability efforts.”
How Does The Sustainability Program Work?
In short, the Sustainability Food Retail Certification will help your store achieve operational excellence and meet sustainability goals by benchmarking performance, reducing costs, and increasing margins.
As in Rybick's example, a Ratio Institute team member visits your store and assesses opportunities to improve energy efficiencies, decrease waste, and more. Then they will make recommendations that can reduce costs and increase margins, giving retailers access to a sustainability management system to easily implement the recommendations. Retailers can track their progress thanks to benchmarking data, and earn recognition that they can then communicate to shoppers.
That recognition includes:
- An official certificate
- A digital certification seal or badge that retailers can use in marketing materials and on social media
- Listing on the Sustainable Food Retail Certification website
- Announcement of certification status on Ratio Institute’s social channels
The four certification badges a retailer can receive through the program.
Stores can receive one of four certification levels based on their initial assessment, and have the opportunity to improve each year when making the recommended changes. Levels include:
- Advocate: Complies with requirements to prevent pollution, provides safe working environment, ensures safe food products, and invests in basic efficiency measures.
- Steward: Has a public sustainability commitment, prioritizes community engagement and employee satisfaction, and prioritizes investments in efficiency improvement and impact reduction measures.
- Leader: Has clear sustainability goals and commitments to drastically reduce or eliminate the biggest environmental and social impacts of its operations.
- Luminary: Has integrated sustainability as an operational principal, and has invested in promoting the circular economy, net zero carbon, diversity, equity & inclusion, and sustainable and ethical supply chains in its operations.
Once certified, stores will also gain access to a certified stores share group for peer communication on sustainability best practices, a newsletter for certified stores, and exclusive access to the Ratio Institute hotline for sustainability.
The Opportunity For Grocers
The certification is a win-win for retailers, as it gives them the opportunity to assess their current sustainability status and get valuable recommendations that can help them save money, do better for the environment, and improve their bottom line. Then it's time to communicate those positive changes to shoppers.
"Don't leave money on the table or miss out on an opportunity to differentiate yourself by neglecting sustainability," IGA CEO John Ross urges. "Walk the walk and show your customers what you're doing to be more sustainable."
83 percent of U.S. consumers think more brands should do their part in helping the world, according to an Amazon global survey. And Cooke says over 75 percent of American shoppers are interested in sustainable attributes for the products and services they shop for.
The problem? "We don’t really see a lot of communication about sustainability happening at the grocery stores," Cooke says.
"Supermarkets must position themselves as partners in this fight—as food suppliers and as community members," adds Ross. "As independents, we have a unique opportunity to lead this initiative within our communities. We know our retailers are already hyper-focused on Local Equals Fresh, so this is a logical extension of that commitment to local. By showing shoppers what we're doing in terms of sustainability, we can build shopper loyalty and therefore increase sales."
As part of the program, you will receive resources to help you communicate your sustainability commitment to shoppers, including store signage, digital graphics, and a press release.
How Can I Get Started?
Any store can benefit from the savings, efficiencies, and branding that come with being sustainable. To get started on the certification process, contact the IGA Coca-Cola Institute here and read more about the program here.
Your consumer base will continue to care more about your efforts, and we’re here to help you get on the right path forward!
To learn more about the certification process and the value these sustainable practices will bring to your store, join IGA CEO John Ross and Ratio Institute's Peter Cooke on July 25 at 12:00 p.m. Eastern for the webinar, How Sustainable Practices Maximize Revenue For Independent Grocers.
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