RETAILERS 'GO GREEN' TO HELP ENVIRONMENT, CUT COSTS

SN STAFF / Reporting by Elliot Zwiebach, Jon Springer and Mark Hamstra

As energy costs increasingly bite into food retailers' bottom lines and consumers become more concerned about environmental issues, more and more operators have been exploring their options for alternative energy sources and other measures to reduce their impact on the environment.

Austin, Texas-based Whole Foods Market last year became the country's largest buyer of wind-energy credits, one of several "green" initiatives at the chain, which has built its entire image around the concept of minimizing the impact on the environment. The company accounts for 100% of its electricity use through the credits.

Wal-Mart Stores, Bentonville, Ark., has built two prototype stores in McKinney, Texas, and Aurora, Colo., that incorporate a slew of design features meant to ease the retail giant's impact on the environment, from porous parking lots that allow water to seep through to the use of recycled construction materials. The stores are among a raft of initiatives the world's largest retailer has taken as part of an effort to become a "greener" corporate citizen.

Food Lion, Salisbury, N.C., has been at the forefront of energy conservation and expects to open its 600th certified Energy Star store by the end of the year, representing about half the chain. The company recently said it had decreased its energy use by 25% since 2000, despite a net increase in the number of stores operated. It said the 2.29 trillion BTUs cut from the chain's energy use have saved the company more than $104.8 million annually.

Likewise, Safeway, Pleasanton, Calif., has taken an aggressive stance on its energy use as it seeks to offset $100 million per year in energy cost increases. The chain is a major purchaser of wind energy and has rolled out other conservation strategies throughout the chain.

Price Chopper Supermarkets, Schenectady, N.Y., earlier this year became one of the first retail businesses in New York to make use of wind power. The company introduced wind-generated energy at two Saratoga Springs locations, where 42% of the power is now obtained from wind energy, according to reports. The company also said it is reducing energy usage through such initiatives as installing more efficient lighting and running cleaner motors in its appliances.

A spokeswoman for the Environmental Protection Agency, Washington, said companies that join the EPA's Green Power Partnership program can stabilize their energy costs. The program is a voluntary partnership between the agency and organizations that pledge to replace a portion of their fossil fuel consumption with renewable energy - electricity generated from sources more environmentally friendly than traditional fossil fuels, including nuclear, coal and other fuels, which emit carbon dioxide.

"Most companies join for environmental benefits, but long-term contracts can provide a hedge against electricity price volatility and help ensure energy price stability," Roxanne Smith, the EPA spokeswoman, told SN.

CUTTING CARBON DIOXIDE

Safeway is purchasing renewable wind energy to offset the use of fossil fuels in powering 15 stores in San Francisco, 270 fuel stations across the country, its headquarters building in Pleasanton, Calif., and an IT facility in nearby Walnut Creek.

"We purchase wind energy credits to reduce our reliance on conventional fossil-fuel-generated electricity and to utilize a cleaner-burning energy source," Teena Massingill, manager of Safeway's corporate public affairs, told SN. Safeway started the program last September as a pilot effort, she added, "with expectations to expand it." Every new fuel station opened since the program took effect incorporates wind energy, she pointed out.

As part of the Green Power Partnership, Safeway agreed to purchase 78 million kilowatt hours of wind energy - the equivalent of avoiding more than 85 million pounds of carbon dioxide, which is comparable to planting more than 10,500 acres of trees, according to the EPA. The agency also said use of wind energy enables each store to reduce carbon dioxide emissions by the equivalent of planting 200 acres of trees, and each fuel station to reduce emissions equivalent to planting 24 acres of trees.

Safeway posts signs at each of the 15 San Francisco stores and all fuel stations letting consumers know that it is doing its part to protect the environment, Massingill said. The signs, which show a photo of wind turbines in a field, read: "This building is 100% powered by wind energy. All our U.S. fuel stations are now powered by wind energy. Safeway is one of the top 10 corporate purchasers of renewable energy in the U.S. Our purchase of wind power is the equivalent of removing 85 million pounds of carbon dioxide from the environment. This is equal to planting 10,500 acres of trees."

The signs at fuel stations add: "By purchasing renewable energy, Safeway is dedicated to a greener, cleaner environment."

Safeway also engages in several recycling programs at store level nationally, Massingill said. In 2005, it recycled 314,000 tons of corrugated cardboard, 100,000 tons of produce trimmings and discarded perishable products for composting, and 100,000 tons of returned plastic bags, she said.

The chain also has cut energy usage by 20% by using basic light-emitting diodes for exterior signs.

In addition, Safeway is selling reusable bags made of plastic and fiber in all Safeway-banner divisions in the U.S. for 99 cents. Although it has offered similar alternative bags in the past, it began offering these last year after being one of several Northern California chains that signed a letter of agreement with the city of San Francisco to reduce the number of grocery bags entering the waste stream by 10 million by the end of this year while also encouraging bag reuse and recycling. The agreement headed off a proposal by the city to impose a 17-cent tax on each bag used.

Massingill said Safeway is seeing "a positive consumer reaction" to the bags, "though it varies by geography, with more people in the San Francisco area opting to use them. But they also sell well throughout Northern California in areas that were not covered by the agreement."

The variety of environmental efforts by Safeway "are not just good for our corporate image but for a large corporate player like Safeway, we must be a contributor to the communities in which we operate," Massingill said. "We contribute millions of dollars to food banks, charities and educational programs, but we also contribute to the welfare of the environment.

"There are expectations out there for companies to do that, and all large companies must do it, not to just exist in those communities but also to contribute in positive ways to those communities and the environment."

'DOING THE RIGHT THING'

Allowing an exhaust hood in a supermarket deli to run a few moments longer than necessary may not appear to be an environmental crisis, but multiply that by 1,200 stores and you begin to get an idea of how Food Lion approaches even the smallest details of energy conservation.

The chain, a division of Belgium's Delhaize Group, has made energy-efficient stores a top priority, spokeswoman Ruth Kinzey told SN, "because there's a strong business case for it and because it's the right thing to do."

Food Lion's conservation efforts this fall will devote a special focus on exhaust hoods and other energy-hungry necessities of its deli departments. The retailer is preparing a month-long educational campaign directed at store deli employees set to coincide with National Energy Awareness Month in October.

"The deli department is a major contributor to a store's energy bill," Kinzey explained. "A single associate's action, such as letting an exhaust hood run unnecessarily or leaving on a wrapping machine or oven unnecessarily can quickly add up, when you are talking about our size of chain."

The program will reinforce knowledge deli associates have through their training and emphasize "the individual power they have in contributing toward the reduction of Food Lion's energy bill," Kinzey said.

Food Lion corporate departments including communications, category management, operations, training and energy collaborated on the deli energy project for more than a year, Kinzey added. Materials will be sent to deli managers in of all Food Lion's 1,200 stores.

The effort is part of a larger conservation emphasis at Food Lion, which last year was named a charter member of a task force of utilities, businesses and agencies developing a National Plan for Energy Efficiency facilitated by the U.S. Department of Energy and the EPA. The group drives policy recommendations designed to create an aggressive national commitment to energy efficiency, and save billions of dollars.

Food Lion was named to the panel as a result of its success in the Energy Star program also administered by the DOE and EPA, Kinzey said. Energy Star promotes conservation by allowing top-performing efficient buildings and products to display the Energy Star logo.

Food Lion intends to display Energy Star plaques at half of its stores by the end of the year, Kinzey said. The retailer has participated in the Energy Star program since 1998, and its 400-plus Energy Star stores - more than any other food retailer, according to the company - left it uniquely prepared to weather the price spikes of recent times.

"We were out in front on this, and recent events have proven our focus has been in the right place," Kinzey said.

Participating in conservation programs has also provided a point of pride for store associates and sends a positive message to consumers, especially as they too deal with soaring energy prices.

"We see reducing energy consumption in a world of quickly rising energy costs as being financially prudent. Our energy conservation efforts also speak to how we manage the environmental and social aspects of our business," she said. "In addition, we believe such efforts are consistent with our brand attributes of being neighborly and practical."

INITIATIVES AT STATER BROS.

Jack Brown, chairman and chief executive officer of Stater Bros. Markets, Colton, Calif., said his company has a solid waste management program that controls trash going into the trash compactors, with posted regulations as to what goes in - primarily cardboard. The chain also provides receptacles for customers to drop off plastic and, separately, paper bags, and those materials are combined with store plastic and paper and baled. The compacted trash and the baled plastic and paper are sent to the distribution center, where they are picked up by recyclers, he said.

"We're also continuing to convert store refrigeration systems away from ozone-depleting refrigerants, which is a greenhouse issue," Brown said.

Stater also pays special attention to building insulation, he said. "We use an applied urethane roofing, which is better for the environment and provides a better hold than a hot tar roof," he explained.

"We don't know what the return on investment from these programs is, but we don't do this for a return but because it's the right thing to do, and we have a responsibility to our customers to support environmental issues," Brown pointed out. "There's a deep chasm for people who want to look too environmentally friendly. They're doing it for the wrong reasons, whereas we do the right things for the right reasons, not for the publicity we get."

Stater works on green initiatives with Leadership and Energy in Environmental Design, part of the U.S. Green Building Council, "to pick and choose programs applicable to supermarkets," Brown said, "so we can design stores to be more environmentally friendly."

For example, in lighting, Stater's stores capture sunlight though oblique units on the roof that use mirrors to magnify the light. "As it gets lighter during the day, the system cuts power in the store, and as night comes, it draws more power." He said the system has cut Stater's lighting usage by about 30%.

"The challenge for us is to find competent vendors who can help us regulate these programs," Brown said. "There are a lot of people out there, but not all are qualified to maintain these programs."

He said he believes Stater is different than most operators because it builds its own stores, "so we're probably more into savings at the construction level, and we support green programs that we might not know about if we used outside contractors."

GIANT EAGLE'S EFFORTS

Giant Eagle, Pittsburgh, received one of Energy Star's Awards for Sustained Excellence in Energy Management last year for programs that set clear annual goals to continuously push forward a series of energy management programs. Energy Star said the company won the award by meeting its goal of improving energy management at 112 of 134 stores by using the energy performance rating system of the Environmental Protection Agency to identify underperforming stores and to set and evaluate corporate energy management goals for them.

The chain backed up its retrofits and upgrades with energy awareness-raising activities for employees and customers. According to Energy Star, the chain's efforts helped prevent the emissions of more than 24 million pounds of carbon dioxide - the annual equivalent of removing emissions from more than 2,000 vehicles.

In addition, Giant Eagle said it has developed an energy management plan that encompasses 11 business activities, with related strategies and defined plans to carry out those strategies. The foundation of the plan is corporate commitment to energy management, utility data collection and bench marking, the company said.

By utilizing results from bench marking, Giant Eagle has been able to find the best opportunities for savings as well as for setting internal standards and a mechanism for comparisons with leading industry averages.

New construction offers other opportunities to incorporate energy-efficient equipment, materials and design practices during construction planning and design, and the new, highly efficient buildings set the standard for existing facility upgrades, the company indicated. All facilities benefit from improved operating and maintenance procedures that maximize low-cost opportunities to reduce energy use, and new technology reviews that involve installing and auditing one to three promising opportunities annually, it explained.

Another aspect of Giant Eagle's energy management plan is procurement of energy and equipment. Capitalizing on energy procurement opportunities where deregulation is offered potentially lowers energy costs, the company said.

Giant Eagle said its efforts ensure that equipment purchased at the time of new construction, remodelings and end-of-life replacement has the lowest overall life cycle without sacrificing required functionality.

Whole Foods' Way of Life

AUSTIN, Texas - For Whole Foods Market, based here, being "green" is a way of life.

In addition to specializing in organically grown foods, which themselves are meant to minimize the impact of farming on the environment, the company undertakes a range of measures that conserve resources and reduce its reliance on fossil fuels.

Last year Whole Foods said it became the only Fortune 500 company to purchase 100% of its electricity needs via wind energy credits, which compensate wind farms for their contribution to the nation's supply of electricity. The company also uses solar power and biomass to supplement its energy needs, according to its website, which notes that a typical solar installation can save 2.2 million kilowatt hours of electricity over 20 years.

Other conservation initiatives at the chain include:

More than half of its stores backhaul spoiled produce and other biodegradable waste to facilities where it can be processed into compost, reducing landfill waste at the stores by 75%.

Whole Foods hosts internal and community drives for recycling electronics like computers, and also allows consumers to recycle cell phones and ink-jet cartridges at many stores.

The chain encourages customers to use reusable bags by subsidizing the use of such bags at the register.

Some stores have converted to waterless urinals, each of which save about 40,000 gallons of water a year, the company said.

The chain is converting its truck fleet to run on biodiesel fuels and is outfitting trucks with aprons that cut down on wind resistance to reduce fuel consumption.

An array of green construction techniques is used, including the use of materials made from recycled products, such as Dakota Burl, a composite board made from sunflower seed hulls.

Printing is done on recycled paper wherever possible, and the chain evaluates the "right to exist" for everything it prints to avoid waste.

Mark Hamstra