Offline fashion purchases lead to 3x more emissions than those made online, as shown in a recent chart on prime time TV in Germany. Could this retail carbon footprint lead to a paradigm shift for both consumers and the fashion industry?
In this article we compare the drivers for consumers’ CO2 emissions when buying online and offline. We also expand the environmental retail carbon footprint calculation to omnichannel.
Professor Heinemann: “First Covid-19, and now climate killer – stationary retail under fire”
Consumers perceive last mile emissions as higher than they are
Recent media coverage on Black Friday was not positive about the amount of online orders, with consumers noticing the many parcel delivery cars on the streets. A misperception, argued by a study of the German Clean Tech Institute and Öko Institute e.V., as the impact of store energy consumption, as well as consumer habits of travelling to a store, are often underestimated.
With the example of a pair of shoes, the study focusses on those part of the supply-chain, which are different between online and offline channels: from the distribution center of a fashion brand to the house of a consumer.
Consumer behavior drives higher stationary retail carbon footprint
Beginning with online orders, the largest impact on retail’s carbon footprint is on logistics. Both, to the consumer and – in the case of returns – back to the warehouse. Logistics’ emissions contribute to 94% of CO2, with a total CO2 impact of 1kg.
In retail, the energy consumption of the store (in the case example) is almost as high as the total energy consumed by online, totaling 1kg. Adding the impact of distribution and warehousing to get the merchandise to the retail location, leads to a total impact of 1.3kg. The bus and car scenarios simply add the CO2 impact of the consumer means of transport, summing up to 1.7kg and 3.3kg of CO2 emissions per article.
We have also derived an estimate for the CO2 impact in the case of an item not available in the store and then shipped by carrier to the consumer’s address. This is the worst scenario for carbon emissions, amounting to a range of 1.4 to 3.4kg CO2. We are hereby assuming similar modes of last mile transport to the consumer – rapid same day delivery as offered in some metropolitan areas may worsen the impact even more due to the lower load factor in the car. Corroborating these numbers, a recent MIT study in the US comes to a similar result.
The gap between online and offline CO2 emissions will widen further
Whilst the data shown above has been based on German consumer habits and logistics data from 2015, one would expect the overall footprint to be lower for retail shopping in countries such as Denmark and The Netherlands where the bike is more popular. At the same time, logistics service providers such as DPD and DHL have invested heavily low emission vehicles in the last years. Also, the load factor of last mile vehicles has improved, driven by the higher number of parcels and thus reducing the km driven per stop.
Brands need to properly account for store emissions to improve retail carbon footprint
For brands striving to meet the Paris Agreement targets and becoming carbon neutral, this means new challenges. But also opportunities: having customer data (e.g. through membership programs) on the proximity of consumers to stores, can help to gain insights into the consumer CO2 impact when shopping. An increase in consumers using carbon neutral transport to reach retail stores, e.g. by driving electric bikes or cars, will also reduce emissions.
At the same time, it is important to reduce the store energy consumption. One example is grocer Lidl, which just opened a store in The Netherlands which both offsets store energy consumption through more than 1700 solar panels and also offers free charging for consumers coming with electric vehicles, making the journey for those shoppers carbon neutral.
However, one should be aware that further rapid progress on electrification can be expected for logistics service providers (DPD plans to delivery carbon neutral in 225 cities in Europe by 2025), improving the impact per online article from the current 1kg to nearly zero.
Two open topics remain in the journey shown above: Firstly, the impact of packaging materials has not been included. Whilst recycled materials are typically used already, there are also examples of re-usable packaging by companies such as RePack.
Secondly, the impact of the store build and refit is ignored both in the study, but also in most brands’ sustainability statements. While Nike has made an effort to use more sustainable materials in its Paris House of Innovation, it will be interesting how this can be achieved for the whole store and at scale.
To conclude, the drivers for carbon emissions are currently often misjudged and online orders are currently and will likely remain the most sustainable way of shopping for the years to come. Whilst the actual impact is not visible to consumers (yet), this may change soon and environmentally conscious consumers could prefer to not visit stores given the higher carbon footprint.
The most effective way to reduce carbon footprint is of course, to not purchase at all.
About the Author
Maximilian Gellert is passionate about transforming digital technologies into pragmatic every-day solutions for retailers. Combining consulting experience with industry functions in premium apparel and online grocery, he supports retailers and etailers in their digital challenges and last mile innovation.