Much is said about green stores, but what about green sheds? John Ryan discovers that not only do they reduce your carbon footprint, but they have long-term bottom-line benefits too

Over the past couple of years, matters green have shot up the agenda in retail boardrooms across the country. Even if nothing is being done, a lot of noise is being made by almost every player of any size about the intention to save us from ourselves by cutting back on the amount of energy used and reducing carbon footprints.

However, to date, the great majority of what we have heard about has focused on shops: how they get built, what materials are used and how much green technology has been installed with resultant energy saving. While much of what is being done is laudable, the articles that have covered the topic in the press ignore one salient fact. Behind the smiling, customer-facing façade put up by any retailer, there is a supply chain and, for retailers, this means storage and distribution.

If you drive along any motorway today, you won’t be able to avoid seeing huge warehouses with familiar retail names plastered to their sides, ready to receive goods from suppliers, process them and send them on their way to the stores. This is not the most glamorous part of retailing, but it does use vast amounts of space and therefore energy to heat, cool and light it.

A typical retail shed will be upward of 400,000 sq ft (37,160 sq m), slab-sided and have bays at one end for goods arriving and at the other for dispatching them. On the face of it, this does not sound like the most environmentally friendly arrangement and a cynic might say that one of the reasons retailers are not making more fuss about their supply chains is because there are fewer easy wins.

But there are a fair number of retail sheds that have opened over the past couple of years where the explicit intention has been to reduce the amount of energy used, both in their construction and the manner in which they are run.

Ken Hall, managing director for European development at shed developer Prologis, notes that it is important to draw a distinction between being green and carbon neutrality. “Green can mean a whole variety of things, whereas being carbon neutral is highly specific,” he says. There is also a sense that the term green is a bandwagon onto which almost any organisation can jump and that can be made as fluffy as occasion dictates.

Carbon neutrality, by contrast, is measurable and therefore capable of being worked on – and this has been at the heart of what Prologis has created for Sainsbury’s at Prologis Park Pineham: a 506,890 sq ft (47,090 sq m) distribution warehouse next to the M1 at Northampton.

Handed over to the supermarket last week, the shed is the outcome of a close collaboration between Sainsbury’s and Prologis and, while the building boasts a number of what might be termed general green initiatives, the principal focus is on reducing the shed’s carbon footprint. With this in mind, the roof has many more skylights than the typical retail shed, reducing the need for internal lighting, and the structure is much more airtight. Prologis and Sainsbury’s claim that the roof lights, when run with low-energy lighting and intelligent lighting control, make an annual carbon saving of 590 tons. The building’s improved insulation also cuts down on emissions – a 91 per cent energy saving when compared with a comparable shed, meaning 921 tons less carbon hitting the atmosphere.

Then there are the photovoltaic cells. To an extent, along with mini-windmills, this form of energy generation has been the covergirl of the green lobby seeking to show how action can be taken. The fact that the jury is out on both wind and solar power, when set against the price of installation, does not seem to deter developers from including them in new retail schemes of whatever type, because they represent tangible instances of something being done. A rainwater-harvesting system has also been put in place, along with a heat recovery system that uses the excess energy from the shed’s chill plant.

On the face of it, the Sainsbury’s warehouse is a major step in the right direction and, if all retailers adopted distribution centres of this ilk, a lot of carbon would be saved. But, for this to happen, there has to be a payback. Stephen Springham, head of retail research at King Sturge, is sceptical. “Ultimately, all retailers will do this sort of thing, but at the moment, there is a slight mismatch between the noise that is being made [about carbon neutrality] and what’s actually happening.”

Neil Starkie, a director at Savills, thinks along similar lines. Speaking of the efforts being made by retailers to build more energy efficient sheds, he says: “If I was being cynical, I would say it’s more about marketing than a response to a demand. I think that people are interested in pounds, shillings and pence.”

Springham argues that retailers are sufficiently powerful operators in the shed sector that, if they all started to push for green distribution centres, the industry would have to be more active in its response. “I think it’s still not that high up the agenda,” he says.

COST OF GOING GREEN

And there’s the rub. Building a greener shed costs more, square foot for square foot, than constructing one the conventional way. Given the short-term, bottom-line-focused nature of retailing, this is likely to be a pretty major hindrance to more green sheds springing up around the country.

Alongside Prologis, however, Gazeley, a wholly owned Wal-Mart subsidiary, has been in the vanguard of developers building new energy saving sheds. Gazeley has even gone as far as developing an eco-template, which incorporates a host of climate-friendly elements and aims to provide a blueprint for more sustainable sheds.

The 650,000 sq ft (60,385 sq m) John Lewis automated distribution centre, at Magna Park near Milton Keynes, which was handed over in August, stands as an example of this kind of thinking in action. The centre was developed by Gazeley and Land Securities, with the overriding objective of building a shed that would support the retailer’s plans to open nine stores over the coming seven years, while saving on carbon emissions at the same time.

Many of the elements that have been installed at Magna Park are similar to what has been done at the Pineham Park centre for Sainsbury’s. And, like Pineham Park, the results are easily grasped: a 39 per cent reduction in CO2 emissions, or 1,826 tons a year, a 40 per cent energy saving and a 61 per cent water saving. Although impressive, more telling is Gazeley’s estimate that the saving in operating overheads for John Lewis will be£240,000 a year, or£4.8 million over the 20-year period of the lease.

Jonathan Fenton-Jones, Gazeley global director of procurement and sustainability, says these figures make an attractive package for retailers. “The additional capital expenditure [on creating a more energy efficient distribution centre] is£1 million, so you don’t have to be that clever to work out that the payback will be four years.”

He says that sustainable sheds and operations will eventually become a mandatory part of any construction programme but, at the moment, “business is way ahead of regulation”. Gazeley has been working on sustainable sheds since 2003 and it leased its first green shed, built speculatively, to Woolworths in 2004.

“We see the issue of sustainability as too important to be left to the competitive landscape; it’s just something that we have to do,” says Fenton-Jones. The question has to be whether retailers will take the same view.

Hall says that green sheds are “a need-to-have” now. “It’s widely reported that there’s going to be a large ad campaign at Christmas, or just after, based on the green or low-carbon nature of what’s been done,” he says. The campaign, according to Hall, will probably involve either Tesco, Sainsbury’s or both. “The big retailers have been waiting to have something to talk about,” he says.

In theory, a green shed should be a no-brainer. It is capable of saving money in the medium to long term. It will be another feather in the cap as far as being seen to be doing the right thing is concerned and, perhaps most importantly, it will reduce retail’s impact on the environment.

The reason for putting money at the top of this list and the environment at the end is simple: that is going to be the approach taken by hard-nosed financial directors when budgets are drawn up. In what looks like increasingly straitened times, the ability to save cash while being green should ensure that we see increasing numbers of sustainable sheds along our major highways and byways.

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