Eco-efficiency

The term eco-efficiency is based on the concept of creating more goods and services while using fewer resources and creating less waste and pollution. This is a concept that appeals to us on both a commercial and environmental level. If we can operate our business using less resource then this not only minimises the impact we have on the environment but also reduces our costs, enabling us to be more competitive.

Being a responsible catalogue retailer

One of the main ways that Home Retail Group markets its products to its customers is through the Argos catalogue. Last year, Argos produced 46 million catalogues. This equates to 93,000 tonnes of paper. This has increased since last year (86,000 tonnes) as we have increased the number and variety of catalogues we offer our customers. For example, we launched a version of the main Argos catalogue which is slightly smaller than the original catalogue. We also launched our ‘Home’ catalogue which is dedicated to our expanding home furnishing ranges.

In response to our customers’ needs and the market, we also produce a significant number of promotional materials such as flyers. In the year being reported upon, we used over 25,000 tonnes of paper for this.

In overall terms, we used 118,000 tonnes of paper – a 6% increase on the previous year. However, this growth is directly in proportion with growth in sales, indicating the important role that these publications play in generating sales.

As the catalogue is such an important marketing tool for Argos, the potential to reduce the number we produce or the size or scope is limited. Our approach has been to find ways to make sure the environmental impact associated with its production, and ultimate disposal is understood and well managed. Despite changes to the way our customers are able to access our products, particularly through the Internet, there has been no reduction in the demand for catalogues. This illustrates how much our customers value being able to browse their Argos catalogue at home and we take this as an indication that reducing the size or number of catalogues we produce would pose a significant business risk.

We have continued to use recycled paper in sections of the catalogue where the clarity of images is not so crucial to the presentation of the products, such as for toys, compared to other areas, such as jewellery where our customers need to be able to see the product in a high level of detail. We are pleased to report that this has increased from 8% last year to 13% in the latest catalogue. In total, we used 12,000 tonnes of recycled paper during 2006/07.

Environmental credentials are a key part of the selection of paper for Home Retail Group. All raw materials for paper procured must be traceable to known and legal sources of origin. We also require that the paper mills we use be accredited to a recognised environmental standard (such as ISO14001) and we require them to provide us with regular quantified information about their environmental impacts. In addition, we are now implementing an eight point environmental initiative, analysing the impact of our paper, print and catalogue manufacture.

An Argos catalogue is 100% recyclable and this year we have launched a programme in our Argos stores nationwide so that customers can return their old catalogues to stores to be recycled. ‘Point of Sale’ material helps to generate awareness of the importance of recycling. Argos has established a relationship with one of the UK’s largest recycling plants, working with them to help them get access via local authorities to catalogues and buying paper from the Group to help ‘close the recycling loop’.

Aspiring to be a zero landfill business

We are a big business and we generate a significant amount of waste. The majority of waste we produce is associated with packaging on products as they come into our warehouse or stores. In 2005, we decided that we needed to do something about it, particularly the amount we were sending to landfill. Regardless of the obvious environmental impact, waste management and disposal represented a sizeable financial cost to the business. Consequently, we adopted an aspirational goal of sending zero waste to landfill by 2010, which was endorsed by senior managers within the business. Download Waste Policy PDF

Last year, Home Retail Group generated 84,000 tonnes of waste from our operations (excluding paper as discussed above). This compares to 87,000 tonnes in the previous year. This is a 3% reduction and demonstrates our commitment to reducing waste and the successful implementation of a number of initiatives in this area. When compared against sales, the reduction is even greater at 8% (14.4 kilograms per £1000 of sales).

However, our most significant achievement this year is the large fall in the proportion of waste that goes to landfill. This is a significant step on our journey to becoming a zero waste to landfill business. Last year, we recycled over 40% of the waste we generated (mainly cardboard packaging). This compares to 26% in the previous year.

To achieve the improved levels of recycling, we have made a significant investment particularly at our Argos Distribution Centres (DCs). This major initiative included three main features:

• The establishment of ‘Recycling Centres’ at each DC. Warehouse staff were trained to segregate waste and dispose of it in the right way in material-specific bins. Balers were installed to compact the waste to make recycling easier and reduce the volume of storage required for waste prior to its collection.
  
  
• Extra recycling capacity built in at each DC meant it was also possible to take most of the waste from stores. Argos store employees now separate and collect cardboard and plastic into empty roll cages. As each Argos store has almost daily deliveries of new stock, we were able to take advantage of the existing distribution reverse flow process to collect these roll cages and return the waste to the DC for recycling.
  
  
• The introduction of a reusable plastic tote system at Argos’ new state-of-the-art DC at Barton for the distribution of small electrical items has significantly reduced, and continues to reduce, the amount of transit packaging used and, ultimately, disposed of.

Recycling, particularly cardboard, has now become standard practice at Argos with this activity demonstrating how environmental improvements and business efficiency can go ‘hand in hand’. At our Argos DCs the recycling rate is now approaching 80% of the waste produced. The practice in Homebase is different: waste is disposed of at stores making it much harder to implement successful recycling, but this is under review for improvement in future years and possible transference of good practice developed at Argos DCs.

Working with stores

In 2007, we launched the Argos Recycling & Environmental Scheme (Cares programme) to look at ways that Argos store teams can be more environmentally friendly by recycling, re-using and becoming more energy efficient. This includes the appointment of an environmental representative at each store. Argos stores can apply for the prestigious Green Store Accreditation Status, given only to those stores who are actively promoting and using the scheme’s guidelines.

We are also launching the ‘Green Stores Challenge’ across our network of over 300 Homebase stores to promote environmental awareness and contribute to our environmental objectives. Colleagues are set a series environmental challenges and the winning store is awarded with an acre of new woodland for their local community.

Stores are also affected by the European Directive on Waste Electrical and Electronic Equipment. The Group has been preparing for the implementation of the directive for a number of years, working closely with the BRC and other retailers in developing its response. More information.

Minimising packaging

Almost everything sold in Argos or Homebase comes in packaging to protect the product during transport and distribution, to make it attractive to customers and to hold all the components together. Ultimately all of this material ends up as waste, and so we seek to minimise the total amount, consistent with providing proper protection and presentation.

Minimising packaging used has been a particular area of focus for us during the last year. We have established a high level working group, led by our Group Commercial Director to look at this issue and find ways that we can minimise the amount of packaging we use and pass onto our customers. Of course, there is a financial angle to this too; the materials cost money and compliance with the UK Packaging Regulations adds a significant cost each year.

In 2006/7 the products sold by Home Retail Group were accompanied by 114,000 tonnes of packaging, which equates to 19.5 kg per £1,000. This second figure has now remained fairly consistent over the past three years as the amount of packaging we pass onto our customers has followed growth in sales.

We require our suppliers to meet minimum packaging specifications, which are constantly reviewed to try and make packaging more efficient and reduce the weight and volume of materials. However, this is often difficult as product packaging plays a significant role in terms of product presentation as well as protection. Given this, we have focused our efforts of minimising the packaging that we use – so called transit packaging.

For example, we have worked closely with our suppliers and WRAP, the Government’s Waste and Resources Action Programme, to develop and trial a reusable packaging system that can be used for the delivery of upholstered furniture. Further information on this project can be found on WRAPs website at www.wrap.org.uk.

We also supply 138 million disposable carrier bags to our customers every year. We have implemented a programme in our stores to encourage our colleagues to ask customers whether they need a carrier bag. It is early days for this scheme which started part way through the year but has already lead to a reduction of 5% in the number of bags we provided compared to the previous year.

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