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Consumers Opportunities of and Interest in Purchasing Green Electronic Products

5 The environmental dimension of electronic products retailers

This chapter describes how environmental matters figure into the daily work of electronic products retailers in Denmark.

5.1 Objectives

The objectives of this part of the survey were to determine whether:

• retailers carry less polluting electronic products
• information is available on any potential environmental advantages
• shop assistants can provide correct advice on environmentally beneficial choices
• environmental requirements are made to sub-suppliers
• retailers experience environmental requirements from customers
• retailers have policies for environmental training of purchasers and shop assistants
• less polluting electronic products are on offer

5.2 Methodology

To determine how retailers prioritise environmental aspects, the survey interviewed 10 major retailer chains of electronic products in the period May-August 2001. This chapter therefore describes the situation until August 2001.

Our criterion for selecting staff for the interviews was that the persons should have responsibility or co-responsibility for the products included in their shop ranges. Further, we wanted these persons to cover the environmental dimension of their companies.

To make sure that we were interviewing the right people and that all the questions could be answered, we asked the companies who the relevant person would be.

Depending on the organisation structure and competence division of the individual retailer chains, it sometimes proved relevant to interview a product manager and other times a purchasing manager or marketing manager. At two retailers, we interviewed both the person responsible for the environment and the person responsible for products. In one instance, we had to select one specific type of electronic products. This was because the responsibility for the product range had been divided into stereo/television, hi-fi and IT equipment, and that it proved impossible to set up an interview with people responsible for all areas. In this instance, we chose the product manager for stereo/television, because knowledge on less polluting products in this area is particularly poorly studied.

The retailers were very keen to participate in the survey. Of the 13 retailers asked, 10 agreed to participate. The three retailers not wishing to participate, were either unable to find the time or had no interest in the area. The interviews were conducted in person or by telephone. The interviews were based on a question framework built around 12 main questions with associated additional questions. The question framework appears in appendix B.

In practice, the interview procedure used the question framework to ensure that all main questions were answered, while it did not need to be followed stringently. This gave the retailer some latitude to decide how the interview covered the subjects and in which sequence the questions were answered. This procedure also enabled the retailer to communicate information and views not immediately inherent in the question framework.

Time consumption per interview depended widely on whether the meeting was held in person or on the phone. The average face-to-face interview took about 1½ hours, while telephone interviews varied from fifteen minutes to one hour.

The advantage of physical presence was that the interviews were conducted in a relaxed atmosphere, perhaps because both parties could see the other person and read each other’s body language. The telephone interviews made it more difficult to assess moods and know whether the retailer found the interview uninteresting and wanted it to conclude quickly or the reverse.

The table below shows the ten retailers participating in the survey and the interview method for each interview.

Click to see html-version of: Tabel 6.1

5.3 Conclusions

The project drew on ten interviews with major Danish retailer chains to uncover the environmental aspects related to retailers of electronic products.

The general picture that emerged showed that the environment as such has not yet been put onto retailers’ agendas. Retailers state the reasons to be the tough price competition on the electronic products market. A few had set up an environmental policy, but only one of them set out environmental requirements directly related to products.

The retailers’ knowledge of electronic products having a less adverse impact was very limited. More than 50% stated that they were unaware of any environmental aspect other than energy consumption that concerns electronic products. To this should be added that several retailers stated that no other significant environmental problems related to electronic products exist and therefore no activities need to be targeted at the area.

Generally, the retailers believe that producers will develop their products in a way that ensures that the environmental load of individual electronic products diminishes.

None of the retailers deliberately offer or market environment-friendly electronic products. However, they do offer electronic products carrying one of these energy or eco-labels: TCO 95/TCO 99, Energy Star or Energy Arrow, but this is more or less coincidental.

According to the retailers, they do not consciously offer alternatives of environment-friendly electronic products because consumers do not demand them, and until they start doing so, retailers will not be active in the area.

According to the retailers, consumers consider four parameters when they purchase, and they are price, design, functionality and service. Retailers believe that if the environment were on consumers’ agenda, their sales staff would pick it up and communicate it to the management, which would then act on the basis of conventional commercial deliberations.

The lack of attention to the environment is also apparent in purchasing situations, in which retailers generally put no environmental requirements on suppliers. This is because retailer chains in Denmark are too small to make demands on their suppliers.

Nor in sales situations does the environment figure as a significant parameter. If significant, new environmental knowledge or regulation is introduced in the area, retailers will make it a natural element of the ongoing training of sales staff in the shop chains.

Overall, the retailers believed that the environment might become a more powerful factor in the future, but that the initiative must come from customers’ demand or authorities’ regulation. If this happens, they are prepared to focus on the environment, as long as it involves no extra expenses to them.

5.4 Results

The following section reviews the results of the interviews conducted.

5.4.1 Retailer structure and situation in Denmark

For several years, the trend in Denmark has been moving towards fewer, but larger retailer chains in the electronic products market. Mergers and acquisitions have frequently caused changes in the retailer structure. While this study was being conducted alone, Fredgaard sold its seven large outlets (Super Radio) to Elgiganten and merged with FONA. Further, Radius and Audiolink merged with 2tal. Such developments make it difficult to assess total sales on the market, but calculations based on the information furnished by the interviewed retailers indicate total sales in the range of DKK 10bn annually.

The market for electronic products is subject to keen price competition, which according to several retailers has lowered their earnings level to 10 to 15% below the normal (expected) level.

5.4.2 Environmental requirements on the agenda

Generally, the environment does not currently appear to be on the agenda of retailers selling consumer electronic products. Some retailers do consider the environment, but either they do so in other business areas or the environment is still at the planning stage

In addition, several retailers have started considering whether the environment is a parameter they should introduce into their organisations. According to electronic products retailers, the fierce price competition on the market is a key reason why the environment is poorly represented on their agendas.

5.4.3 Environmental policy

Three of the interviewed retailers have set up an environmental policy. Only one of these deals directly with electronic products. This environmental policy poses requirements to the products being purchased, both to production circumstances and to component substances in the products. As to the other two retailers, their environmental policies provide general guidelines that cover their entire business areas.

One retailer had previously had a written environmental policy, but discarded it when he found out that the chain was too small to pose requirements to suppliers. The retailer expects that the chain will reestablish an environmental policy in 2-3 years, depending on whether the sector’s financial outlook improves, thus allowing the environment to gain greater importance.

Six out of ten retailers stated that they found an environmental policy unnecessary. The reason given was that customers show no interest in the environment when they purchase electronic products. Three of the six retailers further believed that there is no reason to pose environmental requirements to electronic products other than for their power consumption in operation and in standby.

Their general attitudes were that technological advances would to a wide extent automatically lead environmentally hazardous substances to be replaced with new ones that are better for the environment. Generally, the retailers believe that producers will produce products in a way that ensures that the environmental load of individual electronic products diminishes.

One retailer, TDC, has recently developed a tool targeted at promoting purchase of environment-friendly telecommunication products. The tool is based on the methodology for life-cycle analysis developed in relation to the EDIP project⁸.

The tool is still so new that the group has not yet implemented it. Once this is done, group purchasers will initially have the option of using it or not.

In practice, it will require suppliers of displays to fill in a form placed on a special section of the TDC Internet portal. Subsequently, supplier replies will be processed and weighted in a dynamic score model, thus making it possible to evaluate and compare various telecommunication products. In a longer perspective, TDC is considering to develop a format for an environmental product declaration that can be used vis-à-vis customers.

5.4.4 Knowledge

Most of the interviewed retailers know comparatively little about environmental aspects related to electronic products. When the environment was mentioned, the power consumption of products was the first thing that came to the retailers’ minds. More than 50% stated that they were unaware of any environmental aspect other than energy consumption that impacts on electronic products. To this should be added that several retailers stated that no other significant environmental problems related to electronic products exist and therefore no activities need to be targeted at the area.

In general, the interviewed retailer chains train their sales staff regularly or when they find it necessary. At this point, the environment is not an element of this training, but if it becomes relevant, retailers see no problem in including it on an equal footing with the conventional elements of sales staff training.

The retailers also stated that customers’ knowledge on less polluting electronic products is limited to inquiries concerning power consumption of products. The retailers get the impression that other environmental aspects simply fail to be considered when customers purchase electronic products.

5.4.5 Supply and demand

None of the interviewed retailers would definitively say that they make a conscious effort to offer environment-friendly electronic products. However, they do offer electronic products carrying an energy or eco-label.

The labelling schemes concerned are the US Energy Star and the Danish Energy Arrow as well as the labels TCO 95 and TCO 99. The two latter eco-labels for computers, etc., were developed by the Swedish trade union, Tjännestemännens Centralorganisation. TCO labels pose certain requirements to design, reuse, component substances, packaging, ergonomics and radiation.

According to the retailers, the offer of environment-friendly electronic products is so limited because consumers do not demand them. Very few retailers have heard customers inquire about the environmental aspects of products. The customers posing questions are often public purchasers, and the questions rarely relate to the actual products, but to general aspects such as purchasing policy, etc.

Only two retailers pointed to specific producers whose products they would characterise as more environment-friendly than others.

The retailers were not interested in considering whether one product type was better than another. All retailers stated that they operated on commercial conditions and therefore offered the product types demanded by their customer group. Retailers do not care to consider whether it is, e.g. environmentally responsible to carry plasma televisions in their ranges, even though they consume more power than conventional cathode-ray tube televisions.

According to the retailers, there are few differences in the parameters their customers give weight to when they purchase electronic products. In short, all retailers name four general parameters: price, design, functionality and service. The largest retailers who cater to the widest group, especially experience the price as the chief factor in a sale. Customers also give much weight to the functionality of products, and are often conscious of the special functions they want in a product. Design is also important to the choice, and this is why customers demand specific brands. Most retailers make a high service level a priority and see this as a way of distancing themselves from a singular focus on low prices.

According to retailers, customers can be divided into three groups:

1. customers who focus solely on price
2. customers who do not want to get into the details, and
3. customers who are unable to find out about details on their own. The last two groups put much weight on good service. 

One retailer stated that IDG Danmark A/S (International Data Group) conducted a questionnaire in March 2000 in Denmark on the sales criteria on which customers based their decisions in purchases of electronic products. The survey showed that about 26% of the customers ticked off the category: ”Health aspects, healthy products, low radiation, ergonomics” as being a decisive factor in their selection. According to other categories, this was the ninth most important decision parameter. The survey was based on 1,420 respondents. Presumably, the survey focused on PC purchases.

The IDG survey results show that customers are very interested in the health-related environmental aspects of a product. This result ties in well with the relatively wide awareness of the TCO label scheme, which supplements environmental requirements with health-related requirements.

5.4.6 Purchasing situation between retailers and suppliers

The general picture shows that retailers do not make environmental requirements when purchasing. Retailers have argued that no chain in Denmark is large enough to make requirements to suppliers. Denmark represents too small a market to suppliers. For this reason, retailers believe that environmental requirements must be made through European and international forums. It also means that, currently, Denmark cannot function as the vanguard for less polluting electronic products.

One retailer explained that in the trade organisation Euro Coop⁹, of which he is a member, only Denmark and Sweden name brominated flame retardants as an environmental problem. As to the other countries, they show lacking knowledge or understanding of anything but energy-related questions related to electronic products. If requirement specifications are to encompass brominated flame retardants, for instance, a basic information campaign must be organised at the European level with groups of purchasers or trade organisations as the primary targets. In the long run, this could engender a common awareness of the need to phase out brominated flame retardants in consumer electronics.

Retailers do not demand eco-labels when they purchase. A single retailer has implemented the policy of only purchasing TCO99-labelled computer displays, while the extent to which the electronic products purchased carry the Energy Star or the Energy Arrow labels seems more coincidental.

About 50% of the retailers were familiar with the eco-labels, while their awareness of the TCO labels was higher.

5.4.7 Marketing

No retailers make a conscious effort to market less polluting electronic products. However, in product descriptions several retailers pass on information on whether the product carries the TCO or Energy Star labels.

One retailer has tried to market less polluting televisions as green products but without any impact on consumers, and the retailer therefore dropped the endeavour.

One retailer chain explained that in 2000 it participated in the Danish Energy Agency campaign for the Energy Arrow¹⁰, where the staff attached stickers with the Energy Arrow on the products that met its requirements. The retailer was interested in the campaign and explained that it would like to support such activities. Unfortunately, at some point the retailer ran out of labels and had therefore stopped attaching labels to the less energy-consuming products. The results of such a campaign need to be followed up with additional material and revision of the information contained in the material.

Several retailers expressed an interest in participating in potential information campaigns to promote less polluting electronic products, but they will not finance them. Similarly, the retailers do not want to participate, unless customers show an interest.

The retailers agreed that technological development should be the primary source of environmental innovations. This is also why they do not believe in using environmental innovations in marketing vis-à-vis customers. Producers and suppliers communicate environmental data to retailers, but without retailers in Denmark making requirements.

5.4.8 Sales situation

It proved impossible within the framework of this project to determine sales staff’s direct experience in sales situations, but according to the interviewees they would - as managers - be informed if sales staff registered a demand for less polluting products.

In sales situations, the retailers state that sales staff only provide occasional information on environmental aspects of products. In response to inquiries, the sales staff is able to provide the information contained in the product data sheets. Such information could be whether the product is, e.g. TCO labelled, whether it carries one of the energy labels and its standby power consumption.

If significant, new environmental knowledge or regulation is introduced, the shop chains interviewed would make it a natural element in the ongoing training of their sales staffs.

If environmental aspects are to become visible, the retailers want it done in a way that allows the information to be used as a sales argument to customers. Several retailers mentioned that the information could, for instance, enumerate actual financial savings in the short or long term. A few retailers mentioned that it would be beneficial if they could visibly show the advantages that result from purchasing less polluting products over conventional products.

5.4.9 Internal communication

The vast majority of retailers do not discuss environmental aspects of products internally in the company/group. Again, this is because customers neither give weight to nor demand environment-friendly products. If customers should begin demanding less polluting electronic products, sales staff would register this demand and communicate it to the management. The management would then use general commercial deliberations to determine how to meet the demand.

5.4.10 The future

The retailers widely agreed that the environment may become a more decisive factor in the future, but that the customers should make the opening moves. Customers determine the popularity and scope of less polluting electronic products.

Another way of ensuring the environmental aspects gain importance in the future calls for authorities to intervene and regulate the area. Several retailers said that it would require an overall control to start a trend towards less polluting electronic products.

5.4.11 Possibilities for selecting less polluting electronic products

Characteristically, retailers believe that consumers are unable to relate to less polluting electronic products. One retailer explained that, since electronic products are often produced outside Denmark and normally cause no visible environmental problems for consumers, environmental aspects become irrelevant. He believed that the closer the environmental problem comes to the consumer, the more relevant it becomes. This applied to both physical (is it made in Denmark?) and psychological (does it directly affect me and my children?) aspects.

Furthermore, consumers must have financial incentives for choosing one product over another. The offers of less polluting electronic products available on the Danish market are limited to products labelled with the Energy Star or the Energy Arrow and computers carrying the TCO 95 or TCO 99 labels. Even though the Nordic eco-label, the Swan, and the EU label, the Flower, all have eco-label criteria related for a range of electronic products, no producer has applied for a licence in Denmark.

____________________________________________________________
⁸ EDIP = Environmental Design of Industrial Products.
⁹ European Community of Consumer Cooperatives. 
¹⁰ Electronic products with low power consumption in standby mode can achieve the Energy Arrow. Additional information is available in Danish at: www.energipilen.dk

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