RETAIL - HOW TO COUNTER THE EFFECTS OF THE ECONOMY: DELIVER REAL

HOW TO COUNTER THE EFFECTS OF THE ECONOMY: DELIVER REAL

I pick up my pro form BD Havoc's and Revelation backpack - a sweet setup for next season, but I still need a pair of DynaFit bindings - light and fast. Next season??!! This season is unbelievable - late March/Early April and it is dumping!!!!

Picking up my gear, I meet with Kurli, a rep for BD and we talk about the current state of the economy - his optimisim, love for life, passion for the industry, his company is uplifting.

He mentions, REAL. I am awed as I read this article this morning - Marty Weening from Gramicci, talking about "delivering real"

Must be the snow!

Be environmentally Cool,

Head Local and Local Artist

Retail - SNEWS Mini-Survey provides look at how retailers are adjusting to the new economic climate

The SNEWS® Mini-Survey that ended March 26, 2009 asked, “What are you doing differently to help your retail business survive the current economy?” It was refreshing to read that more than seven of 10 (71 percent) of our respondents indicated they were emphasizing more customer service and follow-up. Not surprisingly, more than two-thirds or 68 percent responded that they were “keeping their inventories leaner” while 53 percent indicated they were carrying fewer SKUs in their stores.

As a bit of a wake-up call to suppliers and manufacturers, nearly half of respondents or 47 percent stated they were cutting out “marginal suppliers.” It was also interesting to note that 44 percent were relying on holding special in-store events with the goal of attracting new customers.

What did surprise us a bit in the results is that only 29 percent of our retail respondents indicated they were seeking to negotiate rent decreases or moving to cheaper space. Several reports in our ongoing economic series, which can be found by clicking here, point out that renegotiating leases is a valuable retail survival tool during this economic downturn, and we do know from conversations with some retailers who have done this that savings have been substantial.

And as for seeking to match prices with competitors, including big box, we were pleasantly surprised to see only 17 percent of our survey respondents indicated this was one of their strategies. Indeed price competition is a course of action that retail experts have also noted is not the way to win the war.

Our new survey question, “Have you found social networking sites to be beneficial to your business?” is now live and awaiting your feedback. We look forward to hearing if you use these sites as a part of your business and, if so, which ones.

To make your vote count, simply go to the SNEWS Reader Poll section in the right navigation bar of every web page in SNEWS or, click here.
--SNEWS® Editors

New digital eFitBiz by SNEWS now out: Don’t miss annual state-of-retail report, ’08 top retailer lists

Always a frontrunner when it comes to delivery of news and information, with this issue of eFitBiz, SNEWS® will start to deliver news to you in a dynamic, interactive fashion like no other industry publication has -- in a virtual magazine format where you live the content.

Debuting in this sixth-annual eFitBiz by SNEWS – our annual look at the state of the previous year’s retail and

retailers – the virtual magazine will help you, our readers, truly live our stories and information, experience our ads and learn from the material presented. It’s not just passive, but an active adventure in reading and education. Be sure you have the volume turned on and up on your computer.

While our much-awaited report on the state of retail and our top retailer lists are all still here, they are presented with many enhancements in this virtual magazine: When you “flip” the pages with a click, you’ll find links directly in the stories and charts that will take you to SNEWS stories so you can read up on things you missed or have forgotten – mouse over and around the pages to discover embedded links and features. You’ll experience product videos in ads that demonstrate and show you the equipment, with the video also allowing you to play and replay as needed, stopping where you want to take a closer look.

This is of course only the beginning: The SNEWS fitness magazine, out as usual in mid-summer, will also be virtual and you’ll see all of the above features – and much more as we incorporate more experiences into our mutual adventure into the future of information delivery.

Certainly the virtual content isn’t all there is to talk about, though. The state-of-retail report isn’t unfortunately a rosy picture but when you take a look at the information about past recessions and who’s doing what, you’ll see some optimism still exists. The list of “top retailers” – again using black-and-white store numbers since we know they are factual and not fudged – has changed quite a bit. You may be surprised to realize what did happen between January and December 2008, uttering, “Gosh, that was only a year ago?”

You’ll also be a bit surprised to see how many more changes have taken place since 2009 – businesses are listed where they wouldn’t be now -- since we don’t represent 2009 news on the list. For ongoing information you’ll need to turn to SNEWS online (www.snewsnet.com).

Meanwhile, you won't want to miss this newest release. This 2009 edition of eFitBiz by SNEWS is brought to you by SNEWS (of course!), Afterburner Fitness, BodyCraft, Fitness Master, Health & Fitness Business Expo, Lifecore Fitness and the American College of Sports Medicine.

Our SNEWS subscribers are also first in line to see eFitBiz when it's released. You can also view past editions by clicking here and scrolling down to the eFitBiz editions you choose. Of course, you must be a subscriber to see magazines and magazine archives, but we do offer a Freebie SNEWS subscription that’ll do the trick. Just click here to get one of those if you don’t already have one.

Missed the link to eFitBiz? Click here to get to your copy of the latest edition. Enjoy the new virtual format; pass it around, and please tell us what you think. You can reach us either by emailing snewsbox@snewsnet.com or giving a ring, 530-268-8295.

Note: Retailers, the annual SNEWS® Retailer Survey is kicking into gear soon. Let your vote and voice count. Our 7th-annual survey will open in April. If you have not been surveyed in the past or want to make sure you are included this year, send an email to survey@snewsnet.com with your store name and contact information (including email, phone and fax), as well as the name of the best single person to be in charge of responding to the survey for your business, if it’s not yourself. Don't let you or your suppliers be left out.

HUGE LANDS PACKAGE CLEARS CONGRESS, AWAITS OBAMA’S SIGNATURE

Bend, Ore., – the House of Representatives voted today to pass the Omnibus Public Land Management Act. The final vote in the House was 285-140. The bill passed the Senate 77-21 last week. The lands package now goes to President Obama for his signature, possibly as early as next Monday.

The legislation protects two million acres of Wilderness and 1000 miles of rivers, and prohibits new oil and gas development on 1.2 million acres in Wyoming. It also legislatively affirms the 26-million-acre National Landscape Conservation System.

“This is a major conservation victory that preserves wild places throughout the US forever,” said John Sterling, Executive Director of The Conservation Alliance.

Every conservation provision included in the legislation started at the local level where grassroots organizations led the charge to build public support to protect a special landscape or waterway. The Conservation Alliance supported the local organizations that led the efforts behind 12 of the 16 Wilderness provisions included in the package. The Alliance also funded the groups leading the efforts behind protecting the Snake River Headwaters, and closing the Wyoming Range to new oil and gas development.

In total, The Conservation Alliance contributed more than $700,000 to ten different organizations whose good work eventually wound up in the package. The Alliance also worked in close partnership with Outdoor Industry Association to demonstrate that the outdoor industry stood uniformly behind the provisions in this package.

“This is a big victory, and we did everything within the limits of our lean staff capacity and financial resources to ensure it crossed the finish line,” said Sterling.

Click here http://conservationalliance.com/UserFiles/File/OPLMA08.pdf to view a summary of the conservation provisions in the bill.

About the Conservation Alliance:
The Conservation Alliance is an organization of outdoor businesses whose collective contributions support grassroots environmental organizations and their efforts to protect wild places where outdoor enthusiasts recreate. Alliance funds have played a key role in protecting rivers, trails, wildlands and climbing areas.

Membership in the Alliance is open to companies representing all aspects of the outdoor industry, including manufacturers, retailers, publishers, mills and sales representatives. The result is a diverse group of businesses whose livelihood depends on protecting our natural environment.

Since its inception in 1989, the Alliance has contributed more than $7.4 million to grassroots environmental groups. Alliance funding has helped save over 40 million acres of wildlands; 26 dams have either been stopped or removed; and the group helped preserve access to more than 17,000 miles of waterways and several climbing areas. For complete information on the Conservation Alliance, see www.conservationalliance.com

Retail - Trading Down Phenomena has Outdoor Retailers Shopping Lower Price Points

Some outdoor specialty retailers are beginning to follow their customers down market. “I think people are scaling back on the number of $400 shells they are bringing in and buying more $100 shells,” said Dave Matz, president of Grassroots Outdoor Alliance. “There is a movement to bring in a lower price point.”

While fashion and luxury brands are much more vulnerable to the trend, average retail prices have declined in specialty outdoor channels thanks to a surge in sales of carry over product and a rise in sales of accessories, according to retail sales data for January released last week by Outdoor Industry Association (OIA) and Snowsports Industries America (SIA). SIA reported that while consumers snapped up accessories like hats, gloves, goggles, wax, parkas, fleece tops, sweaters and winter boots, they backed away from buying skis, boots, boards, and bindings.

In outdoor channels, the share of product sold in the fourth quarter that was priced under $25 grew to 17.5% in 2008 from 16.7% in 2007 and 16.0% in 2006, according to data compiled by Leisure Trends Group for the OIA Outdoor Topline Report. The share of product priced over $100, meanwhile, fell to 38.0% from 40.0% and 39.1% respectively. The trend became more pronounced in January, when sales of sub-$25 product grew to 22.7% of total outdoor sales from 18.7% in the same month a year earlier. Sales of $100-plus product fell to 33.0% of total sales from 38.0% a year earlier. The share of footwear sales priced under $25 nearly doubled to the 10% range.

While analysts warn against reading too much into January sales figures, consumer surveys are detecting the shift down market, particularly in apparel. In one survey published last month, 90.7% of Americans designated specialty shopping for apparel as expendable.

Even specialty retailers catering to a more affluent clientele are introducing lower price points. Their thinking is a shift in consumer buying habits toward value and will continue long after the recession ends. In Charlotte, NC, Jesse Brown’s Outdoors is bringing Columbia Sportswear apparel back into their shop for the first time in years. Owner Bill Bartee stopped buying Columbia years ago after deciding his future lay with brands not carried by big-box retailers. With consumer anxiety over the economy rising, Bartee will add product from Columbia’s PFG and Titanium lines to complement his assortment of Arc’teryx, Ex Officio, Patagonia, Mountain Hardwear and The North Face.

“We will still sell $500 Gore-Tex shells,” said Bartee, “But we will sell less of them. Columbia will bring a price-point to Jesse Brown’s that to a large extent is not available right now. We anticipate a backlash against luxury.”

Some retailers see the recession accelerating a long-term trend away from brand loyalty that was already being driven by the millennial generation (born 1978 - 2001). That generation is much less inclined to define themselves by conspicuous consumption of specific brands, said Ted Manning, VP of merchandising for Eastern Mountain Sports (EMS).

“The customer is coming back to the concept of minimalism and core functionality and not excess,” said Manning, “There will be less brand loyalty.”

Still, national brands will continue to play a major role at EMS, which continues to grow its own brand of apparel. “We have not headed into recession by throwing out national brands,” Manning said.

Below are examples of how retailers are adapting to consumers’ new frugality:

Loading up on basics and accessories that are priced below $25.

Shifting down within a brand. Rather than cut premium brands, buyers are bringing in more of their entry-level product. The good-better-best mix is shifting more toward better.

Bundling product on the equipment side to lower the cost of entry for your core sports. For instance, bundle a boat, PFD and paddle to show entry-level paddlers how inexpensively they can getting into paddle sports.

Bringing in new brands. Specialty retailers are giving more widely distributed value brands another look.

Expanding and/or promoting private label offerings.

Buying overstock and close-out deals. Many retailers who cut back their pre-season orders are aggressively buying overstock and closeouts to ensure a steady flow of deals.

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WALLOWA'S BACKCOUNRY VIDEO

Rethinking Retail: Sunshine Fitness offers a smorgasbord of all things active

Think of Sunshine Fitness as a smorgasbord for those hooked on all things active, indoor or out. Customers who walk through the doors of the Anchorage, Alaska, store can buy scuba gear, mountain bikes, swim suits and all matter of fitness equipment from treadmills to rowers to barbells, all under a single roof.

As retailers across the country seek creative ways to reel in shoppers, Sunshine (www.sunshinefitness.com) is leaning on its wide variety of offerings to try to ride out the recession's rough waters.

"It's been a good way to diversify," said John Bice, owner of the 6,000-square-foot store. Sales "are up modestly," he said, which in this economy is no small feat.

SNEWS® knows the current economic state is having a huge impact on the specialty retail business. This is one look at different ways retailers are rethinking their retail strategy to become better at serving customers and keeping their bottom line intact. We will take a look at different retail concepts we find in a periodic and ongoing series of stories in SNEWS. This time around we focused on a new fitness retail store with an emphasis on fitness that includes equipment but speaks to the well-rounded needs of a fit and healthy lifestyle. Stay tuned for more in-depth reporting on the current situation both economically and at retail as it develops and changes.

Non-traditional mates
While it's true that what flies in Alaska might not fly in other parts of the United States, Sunshine's experience provides insight into the ups and downs of pairing non-traditional offerings.

"It's a nice mix if you think about it," said Brad Lally, global product development manager for San Diego-based Scubapro diving gear, which Sunshine Fitness has carried for years. "They're going after people in the active lifestyle. If you're outside biking in Alaska, you're definitely into nature and staying fit."

Lally noted that in Florida or California, it's not unusual for a store to combine scuba, snorkeling and swimwear.

"But in other regions of the country with weather extremes, you need to have something else in the store to complement you and sustain sales through the different seasons," he said.

That's pretty much the model that has worked for Sunshine Fitness. Bikes and fitness machines are good seasonal offsets, Bice said, and the state's competitive swimming events help keep sales of suits, caps and goggles strong throughout the year.

Scuba, which Bice called the "odd duck," actually is the bedrock of the store's many offerings. Sunshine Fitness opened 36 years ago in the southeastern Alaska city of Sitka as a scuba shop. The store relocated to Anchorage in 1980.

"Selling scuba in Alaska is probably like selling (snow) skis in Florida," he said. "It's a small, but profitable business."

Diversification to survive
Bice said the decision to diversify came as much from business necessity as it did from a desire to reach new customers. (He said he'd sell the scuba business in a heartbeat if someone offered a fair deal!)

Sunshine began selling fitness equipment five years ago because Bice was eager to unload the ski/snowboard business, which had become so competitive that margins were slim. Sales also were more closely tied to weather than other departments, and the bulky equipment took up valuable floor space. Sunshine officially closed out its line of skis and snowboards last winter.

"It was just a race to the bottom," Bice said of the fragmented ski/snowboard industry. "There was a huge amount of manufactured product, more than the market could handle. It was like selling potatoes."

Bice said he entered the fitness business at the top of the market. And while it remains a profitable and growing part of the business, Sunshine's home and commercial fitness sales have been "off tremendously" this year, Bice said, which is in keeping with most others in the 48 contiguous states. Scuba and bikes make up about 10 percent of sales, and swim a bit less than that, he said.

Tim Porth, co-founder of Octane Fitness, said Sunshine Fitness has stretched farther outside the box than most retailers who carry his company's ellipticals. Porth said it's more common to see fitness retailers branching out into supplements and offering enhanced service packages to try to keep customers coming back to the stores.

But with fitness industry sales plunging some 20 percent in the fourth quarter of 2008, Porth said retailers must get creative, yet remain wary of overreaching.

"You don't want to dilute your offerings too much," said Porth. "You gotta be an expert in fitness categories and you gotta believe in your equipment. If people are paying you that much money for a piece of equipment, you need to gain the respect of your customers."

Octane regional sales manager Dan Rahmann, who works directly with Sunshine Fitness as part of his 18-state coverage area, said Sunshine's location outside the continental United States means it faces some unique challenges.

"Shipping from Minneapolis to Anchorage incurs quite a bit more costs for the product than someone in, say, Denver," Rahmann said. "Dealers can save money through a container program by bringing in great quantities of a product and not paying freight on it. But you're not going to place big orders if you think it could take you a year to sell through it. The manufacturer wants to get paid in 30 to 45 days."

Planning for downturn
Bice said he saw the downturn coming and started making plans to cut inventory and shift his showroom floor in early July 2008. Getting rid of skis and snowboards allowed him to reduce some of his retail space, while also freeing the business of a high-risk category.

The diversity of offerings, he said, is helping him weather the slumping economy better than some of his competitors, though his outlook is far from sunny.

"We're not selling as much as we'd like," he said, "but every department is profitable."

--Jackie CrosbySNEWS® View: Even in the sporting goods category, some areas may sell better than others so for Sunshine offering a number of seemingly odd companions has served a purpose. Perhaps rather than thinking of Sunshine as a specialty dealer who is doing a number of categories, he should be thought of as a sporting goods dealer who is specializing. The broader but still selective offerings allow him to have more things for more people while still being a specialty retailer in dealing with customers. Not a bad model in today's times. --SNEWS® Editors

ForecastIQ™ : Outlook Moves from Thunderstorms to Scattered Showers for Most Retailers

COLUMBUS, OH – 3/20/2009 – The forecast for same store sales growth is looking better for several retailers this month, according to the latest ForecastIQ™ analysis (a service from Prosper Technologies, LLC). In addition to Aeropostale, Buckle and Hot Topic (retailers who have maintained a positive outlook), there are more retailers to add to the list of those expected to see growth over the next two months.

Fred’s and Sam’s Club improved from retailers likely to see an increase to almost certain to see an increase in same store sales over the next 60 days. Cato and Ross are also expected to see significant improvement. Both are likely to see an increase, whereas last month’s forecast predicted a likely decline in same store sales growth for each.

"There is improvement on the horizon," says Prof. Greg Allenby, Fisher College of Business at Ohio State University. "A number of discount-oriented retailers, including BJs, Freds and Ross are expected to see an increase in same store sales relative to earlier predictions. While prospects for department stores still look generally bleak, there does seem to be a break in the clouds for stores offering good deals."

For a complimentary 30 day trial of ForecastIQ: www.forecastiq.com

Although there is a silver lining for some retailers this month, Abercrombie & Fitch, American Eagle, Gap, among others are almost certain to see declines.

A partial list of retailers covered in the ForecastIQ and expectations for same store sales growth/decline for the next 75 days follows:

Almost certain to see increase:

Aeropostale
Buckle
Family Dollar
Fred’s Hot Topic
Sam’s Club
Walmart

Likely to see increase:
BJ’s
Cato
Costco
Ross

Almost certain to see decline:
Abercrombie & Fitch
American Eagle
Banana Republic
Bonton
Chico’s
Dillard’s
Gap
Neiman Marcus
Nordstrom
Pacific Sun
Saks

Likely to see decline:
TJX
Wet Seal

Flat:Children’s Place

ForecastIQ was developed by Prosper Technologies and Greg Allenby by analyzing over 7 years of data from BIGresearch’s monthly Consumer Intentions & Actions (CIA) surveys. Allenby analyzed same store sales of over 37 publicly held retailers and applied Bayesian quantile analysis to the data including whether or not consumers said they plan to spend more, same or less. The results are accurate and for the first time, provide a forecast of consumer spending 75 days in advance. Same store sales forecasts are provided by percent growth over the next 45 and 75 day period. Short term forecasts are also available via enhanced consensus estimates.

About Prosper Technologies: Prosper Technologies develops consumer centric analytics such as ForecastIQ from consumer responses to help businesses forecast consumer demand and expenditures, budget marketing and merchandising allocations and provide retailer specific cross consumption behaviors.

ForecastIQ is a forecast of same store sales for 37 retailers based upon future spending plans of consumers derived from BIGresearch’s monthly Consumer Intentions and Action survey (CIA). Forecasts are 45 and 75 days forward and also include an enhancement to the consensus currently provided in the marketplace.

Picture - Kiwi Dave in the Backcountry

Tanzania Honeymoon

Picture - Head Local and Mrs Head Local on Kilimanjoro

Did you hear?...BIGresearch survey says economic crisis will continue to affect consumer lifestyles for 5 years

According to the March 2009 BIGresearch Consumer Intentions & Actions Survey, just under 91 percent of consumers feel that the current economic crisis will continue to impact lifestyle spending choices over the next five years.

BIGresearch (www.bigresearch.com) asked: "Do you think the current economic crisis will impact your lifestyle over the next five years in any of the following ways?" and more than 8,000 adults, ages 18 and over, responded accordingly:

I will consider each purchase more carefully -- 55.2%
I will be more price-conscious when buying clothing and food -- 50.7%
I will try to stick to a budget -- 48.1%
I will spend less dining out -- 46.3%
I will not incur a large credit card debt -- 43.4%
I will spend less on entertainment (movies, concerts, sporting events, etc.) -- 39.2%
I will save more of what I earn -- 36.3%
I will be more conservative when buying a car -- 30.1%
I will pay off my credit card each month -- 29.0%
I will not run up home equity debt -- 28.1%I will take more practical vacations -- 23.3%

For more details regarding age, gender and income for this survey, click here.

SNEWS® View: The silver lining in what some might perceive as a consumer spending storm cloud is that practical vacations will most certainly include camping and recreational trips with families seeking to stretch dollars while spending more quality time together. Now, more than ever, the outdoor and fitness industries have an opportunity to market the health and well-being of outdoor recreation and vacations for families. It also means for fitness stores, and outdoor stores, it is time to focus on marketing to consumers to show that what products you offer provide quality of life, health, well-being and high value -- needs for any consumer. There is no doubt in our minds that consumers, while interested in saving money and spending less, still want to have fun and stay fit and healthy while doing so. --SNEWS® Editors

What New Climate Change Policies Will Mean for Your Business

[Editor's note: This is the second of a two-part series on global climate change policy from Ryan Schuchard.

To read about policy developments taking place this year, see "Looking for Signs Along the Road to Copenhagen." Listen to advice from Ryan on positioning your business at "Reading the Tea Leaves of Evolving Climate Change Policy."]

As global leaders prepare to negotiate an updated version of the Kyoto Treaty at the U.N. Climate Change Conference in Copenhagen in December, the big question is whether China and the United States will join the 183 countries that have already signed on. If that happens, we’ll be on our way to a serious global effort to stabilize the climate.

What would this mean for your company? An agreement that includes China and the U.S. -- the world’s No. 1 and No.2 emitters -- will commit all signatory countries to broad reductions in domestic emissions. Beyond outlining general principles for international cooperation, however, the treaty likely will leave it up to countries to figure out how to do so. Therefore, an evolved global agreement will help speed up and synchronize country-level efforts, but national governments will continue at the helm of climate policy design.

Through that lens, consider the following ways in which policy will impact individual companies, starting with the most direct effects.

1. The Price of Carbon

From global to local, the essence of climate policy is putting a price on carbon emissions, which means either direct regulation by taxes or what’s known as “cap-and-trade” -- a requirement for companies to buy tradable permits when they exceed a certain threshold of emissions. Generally, when experts talk about the “regulatory risk” of climate change, they’re referring to direct exposure to just such a price, and this is rightly considered one the most immediate and tangible climate-related risks.

The onset of a carbon price affects companies directly in two main ways. First, for those paying, there is a per-unit price, which, in recent years, has ranged between $1 to more than $50 per ton of carbon in voluntary carbon offset markets and regulatory schemes like the European Union Emissions Trading Scheme (ETS). The Economist suggests that range may move and narrow to between $38 and $63 in the future.

The second direct impact on companies is the uncertainty over what the price will be, and who will have to pay it. This may be more profound than the price impact itself, which is why companies in the U.S. Climate Action Partnership are asking for a system of regulation. Since most emissions come from fossil fuels, regulation is closely related to the supply and the cost of energy. And because corporate energy expenses are so substantial -- many companies spend more on energy than they do on taxes -- an increasing number of firms see regulation as a good deal, as long as the government clarifies it soon.

2. “Supporting” Policies

In addition to direct regulation, there are various supporting policies. One main type is standards, which include transportation sector fuel economy specifications and efficiency requirements for energy-using products in the information and communications technology (ICT) industry. Standards typically set out requirements for end products, but as international sectoral approaches take shape, standards increasingly will cover production processes as well.

Another main type of supporting policy is technology incentives, which include funding for R&D, the removal of barriers to enter new industries (particularly energy), and financial incentives such as tax credits to encourage companies to generate renewable energy on site.

While the three instruments mentioned so far tend to constrain emissions, there is also a widespread movement to develop “market mechanisms” that create positive incentives by taking advantage of the commodity aspect of carbon. For instance, since a ton of carbon emissions is a ton anywhere, it’s possible to use the market to promote activities being done at the lowest-cost locations -- where investments in activities that reduce carbon emissions are cheaper. With market mechanisms, companies can buy reductions when it is cheaper than “making” them. Examples of markets include the U.S. Regional Greenhouse Gas Initiative and United Nations’ Clean Development Mechanism.

Despite the promise of environmental finance-based market systems, two big questions loom: whether and how carbon instruments can be “imported” from elsewhere, and whether forestry-related carbon instruments should be allowed at all.

3. All Policy is Climate Policy

Policies that reduce carbon emissions are not always named as “climate” policies. Case in point: Transportation accounts for a third of emissions in the U.S., so climate will be a significant topic when the U.S. transportation bill comes up for its six-year reauthorization in September. Also, with 20 percent of global emissions caused by forestry and land-use change, and with the food and agriculture sector looking for rewards for good behavior, climate considerations are also likely to come into play in agricultural policy.

In addition, climate issues are becoming ubiquitous in policies that address economic and social issues. For example, the growing risk of international legal and border disputes, the greater likelihood of damaging weather events, and the increasing vulnerability of energy security all mean climate change is a key security policy issue (PDF). It’s no coincidence that the first carbon tax bill -- America's Energy Security Trust Fund Act, which was introduced in the House earlier this month -- has “security” in its name. Climate relations are also ground zero for trade issues. Realizing there is a legal basis (PDF) for using trade measures to enforce environmental initiatives, the U.S. and China are debating who is ultimately responsible for cross-border emissions. In other words, climate policy is trade policy.

4. Society as the Policy Authority

Ultimately, policy is part of a general contract between business and society, and social groups may start to hold companies accountable via direct pressure. These actions, according to a recent Harvard paper (PDF), can range from events targeting single companies to strikes and riots deriving from social instability exacerbated by climate change.

To stay ahead of this risk, companies should conduct broad policy assessments of sociopolitical situations, using resources like the Economist Intelligence Unit, the International Country Risk Guide, Business Environment Risk Intelligence, and S. J. Rundt & Associates.

5. Everyone is Affected

According to the Peterson Institute and World Resources Institute, the most vulnerable industries are those that have high energy intensity of production, low potential for efficiency improvement, little ability to switch to low-carbon energy sources, and high elasticity of demand. These include, in particular, energy utilities and heavy manufacturing sectors.

This analysis, like many, focuses on policies that likely will have a direct impact on a relatively small number of players -- for example, the U.S. Environmental Protection Agency’s proposed reporting rule covers 85 to 90 percent of domestic emissions by focusing on just 13,000 facilities. Nonetheless, all of the policies mentioned so far may reverberate to impact the fundamental conditions on which all businesses depend. For instance, a carbon tax impacting the price of carbon-intensive energy could lead to reduced availability of carbon-intensive inputs such as steel. Such a tax could also lower demand for products that create higher emissions during their use.

These types of policies could also influence competitive dynamics. For example, incentives for renewables might lower entry barriers for ICT companies in the energy sector, while feed-in tariffs might enable consumer products companies to develop better cost positions over rivals. Also, with investor groups like the Carbon Disclosure Project demanding more information about companies’ self-appraisals of policy risk, those firms that are willing and able to disclose more have increasingly preferential access to capital.

Putting it in Perspective

By no means are the effects of climate policy all negative. The economy as a whole stands to benefit from comprehensive climate policy. Without it, a wide scale of human rights, health, disease, and energy problems will likely result.

But more pragmatically, for most climate policy risks, there is also opportunity. Companies that generate and rely on low-carbon energy are set to prosper, as are those that can exploit technological breakthroughs in resource efficiency and materials. Those firms generating new forms of energy -- in particular, renewables -- will participate in a massively growing market. Companies in industries that address adaptation problems, such as pharmaceuticals and biotechnology, stand to gain. In the end, as the world’s climate policies are developed and strengthened, there will be important roles for companies from almost every industry.

Ryan Schuchard is manager of environmental research and innovation at Business for Social Responsibility.

Retail - Recession a Good Time for Retailers

If ever there was a time for guerilla marketing this is it. As the focus has shifted to conserving cash, retailers and brands alike have cut their marketing budgets. One survey taken late last year showed 33% of national advertisers, including some of the nation’s biggest brands, were planning on cutting their advertising spend in 2009. Dick’s Sporting Goods told analysts last week it would reduce its advertising spend as a percentage of sales in Q3.

Marketing professionals argue that’s why a recession is the best time to boost your marketing activity. As other brands and retailers dial down their messaging there is that much less clutter to break through.

Even if you don’t have more money to spend on advertising, this is a good time to focus your messaging on whatever marketing you can afford. In a survey conducted for the OIA Specialty Retail Operational Report 2007, more retailers (53%) attributed increased sales to improved advertising than to eight other reasons, including more advertising and a strong economy. Brands, retailers and marketing gurus consulted last week by OIA WebNews indicated they are getting the best return on investment by focusing on existing customers, building up their online communities with user generated content and generating public relations.

“I would wrap all the marketing dollars I had left around those ideas that live in PR,” said Gregg Bagni, a marketing consultant whose firm Alien Truth Communications works with brands in the active outdoor lifestyle market. “I think PR is elevated to another level because PR has a lot more extension and legs on the web from a viral standpoint.”

Below are some marketing tactics that appear to be working in today’s environment.

A constant flow of promotions. Use your close-out buys to fuel a steady stream of sale promotions expected by today’s consumer. Dick’s Sporting Goods has been emphasizing $29 and $39 running shoes in its Sunday circulars for months and is working closely with suppliers to identify other close-out deals to drive traffic. Offer first-come, first-serve daily or weekly deals on your Website to those willing to sign up for an e-mail alert.

Expand rental/outfitter business. Gear rental and outfitting enjoy the highest gross margin of anything outdoor retailers do and will drive motivated buyers into your store.

Focus on existing customers. Existing customers tend to be twice as profitable as new ones, so start rewarding them. Reinvigorate your ties with local outdoor clubs, schools, parks and recreation departments and other NGOs. Partner with them to bring in speakers or hold events that will elevate your brand. If creativity is not your forte, hire a local enthusiast for 10 hours a week to work on promotions and community relations. Give all employees 20% off coupons or $10 gift certificates for distribution to enthusiasts, friends and family outside the store.

Mock “Liquidation Sale.” Bagni offers this free guerilla marketing tip. Buy a gigantic block of ice, carve your logo in it, put it in your parking lot and announce you are having a “Winter Liquidation Sale” until it melts. Hook up a live web cam to your web site to show how much ice is left and send photos to local TV stations every day. “In March, if you’re above Mason-Dixon Line, you can probably get a week out of it,” said Bagni. “The down side is if it melts quickly you’d have to put a tent out there, but then you could have fun with that. It’s totally guerilla.”

Business Plan - Outdoor Foundation Report Finds Participation

Initial data from the 2009 Outdoor Recreation Participation Topline Report, published by The Outdoor Foundation, shows that an increasing number of Americans participated in nature-based, outdoor activities last year. The study finds sizeable participation increases in many nature-based activities including double-digit increases in backpacking, mountain biking and trail running and close to a ten percent increase in hiking and camping. Overall participation trends in recreation, sports and fitness remained largely unchanged from last year.

“Americans are finding solace and security, adventure and excitement in the great outdoors,” said Christine Fanning, executive director of The Outdoor Foundation. “During these challenging economic times, a return to affordable, nature-based recreation allows individuals, friends and families to reconnect – with one another, with the natural world and with natural values.”

The Outdoor Foundation 2009 Outdoor Recreation Participation Topline Report also shows increases in many active outdoor activities among youth, showing a positive trend from 2008 in some key areas. Biking, backpacking and hiking are just a few of the activities that show increases in participation among young people. Overall, outdoor participation for youth ages 6 – 12 is down 7.6% from last year, showing a continued need to focus on connecting kids and nature.

“It is certainly encouraging to see an increase of youth participation in some important recreation categories, but more must be done,” continued Fanning. “Public and private partnerships, effective outreach programs and creative campaigns must be top priorities for every sector of society if we are to truly inspire and grow the next generation of outdoor enthusiasts.”

Retail sales information from Outdoor Industry Association supports the assumption that more Americans are participating in nature-based outdoor activities. The Outdoor Industry outperformed many other industries in 2008, with a 5% gain over 2007.

The Outdoor Foundations 2009 Outdoor Recreation Participation Topline Report details Americans' participation in outdoor activities from 2007 to 2008. The Report is a high level overview of The Foundation's full Participation Report, which will be released later this year with expanded data and full analysis.

A copy of the 2009 Outdoor Recreation Participation Topline Report along with the 2008 Outdoor Recreation Participation Report can be downloaded from The Outdoor Foundation website at outdoorfoundation.org/research.

Recycling Glut - Time to Find a New Place to Dump the Garbage

For a long time, the system worked pretty well. U.S. consumers did what we do best--consume. The resulting refuse--paper, plastic, glass, aluminum, and more--would be shipped to China to be turned into new products and packaging for the U.S. market, and the whole cycle would begin again.

But then the bottom dropped out of both the economy and the price of oil. As production plummeted in the developing world, so did the demand for materials. Low oil prices meant that recycled plastic lost its price advantage over virgin plastic.

One of the chief selling points of recycled commodities--their energy cost savings--disappeared. "The market has pretty much tanked," says Chaz Miller, director of state programs for the National Solid Wastes Management Association.

Last November, prices for recyclable commodities dropped, sometimes by more than 80 percent. Mixed paper, which sold for $105 a ton in October, was selling for $20 a ton by December. The price for newspaper, which had commanded $200 a ton, plunged 90 percent, and cardboard fell by two-thirds. Plastic you can't even give away. Unable to find buyers for low-value materials, recyclers are either warehousing them or, ironically, sending them to the landfill. "You can't pay for storage forever," Miller says. "And some materials--paper and plastics--you have to keep out of direct sunlight. Sooner or later you're going to run into fire code issues. It's a matter of space."

The problem is compounded by the fact that in the 11 states where consumers pay a deposit on beverage bottles and cans, returns are up as much as 10 percent thanks to an economy that has people scrounging under sofa cushions for grocery money. And while recycling rates in the United States are lower than they could be--half the nation still has no curbside pickup--we are the world's largest paper recycler, collecting 43.2 million metric tons per year.

Even though the glut of recyclables is bad news in the short term, recycling advocates try to see it as an opportunity. At present the United States relies on foreign markets to purchase and re-cycle its garbage. What would happen if we reused our refuse here at home as part of that new green economy we keep hearing about?

"It's a huge opportunity domestically," says Conrad MacKerron, who's a program director at the corporate-responsibility nonprofit As You Sow. "There's been a lot of whining [from U.S. manufacturers] that they're being outbid by countries that until recently had a real thirst for our paper, plastic, and metals. Why not go in now and lock in better rates?"

As You Sow recently evaluated the recycling habits of the nation's major beverage companies. Most are far better at producing garbage than they are at reusing it. Of the 200 billion beverage containers sold in the United States each year, less than one-third are recycled. And while most aluminum cans contain 40 percent recycled material, the majority of plastic PET (polyethylene terephthalate) bottles are constructed entirely from virgin resin. Coca-Cola leads the beverage industry with 65 percent recycled content in its aluminum cans, and Pepsi wins the eco-bottle pageant by using 10 percent recycled PET.

Coca-Cola is now building a new PET-bottle recycling fact ory in South Carolina and has pledged to recover 50 percent of its plastic bottles and cans by 2015. Even so, the U.S. market for recyclables continues to shrink. A sixth of our egg cartons, shopping lists, and newspapers still goes to China, but that number is unlikely to increase anytime soon. Nor can U.S. paper mills take up the slack, given that they're closing at a furious rate. "I'd love to see more use of recycled materials in this country," Miller says. "But the reality is, we don't have the same manufacturing sector that we used to." --D.S.

Book - Cradle to Cradle

CRADLE TO CRADLE

ANOTHER SICK DAY BY OUR INTERN - NOT MUCH WORK GETTING DONE HERE!

SICK DAY

Shoppers still recognise the importance of reducing carbon emissions in spite of recession

Businesses that assume the deepening recession has dampened consumers' desire to go green should think again. Despite the worsening economic outlook, shoppers are still placing an emphasis on environmental concerns, new research suggests.

Two thirds of customers say that environmental considerations inform their purchases to the same extent as they did a year ago, while more than a quarter said that they were now even more conscious of the environmental impact of what they buy, figures from the Carbon Trust, which operates the first carbon-reduction award scheme, show.

While this may help to influence how shops stock their shelves, many businesses may have had to look closer to home to satisfy customers' desire to know that the companies to which they are giving their custom are also making efforts to become more environmentally friendly. Two out of three people think it is important to buy from environmentally responsible companies, with about one in seven saying that they had even decided to take their custom elsewhere if they felt a company's environmental reputation was not up to scratch.

Add the consumer goodwill to the reduction in energy costs brought about by cutting carbon emissions and it seems like a win-win situation for most companies. But as businesses weather the most damaging economic turbulence in decades, many are focusing first and foremost on survival, placing green issues down their list of priorities.

Harry Morrison, chief executive of the Carbon Trust, sympathises. “I understand this sentiment that for some businesses, survival is critical now. But from an environmental perspective, the clock is ticking — we don't have much time. In addition, cutting carbon has an immediate bottom-line effect as costs drop, and a medium-term benefit for the brand.”

The British Retail Consortium agrees, saying that many retailers remain interested in green initiatives not only because of the cost savings, but also because making such commitments helps to differentiate them from competitors. Retailers have already surpassed a voluntary target to reduce the use of carrier bags by 25 per cent and aim to cut this by 50 per cent by the end of May.

Larger companies have an added impetus to look at reducing their carbon footprint, as new rules next year — which will affect the biggest 5,000 companies — will require businesses to buy carbon allowances to offset their emissions. Those that have taken early action will have a head start. But there seems to be a stumbling block in how businesses can let their customers know about the good work that they are doing to curb carbon. More than two thirds of consumers are hazy about which companies are environmentally responsible but this suggests that firms that are able to relay clearly their message to the public will be in pole position to attract shoppers.

Carbon Trust believes that it can help by informing customers about the good work companies are doing. “When companies are granted the standard, they can use a logo in all their marketing which makes it clear that they are working towards cutting emissions,” Mr Morrison said.

B&Q has gone one step further at its new flagship store in New Malden, southwest London. Visitors sipping a coffee in the café can look through glass panels to admire the solar panels and wind turbine that are helping to cut the store's carbon emissions

Books Reviews

GETTING GREEN DONE

THE RIVER WHY

Wild and Scenic Film Festival Hits Park City

Wild and Scenic Film Festival - Tour Schedule

Films and shorts that have an eco-friendly theme

Eco Friendly Fair

Guest Speakers

Music

Retail versus E-Commerce: Did you hear?... Recent Carnegie Mellon study indicates e-commerce more e-friendly…sort of

In a report that is not necessarily great news for brick-and-mortar retailers, results of a Carnegie Mellon Design Institute study estimates that e-commerce retailers use less energy -- click here to read. Further, the study found that e-commerce retailers could claim a carbon footprint that was a third smaller than their brick-and-mortar brethren.

This is certainly an argument that was made by Nau founders when the company, now owned by Horny Toad, first launched to much fanfare and some raised eyebrows -- click here to read the SNEWS® story, "The time is 'Nau' for new concept in retail." Nau claimed that by building its business on a foundation of stores that had small footprints, and encouraged customers to purchased items on the web or even in the store to have it shipped, the overall environmental impact was less than a traditional brick-and-mortar model. Now, it appears, science is backing up that claim…to a point.

To conduct the study, researchers used a test case of purchasing a flash drive either in a brick-and-mortar store or via the web. Buy.com was the e-commerce site, giving researchers open access to data that might otherwise be considered confidential -- data center info, energy consumption info and delivery details.

To create a comparison, researchers made the assumption that a consumer shopping at a brick-and-mortar store drove approximately 14 miles roundtrip, buying on average three items per trip. By comparison, a UPS or FedEx delivery truck certainly uses a significant amount of fuel and energy, but spreads it out by delivering numerous packages, meaning less energy per package than a traditional shopper.

E-commerce data centers and computers use much less energy compared to a traditional store, giving them a strong edge there, too.

Of course, a shopper that walks, rides a bike or picks up many more packages during a single trip starts to swing the data points in favor of brick-and-mortar stores. Researchers also made it very clear that Buy.com cannot be compared with an e-tailer such as Amazon or Backcountry.com, since it uses a virtual model where it warehouses nothing and instead has products shipped directly to buyers via its distribution partners.

And all those overnight shipping upgrades? Well, that swings the pendulum of energy savings well into the camp of the brick-and-mortar business.

No mention was given to packaging, which in an e-commerce model is an Achilles' heel, generating far more packaging to ship one item than a brick-and-mortar store does by receiving multiple products in one box. --Michael Hodgson

Retail - January Outdoor Sales Mixed Bag as Retail Prices Plunge, Internet Sale

January 2009 retail sales for all core outdoor stores (chain, internet, specialty)* started off the new year on a mixed note, according to the most recent edition of The Outdoor Industry Association (OIA) Outdoor Topline Report, produced for OIA by the Leisure Trends Group.

According to The OIA Outdoor Topline Report, retail sales for all core outdoor stores (chain, internet, specialty)* gained 4% in dollars ($363,157,003) compared to January 2008 ($350,116,342), with the internet channel realizing a 35% gain in dollar sales while specialty stores (-2%) and chain stores (-8%), logged declines in overall dollars this month.

Internet Sales Continue to Grow
Online sales were very healthy in January. Retail prices plunged across the board as consumers took advantage of bargains and sales; however, the resultant increase in units was more than enough to make up the difference. The channel improved on last January’s dollar sales by double-digits in nearly every category and moved from 21% of total dollars sold last January to 27% this month. Carryover (defined as old and/or discontinued merchandise) sales leapt to record amounts in January, a significant factor in driving prices down and units up for the period.

Category Bright Spots
Although total sales dropped 2% in specialty stores this month, there were many bright spots. Categories with dollar growth in January included packs, climbing gear, winter equipment, hiking boots, winter boots, trail running shoes and multisport shoes. Accessories were especially hot sellers this month, as most equipment, apparel and footwear accessory categories enjoyed healthy growth compared to last January.

In chain stores, sales were driven by good deals and low retail-selling prices. The entire channel was up 5% in unit sales but fell 8% in dollars as plunging retail prices ate away gains from increased volume. Nearly every product category saw retail prices slip significantly from January 2008. Carryover product sales soared in almost every category, moving from 2% of all chain dollar sales last January to 7% this month and contributing to the overall decline in retail prices. The equipment accessory category was the only major product category to gain dollar sales this month, inching up 1%.

Positive Growth in Paddlesports
All paddle product sales from all three channels (specialty, chain, and internet) grew 7% in dollars this month. Compared to last January, specialty stores grew 6% in dollars, chain stores dipped 14% and internet grew 46% off an extremely small base. Boats, paddles and accessories each increased sales in specialty stores this month. As a whole, January is not a significant month for paddlesport sales; it typically accounts for about 2% of each year’s total sales and is traditionally the smallest month for sales. Nonetheless, the positive January growth was a welcome start to the calendar year.

Retail - Despite Economy, Many E-Commerce Initiatives

When it comes to cutting expenses, one area appears off limits for larger retailers – e-commerce. Sports Chalet, Eastern Mountain Sports and Backwoods Equipment Co. (see Q&A with Jennifer Mull) are all moving forward with major e-commerce initiatives this year despite the economy. There is a sense among some that the recession may actually accelerate consumer’s migration online.

It’s easy to see why after reviewing the data. While the recession has slowed online sales growth dramatically from a year ago, sales are still growing. That’s an amazing feat in this economy and a portent of things to come. Consumers are clearly becoming more comfortable buying outdoor apparel, footwear and gear online.

Online sales of outdoor product rose 13% in December, while outdoor specialty sales fell 10%, according to the OIA Retail Sales Topline Report for the month. Research shows shoppers have increasingly identified Internet-only retailers – such as Overstock.com, Zappos.com and Amazon.com – among those who offer the best customer service.

Moreover, the OIA Specialty Retailer Operational Report shows that retailers with more than 10% of total sales online have a higher profit margin (8.2%) than retailers with less or no online sales (4.5%). Online sales comprise 14.2% of sales for stores with less than $1 million in sales compared to 6.2% for stores with more than $2 million.

Yet as recently as 2006, 46% of single store outdoor retailers and 38% with less than $1 million in sales still did not sell online, according to OIA research.

Still, e-commerce is not for everyone. It requires a major commitment on top of your existing brick-and-mortar operations, notes Dawson Wheeler, co-owner of Rock/Creek Outfitters, the Chattanooga, TN, retailer that has sold online for 10 years.

Wheeler said selling online can be a great tool for a successful retailer who is beginning to max out their sales per square foot because of limited market size and local competition.

“But as a life jacket, trying to keep myself afloat I would not look at it for $1 million,” Wheeler said. “It's a completely different business and just because you're a good retailer, does not mean you are a good online retailer. You are talking about a whole new workforce of folks who are far more technical. The day you start out, you are going against backcountry.com, Altrec and others. The competition is intense.”

Wheeler said retailers should expect the cost of launching a viable e-commerce business to equal the cost of opening a new a new brick-and-mortar store.

Online, as in store, retailers must commit to the category, said Dan Mann, founding partner of the retail consulting firm TMG Inc. Mann advises retailers start by offering core product already in their assortment plan, i.e., those items that already have the highest inventory turns at their brick-and-mortar location.

“A lot of people are doing e-commerce, but they are throwing things at the wall and seeing what’s going to stick,” Mann said. “Retailers who take that approach are going to get in over their head. Opening a website is the least of their troubles. Marketing and order fulfillment are your biggest challenges.”

Retailers - Vicious economic times could call for brutal retail game plans

Surviving vicious retail markets can require difficult and unpleasant action -- bankruptcy, staff reductions, renegotiating leases or shuttering underperforming stores. Although the navigation of today's challenging marketplace can be brutal, those steps are often necessary.

That was the consensus of a group of business attorneys, retail real estate experts and specialty retailer financial officers who gathered recently for a conference in Seattle. The goal: offer tips and suggestions for distressed retailers to help them get a handle on the extreme downturn in the economy.

"Retailers are facing unprecedented challenges," said Scott Staff, business development director at event sponsor Perkins Coie, Washington state's largest law firm and legal counsel to leading retailers and others in consumer products. "We expect the challenges to grow in number and complexity."

Practical advice for surviving the downturn ranged from knowing when a customer is in trouble (sources include www.debtwire.com, a real-time news and data site for financial professionals published by the Financial Times, plus www.MarketWatch.com) to what to look for when a customer is in trouble (e.g. are they stretching out payments).

Other advice included:

Be sure to have a diverse base - Don't become dependant on any one single customer or account, said Marv Toland, Eddie Bauer's chief financial officer. Prior to Eddie Bauer, Toland was executive vice president and CFO of London Fog Group from 1999 to 2007. Seattle-based London Fog Group sought Chapter 11 bankruptcy protection twice (prompting some ribbing from panelists about the company having filed Chapter 22). Click here to see a March 23, 2006, SNEWS® story, "London Fog files again for Ch. 11 reorganization, to divest Pacific Trail.")

"You can't prevent these shocks (customers going out of business), so make sure that no single one can kill you. You have to diversify," Toland said.

Later, when asked what a business owner can do when suppliers or customers are operating under Chapter 11 reorganization and court protection, Toland suggested a clinically objective approach.

"Ask why they are in bankruptcy," he said. "If you see a business model that really is failing and the ground is shifting so fast, it may not be fixable in today's environment."

Use bankruptcy if it could provide breathing room - One tool a bankruptcy filing can provide is the ability to unload unprofitable leases with limited exposure to landlords, Smith said.

It's no secret that retailers are struggling. Retailers are seeing their revenue plunge as financially strapped U.S. consumers spend less and scrutinize purchase decisions. The holiday shopping season failed to save some companies as seasonal sales fell, with some areas logging the first declines in 20 years.

Last year saw a growing number of companies seeking bankruptcy protection, shuttering thousands of stores, breaking leases with shopping malls and laying off workers. And retailers are far from alone in rising bankruptcy rates: newspapers, auto makers, casinos, electronics retailers, and fitness clubs, manufacturers and retailers. The latest: Ritz Camera Centers sought Chapter 11 protection in early March as did Joe's Sports & Outdoor (Click here to see that March 5, 2009, SNEWS story, "Joe's Sports & Outdoor files for bankruptcy protection.")

…But it's not for everyone - A bankruptcy is not "a solution to a business problem, it's a solution to a balance sheet problem," said Alan Smith, Perkins Coie partner, during a retail restructuring and bankruptcies seminar. Bankruptcy offers "just an opportunity for the debtor to take a deep breath."

"There's no point in filing bankruptcy if you don't have a core business that is worth saving," Smith said. "You have to look at business and ask if it is a business that can survive in today's environment."

Carefully examine workforce reductions - During such a down economy, knowing when and how to reduce your workforce is, of course, another important key to survival. To catch the benefits of the next boom, a company also needs to manage its workforce with an eye on top talent retention, employee morale and strategic hiring.

"Some clients are looking for bargains, but that doesn't always work out," said Roy Notowitz, partner at Portland-based Generator Group, a recruiting firm. In a down economy, there are "more candidates on the market, but usually the market floods from the bottom up. "

In these times, it's difficult to convince professionals to relocate for jobs, Notowitz added. Trailing spouses often fear they won't find new employment after following a partner to a new location, he said. Decreased residential real estate values also hamper relocation deals.

Avoid layoff mistakes - The other side of the headcount equation -- reductions in workforce -- sees more action. More companies are scrambling to trim their worker roles. Perkins Coie attorney Linda Walton advises employers to avoid layoff missteps that could land them in front of a jury.

"For every single person you layoff, you need a reason for laying off that person," she said.

Develop selection criteria; train your managers on the process; and sit down and map it out in advance, she said.

As bad as 2008 was, 2009 isn't looking much better. In fact, you can already say sayonara to New Year's cheer, said Nina Kampler, executive vice president of Northbrook, Ill.-based Hilco Real Estate. She spearheads retail business development and works with major retailers and commercial companies to implement real estate portfolio restructuring strategies.

"People still had jobs in 2008. (In 2009), actual net worth has disappeared and there are way fewer shoppers," Kampler said.

Phase out underperforming store locations - In order to stay healthy, retailers can't allow underperforming, duplicative or non-core locations to weigh them down, she said. Retailers have to grab their landlord's ear -- and renegotiate lease terms, she said.

Kampler said she sees "a mass movement of probably every retailer in this country with more than one store acknowledging that in order to stay alive the expense line of rent and occupancy -- the R&O -- has to shorten."

"What we are really talking about when you strip this all away is a retail revolution," she said. "It's about valuations, about what was that shopping center worth? How many times did it change hands? All that perceived value has been filtered down to a rent number and the tenants -- the retailers -- were happy to pay as long as the people were ringing up hundreds of thousands in sales each week. All that is the backdrop to first quarter 09. Where it will settle, we don't know. But people are shopping differently and today's values are all wrong."

Every retailer should carefully study the value of their real estate, Kampler said.

Given the downturn, some landlords (particularly smaller ones) are nervous and are willing to deal, willing to work with retailers to try and keep them.

"They not only want a warm body in the real estate, they have a personal pride and interest in the operation," she said. "They are proud of (the businesses) they have in the center and they want to keep them there."

To get the landlord's attention, you could show the level of threat and demonstrate the downward trend in sales, she said. Of course, Chapter 11 provides another tool that gets the landlord's ear. But she thinks many landlords would rather renegotiate first, and she encouraged that route whenever possible. Forge win-win solutions with landlords, she added.

A Third of Global Suppliers Unaware of Climate Change Risks: CDP

NEW YORK, N.Y. -- One in three global suppliers believes climate change poses no risk to their operations despite the increasing amount of attention being paid to supply chain greenhouse gas emissions.
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Nearly three dozen companies -- including heavy hitters such as Johnson and Johnson, P&G, Johnson Controls, Boeing, Dell and PepsiCo -- called on thousands of their major suppliers to disclose emissions and reduction strategies through the Carbon Disclosure Project.

Of the more than 2,300 suppliers asked to participate in the disclosure, 634 responded, the vast majority of which -- 71 percent -- were divulging their emissions and mitigation strategies for the first time. Fifty-eight percent of respondents acknowledged climate change risks.

Supply chain emissions often represent the largest slice of corporate carbon footprints, but is, in many ways, the least understood aspect of a company's environmental impacts.

Since many suppliers are confronting climate change risks for the first time, the CDP suggests companies engage them, raise awareness and identify the greatest opportunities to improve efficiency. There must be an open dialogue on the types of information needed and how they will be used, and companies should seek support at the board level of supplier companies.

"Procurement teams worldwide must take a role in developing more sustainable business practices and embed the issue of climate change into an organization's core operations," Francis Way, CDP's head of supply chain, said while announcing the survey results. "Risks posed to a company's supply chain from the impacts of climate change include extreme weather events, water scarcity, regulation and associated cost volatility. Companies must take steps to mitigate the impact of these risks to their business."

Michael Meehan, CEO of Carbonetworks, a carbon measurement software developer, hailed the CDP's contribution to supply chain emissions measurement but cautioned that addressing carbon goes beyond using a simple spreadsheet to track emissions.

"What's needed are strategies for managing corporate carbon emissions to achieve the ultimate goal -- that of reductions," Meehan said via email. "The tools to do that already exist, and corporations and their consultants need to evolve their thinking to reflect the possibility of active carbon management, versus passive measurement."

Green Power Forecast: Partly Cloudy -- For the Short Term

The sagging economy continues taking its toll on renewable energy spending, with solar and wind projects across the country shutting down or getting delayed as financiers reassess the benefits of investing in new energy technology as their bottom lines shrink. The lower price of oil isn't helping.

When oil prices spiked last summer, investment in any renewable energy project seemed like a prudent, and even necessary decision. Within months, however, the cost of oil dropped, the economy tanked, and priorities shifted.

"Any time conventional energy prices drop, it impacts renewable energy spending," notes Ying Wu, senior analyst for Lux Research, a New York-based emerging technologies research firm. "Solar is more expensive now that fossil fuel prices have gone back down."

That spells doom for business owners and investors looking for short-term returns on their investments, but those taking a long view are more likely to see renewable energy as a worthwhile, especially with the American Recovery and Reinvestment Act of 2009 stimulus package offering billions in green power incentives which, in some cases, may offset up to 50 percent of some renewable energy installations.

Tight credit, however, remains an obstacle.

"For companies that have already made an investment in solar projects, such as Yahoo and Wal-Mart, they will probably continue to make solar part of their energy mix," says Wu. "But companies that were just beginning to look at investing in renewable energy are slowing down, and financing for unfunded projects is getting delayed."

Though several solar companies have announced major layoffs because of collapsed financing, Monique Hanis, spokesperson for the Washington, D.C.-based Solar Energy Industry Association, believes the stimulus package, signed by President Barack Obama three weeks ago, will help turn things around. The measure includes $16.8 billion for the Department of Energy Office of Energy Efficiency and Renewable Energy (EERE), a nearly tenfold increase.


Three Reasons Why Renewable Energy is Worth a Second Look

• New federal tax incentives make renewable energy projects more beneficial than ever. Analysts suggest you can offset up to half of the total cost of the project by taking advantage of these incentives.
• Many states offer further tax incentives and grants to promote renewable energy growth. Speak to your local utility company to identify resources, partnerships and other opportunities to offset the cost of renewable projects.
• Despite the fact that fossil fuel costs have dropped, pending climate change legislation and an uncertain economy could spell price volatility. Investing in renewable energy is an excellent way to hedge your costs.


"We expect provisions in the bill to stimulate demand, open up financing and create jobs," she says. "We are hopeful that the renewable energy grants, removing a penalty for subsidized financing, and loan guarantees will help free up the credit and investment markets and that the manufacturing tax credit will scale up U.S. manufacturing, which will keep prices coming down."

Lux analyst Johanna Schmidtke agrees. "The final stimulus bill offered a range of incentives for renewable energy," she says, pointing out the $6 billion earmarked to support loan guarantees for renewable energy and electric transmission technologies. The funds are expected to guarantee more than $60 billion in loans.

"That should encourage greater investment from private sector companies who can benefit from these grants," she says. "It should generate a big uptick in renewable energy generation."

Even before the stimulus bill was signed, certain regions still showed enthusiasm for solar energy, Hanis said. In California, for example, the number of grant applications for business and residential solar projects hit record highs in the last five months of 2008. And while she expects that interest to wane in '09, she thinks it will be temporary and localized.

"You'll still see activity where there are federal and state incentives for solar," she says. Along with California, she expects progress to continue in Pennsylvania, Ohio and New Jersey, where government programs to support solar investment remain strong.

"I got a call from a manufacturing company in Pennsylvania just yesterday that is still moving forward with a solar water heating project," she says. "And they are very excited about it."

She notes that several major businesses are also showing strong public commitment to solar, despite the economy. For example:

-- Global retailer Wal-Mart announced in January that its Mexican unit installed 1,056 photovoltaic panels on the roof of the Bodega Aurrera Aguascalientes retail center in the city of Aguascalientes in central Mexico.
-- Kohl's, the specialty clothing retailer based in Menomonee Falls, Wis., is currently converting four of its nine stores in Oregon to solar power, and also has solar projects underway in California, Connecticut, Maryland, New Jersey and Wisconsin.
-- As part of achieving its pre-certified LEED Gold status for all new store construction, Office Depot will install photovoltaic solar arrays to offset 11 percent of the building's total annual energy costs, and will include active solar tracking skylights that provide light to than 75 percent of the store. These plans will be implemented on every new store construction project going forward.
-- In the next redesign of its hybrid Prius automobile, automotive manufacturer Toyota plans to install solar panels on the vehicle's roof. The panels will power the air conditioning system and fuel its operation even when the main engine is turned off.

"There are definitely pockets of activity," she says of these and other initiatives. "But the larger projects will need additional funding to survive."

A Little Help from Uncle Sam

The new administration, along with the benefits included in the stimulus package, should boost all renewables industries, suggests Karlynn Cory, senior renewable energy analyst for the National Renewable Energy Laboratory (NREL), a renewable energy research and development lab in Golden, Colo.

"It was definitely a step in the right direction, and a lot of issues around liquidity and the tax market got addressed," she says.

One of the most promising additions was the extension of production tax credit (PTC) to 2012 for wind, and to 2013 for all other renewables. The PTC provides a 1.9-cent per kilowatt-hour (kWh) benefit for the first 10 years of a renewable energy facility's operation.

The extension also allows utilities and businesses already paying the alternative minimum tax (AMT) to take advantage of that credit, which creates greater incentives to invest in renewable energy. In the past, those companies that took advantage of the AMT were not eligible.

"Most companies pay the AMT, so this creates opportunities for a whole new set of investors," she says. "These companies can now own solar operations and take a tax deduction for it. For businesses that have a tax appetite this is very appealing.

"These combined tax incentives mean investors benefit from the long-term 10-year credit, as well as a short-term, upfront 30 percent tax benefit that can be realized in the first year of commercial operation, Cory explains. She estimates the combined tax incentives could offset half the costs of a solar installation. "It's a sizable incentive that impacts the economics of investing in renewable energy substantially."

The elimination of tax laws preventing companies from taking advantage of the investment tax credit if they were subsidized by state or federal programs will further drive incentives to invest in renewables, Cory predicts.

"The stimulus bill will accelerate things beyond what could have otherwise been accomplished," she says. "It's like pushing a fast forward button on project development. Hopefully it will get us back to 2008 levels by early 2010."

She has spoken with major retailers and hotel chains that have already shown interest in investing in solar projects as a direct result of this change in the tax system.

Smaller companies are also looking at ways to partner with utilities to take advantage of similar incentives without making the capital investment themselves. These partnerships allow the utilities to build and operate plants on the business owner's site, in exchange for a fixed energy price, explains Dave Scanzoni, spokesperson for Duke Energy in Charlotte, North Carolina.

"They are like mini-power plants owned and operated by the utility but located on private property," he says. Duke currently has a pilot program in North Carolina to develop this distributed generation system with businesses and residential customers.

"We've seen a lot of interest in this program," he says, noting that more than 500 customers contacted the utility about participating. "It's just a pilot program now, but it's a concept that in the long-term could address our clean energy needs."

The combination of innovative investment opportunities and the lowering price of solar makes these projects attractive, Cory says. "This appears to be a good time to invest, even in today's market," she says. "Solar is a great way to hedge yourself against the current electric and fossil fuel markets, and the tax credit is a great sweetener."

Blowing Against the Wind

Wind farms are not in as strong a position to benefit from all of these lucrative incentives. While wind project investors can currently take advantage of the production tax credit, a separate credit for wind is set to expire in December. That leaves owners of projects already underway scrambling to get them finished before the clock runs out, while investors with projects in the planning stages are slowing progress as they wait to see what happens next.

Most notably, T. Boone Pickens, the billionaire Texas oil tycoon who's been a champion of wind power for years, had to delay construction of his 4,000 megawatt $6 billion Texas wind project. He attributes the delay to the credit crunch and the falling price of natural gas. Construction was originally slated to begin in 2010, but it's now on hold until at least 2011.

Wu predicts that such slowdowns will likely occur across the wind power industry in response to the economy but doesn't believe it will peter out. "Wind is closer to conventional energy costs than solar, it's close to the grid for coal," she points out. "Because of that wind will continue to grow, but at a slower pace."

In fact, she sees the intermittent nature of wind power, rather than the economy, as the primary obstacle to widespread adoption.

To counter that issue, many utility companies, including Pacific Gas and Electric Co., Southern California Edison, and Duke Energy, are currently developing storage technologies that can capture wind energy at its peak and distribute it during lulls.

"Our CEO is a big proponent of renewable energy for the future, and we are in a good capital position to invest in it," says Scanzoni. Along with two solar initiatives, Duke recently acquired two wind companies in an effort to grow that side of the business. By the end of 2008 the company generated 500 megawatts of wind power, including two new wind farms in operation. It has another 5,000 megawatts under development.

He also notes that Duke Energy is very supportive of the stimulus bill and any related tax incentives that will come from it. "It's not going to impact any of the projects we are working on today," he says, "but there will likely be benefits in the future that will enable us to implement technology faster and cheaper, and we will be able to pass those benefits on to our customers."

Duke entered an agreement in December with Wal-Mart to provide up to 15 percent of the electricity used in its 360 stores in Texas from Duke's Notrees Windpower Project.

"Wal-Mart has shown a commitment to a green future on a number of fronts," Scanzoni says. "For Duke, it's exciting when a major partner can commit to these kinds of projects on a large scale because it makes renewable energy that much more cost-effective."

He believes that as the cost of fossil fuels continues to fluctuate and stricter climate change legislation moves forward, other companies, large and small, will follow suit.

"There is one certainty in the electricity market, and that is that costs will go up, and while renewable energy is still expensive, it pays off tremendously," he says. "Global warming is a reality and if we want to keep our businesses and our planet going, these are the choices we need to make."

Sarah Fister Gale is a freelance writer based in Chicago.

Reading the Tea Leaves of Evolving Climate Change Policy

It promises to be an eventful year in the development of climate change policy, both internationally and at the domestic level. But with so much potential movement on several different fronts, what should businesses be monitoring and how can they move from the sidelines to take an active role in shaping future climate policy?

To answer some of these questions, we have Ryan Schuchard joining us. Ryan is a manager of environmental research and development at Business for Social Responsibility. Known as BSR, the organization works with companies to develop and promote sustainable business strategies and is also a partner with ClimateBiz.com.

Ryan is the author of "Looking for Signs Along the Road to Copenhagen," an article appearing at ClimateBiz.com that explores the developments businesses should watch in the months leading up to the U.N. Climate negotiations in December. Today he’ll give us a snapshot of all the action and offer advice on how companies can position themselves ahead of future climate change policy.

Tilde Herrera: Thanks so much for joining us today. How would you characterize 2009 in terms of climate change and potential impacts on business?

Ryan Schuchard: Well, it’s a pivotal year. First of all, we have a president that’s committed to reducing emissions by 80 percent by 2050 and vigorous diplomatic action. We have an incoming Congress that has (more than) 20 more Democrats, more evidence that clean energy is not at odds with jobs, and more consensus among economists that we need to act now. So, it’s a pretty big time for climate policy.

TH: On the international front, I know that a lot of people are looking forward to the U.N. Climate negotiations in Copenhagen in December. Can you talk a little bit about, in big picture terms, why should businesses in the U.S. care about what happens in Copenhagen?

RS: Well, generally speaking, with global climate policy there’s the United Nations Framework Convention on Climate Change process and that’s the big process leading towards an international treaty. It’s important to address leakage, which is emission sources moving from one place to a place of less regulation. Many are concerned that if we don’t address leakage the whole system would be undermined.

So, this is a global treaty that we’ve been working on since the ’90s with Kyoto, and many hope and some expect that we’ll see some treaty in the next year or couple of years signed.

TH: O.K., that’s happening in December. Can you offer us sort of a thumbnail sketch of the events leading up to the talks in Copenhagen that businesses should be paying attention to?

RS: There’s a series of events leading up to Copenhagen, and like Kyoto, there will be meetings afterward. So the big event this year, the symbolic one, is Copenhagen in December. Before that, we’ll have a meeting in Bonn next month in March. There will be another meeting in Bonn in June and then a meeting in Bangkok in September and October, and those are the U.N.-focused events.

There are also some other important ones. There’s a World Business Council meeting on climate change in Copenhagen this May, which is a gathering of corporate leaders that will ideally play into the process. Then, of course, the G8 summit in July is also going to be influential. Climate change is one of four big items on their agenda.

TH: What sort of developments do you expect to come out of those two meetings?

RS: Well, the general thought is moving towards agreement by countries on the basis for a treaty, and both the U.S. and China are two of the big players that need to agree, in particular. So, it’s holding the hands of the U.S. and China, in many ways, to agree and to make them comfortable with the process.

TH: O.K. you talked a little bit about leakage. What are some of the other issues that businesses need to be following at the international level and why?

RS: Well, it’s a good question because global policy can seem kind of esoteric. Ultimately, there’s probably at least two main ways that policy is going to affect companies from the treaty.

One is domestic legislation that companies will take on in order to meet the commitments, so those are things like direct regulation, which could be cap-and-trade or carbon tax. Also product standards and technology incentives -- those are some broad things. That’s on the domestic legislation side.

And then also border measures. We haven’t seen much in the way of border taxes or border tax adjustments or things like that yet, but as the global market mechanisms form, we would expect probably some measures at the border.

TH: And what’s a border tax? How would that impact your average business owner?

RS: There are different proposals for a border tax. A border tax would be relevant if a country has a tax itself, as opposed to a cap-and-trade system, in which case, a border permit would be more likely. A border tax would probably be relevant for some of the heavy-emitting industries like aluminum, steel, maybe glass, paper products.

So, imports would likely be taxed or could be taxed if they were from a country that didn’t have adequate regulations by the view of the importing country.

TH: O.K. So, for instance, raw materials coming out of China might be subject to a border tax.

RS: Yes, that’s a good example. Another one is U.S. exports being taxed (by) the market that they would be exporting to.

TH: So, Ryan, in what sort of scenarios would U.S. exports be subject to a border tax, and what types of exports are we talking about?

RS: Well, you might see border taxes or border permit measures when we have countries with their own domestic regimes. Specifically, you would see the most energy-intense or emissions-intense sectors getting likely caught there, and those would be things like aluminum, cement, steel, paper, glass, chemicals, iron -- these sorts of very intense industries.

When countries like the U.S., Canada, China and other large countries have more serious taxes or caps on carbon, they would want to keep out or at least put constraints on imports.

TH: Mostly for competitive reasons?

RS: That’s a good question. It’s both competitive and environmental reasons, so you can see both. But environmental leakage is one of the big issues, in addition to competition problems.

Those are two of the broad ways the companies will ultimately be affected -- domestic legislation and border measures -- so those have a lot to do with mitigation. The U.N. Framework process is also taking on some broader issues like climate change adaptation, technology transfer, finance, and ultimately developing systems for global finance, or market mechanisms in general, to lead investments to their lowest cost location.

TH: So, you gave us a good primer on what to look for on the international level. What about the national level? What about closer to home? What’s going happen this year and what are the signs that businesses need to be paying attention to?

RS: Well, a lot is going to happen and is already happening, starting with EPA expected to give out more guidance on the greenhouse gas reporting rule that the Clean Air Act outlines.

Of course, both the Senate and the House are developing bills right now on energy, on transmission, and ultimately, on a climate bill. Obama and a number of senators are thinking it seems more like a cap-and-trade is the best or most likely, so it’s not clear that a tax will happen. Cap-and-trade looks more likely. So, those are some of the different levels that they’re happening.

TH: This debate between cap-and-trade vs. a tax -- in recent days it seems like more businesspeople -- CEOs -- coming out in favor of a carbon tax. What’s your take on that?

RS: Well, I’m not an economist and it gets technical pretty quickly, but ultimately a cap fixes the amount of emissions and the tax fixes the price, so a tax might seem easier to manage from an economist’s view and a financial manager’s view, but there is also some back-end work that needs to be done to make sure that we’re getting to the targets, the emissions targets we need.

TH: So, we have all of this action taking place on that policy side, but what can businesses do to engage in the discussion?

RS: Well, there are different standards groups that always make sense to participate in at the industry level and the company level, especially as we talk about supply chain and how carbon footprinting is measured in the supply chain.

One of the big ones is the greenhouse gas protocol developing new guidance on their Scope 3 -- or essentially supply chain -- emissions footprinting. I’d advise companies to go to the WRI website – the World Resources Institute website -- and check that out and there might be some opportunities to get involved with that.

There’s also, depending on the industry -- if it’s the electronics industry, the Electronics Industry Citizenship Coalition, for example, is developing their own suggestions on how their industry ought to be regulated or at least measured in terms of footprinting. So, for most industries, there’s an opportunity to be a part of developing what policies make sense at the sort of measurement accounting level, but it’s very much still being developed all around.

TH: Aside from sort of observing all of these developments taking place and getting involved with their sector, what can businesses do to position themselves favorably ahead of all of these pending regulation?

RS: Well, there’s a lot of different layers of looking at it and possible risk. For some companies, they expect to be regulated soon and so it’s not even so much about risk but about preparing and learning what emissions trading looks like and how that works for their company.

For others, it’s understanding what’s happening in their supply chain, and are there going to be regulations upstream that would likely create more pinches, more price hot spots in their supply? It really depends on the industry, but there are a lot of different levels of analysis that companies should be doing.

TH: So, Ryan, what are the big takeaways here? What’s the single biggest piece of advice you could offer businesses?

RS: Well, it’s that no matter how you slice it, there’s increasingly pressure for the use and propagation of lower carbon fuel and energy. So being on the right side of that makes sense and that is true both in terms of the direct price on energy and carbon associated with the energy, as well as indirect effects, like how suppliers might be affected, about products that you’re selling. So in very many ways, indirectly and directly, there is increasingly a premium on using and propagating low carbon energy and fuels.

TH: You just proposed that businesses get on the right side of low carbon fuels and energy. How do you propose they do that?

RS: Well, it depends on what kind of situation they’re in. If companies have supply chains that rely on emissions-intense or energy-intense production, those that basically have higher emissions coming from the supply chain face more risk. So it’s having a handle on where there are opportunities for lower emissions in the supply chain – that’s one.

For those that are large energy users in production, both efficiency and renewable energy will be a lot more valuable. Also then also for companies that make energy using products, those that are more efficient obviously make more sense. So if the auto industry had been doing this a long time ago, they’d be in a lot better shape now. That’s just going to hold more and more true in the future.

TH: How do you foresee events happening this year, if you can make a prediction?

RS: Well, there’s a lot of speculation about whether the U.S. will ratify a treaty in Copenhagen this year, and if it does, if that’s even a good idea at this point.

There’s a lot of sequencing that needs to take place in order for it to be ratified, and ultimately for policies that the U.S. implements to be durable. So, I don’t know if it’s going to be this year or next year. It’d be too early to say, but in the next one to two to three years, you would expect to see something pretty robust.

TH: Thank you for joining us today.

RS: Thank you, Tilde.