Retail Carbon Footprints: Measuring Impacts from Real Estate and Technology

Over the last quarter of a century, no asset class in real estate has seen more transformation than the retail sector, due to advances in technology, innovations in the supply chain and ever-advancing changes in consumer behavior. Where once consumers flocked to suburban shopping malls and the brick-and-mortar stores of city streets, ecommerce – combined with next-day delivery capability – has completely altered how we purchase all forms of goods. Coinciding with this transformation, climate change across the globe has now reached a point where it is unquestionably impacting our environment, economy and resiliency as a society. The question we must now ask is which of these forms of consumer behavior leads to lower carbon emissions, and is better for the world in which we live?

METHODOLOGY

This analytical study aims to investigate and measure consumers’ Greenhouse Gas (GhG) emissions while engaging in either ecommerce purchasing or the more traditional purchasing from brick-and-mortar stores.

Using a Monte Carlo simulation, we illustrate the primary sources of emissions in the supply chain and simulate a base case of corresponding results. Afterward, we change the initial assumptions to output more environmentally-efficient outcomes based on new technologies and advances in the ecommerce field. At every point, our study compares the ecommerce channel with the traditional retail one to determine which one poses fewer emissions for a particular case. Notably, we focused primarily on the aspects of the final part of the supply chain, or the last-mile portion of the overall process, as this is the most distinct and where the true differences between traditional purchasing and ecommerce purchasing occur.

Average emissions by sources for both ecommerce and traditional retail.
“Unlike any other form of real estate, retail and ecommerce can make the greatest impact on climate, as the location and transportation interaction can fundamentally alter the total emissions for consumers.” -Dr. Andrea Chegut
Key recommendations: Logistics and supply chains can choose better locations to distribute packages from. Additionally, switching to EVs will help to lower GhGs.
Key recommendations: Consolidate shopping trips by buying items in bulk. And, if possible, walk or bike to the store: urban or enhanced mixed-use development is best for health and the environment.

FINDINGS

Our research suggests that the behavioral changes that consumers elect to adopt can translate into considerable savings. Reconsidering the basic components of the supply chain are paramount, as better locations, more efficient facilities and closer proximity to the end user and how we package products are key drivers to reducing carbon emissions. With simple choices, together with advances in new technology, it is possible to reduce GhG emissions while also achieving greater cost efficiencies.

“In traditional brick-and-mortar, ecommerce, and combined retail strategies, boxes account for some of the largest carbon pollutants in the ecosystem.” -Diego Fernandez
Ecommerce was found to be more sustainable than traditional retail in more than 75% of the scenarios developed in our base case.