THERE'S no question that 2009 is going to be a tough year for most businesses, with relatively few reasons for optimism. However, growth opportunities that do emerge in 2009 will have a decidedly green flavor due to public policy, growth in green building, and shifting consumer priorities.
At the macro economic level, government policies will tilt toward green more strongly than ever before. Among the announced priorities of the incoming administration, we can expect investment in new school construction and renovations, as well as government building retrofits.
School construction projects will likely incorporate many environmentally friendly elements, including green building materials, energy and water efficient fixtures, and less-toxic finishes.
New government buildings will be built to green standards and existing buildings will undergo energy efficiency retrofits. The new administration has also promised to weatherize one million homes.
At the federal, state and local levels, other policy activity will likely result in homeowner tax credits for alternative energy and energy efficiency features, plus rebates and a variety of other incentives. These measures could result in some opportunities by year's end for well-positioned suppliers.
While the construction industry is down, these days if something is getting built, it's probably going to be green. Green building, once a niche, is now mainstream and LEED is practically a household word. In a recent report, McGraw-Hill projected that the green building industry could triple by 2013. Increasing focus on energy efficiency and reduced operating costs are major drivers for developers, but other factors are gaining in importance-such as increased property values for green commercial buildings and homes, and the fact that lenders are beginning to show a preference for green projects.
And just to make it a little easier, a growing number of city building departments are fast-tracking permits aiming for LEED and other green building certifications. If ever there was a time for the LBM industry to get up to speed with the green building movement, it is now.
Shifts in consumer priorities could combine to help give a boost to the savvy merchandiser right away. First, there is the "staycation" or "nesting" phenomenon that seems to accompany every economic slowdown. As people deal with reduced income and higher travel costs, the desire to spruce up the home and garden comes naturally. Naturally, there will be plenty of interest in products that are energy and water efficient, especially in those regions where energy costs are high and drought conditions exist.
A second consumer trend offers an important insight. The Natural Marketing Institute (www.nmisolu-tions.com) reports that a large and growing number of consumers are actively seeking to eliminate toxic chemicals in their homes.
That shouldn't be surprising. Last year, the media reported on a variety of toxic chemical stories, including formaldehyde in prefabricated homes, ethylene glycol in cleaning products, bisphenol-A in plastic baby products, and so on. Products such as non-toxic cleaning products, zero-voc paint, low-voc adhesives, and wool carpeting, for example, will continue to do well.
Among the retailers that I've spoken with over the past several weeks, those that focused exclusively on green products (such as Eco Home Improvement in Berkeley, Ca.) or otherwise have a strong green product offering (such as Friedman's Home Improvement in Santa Rosa, Ca.) consistently did better last year than their non-green counterparts. As this year unfolds, for some retailers, being green could make all the difference.
- Jay Tompt is vice president of green product development at Plan-It Hardware, San Francisco, Ca., which distributes green products for hardware and home improvement stores throughout California, and a leading expert in sustainable business and supply chain issues. He can be reached at info@plan-ithardware.com or (415) 359-9914.