Sustainable Smart Stores 2021 - Digital Sustainability Solutions for the Retail Industry - Microsoft Industry Clouds
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EHI WHITE PAPER Sustainable Smart Stores 2021 Digital Sustainability Solutions for the Retail Industry With generous support from:
2 Contents 03 INTRODUCTION 03 What Does Sustainability Have to Do with Smart Stores? 04 WHAT IS SUSTAINABILITY? 04 In Society 05 In Technology 08 In Retailing 09 WHAT ARE SMART STORES? 09 Formats 12 WHAT ARE SUSTAINABLE SMART STORES? 12 Technology 15 RESULTS OF THE EHI RETAILER SURVEY 24 DIGITAL SUSTAINABILITY SOLUTIONS FOR THE RETAIL INDUSTRY 24 Headquarters 29 Supply Chain & Logistics 32 Product Range & Production 38 Stores 48 Customers & Circular Economy 55 CONCLUSION AND OUTLOOK 55 Appendix 55 Customer Stories – Overview 56 Microsoft Partner Solutions – Overview 57 APPENDIX 57 List of Figures and Tables 58 About EHI 58 About Microsoft 59 Publication Details Some of the graphics shown in this study are available in our online statistics database at www.handelsdaten.de and can be downloaded as Information xls, pdf and jpg files. You can find further statistics and graphics on Click on the headings under Naviga- smart stores on our topic pages at tion to go directly to one of the sec- https://www.handelsdaten.de/ tions. handelsthemen/smart-store Navigation Contents | 1. Introduction | 2. Sustainability | 3. Smart Stores | 4. Sustainable Smart Stores | 5. Results of the EHI Study | 6. Sustainability Solutions – Headquarters – Supply Chain & Logistics – Product Range & Production – Stores – Customers & Circular Economy | 7. Conclusion EHI White Paper: Sustainable Smart Stores 2021
Text: Xenia Giese, Microsoft Introduction 3 Introduction What Does Sustainability Have to Do with Smart Stores? Sustainability has become a familiar term in busi- As a consequence, “smart stores”, which rely on ness and everyday life. In retailing, it plays an espe- sensor systems, the Internet of Things and artificial cially important role in business operations, and at intelligence (see the previous EHI + MSFT white pa- the same time it is a key consideration when it pers Smart Store, AI in Stores), are more energy-in- comes to enhancing a store’s image with custom- tensive than those which make little or no use of ers. digitalisation. Sustainable business processes are now easier In the following we will look at some examples to organise and monitor thanks to increasing digi- of smart stores that are increasingly applying digi- talisation. However, digitalisation can also have a tal technology while still being able to contribute to negative impact on sustainability goals. For exam- sustainability. ple, CO2 is generated through the manufacture of smartphones, computer monitors and IT-infra- structure, and energy is required to operate digital systems. Navigation Contents | 1. Introduction | 2. Sustainability | 3. Smart Stores | 4. Sustainable Smart Stores | 5. Results of the EHI Study | 6. Sustainability Solutions – Headquarters – Supply Chain & Logistics – Product Range & Production – Stores – Customers & Circular Economy | 7. Conclusion EHI White Paper: Sustainable Smart Stores 2021
Text: Xenia Giese, Microsoft What Is Sustainability? 4 What Is Sustainability? In Society In 2015, the United Nations adopted Agenda 2030, ble on the use and reuse of renewable resources. In which laid out a global roadmap for a more sustain- this way the current linear economy is to be re- able future. The Agenda comprises 17 Sustainable placed by a circular economy. One of the tools is a Development Goals (SDGs) for civil society, the pri- comprehensive SDG Tracker, which reports in de- vate sector and science. Its objective is to achieve tail on the worldwide status of the 17 goals and mon- sustainable consumption, based as much as possi- itors the progress being made by each country. 17 United Nations Sustainable Development Goals Source: UNDP – United Nations Development Programmes Navigation Contents | 1. Introduction | 2. Sustainability | 3. Smart Stores | 4. Sustainable Smart Stores | 5. Results of the EHI Study | 6. Sustainability Solutions – Headquarters – Supply Chain & Logistics – Product Range & Production – Stores – Customers & Circular Economy | 7. Conclusion EHI White Paper: Sustainable Smart Stores 2021
What Is Sustainability? 5 Map in the SDG Tracker for Goal 6.1, “Clean water and sanitation for all” Source: WHO/UNICEF Through their purchasing behaviour, end consum- Manufacturers of consumer goods have a di- ers in industrialised and newly industrialised coun- rect influence on sustainability goals through their tries have a decisive impact on value chains and production conditions and the organisation of their supply chains, and thus on the global sustainabili- value chains. Retail enterprises, which serve as a ty goals. Consumers are guided by numerous seals link between manufacturers and consumers, are in that show compliance with standards. One exam- a unique position to promote sustainability in their ple in Germany is the Blue Angel, a government eco- product ranges and business processes. In this way label that has been in existence for 40 years. More they can also foster consumer awareness. than 12,000 products and services fulfil its strict cri- teria. In Technology Digitalisation of business processes has gained ac- only be leveraged if the energy and resources they ceptance among retailers and producers of consum- consume are saved through other measures. er goods by helping them to increase efficiency and Digital solutions can also lessen the impact of harness synergies to cut operating costs. Another business processes on our climate and environ- advantage is that it allows them to meet customers’ ment. For example, knowledge derived from data needs and expectations. However, the potential of and algorithms can be used to increase efficiency digital solutions to contribute to sustainability can and optimise processes. This can reduce the Navigation Contents | 1. Introduction | 2. Sustainability | 3. Smart Stores | 4. Sustainable Smart Stores | 5. Results of the EHI Study | 6. Sustainability Solutions – Headquarters – Supply Chain & Logistics – Product Range & Production – Stores – Customers & Circular Economy | 7. Conclusion EHI White Paper: Sustainable Smart Stores 2021
What Is Sustainability? 6 consumption of energy and resources, and it can fa- gation Through the Use of Digital Technologies cilitate reuse and recycling. Climate Change Miti- (bitkom.org) Microsoft’s commitment to sustainability As a company with global operations, Microsoft is carbon from the atmosphere that it has emitted, very much aware of its responsibility in regard to directly or through power consumption, since it sustainability. Protection of our planet is the foun- was founded in 1975. dation of our mission, which is to enable every per- Measures: We will increase the share of renew- son and organisation to achieve more. Microsoft an- able energy sources used for powering our data nounced its first sustainability goal, reduction of centres to 100 percent, and we intend to reach 70 carbon emissions, already back in 2009. During the percent by 2023. We are requiring our suppliers past ten years we have continually expanded our to disclose their carbon emissions and are help- sustainability goals throughout the company. ing them to reduce their carbon footprint. Together with partners, researchers and NGOs, Tools: In order to achieve greater transparency Microsoft is now making great efforts to increase relating to emissions caused by services and sustainability. The focus is on four areas: carbon products, we have developed a Sustainability Cal- emissions, waste, water and biodiversity. culator that companies can use to analyse their Carbon EMISSIONS carbon footprint from using Microsoft Cloud Ser- Goal: To be carbon-negative by 2030 vices and compare it to the carbon footprint of Significance: By 2030, we will be removing more their on-premise data centres. The results can be carbon from the atmosphere than we release into used for reporting on sustainability. it. By 2050, Microsoft will have removed all of the Microsoft’s annual carbon emissions leading up to achievement of its carbon-negative goal. Source: Microsoft Navigation Contents | 1. Introduction | 2. Sustainability | 3. Smart Stores | 4. Sustainable Smart Stores | 5. Results of the EHI Study | 6. Sustainability Solutions – Headquarters – Supply Chain & Logistics – Product Range & Production – Stores – Customers & Circular Economy | 7. Conclusion EHI White Paper: Sustainable Smart Stores 2021
What Is Sustainability? 7 Alliances & partnerships: As a founding mem- soft, enables companies to quantify the financial ber of the „Transform to Net Zero“ Alliance we risk associated with water availability and quali- are cooperating with a number of companies, in- ty. It uses local information on water use, costs, cluding A.P. Moller-Maersk, Danone, Mer- quality, business volume and predicted produc- cedes-Benz AG, Nike, Starbucks, Unilever and Wi- tion to calculate the total value of water used and pro, to move the economy towards net zero discharged, taking possible local water shortages emissions. The measures applied by these com- into account. panies will remove all of their greenhouse gas Alliances & partnerships: We are a member of emissions from the atmosphere. The Water Resilience Coalition, a cooperative al- liance of companies and NGOs dedicated to the WASTE responsible use of water. Goal: To be waste-neutral by 2030 Significance: Waste production and disposal are BIODIVERSITY – SPECIES PROTECTION IS ALSO major sources of emissions. For this reason, we CLIMATE PROTECTION are taking special measures in our data centres Goal: Collecting environmental data from around and through our product packaging to promote the globe, processing it by means of machine sustainability. learning and making it available worldwide. Measures: The Circular Centres at Microsoft’s Significance: Global warming is closely associat- data centres sort through discarded hardware ed with large-scale ecosystem destruction, spe- components on site by means of artificial intelli- cies extinction and other dramatic consequenc- gence in the cloud and mark them for repurpos- es. But the threat is not limited to species ing. This will increase the reuse of servers and diversity on our planet; it extends to the ecosys- their parts to 90 percent by 2025. In addition, sin- tems on which these species depend. gle-use plastics will be eliminated in packaging Measures: The Planetary Computer will collect and replaced by innovative packaging solutions environmental data from throughout the world with greater sustainability. and record trillions of data points. Tools: We are investing in the collection of waste Tools: The Planetary Computer will give the AI data and the development of digital solutions for for Earth community access to important data tracking waste chains. sets through more than 500 projects in 81 coun- Alliances & partnerships: Microsoft is investing tries. It will also provide a platform for analysing USD 30 million in funds from Closed Loop Part- the data. ners to support supply chain digitalisation, recy- Alliances & partnerships: AI for Earth is a glob- cling and the creation of a circular economy. al community of environmental researchers, en- vironmental engineers and companies who are WATER developing models to protect our planet based on Goal: To be water-positive by 2030 the open-source principle and AI tools. Besides Significance: Across all business units, we will contributing its technological expertise, Microsoft treat more water than we consume. is investing USD 50 million in this initiative. In Measures: Microsoft will reduce its water con- addition, over the next four years we will be in- sumption, treat the water it uses and return this vesting USD 1 billion through our Climate Inno- water to use. vation Fund in new technologies for climate Tools: The Water Risk Monetizer, a tool devel- change mitigation and the solution of environ- oped by Ecolab together with Trucost and Micro- mental protection problems. Navigation Contents | 1. Introduction | 2. Sustainability | 3. Smart Stores | 4. Sustainable Smart Stores | 5. Results of the EHI Study | 6. Sustainability Solutions – Headquarters – Supply Chain & Logistics – Product Range & Production – Stores – Customers & Circular Economy | 7. Conclusion EHI White Paper: Sustainable Smart Stores 2021
What Is Sustainability? 8 In Retailing Sustainability has played an important role in re- Retailers must meet a number of requirements tailing for some time. For years, many large retail in their efforts to achieve sustainability, including enterprises have been publishing sustainability re- legislation at the national and EU levels such as the ports outlining their goals, initiatives and progress, German Packaging Act and an act, currently under often with reference to the Sustainable Develop- discussion, applying to supply chains. There is also ment Goals of the United Nations. Small and medi- the European Green Deal and the European Climate um-size retailers have likewise emphasised sustain- Law based on it, which sets the goal of making Eu- ability, for example by establishing energy-efficient rope climate-neutral by 2050. stores or installing sustainable lighting. These approaches are reflected in a variety of Industry organisations have also launched rel- initiatives and measures covering the entire supply evant initiatives. Examples are the German Retail chain and process chain. They are summarised in Federation (HDE) and the EHI Retail Institute with the following table. its many special topics such as energy management and building. Another organisation focusing on sus- tainability is GS1, with its projects to promote a cir- cular economy. Typical areas of focus and action (Table 1) Area of focus Approaches/measures Headquarters Cloud infrastructure & digital collaboration Sustainability tracking & reporting Central smart energy management Green building and ecology minded building* Supply Chain & Logistics Supply chain transparency Optimised logistics processes E-mobility and alternative drive technologies* Product Range & Production Sustainable production Product range optimisation for waste reduction Process optimisation in production Sustainable packaging* Stores Smart energy management in stores Inventory optimisation Waste reduction Generation of electrical and thermal energy* Customers & Circular Economy Customer commitment to sustainable consumption Transparency & traceability Circular economy & recycling Electric vehicle charging stations* * Not dealt with in this white paper because most approaches are non-digital. Source: Microsoft Navigation Contents | 1. Introduction | 2. Sustainability | 3. Smart Stores | 4. Sustainable Smart Stores | 5. Results of the EHI Study | 6. Sustainability Solutions – Headquarters – Supply Chain & Logistics – Product Range & Production – Stores – Customers & Circular Economy | 7. Conclusion EHI White Paper: Sustainable Smart Stores 2021
Text: Xenia Giese, Microsoft What Are Smart Stores? 9 What Are Smart Stores? “Smart store” is an umbrella term for stores that uti- This is what bricks-and-mortar retailing will be lise a variety of digital solutions. The purpose is to all about in the future. Using sensors, the Internet make operations more efficient and offer custom- of Things, machine learning, mixed reality and tech- ers more information or services. Many of these nologies that leverage artificial intelligence (AI), solutions are necessary in order to enable linking of fixed-location stores will offer all the personalised online and offline channels, and they open up fur- shopping advantages that we have come to appre- ther channels for hybrid shopping such as online ciate from e-commerce. ordering followed by pickup at an automatic vend- ing machine or delivery by car. Formats Stores with digital solutions CUSTOM SOLUTIONS Increasing numbers of structure, and their internet bandwidth may be lim- stores are applying solutions that are tailored to ited. By taking advantage of their cameras and us- their individual requirements. For example, they are ing computer vision, i.e. AI-based image analysis, using existing security cameras or motion sensors these stores can cover a variety of needs, such as at their entrances to count customers. This can al- supporting operative processes and monitoring pro- low them to set up customer traffic lights with dig- motion shelves for stock levels and customer traffic. ital signage showing “green – entry permitted” and Examples: Bütema, Dynamics 365 Connected “red – please wait”. In most cases these stores are Store. not part of a modern, comprehensive outlet infra- Autonomous and semi-autonomous stores FOCUS ON SELF-CHECKOUT Autonomous, un- Semi-autonomous formats, with limited staff staffed stores usually have a small floor space of ap- or no staff at all, are an increasingly common vari- proximately 50 sqm and some 800 articles on offer. ant. Customers can enter the store outside normal Customers gain entry by means of a special app. The shopping hours or even 24/7 and pay at a self-check- doors are closed during shopping. Purchases are out station or with an app. Security and theft pro- completed by self-checkout via the app or at a check- tection are ensured by cameras, employees or per- out station. After checkout, the doors open and cus- sonalised access. Examples: MishiPay, Rapitag, GK tomers can leave. Software. Navigation Contents | 1. Introduction | 2. Sustainability | 3. Smart Stores | 4. Sustainable Smart Stores | 5. Results of the EHI Study | 6. Sustainability Solutions – Headquarters – Supply Chain & Logistics – Product Range & Production – Stores – Customers & Circular Economy | 7. Conclusion EHI White Paper: Sustainable Smart Stores 2021
What Are Smart Stores? 10 Automated stores FROM ROBOTS TO MICROWAREHOUSES A new In another new trend, certain parts of a store format, based on a system that has already been are being transformed into what are called micro- used for some time by pharmacies, relies on a small warehouses. Goods that are ordered online can be warehouse which receives deliveries when orders picked from here instead of from the store shelves. are placed online. When customers come to pick up This increases picking efficiency, simplifies inven- their purchases, a dispensing robot moves the items tory management and prevents possible competi- to the pickup window. Products can be fetched and tion in the store between customers and pickers. paid for at any time. The robots optimise warehouse Microwarehouses can also be automated by means efficiency and considerably accelerate the provision of robots that combine the characteristics of a dis- process. The automatic gripper systems can retrieve pensing robot and warehouse robot and can oper- and move up to 14 packages at a time. A video cam- ate in small areas. Examples: BD Rowa, Self Point- era identifies the products and records them. Stor.AI, Attabotics. Automated parcel machines and retail machines THE SOLUTION FOR HYBRID SHOPPING Auto- show dynamic prices and videos. Sensor systems mated parcel machines and retail machines are ide- can monitor stocks automatically. Automated par- al as shopping points or pickup stations in hybrid cel machines can be configured according to the shopping. They are available in a wide range of types number and size of the compartments and can be (for example, for refrigerated or unrefrigerated equipped with special management software and goods), with different payment methods and in dif- retailer-specific apps to encourage customer loyal- ferent sizes. Many automated retail machines offer ty. Examples: Stora Enso Smart Cabinet, Invenda, additional functions such as digital screens that StrongPoint, Ombori together with ITAB. Seamless or frictionless shopping AUTOMATION OF THE ENTIRE SHOPPING PRO- able fully automatic checkout without a stop on the CESS THROUGH GRAB & GO Frictionless shop- way out. A wide range of sensor systems are re- ping, sometimes called grab & go, is the ultimate in quired, such as cameras on ceilings and shelves and automation. Here customers simply select their weight-sensing mats. In addition, IoT solutions are merchandise and walk out of the store. However, needed for aggregating the sensor data, and AI must these concepts are very hard to implement. Custom- be used analysing the data and following the move- ers must be identified when they enter. The move- ment of customers and goods. Examples: AWM, ments of people and goods must be tracked, and the Zippin, UST Global/CloudPick. two must be correlated – this is the only way to en- Navigation Contents | 1. Introduction | 2. Sustainability | 3. Smart Stores | 4. Sustainable Smart Stores | 5. Results of the EHI Study | 6. Sustainability Solutions – Headquarters – Supply Chain & Logistics – Product Range & Production – Stores – Customers & Circular Economy | 7. Conclusion EHI White Paper: Sustainable Smart Stores 2021
What Are Smart Stores? 11 Digital store twins STATE OF THE STORE IN REAL TIME A digital twin sensor data. Considerable computer power is re- is a digital representation of an object or building, quired for checking and displaying this information including all equipment, things and processes. Ac- on a continuous basis. Ideally, digital twins should cordingly, a digital store twin is a digital represen- be possible for large stores, but at present there ex- tation of a store together with all equipment, ma- ist only conceptual approaches and pilot versions. chines, furnishings and articles – in real time. This However, in the manufacturing industry they are requires a large number of sensors, a suitable IoT already possible for production facilities. Examples: platform and artificial intelligence for evaluating the Azure Digital Twins. Navigation Contents | 1. Introduction | 2. Sustainability | 3. Smart Stores | 4. Sustainable Smart Stores | 5. Results of the EHI Study | 6. Sustainability Solutions – Headquarters – Supply Chain & Logistics – Product Range & Production – Stores – Customers & Circular Economy | 7. Conclusion EHI White Paper: Sustainable Smart Stores 2021
Text: Xenia Giese, Microsoft What Are Sustainable Smart Stores? 12 What Are Sustainable Smart Stores? Sustainable smart stores are stores that are and refrigeration, and efficient generation and use equipped with digital solutions in order to make of electrical and thermal energy. Digital solutions their operations more efficient and offer their cus- additionally make it possible to optimise store op- tomers more services. At the same time, these solu- erations and make them more sustainable. This in- tions make it possible to pursue a variety of sustain- cludes waste management and predictive monitor- ability goals. ing of refrigeration equipment to prevent losses. For example, digital solutions help to save en- Store assortments and warehouse stocks are mon- ergy, thereby minimising carbon emissions. They itored by sensor systems and optimised by AI so are used in control systems for buildings and equip- that both waste and out-of-stock situations are ment, including lighting control, energy-efficient avoided. light management, optimisation of air-conditioning Technology Energy requirements of traditional data centres vs. cloud data centres According to the International Energy Agency liver more computing power per unit of energy than (IEA), data centres account for about 1 percent of traditional data centres. global energy demand. Although the need for com- Through exact management of capacity, these puter power is increasing due to digitalisation, there data centres can better predict their energy require- has been hardly any rise in worldwide electricity use ments and plan their consumption. This means, for by data centres in the last 10 years (Figure #). The example, that they can use green electricity from a reason is that traditional data centres with low en- variety of suppliers to reduce their carbon footprint. ergy efficiency are being replaced by cloud data cen- Moreover, modern data centres are built in such a tres and, increasingly, by hyperscale cloud data cen- way that they are cooled by the environment instead tres. of by air-conditioning equipment. Microsoft, for ex- Hyperscale cloud data centres are very large, ample, successfully operated an underwater data highly efficient data centres that operate at high ca- centre in a two-year pilot project in order to study pacity. Thanks to state-of-the art hardware, they de- the requirements. Navigation Contents | 1. Introduction | 2. Sustainability | 3. Smart Stores | 4. Sustainable Smart Stores | 5. Results of the EHI Study | 6. Sustainability Solutions – Headquarters – Supply Chain & Logistics – Product Range & Production – Stores – Customers & Circular Economy | 7. Conclusion EHI White Paper: Sustainable Smart Stores 2021
What Are Sustainable Smart Stores? 13 Global data centre energy demand by data centre type (traditional on-premise, cloud non-hyperscale, cloud hyperscale), 2010–2022, IEA Source: IEA Digital solutions on the cloud edge In view of these capabilities and the advantages they and processed by a special device (also called an ap- bring for sustainability, it would make sense for pliance) right at the sensor or close by. The predic- stores to operate their digital solutions in the cloud. tive ability of AI is transferred to the device and pre- Many, however, do not have sufficient bandwidth to installed so that it is available even without a make use of cloud solutions. A connection to the connection to the cloud. A connection is needed only cloud is necessary in particular for computation-in- for the initial AI teaching process and later possible tensive tasks like processing data from IoT sensors, changes. This cuts bandwidth requirements consid- analysis of the data by means of AI and forecasts erably. An additional advantage of edge technology based on this. Applications like these would quick- is that data can be processed in near-real time, with- ly bring stores to the limits of their bandwidth. out appreciable latency. The answer to this problem is edge computing. Here the data generated by a sensor are aggregated Navigation Contents | 1. Introduction | 2. Sustainability | 3. Smart Stores | 4. Sustainable Smart Stores | 5. Results of the EHI Study | 6. Sustainability Solutions – Headquarters – Supply Chain & Logistics – Product Range & Production – Stores – Customers & Circular Economy | 7. Conclusion EHI White Paper: Sustainable Smart Stores 2021
What Are Sustainable Smart Stores? 14 Store infrastructure and architecture The infrastructure of a smart store is a key factor af- STORE: fecting the sustainability of digital solutions. It de- 3. Stores have an edge platform for aggregation of pends on the digital solutions in the store itself and IoT data, analysis by AI and creation of forecasts. on the solutions provided by the retail enterprise. 4. IoT data are provided by sensors in store equip- The graphic below shows an example of the ar- ment such as reverse vending machines, bread chitecture of a sustainable smart store. baking machines, doors and gates. 5. After aggregation of the IoT data and forecast- HEADQUARTERS: ing by means of AI on the store edge platform, 1. Retail enterprises typically have a large number tools and simple workflows on the modern work of centrally located core systems, such as ERP/ platform can be used to send notifications and merchandise management, CRM and FiCo. De- instructions to store employees. pending on their age, these systems run in a tra- 6. A variety of sector-specific solutions can utilise ditional data centre (on-premise), in a hybrid information from sensor systems, IoT and AI, configuration or in the cloud. enabling them also to benefit from processing 2. In addition, retailers operate modern cloud plat- on the store edge platform. forms, for example for data. Usually there is also a modern work platform for use by headquar- ters as well as store staff. Architecture of a smart store with connection to headquarters Source: Microsoft Navigation Contents | 1. Introduction | 2. Sustainability | 3. Smart Stores | 4. Sustainable Smart Stores | 5. Results of the EHI Study | 6. Sustainability Solutions – Headquarters – Supply Chain & Logistics – Product Range & Production – Stores – Customers & Circular Economy | 7. Conclusion EHI White Paper: Sustainable Smart Stores 2021
Text: Ulrich Spaan and Çetin Acar, EHI Results of the EHI Retailer Survey 15 Results of the EHI Retailer Survey Retailers unanimously agree that technology will be there are also promising applications in the non- able to make an enormous contribution to sustain- food sector. In food retail, refrigeration accounts for able store concepts in the future. Although this is by far the largest share of energy consumption, especially true for stores in the food sector with their whereas in non-food the most important category comparatively high level of energy consumption, is lighting. Breakdown of electricity consumption by Breakdown of electricity consumption by categories – food retail categories – non-food retail (Figure 1) (Figure 2) Shares in percent Shares in percent 15 20 22 10 28 57 48 Lighting Lighting Air conditioning/ventilation Air conditioning/ventilation Refrigeration Other Other Basis: 34 food retail chains, more than 27,000 stores, Basis: 26 non-food retail chains, more than 11,000 stores, approx. 35 million sqm selling space approx. 20 million sqm selling space Energy Management in Retail 2020 Energy Management in Retail 2020 Source: EHI Source: EHI Navigation Contents | 1. Introduction | 2. Sustainability | 3. Smart Stores | 4. Sustainable Smart Stores | 5. Results of the EHI Study | 6. Sustainability Solutions – Headquarters – Supply Chain & Logistics – Product Range & Production – Stores – Customers & Circular Economy | 7. Conclusion EHI White Paper: Sustainable Smart Stores 2021
Results of the EHI Retailer Survey 16 Little involvement by retail IT departments Although retailers are already using automated sys- centralised energy management, including clear, us- tems to monitor and control energy-consuming ap- er-friendly visualisation, is often named as a goal plications, they are nowhere near exhausting the but not yet achieved. technical possibilities. Responsibility for these ac- tivities, referred to here as smart energy manage- BRIEF INFORMATION ment, often does not lie with the IT department but with facility management or the construction de- Facts & Figures partment. Moreover, there is often no uniform plat- form for giving an overall view. The IT department is closely involved in energy Monitoring of certain applications is some- management in 18 percent of companies. times assigned to service providers like the manu- Source: EHI: Technology Trends in Retailing facturers of refrigeration units. A comprehensive 2021 approach comprising smart, highly automated and Political encouragement for the use of technology Political incentives can be expected to encourage and regulation will continually increase as volatile the use of technology. Phased increases in the price renewable energy takes on an ever greater role in of carbon emissions will stimulate investment in electric power generation and the need grows for ef- energy-efficient heating and the use of renewable ficient heat management. Retailers will therefore energy sources. The effort and expense of control increasingly have to rely on smart IT systems to Measures to save heat energy – food retail (Figure 3) Shares in percent Heat recovery/ 100 waste heat utilisation Intelligent control/regulation 81 Building shell 38 Generation of heat from renewable sources/ 31 thermal energy storage Other 19 Basis: 16 retail chains, approx. 11,000 stores, approx. 14 million sqm selling space; multiple answers possible Energy Management in Retail 2020 Source: EHI Navigation Contents | 1. Introduction | 2. Sustainability | 3. Smart Stores | 4. Sustainable Smart Stores | 5. Results of the EHI Study | 6. Sustainability Solutions – Headquarters – Supply Chain & Logistics – Product Range & Production – Stores – Customers & Circular Economy | 7. Conclusion EHI White Paper: Sustainable Smart Stores 2021
Results of the EHI Retailer Survey 17 handle these complex tasks. Although prises in Germany, Austria and Switzerland were 81 percent of the food retailers surveyed in the most asked about the most important trends and devel- recent EHI energy management study say they are opments in the years ahead. For the reasons out- already using smart control and regulation systems lined above, the survey also covered the topic of to save heat energy, it can be assumed that they smart energy management and the importance of could go a lot further. sustainable store concepts from the technological In the present study on technology trends in re- point of view. tailing, CIOs and IT managers from 97 retail enter- AI is still the most important trend for IT decision makers One of the main results of the study is that artificial an increasingly important role in various applica- intelligence continues to be seen as highly import- tions and have a lasting impact on many processes ant for the future in the retail sector. Of the decision in the medium term. makers surveyed, 63 percent think that AI will play Technology trends and projects The most important technological trends in the next three years (Figure 4) Shares in percent Artificial intelligence 63 Connected retail 44 Customer centricity 37 Cloud 33 Self-checkout/self-scanning 30 Digitalisation of processes 26 Analytics 26 n = 97 Technology Trends in Retailing 2021 Source: EHI Here it should be noted that opinions often dif- self-teaching algorithms are growing in importance, fer on the definition of AI. Some decision makers especially when it comes to forecasting and replen- equate machine learning with AI, whereas others ishment, and that the applications are becoming in- make a clear distinction. However, all agree that creasingly intelligent and sophisticated. Navigation Contents | 1. Introduction | 2. Sustainability | 3. Smart Stores | 4. Sustainable Smart Stores | 5. Results of the EHI Study | 6. Sustainability Solutions – Headquarters – Supply Chain & Logistics – Product Range & Production – Stores – Customers & Circular Economy | 7. Conclusion EHI White Paper: Sustainable Smart Stores 2021
Results of the EHI Retailer Survey 18 Specific plans for smart energy management, IoT and electric vehicle charging stations The interviewees were also asked about the status IT departments were only marginally involved in quo and their planning relating to new technologies. these matters and that other departments were the The focus here was on IoT, smart energy manage- ones with responsibility. On the other hand, initial ment and parking spaces with charging stations for steps to establish comprehensive, highly sophisti- electric vehicles. More than half reported that they cated smart energy management with AI-support- were already using simple solutions. However, as ed applications can be observed, especially in the already mentioned above, they often said that their food sector. Assessment of new technologies Smart energy management (Figure 5) Shares in percent 8 25 Currently in use Specific planning for the years ahead 50 Interesting for the future, but not relevant at present Of no interest to the company 17 n = 97 Technology Trends in Retailing 2021 Source: EHI Navigation Contents | 1. Introduction | 2. Sustainability | 3. Smart Stores | 4. Sustainable Smart Stores | 5. Results of the EHI Study | 6. Sustainability Solutions – Headquarters – Supply Chain & Logistics – Product Range & Production – Stores – Customers & Circular Economy | 7. Conclusion EHI White Paper: Sustainable Smart Stores 2021
Results of the EHI Retailer Survey 19 Closely connected with this is the assessment of IT so, 34 percent say that they are already using IoT decision makers concerning the Internet of Things technologies and a further 37 percent do not see (IoT) in stores. In the future, IoT applications can be them as relevant at present but think they could be expected to take on particular importance for mon- interesting in the future. These results indicate a itoring refrigeration, lighting and other energy-in- high potential in the medium term, and it will be in- tensive applications. Most of the panel participants teresting to watch developments in the years ahead. are currently somewhat reserved on this issue. Even Assessment of new technologies Internet of Things (Figure 6) Shares in percent 11 34 Currently in use Specific planning for the years ahead Interesting for the future, but not relevant at present 37 Of no interest to the company 18 n = 97 Technology Trends in Retailing 2021 Source: EHI The CIOs and department heads were also asked to ready providing charging stations for their what extent they have implemented charging op- customers and a further 10 percent plan to do so in portunities for customers with electric vehicles. the near future. The technical challenge here will be Here it must be noted that some stores do not offer to integrate this service in the store’s IT infrastruc- parking in the first place (for example, in inner cit- ture, for example by analysing usage behaviour or ies) and some let other companies provide this ser- creating offers that are tailored to individual cus- vice. However, 56 percent reported that they are al- tomers. Navigation Contents | 1. Introduction | 2. Sustainability | 3. Smart Stores | 4. Sustainable Smart Stores | 5. Results of the EHI Study | 6. Sustainability Solutions – Headquarters – Supply Chain & Logistics – Product Range & Production – Stores – Customers & Circular Economy | 7. Conclusion EHI White Paper: Sustainable Smart Stores 2021
Results of the EHI Retailer Survey 20 Assessment of new technologies Parking spaces with electric vehicle charging stations (Figure 7) Shares in percent 21 Currently in use Specific planning for the years ahead Interesting for the future, but not relevant at present 56 Of no interest to the company 14 10 n = 97 Technology Trends in Retailing 2021 Source: EHI As mentioned above, many IT departments are not BRIEF INFORMATION (yet) involved in energy management. This can be expected to change in the years ahead, at least in Facts & Figures food retail. A separate analysis of this sector shows that 33 percent of all decision makers surveyed al- In the food retail sector, the IT departments in ready concern themselves with this topic, and ac- 33 percent of companies are closely involved in cording to many individual statements the trend is energy management. Source: EHI: Technology rising. Trends in Retailing 2021 56 % of companies report that they are already providing electric vehicle charging stations for their customers, and 10 percent plan to do so in the near future. Navigation Contents | 1. Introduction | 2. Sustainability | 3. Smart Stores | 4. Sustainable Smart Stores | 5. Results of the EHI Study | 6. Sustainability Solutions – Headquarters – Supply Chain & Logistics – Product Range & Production – Stores – Customers & Circular Economy | 7. Conclusion EHI White Paper: Sustainable Smart Stores 2021
Results of the EHI Retailer Survey 21 The cloud as a basis for sustainable smart stores In order to make meaningful use of applications increasingly using a cloud platform, which can pro- based on AI and the IoT, companies need to put their vide a wide range of solutions and services. IT infrastructure on a suitable foundation. Many are “Cloud-based applications are already very important for 48 percent of retailers.” Ulrich Spaan, Member of the Management Board EHI Retail Institute Cloud Importance of cloud-based applications in companies (Figure 8) Shares in percent 21 Already very important Importance will rapidly increase Importance is still low 48 31 n = 97 Technology Trends in Retailing 2021 Source: EHI The former scepticism towards cloud solutions in nies prefer to avoid complicated in-house this sector is yielding to a friendly attitude, and there installations and instead get flexible, up-to-date ser- are many reasons for this. For one thing, retailers vices from the cloud. Another reason is that they can want greater scalability when they roll out new solu- focus on their core strengths. In addition, resource tions. Quick and simple implementation has be- conservation and energy efficiency have been men- come a critical factor for success, so many compa- tioned as reasons. Navigation Contents | 1. Introduction | 2. Sustainability | 3. Smart Stores | 4. Sustainable Smart Stores | 5. Results of the EHI Study | 6. Sustainability Solutions – Headquarters – Supply Chain & Logistics – Product Range & Production – Stores – Customers & Circular Economy | 7. Conclusion EHI White Paper: Sustainable Smart Stores 2021
Results of the EHI Retailer Survey 22 “Resource conservation and energy efficiency were often mentioned as relevant factors, but not as decisive ones.” Çetin Acar, Project Manager, Research IT EHI Retail Institute Reasons for cloud use What are the most important drivers for the use of cloud-based applications? (Figure 9) Shares in percent Flexibility 53 Scalability/speed 38 Cost-effectiveness 36 Availability/security 32 Focus on core strengths 15 n = 97, multiple answers possible Technology Trends in Retailing 2021 Source: EHI Some retailers are trying to reduce the load on band- edge technology, which keeps artificial intelligence width from digitalisation and taking advantage of locally available. Navigation Contents | 1. Introduction | 2. Sustainability | 3. Smart Stores | 4. Sustainable Smart Stores | 5. Results of the EHI Study | 6. Sustainability Solutions – Headquarters – Supply Chain & Logistics – Product Range & Production – Stores – Customers & Circular Economy | 7. Conclusion EHI White Paper: Sustainable Smart Stores 2021
Results of the EHI Retailer Survey 23 Dynamic pricing to reduce waste In recent years, electronic shelf labelling (ESL) has Although bricks-and-mortar stores have not come become much more common among food retailers nearly as far as online retailers when it comes to dy- in German-speaking countries. Many large retail en- namic pricing, there are applications for perishable terprises have introduced this technology over wide goods that could make a very important contribu- areas, and leading discounters are taking a very tion to sustainability. Smart digital control of pric- close look at it. One advantage of ESL is that it re- es for fruits and vegetables can cut back on waste duces handling effort because price labels no lon- and reduce the quantities of goods that have to be ger have to be placed by hand. Another is that pric- thrown out at the end of the day. es can be adjusted as needed during the day. Electronic shelf labelling The use of electronic labels in food retail (Figure 10) Shares in percent 4 0 17 Already in use Project is planned Under observation No projects planned Numerous implementations are currently in the pilot stage. However, 54 percent of food retailers are planning to expand their use. 79 n = 97 Technology Trends in Retailing 2021 Source: EHI Navigation Contents | 1. Introduction | 2. Sustainability | 3. Smart Stores | 4. Sustainable Smart Stores | 5. Results of the EHI Study | 6. Sustainability Solutions – Headquarters – Supply Chain & Logistics – Product Range & Production – Stores – Customers & Circular Economy | 7. Conclusion EHI White Paper: Sustainable Smart Stores 2021
Text: Xenia Giese, Microsoft Digital Sustainability Solutions for the Retail Industry 24 Digital Sustainability Solutions for the Retail Industry The following pages feature a range of digital sus- posed by Microsoft and its partners in the follow- tainability solutions for retailers and manufactur- ing areas: Headquarters – Supply Chain & ers offered by Microsoft customers and partners. Logistics – Product Range & Production – Stores They will be presented according to the typical ar- – Customers & Circular Economy. eas of focus and action listed on page 8. What all the The bottom of each page features a Quick Naviga- solutions have in common is that they are based on tion bar to help move between the different areas. the Microsoft platform. The Microsoft customer stories and partner solu- This compendium comprises 46 solutions, in- tions are also listed in the overview in the Appen- cluding 29 customer stories and 17 solutions pro- dix. Headquarters Cloud infrastructure & digital collaboration MICROSOFT SUSTAINABILITY CALCULATOR A efficiency, modern IT equipment and infrastructure, study on the Carbon Benefits of Cloud Computing and renewable energy. (MSFT and WSP, updated 2020) found that the Mi- The Microsoft Sustainability Calculator is a crosoft Cloud is up to 93 percent more energy effi- tool that provides companies with a transparent cient than traditional on-premises data centres. overview of their carbon footprint when using the When renewable energy is taken into account, the Azure and Dynamics365 clouds. The tool details Microsoft Cloud is between 72 and 98 percent more both the direct and indirect carbon emissions a carbon efficient than traditional data centres. These company generates when it uses the Microsoft improvements can be attributed to IT operational Cloud. Navigation Contents | 1. Introduction | 2. Sustainability | 3. Smart Stores | 4. Sustainable Smart Stores | 5. Results of the EHI Study | 6. Sustainability Solutions – Headquarters – Supply Chain & Logistics – Product Range & Production – Stores – Customers & Circular Economy | 7. Conclusion EHI White Paper: Sustainable Smart Stores 2021
Digital Sustainability Solutions for the Retail Industry 25 MSC overview of a company’s carbon emissions from its Microsoft Cloud usage Source: Microsoft Source: Microsoft MSC comparison of a company’s cloud/on-premises carbon emissions and detailed emissions report Source: Microsoft Source: Microsoft The tool provides an overview of the carbon emis- Multiply this by the carbon intensity of the elec- sions a company generates using the Microsoft tricity available (gCO2eq/kWh) in the correspond- Cloud. The data are made available either in aggre- ing region to get the equivalent carbon emissions gate form or in detail so that the company can use of the data centre over the period of time them in its sustainability reports. Visit the electricityMap or consult documents The MSC furthermore compares the carbon from local energy providers to find out the carbon emissions generated using the Microsoft Cloud with intensity of the electricity available (gCO2eq/ those produced using a generic traditional data cen- kWh) in any given region. tre (Figure). For a more accurate comparison of car- bon emissions from cloud and on-premises data The MSC is currently available as a trial version for centres, a separate calculation can be made using Azure enterprise customers with an existing ac- the electricity consumption of a traditional data count and will be made generally available in July centre: 2021; further updates beyond Azure to the other Mi- Determine the electricity use of a traditional data crosoft Clouds are also expected at this time. centre over a period of time (kWh) Navigation Contents | 1. Introduction | 2. Sustainability | 3. Smart Stores | 4. Sustainable Smart Stores | 5. Results of the EHI Study | 6. Sustainability Solutions – Headquarters – Supply Chain & Logistics – Product Range & Production – Stores – Customers & Circular Economy | 7. Conclusion EHI White Paper: Sustainable Smart Stores 2021
Digital Sustainability Solutions for the Retail Industry 26 REMOTE WORK AND PROCESS AUTOMATION ity efforts by reducing paper-based processes and (IKEA & MICROSOFT) Digital productivity tools en- replacing travel with digital collaboration. “Using able retail company employees, from the central of- Teams makes our life in the store easier and helps fice to the front line, to work together virtually and us meet our sustainability goals because we don’t automate operational processes. This means great- need to use as much paper,” explains Fabian Hae- er efficiency and a smaller carbon footprint. berlein, Deputy Marketing Manager at IKEA Kun- IKEA uses Microsoft 365 for its 166,000 em- gens Kurva, the largest IKEA store in the world. ployees. IKEA staff were quick to adopt Microsoft “We’ve calculated that in this store, we could save Teams for internal and external collaboration and SEK 364,000 (around EUR 36,000) by replacing our store employees in particular were very pleased current scheduling process with Shifts. And you can with the mobile Teams app. Adopting Microsoft imagine how much we could save as a company if Teams helped the company support its sustainabil- we used Shifts at IKEA stores all over the world.” Sustainability tracking & reporting MASTER DATA MANAGEMENT FOR SUSTAIN- cuses on how well a company has integrated the ABLE PROCESSES (UNILEVER DACH & SYSTRI- sustainability/CSR principles in its business and ON) Efficient master data management is import- management models. The luxury goods company ant for manufacturers and retail companies, not LVMH Moet Hennessy Louis Vuitton SE uses the only because it forms the basis of many of their core EcoVadis solution to monitor the sustainability of processes but also because it is essential to success- its many suppliers for its business activities in fully monitor sustainability. The benefits of digital wines & spirits, fashion & leather goods, perfumes master data management solutions are configurable & cosmetics, watches & jewellery, and selective re- data import, and constant monitoring of data qual- tailing. “New regulations can be helpful because un- ity at maximum scalability using flexible error anal- til recently sustainability was something that each ysis and reports. Data errors are indicated clearly so LVMH House had to approach on its own. Now, that they can be corrected quickly, improving data with Sapin II and “Devoir de vigilance” (Duty of quality in the master data pool. Unilever DACH Care) regulations, especially in France, the group as used the Systrion synfoxx solution to raise the a whole is also responsible for what happens at the quality of its master data from less than 50 percent subsidiary level. This means we need to create more to more than 99.2 percent, effectively halving efforts links between what can be done at House level, the and redundancies due to errors along the entire sup- business line level, or at the group level. It also ply chain. strengthens all the synergies we want to create be- tween our subsidiaries. This is a very positive thing SUSTAINABILITY RATINGS FOR COMPANIES for us. The advice I would give about using EcoVadis (LVMH & ECOVADIS) EcoVadis develops sustain- is that it can help you to make a quick and fairly ac- ability ratings for companies and oversees a global curate mapping of the suppliers who are at risk,” network of more than 75,000 rated companies. As says LVMH Chief Procurement Officer Christian part of its sustainability assessment, EcoVadis fo- Galichon. Navigation Contents | 1. Introduction | 2. Sustainability | 3. Smart Stores | 4. Sustainable Smart Stores | 5. Results of the EHI Study | 6. Sustainability Solutions – Headquarters – Supply Chain & Logistics – Product Range & Production – Stores – Customers & Circular Economy | 7. Conclusion EHI White Paper: Sustainable Smart Stores 2021
Digital Sustainability Solutions for the Retail Industry 27 SUSTAINABILITY REPORTS – PLATFORMS FOR IMPACT solution: Enables automated documen- DOCUMENTATION & MANAGEMENT A great tation, reporting and data collection. The reports number of data are required to publish certified sus- document the sustainability strategy using the tainability reports and these must be constantly up- SDGs and are certified according to CDP and GRI dated to show that progress is being made towards standards. meeting sustainability goals. This means that any Stratsys sustainability plan: Helps plan and doc- gaps in reporting or irregularities, for example con- ument sustainability strategies. Sustainability key cerning supplier data, must be quickly identified and figures can be gathered in one place, responsibil- addressed. There are many digital platforms, with ities allocated and a clear link between activities differing focal points, to do just this: and strategy created. READY-MADE PLATFORMS: CUSTOM SOLUTION: ESGeo sustainability intelligence solution: Eval- Diconium custom sustainability dashboard: The uates ESG-related (environmental, social, gover- advantage of a custom solution is that it can flex- nance) risks and opportunities, integrates new ibly integrate pre-existing source systems, and ESG factors, and streamlines sustainability re- automatically incorporate data via company-spe- porting with a transparent disclosure process. cific workflows and display them in user-friend- ly dashboards together with information on reaching sustainability goals. Example components of a custom solution for sustainability reporting Source: Diconium Navigation Contents | 1. Introduction | 2. Sustainability | 3. Smart Stores | 4. Sustainable Smart Stores | 5. Results of the EHI Study | 6. Sustainability Solutions – Headquarters – Supply Chain & Logistics – Product Range & Production – Stores – Customers & Circular Economy | 7. Conclusion EHI White Paper: Sustainable Smart Stores 2021
Digital Sustainability Solutions for the Retail Industry 28 Central smart energy management BUILDING MANAGEMENT PLATFORM (MICRO- Johnson Controls OpenBlue Enterprise Man- SOFT & ICONICS) The Microsoft headquarters in agement: Monitors and manages devices, build- Redmond currently comprises 125 buildings, 35,000 ings and companies. Proactively analyses build- pieces of equipment and 500,000 data points. Close ing data to improve performance with dashboard to 15 million sqm of office and laboratory space are and app for control. spread over 500 hectares. The campus used many Bosch Energy Platform: Connects to IoT devices different building systems with a peak energy con- in buildings such as existing meters, sensors, and sumption of 100 MW and a yearly cost of USD 60 machines and evaluates data for measurement, million. control and analysis in order to improve energy In 2018, Microsoft decided to integrate the dif- efficiency. ferent systems to make remote monitoring and management possible. This is where the ICONICS WATER MANAGEMENT (ECOLAB, TRUCOST, MI- Genesys64 automation solution came into play, CROSOFT) Global water resources are being deplet- which connects workshops and buildings with com- ed. As such, it is becoming increasingly important pany business systems. A comprehensive building for companies to view water as a company resource management platform was built on the Azure plat- and to pursue risk minimisation, performance max- form with Power BI, SQL Server and Dynamics 365 imisation and cost optimisation strategies for this Field Service. The solution can reduce energy us- resource if they wish to ensure their growth. Mic- age, improve building performance and increase rosoft has joined forces with Ecolab and S&P Tru- work efficiency. The campus and its 59,000 users cost to develop two tools to help companies man- was able to reduce its energy usage by 25 percent age water resources and estimate water risks: and achieve ROI within 2 years. The Smart Water Navigator is a comprehensive Further building and energy management plat- way to manage water. Following a simple 13 ques- forms: tion evaluation, a practical guide is generated that presents intelligent, sustainable water manage- Deutsche Telekom Building Monitoring & Ana- ment practices for individual plants, buildings lytics makes it possible to manage buildings sus- and factories. tainably. Sensors are used to capture and visual- The Water Risk Monetizer provides support in ise energy consumption and the use of building assessing water risks and the impact of reduced space. In addition to monitoring functions, the ap- water availability and quality on operating costs plication also provides analytics to better use re- and revenue. Based on risk-adjusted water prices sources and save energy. ISS, a leading global pro- for incoming and outgoing water, potential reve- vider of facility services, uses the solution to use nue at risk is calculated to identify risks and en- available space, building technology and resourc- able informed decisions about strategies and in- es more efficiently, improve comfort parameters vestments. and lower costs. ABB OPTIMAX® for industrials and commer- cials: Sustainably improves the energy efficiency of sites and manages all elements of a microgrid such as energy production, energy storage, ener- gy distribution, building automation and energy services and marketing. Navigation Contents | 1. Introduction | 2. Sustainability | 3. Smart Stores | 4. Sustainable Smart Stores | 5. Results of the EHI Study | 6. Sustainability Solutions – Headquarters – Supply Chain & Logistics – Product Range & Production – Stores – Customers & Circular Economy | 7. Conclusion EHI White Paper: Sustainable Smart Stores 2021
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