With retailers looking to encourage consumers back onto the high street in the wake of the pandemic, sustainability is firmly at the forefront of the agenda. From product packaging through to store design and fit-out, the beauty sector is well aware of the scrutiny it is under.
Conversations around sustainability have often centred around the retailers themselves and the physical environment has sometimes been overlooked. Looking to the future, property developers and landowners need to support and work with their occupiers to help create more energy efficient stores – whether that is in the construction and design of the building itself or helping occupiers to reduce carbon emissions and energy consumption in areas such as lighting, heating/cooling and water consumption to create more sustainable retail units and centres. More and more leases contain "green lease" provisions that encourage landlords and tenants to work together and collaborate in environmental initiatives and in the reduction of their carbon footprint. It is hard for tenants to resist such clauses when such initiatives are in the spotlight and arguably come with multiple benefits for all parties.
It is a time for retailers and developers to get creative and work alongside architects in creating spaces that are energy efficient whilst supporting the brand. Lush's Liverpool flagship store is a great example of a building that was redesigned with the environment, brand and design at its centre, from responsible sourcing of materials to restoring and repurposing of recycled materials where possible. Several of its stores across the globe are now entirely plastic free 'Naked' stores.
Large landowners are now becoming much more active in this sphere and the New West End Company, a business partnership of retailers, restaurateurs, hoteliers, galleries and property owners operating in and around the West End, are taking the lead with a number of schemes aimed at reducing waste and energy consumption as well as improving the energy efficiency of the buildings in the area, setting ambitious targets. These schemes involve owners, occupiers and other property professionals working together through collaboration. Retailers shape the streets and area in which they are located and going forwards, they will be paramount in creating a wider sustainable environment for the future.
For beauty brands taking on retail premises, there are a number of key sustainability-related points to consider before signing a new lease. Unless exempt, all premises have to have an EPC with a rating between A and G. An EPC is an important indicator of the energy efficiency of a premises. Since 1 April 2018, the minimum energy standard regulations have prevented landlords granting a new lease of premises with an EPC rating of F or G. From 2023, it will be unlawful to continue to be the landlord pursuant to an existing lease of premises with an F or G rating, no matter how long ago such a lease was granted. In the future the Government intends to raise the minimum energy standard and it has been proposed that this is done in a phased approach, with an interim milestone of grade C by 2027 and then grade B by 2030. In light of this, where a premises has a low rating, parties should consider what can be done to elevate the rating.
In terms of store design, ethical focussed retailers are looking to fit-out their premises in a sustainable yet cost-effective way. There have been numerous shops across the beauty sphere that have shown how effective this can be in echoing a brand's ethos and core values, without skimping on quality. Superdrug recently opened its 'most sustainable' store in Serpentine Green shopping centre in Peterborough, featuring fully recyclable signage, reduced lighting, highly efficient air conditioning and a waste management target of 5% to landfill. Similarly, Lush's Liverpool flagship store included the responsible sourcing of recycled materials such as reclaimed FSC certified timbers, and the use of waste-minimising technology such as tagless product scanning. When renovating its Oxford Street store, The Body Shop opted for green materials such as reclaimed wood, recycled plastic, zinc façade cladding, EKOply worktop surfaces manufactured from 100% recycled material destined for landfill, and even upcycled car seats for shelving units and a DIY shower gel refill station.
Lastly, rather than resisting green lease provisions, parties should look to embrace them where possible, agreeing something that is going to work for both parties going forwards.