What if, with every purchase you made, you got a receipt indicating not just the price you paid, but the energy that was used to get that product to you? Chirayu Belthur, senior analyst at Ugam Solutions, in conjunction with SUMANI’s own Aksheya Chandar, briefs us on an emerging concept in retail analytics.
On her way back from work at a consulting firm in New York City, Lisa decides to swing by the nearby Walmart in North Bergen to pick up groceries for the family as well as cup of yogurt on the go. She swipes her credit card for $48 and heads on home, happy that she was able to make the most of the everyday low price deals. But does $48 account for everything Lisa and her family have consumed?
Any economic transaction is not solely monetary in nature. There is an important and often subverted dimension of energy – the primordial necessity for life. Every human interaction for that matter, economic or not, is characterized by an energy exchange. Since energy is the most basic and purest form of sustenance, would it not be wise and beneficial for everyone if we could track its path? Not only would it help one to optimize its usage, it would also help us to identify leakages, reduce wastage, and improve storage and recycling capabilities.
Economists might argue that the $48 amount paid by Lisa combines in itself and reflects the net value of resources consumed. But by assigning a numeric amount to it, we lose a sense of responsibility and gratitude to nature that has endowed us with the resource in the first place (this has been deeply explored by Prof Dan Ariely in his book “Predictably Irrational”). In the absence of gratitude and responsibility, we tend to disregard the actual value of the resource, leading to unnecessary wastage on a domestic level and increased stress on the environment on a global level. If Lisa wished to be a responsible citizen, she did have the choice to opt for sustainably certified products and take on the premium costs associated with sustainable goods. Not many people work as high-flying consultants though and are likely to find “sustainable shopping” too expensive. The question therefore is finding a way to influence shopping behavior itself in addition to specific product choices.
So what can we do to ensure that we comprehensively understand the value of our goods? A more detailed receipt! A typical receipt from a retailer like Walmart details out the products purchased, the quantity of each item purchased, the listed price for each item, total price for each item, savings due to discounts, loyalty points earned etc. However, information that is conspicuously absent is the energy footprint. We do not see the amount of energy which went in manufacturing the product, in procuring the raw material from nature, energy and resources invested in packaging and potential effects of inefficient disposal. Having these details on the receipt will not only provide additional information to the consumer, but would deter waste.
From an analytics standpoint, having such kind of information available unlocks a realm of possibility to solve sustainability related problems. Apart from the array of descriptive work like tracking the energy consumption, wastage, categories or products, which are the most energy intensive ones to produce, it provides a solid platform to carry on predictive analytics. This would include prediction of energy consumption by a family on a monthly level. Extrapolating it to a country and global level can provide us with accurate and useful information to estimate the energy consumption patterns in the times to come. We can also identify cohorts of customers based on energy consumption to identify the group that is more intensive on consumption as well as most susceptible to wastage.
The broader goal of a smart receipt would be to educate consumers, either through the direct effect of a feeling of shame every time you see a receipt with an unfathomable energy footprint attached to it (Imagine being told your shopping basket required 100 pounds of coal to manufacture!) or through innovative outreach programs by the marketing program. With the evolution of the Internet of Things, thanks to Alexa and Google home, it would also be possible to regulate energy consumption of household in real time rather than a retrospective approach. The expectation is that customers proactively alter their shopping trends so as to minimize their basket footprint. Whether this manifests itself as a shift to bulk shopping, dietary changes or any other behavioral modification remains to be seen.
While the idea may seem romantic with immense potential to instigate behavior change, a check on the current state of data integration and availability shows that those interested in making this idea a reality are faced with a daunting task. Companies will have to find the right balance between shifting consumer focus to a specific set of products and bringing about more sustainable shopping habits. Mapping out the energy footprint of a product itself is a challenge- it may be easier in more vertically integrated situations, but otherwise calls for a great deal of collaboration between all actors across the supply chain. This is where sustainability domain knowledge is an important asset that complements analytical capabilities.
To conclude, I would like to stress the fact that we are as much part of an “energy economy” as we are a part of the conventional monetary economy and the energy economy will dictate a lot of dynamics on the global playing field. We should be cognizant of this and try to develop strong, data driven decision-making muscle in this field. This will not only lay down the road map of future sustainability studies, but also make sure that this permeates across to all citizens of earth, making humanity more responsible!
-Chirayu Belthur, Senior Analyst, Ugam Solutions
If you are interested in the smart receipts concept, Chirayu can be reached at firstname.lastname@example.org to discuss it.
*Trendster is a voluntary, crowd-sourced initiative facilitated by SUMA Net Impact. It does not represent the collective views of Columbia University, the Earth Institute or Net Impact