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Real Estate

Catherine Choo discusses ESG in grocery retail

8 MIN READ May 25, 2022

During a recent conversation with Catherine Choo, CIO of Greenman Investments, Choo spoke about areas they have been focusing on for 2022 and beyond, innovation in grocery retail real estate, launching their first vertical farming project and some very interesting applications for the metaverse. 

Choo will be a co-chair at the Deutsche GRI 2022 where she’ll further elaborate on these topics during the Retail in the Digital Information Age session.

1. In 2022, what are the areas of focus for Greenman?

Well, I suppose for a little bit of background, Greenman is part of the Greenman group, so we are Europe's only, I think, fully integrated grocery anchored real estate, investment fund and management group. So the largest fund Greenman OPEN has over 1 billion of grocery anchored real estate across Germany. We're very much focused on grocery anchored real estate trends. And we find that these trends are really driven by the consumer and our tenants are some of Germany's leading grocers. We've Kaufland, Edeka and REWE, and we see them altering their concepts as they listen to what the consumer wants.

I suppose a big trend that we're really seeing at the moment is this focus on sustainability, environmentally friendly options, environmentally friendly real estate, and we're taking that into account. We’re really focusing on this in 2022 and understanding how we can best maximise our funds' physical infrastructure to support our ESG initiatives.

In 2021 Greenman OPEN became a light green fund under the EU's Sustainable Finance Disclosure Regulation and in order to do that we had to set some targets, some goals that we're working towards, and one of those was that the Greenmen OPEN portfolio will be carbon neutral by 2040. To do that, we've put a few different steps and stages in place. We're a grocery anchored retail real estate and, unlike office space or those really complex residential properties, our buildings are relatively simple and similar across the whole portfolio, and as such, any changes that we need to make across our portfolio, they're pretty standard, they're relatively easy to implement, in order to become more environmentally friendly, more sustainable.

We're completing audits at the moment on our properties. We're trying to understand what our carbon footprint is, and you can't monitor unless you can measure it. So we're really trying to understand at what point we're at. Then we're going to put different steps and stages in place over the next few years to help us reach our goals. 
Some of the really interesting ESG projects that we have currently running in this year is our vertical farming project, Potager Farm. We have a team of four people in Berlin now working on it and I think that the first vertical farm is going to be delivered in August of this year. It's going to be a really true urban farming location, on the 1st floor of one of our retail centres in Berlin. 

Considering the economic climate, energy shortages and price hikes in energy, another timely project we are working on is called Greenman Energy. We're going to be implementing solar panels, we're going to be putting in hyper fast charging EV stations in our retail centre car parks, and we're going to be generating electricity and that’s going to be sold to the tenants or can be sold back to the grid. And potentially, over the next few years, we're going to be able to certify and sell credits linked to carbon savings generated by EV and the charging activities and hopefully it’s going to generate additional income for the fund.


 

2. What technology trends do you believe will be implemented in the upcoming years in retail and in grocery retail?

We put a lot of time and effort into trying to understand the trends affecting the grocery market and trying to understand where the market's going to be in 5, 10, 15 years’ time, so at the moment I would say that the industry is going through a little bit of a fluctuation, with post COVID, with the war in Ukraine and there are certain consumer led trends and disruptors that are really changing the trajectory of the industry.

Key areas of focus, I suppose convenience would be one. We're seeing a lot of discussions about the rise of instant delivery startups for grocery and trying to understand how that's going to affect the grocery real estate market, and we're seeing partnerships with the grocers, potentially solving last mile delivery problems, which I think are quite interesting and some of the technology that will be implemented there, whether it's online platforms to support these services, whether it's increased use in robotics and warehouse automation. We're also going to see a lot of the checkout free stores and smart cards that are going to make the shopping experience more frictionless and more seamless.

Technology wise, the continued rise of data, AI, the better understanding and use of data to inform business decisions and more targeted marketing personalised promotions, tailored stock in smaller stores to suit catchment areas and then obviously, as I mentioned before, the massive trend that is sustainability and health. 

So in regards to technology, understanding how we can be more transparent on where produce comes from and what those food miles are, what kind of health benefits the produces might have, and understanding how we can clearly and very transparently reflect that, whether it's through using of blockchain, perhaps, or even the metaverse could potentially be a solution for that as well.


 

3. How do you see the use of urban and vertical farming as a way to tackle some of the pressing problems in the supply chain? And do you believe that could lead to alternative uses of warehousing as it could reduce “food miles”?

Urban vertical farming it's a massive topic for us at the moment, and I suppose supply chain issues have really come into the spotlight now, after COVID and with the war in Ukraine. Through our research, and I think It's quite commonly known that conventional agriculture alone can't cope. I think the statistic is that by 2050, 70% of the world's population will be living in an urban environment coupled with food consumption habits that really aren't sustainable. I think 33% of all food produced is wasted. 

The fact that we can build these urban vertical farms, locating them right in the heart of urban communities, right beside the grocers, right beside people who are consuming that produce. It's going to support a faltering supply chain, it's gonna reduce food miles to zero and, hopefully, it will help reduce food waste as well.

So, these vertical farms, the crops are grown in a controlled and closed environment and that means we don't use pesticides. And that means crops don't need to be washed as a result, which means that they have much longer shelf life, helping with food waste or helping to reduce food waste.

With vertical farms, not only are we able to produce crops that last longer and shorten food miles, but we can produce crops much faster, that have greater flavour because we can optimise the light spectrum and provide the perfect environmental conditions for growing the crops and ultimately produce faster, fresher, tastier, healthier, more environmentally friendly produce. So, I think with our urban vertical farms one can really strengthen that supply chain and can provide another tool in that fight against supply chain disruption and supply shortages. 

In regards to alternative uses of warehousing, at the moment, we're implementing our 1st farm on the 1st floor of one of our retail centres in Berlin, so it's not even outside. It's not in a car park, it's within the retail centre. 

And there are endless opportunities for urban vertical farm locations, as long as access is well considered, potentially, warehouses with good links to grocers, situated in cities close to the consumer, they can all be options for locations of vertical farms. Our farms are highly automated and it's this automation that really helps to scale our farms. 

Warehouse automation technology, linking that into the vertical farming operations It's going to really help overcome any issues regarding scaling up and help us make use of pre-existing urban spaces.


 

4. What is your opinion on how the metaverse fits into the world of retail and especially grocery anchored retail or vice versa?

The Metaverse has become such a huge buzzword lately and people are really bandying about that word and they're not really thinking about real life, real world applications.

We recently held an event in Dublin for our Greenman OPEN fund and we had Shora Shirzad, CEO of Mapstar, a German company dealing in the Metaverse come and speak on our panel and he was very very interesting. He delved into some of the practical use cases for the Metaverse and I think that that's key, taking it out of this virtual reality, buzzwords that people don't really know what to do with, and showing that it can have really practical and useful applications in the real world. 

Fitting it into grocery retail, there are a few applications that come to mind. One, understanding that you can do education, training, remote assistance, remote training all through the metaverse, you can simulate the store, you can simulate the warehouse. You can walk employees through that store, and they get an opportunity to practice in a virtual world that simulates the physical world, improving efficiency, improving productivity. 

I think that's key, that it's not just a virtual world, however, it's that combination between the physical and the virtual world. So I see that it could be very useful in helping with transparency and information that I'd mentioned earlier. So if you can imagine layering Information virtually onto a physical setting, maybe you pick up your bread or your fruit and you will be able to see virtually where it comes from, what the food miles have been, the health benefits of that fruit virtually overlaid on the physical world, and I think that could be a really interesting application for the metaverse. And then, obviously, you can't really leave out the opportunity for immersive sales and marketing, virtual billboards, virtual advertising offers and sales linked to products and places within the physical world. I think they could all be really leveraged in the retail industry, especially in grocery retail.

By Roberta Gomes

Contact

Catherine Choo
Catherine Choo
Chief Information Officer
Greenman
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