Decarbonising the retail sector: executive summary

As described in the Shared Strategic Vision for the Retail Sector, the Welsh retail sector is an important part of the Welsh economy, supporting:

• jobs
• economic growth
• local communities

It is highly diverse, ranging from large international chains to local independent shops. As highlighted in the Retail Forum Action Plan, it is also one of the largest private sector employers in Wales, forms a significant part of the tax base, and contributes about 6% of GVA.

However, the sector is also associated with substantial greenhouse gas emissions, making decarbonisation an important policy priority. At the same time, as described in the Shared Strategic Vision for the Retail Sector, retailers are navigating a rapidly changing economic landscape. This has been shaped by shifts in consumer behaviour, the adoption of new technologies, and ongoing workforce pressures. Together, these environmental and economic challenges are reshaping how the sector operates.

Recognising the sector’s significance, Welsh Ministers under the previous administration established the Retail Forum in 2021 to support the development of a sustainable and resilient retail sector. In addition, support from Business Wales and initiatives such as the Green Growth Pledge (Business Wales) and the Accelerated Growth Programme (Business Wales) aimed to help retailers, particularly small businesses, to adopt practical decarbonisation measures and contribute to the transition to a low-carbon, circular economy.

Against this background, the Welsh Government, under the previous administration, commissioned Alma Economics to undertake research into the decarbonisation initiatives currently being adopted by small retailers in Wales. The project was intended to contribute to the delivery of the Retail Forum’s 2023 Retail Action Plan, specifically the action to explore options to support small business premises to utilise renewables and adopt decarbonisation initiatives. 

To achieve this, the project sought to answer the following core research question: What decarbonisation initiatives are currently being undertaken by both large and small retailers in Wales, which could feasibly be adopted by smaller retailers?

The research adopted a mixed methods approach that included:

• a review of existing literature and evidence 
• a Call for Evidence survey issued to retailers which received 9 responses
• in-depth interviews undertaken with 8 retailers that have been developed into 8 case studies (see separate Annex). 

Most respondents were independent retailers running a single shop, with only a minority comprising large chains (10+ shops or franchise retailers), e-commerce/online-only retailers, and wholesalers operating UK-wide. Geographically, many business respondents were based in mid Wales, with others distributed across southeast, southwest, and north Wales. A minority operated UK-wide while maintaining a presence in Wales.

Across both the survey and the interviews, 18 decarbonisation initiatives were identified. They range from improving site-level energy performance to promoting low-carbon behaviours, reducing waste, and developing more sustainable supply chains. Using the British Retail Consortium (BRC) Climate Action Roadmap as a guiding framework, initiatives were categorised across 5 decarbonisation pathways:

• one related to embedding emissions data into decision-making
• 5 focused on reducing emissions from retail sites
• 2 initiatives involved developing low-carbon logistics
• 3 related to sourcing sustainable materials
• 7 initiatives promoted low-carbon behaviours among employees and customers

Most had been implemented in the past 1 to 3 years.

Development of decarbonisation initiatives

The motivations for developing initiatives in most participating businesses typically included:

• alignment with business values 
• pragmatic goals around cost control and efficiency 
• resilience in the face of rising energy prices and economic uncertainty. 

Initiatives were not typically driven by regulation, incentives or formal governance triggers. Many participating businesses had started by implementing energy efficiency measures and described progressing incrementally, often framing sustainability as part of a wider strategic approach to improving business operations and performance.

Some retailers highlighted that renewable energy projects, like solar panel installations, could take around a year to plan, fund, and implement, while smaller infrastructure upgrades, such as air system replacements, could be completed in weeks. For most participating retailers, sustainability initiatives were ongoing and embedded in daily operations, from recycling packaging to sourcing pre-loved or recycled materials. Implementation relied on practical business skills, careful planning, and understanding the market in which the business operates.

Financing approaches varied, but in general, the businesses financed their decarbonisation initiatives through a mix of:

• internal investment
• loans
• small grants (e.g. Development Bank of Wales loan scheme for energy efficiency upgrades and renewable energy installations)
• self-funding

Low-cost measures, such as packaging reuse, pre-loved sales, and recycling schemes, were largely cost-neutral, sometimes supported by donations or self-funded.

Barriers and enablers

The capability to adopt decarbonisation initiatives of the retailers engaged in this study was shaped by a balance of barriers and enabling factors.

Most participating retailers faced several barriers that can slow progress, particularly for small businesses operating on tight margins. This included:

• access to knowledge and technical support 
• time and staff capacity 
• limited funding and financial capacity 
• supplier and partner constraints, with most retailers describing difficulties in verifying environmental claims and ensuring that products met expected sustainability standards 
• regulatory complexity and administrative processes - delayed project timelines 

On the other hand, retailers leveraged different enablers that allowed them to succeed in implementing their initiatives. Most retailers expressed that support structures – such as advisory services and accessible guidance were very influential in shaping planning and development. This included particular reference to those provided by Business Wales and, in some cases, specific programmes like the Green Growth Pledge (Business Wales). Cited activities included attending webinars, training sessions, and information events covering both general business development and environmental topics.

In addition, practical operational factors such as their premises’ layout were frequently cited as success factors by retailers. For example, certain building types were noted as more suitable for the installation of solar panels and embedding of sustainability into everyday operations. Community engagement and associated community support, the development of clear, written environmental policies, and structured support programmes or complementary initiatives from non-retail stakeholders like local authorities and shopping centres were also cited as enablers.

Impacts and outcomes

Participating retailers generally perceived that their initiatives were delivering tangible environmental benefits, particularly in relation to waste reduction and improved operational efficiency. Fewer impacts were reported in areas such as organisational culture, regulatory compliance, or supply chain transformation, largely reflecting the operational focus of the initiatives undertaken.

Some of the impacts cited included:

• reduced emissions, energy use and associated cost savings 
• lower emissions
• improved waste management
• stronger customer engagement and brand reputation 
• diversion of items from landfill and extended product lifecycles 
• generated cost savings that can be reinvested in the business

Replicability and sustainability

All the engaged retailers highlighted that while many sustainability initiatives have the potential to be replicated, their practical adoption depends on financial capacity, available expertise, and the scale of the business. Lower-cost actions (such as LED upgrades, packaging reuse, pre-loved sales, and upcycling), were seen as relatively easy to implement and replicate across the sector. Other initiatives (including specialist recycling schemes, repair services, or the use of natural dyes), were considered feasible but typically required additional time, skills, or moderate levels of investment. In contrast, more complex and capital-intensive projects (such as renewable energy installations and advanced energy systems), were viewed as scalable mainly if businesses have access to substantial funding, external technical guidance, and sufficient confidence in achieving long-term financial returns.

Taken together, the findings provide evidence of small retailers in Wales actively contributing to the transition to net zero through a range of practical actions embedded within their day-to-day operations. However, the pace and scale of adoption in the cases covered in this research depended on the wider policy and support environment in which businesses operated. Access to finance and technical support may be particularly important for small and medium-sized enterprises (SMEs), especially when implementing renewable energy or advanced energy system upgrades.

Business Wales was repeatedly cited as a valuable source of guidance, helping retailers navigate technical options and identify appropriate solutions. Non-retail stakeholders, including local authorities and shopping centre operators, can also play an important role in creating enabling environments that support sustainability efforts. Continued access to clear guidance, targeted financial support, and practical expertise may therefore be important in enabling more retailers to expand their decarbonisation initiatives and contribute to wider net-zero ambitions.

Full Research Report: Barahona, M.P. (2026). Decarbonising the retail sector in Wales. Cardiff: Welsh Government, GSR report number 105/2026

Views expressed in this report are those of the researchers and not necessarily those of the Welsh Government.

For further information please contact:

Economic Policy
Economic Strategy and Green Growth Directorate
Welsh Government
Cathays Park
Cardiff
CF10 3NQ

Email: EconomicPolicy@gov.wales

Social research number: 105/2026
Digital ISBN: 978-1-80853-597-0

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