When does store consolidation lead to higher emissions?

The design of retail networks has potentially significant impact on their emissions. While having fewer “big-box” stores is usually more emission-efficient for a retailer, it leads to longer shopping trips for consumers and thus higher consumer travel related emissions. This interaction is further complicated by consumers' price sensitivity and aversion to travel. In the last decade, retailers are increasingly exerting efforts to reduce their emissions either voluntarily or motivated by policies such as penalties on emissions. In this paper, we explore the impact of a retailer's emission reduction initiatives on the emissions of the consumers and its supply chain. Scenarios under which the retailer either acts as a price taker or a price setter are investigated. In both scenarios, we show that increased retailer effort to reduce its own emissions can lead to higher consumer emissions and in turn higher total supply chain emissions. This phenomenon is most likely to occur and most significant when consumers' fuel efficiency is low, and when consumers' perceived travel cost and/or cost sensitivity is low. Furthermore, we show that supply chain emissions may increase with an emission penalty under practical penalty values.