When we’re talking about retail, we’re describing one of the largest and most diverse segments of the economy – more than 650,000 buildings including everything from the corner mom-and-pop store to the highway megamall. Collectively, these retail buildings spend more than $20 billion a year on energy. The consulting firm McKinsey recently reported that energy is the fourth largest operating cost for retailers – behind only labor, rent and marketing – and accounts for between 4% and 9% of those costs.
The good news for retailers is that energy is the only one of those four top operating costs that can be reduced without having a negative impact on the store’s operations or the customer’s experience. Lowering a store’s energy bill is arguably the most cost-effective way of trimming operating costs and increasing profit margins without the need to increase sales. According to a 2018 study by the international consulting firm Carbon Trust, a 20% cut in energy costs can represent the same bottom line benefit as a 5% increase in sales.
Here are some quick and easy efficiency measures retailers can take to immediately reduce their energy use and start saving money:
1) LEDs Lead the Way: Lighting can account for 30% or more of a non-food retailer’s electric bill. Upgrading to LED lighting can cut energy costs significantly, first because they use 30% less electricity than fluorescent fixtures, and second because they can last three to five times longer than fluorescents.
2) Controlling the Climate: Heating, ventilating and air conditioning is the single largest energy expense for a non-food retailer. Depending on the size, age and efficiency of your current HVAC system, a new high efficiency system could reduce your heating and cooling costs by 20% or more. Even if you can’t afford a complete replacement or retrofit now, properly maintaining your HVAC system – like regularly changing filters and checking for leaks – can still help lower your bills.
3) Sensors make sense: Installing occupancy sensors in areas of your store that are not always in use – like storage rooms, restrooms and employee break areas – can help control lighting, cooling and heating costs by automatically turning off lights and adjusting temperatures when those rooms are unoccupied.
These measures can benefit retailers beyond simply reducing their energy costs. For example, LEDs provide the flexibility to design a lighting system that reflects their store’s character and creates customer comfort by precisely controlling the elements that have the greatest impact for retailers: Brightness, temperature and color. And an HVAC system that keeps the store’s environment comfortable leads to greater productivity by employees and longer store visits by customers.
These tips are just the starting point. An Ecology Action energy efficiency expert can recommend other measures to reduce your store’s energy use and provide guidance on government and utility-sponsored incentive programs that offer rebates or financing options.