Retailers today face keen competition, reduced profitability of stores due to decreasing foot traffic, rising energy costs, and a need to address corporate sustainability.
Why are retailers going green?
Corporate social responsibility. Protecting the planet. Complying with government regulations. All are solid reasons for implementing energy management and sustainability measures, but the numbers are just as compelling:
- U.S. retailers spend nearly $20 billion on energy each year.
- Based on average electricity consumption and cost in the U.S., 100 stores, each with 10,000 square feet, could generate an energy bill of $1.4 million per year, and energy prices are predicted to rise.
- A 10% decrease in energy costs has the same impact on the bottom line as an 8% increase in sales per square foot.
- On average, an energy management program can deliver savings of 10 to 30% within three years.
- Sustainable brands outperform the market by 120% and tend to increase sales during tough economic times.
Energy savings can build profitability
Contemporary consumer buying patterns are affecting retail sales. With the rise in online commerce, retailers reported a 5% loss in store sales per square foot between 2005 and 2010. Forecasts indicate that online sales should reach 17 to 21% of total retail business by 2016. For brick-and-mortar stores, savings generated by an energy management program can be a hidden asset in offsetting declining sales
Many retailers are using sustainability and energy management programs as a strategy for enhancing brand loyalty, increasing margins, reducing corporate environmental footprint and staying competitive in rapidly changing markets. Such programs help reinforce shareholder trust and boost consumer confidence, which can strengthen brand resilience.
Best practices that work
Leading retailers who launch energy management and sustainability programs follow these best practices:
- Develop sustainability goals that complement organizational goals; identify resources; create an action plan.
- Implement strategic energy sourcing to reduce energy supply costs and mitigate risks.
- Encourage employee action through effective change management programs.
- Track internal metrics: energy, resources, waste and supplier compliance.
- Reduce energy and resource consumption in facilities.
- Communicate sustainability efforts internally and externally.
Technologies that support the program
Retailers can access an enormous amount of data from their buildings, stores and supply chain. The challenge is to collect, aggregate, and interpret this big data and transform it into actions that improve business performance.
Energy and sustainability programs rely on efficient equipment and systems that control a store’s energy use and collect data needed for identifying efficiency opportunities. “Software as a service” applications compile energy, resource, and supplier data, and provide access to a store’s detailed key performance metrics as well as enterprisewide data.
Six steps to a customized program
Energy management and sustainability work hand in hand: Reducing energy use has a positive financial impact and can help fund sustainability projects. To put a program into action:
- 1. Develop a sustainability strategy detailing goals, benefits and risks.
- 2. Implement strategic energy sourcing to identify savings and reduce operating expenses.
- 3. Assess and audit current equipment and operationstopinpoint inefficiencies.
- 4. Collect energy and resource data to generate reports for stakeholder visibility.
- 5. Remotely monitor energy and resource consumption to optimize equipment and processes.
- 6. Identify supply chain risks to compare and evaluate supplier profiles.
Energy management and sustainability programs are long-term initiatives that deliver a number of benefits to retailers. Success in these areas will improve the bottom line, increase stakeholder approval and customer loyalty – and contribute to outperforming the competition.