It’s little secret increasing electricity prices are hitting every Australian hard, and the retail sector is far from immune. In fact, small business, including retail, are experiencing energy price hikes far above the average Australian household, with news.com.au noting some businesses have been slugged with a rise of up to 120% in recent years.
The good news is there are a host of strategies every retailer can take, and they’re a lot easier than many imagine.
Electricity price hikes have been a recurring theme across Australia, hitting the headlines over recent years. With more pending, Chief executive of the Council of Small Business Australia, Peter Strong told news.com.au in July last year it was “the biggest business crisis” he’d seen in his lifetime, surpassing even the GFC.
“What we’re hearing is terrible. We’re seeing closures have already started, I fully expect there will be more closures and staff put off. When you’re running a small supermarket, where do you find an extra $70,000?”
Long before the electricity price increases, Climate Works Australia was pushing for retail to reduce its carbon footprint. In a seminal Retail Sector Summary Report released in 2011 they explained the retail sector was expected to produce approximately 2.52% of Australia’s total greenhouse gas emissions in 2020.
In the US, McKinsey noted energy is the fourth largest store operating cost after labour, rent and marketing, representing 4 to 9% of in-store operating costs.
With prices on the increase down under, chances are it’s an even higher percentage here, so what can retailers do?
Reducing electricity costs
Climate Works Australia outlines a series of actions every retailer can take to lower their carbon footprint and reduce electricity costs. Many involve minimal capital expenditure and have an immediate effect.
They explain: “The emissions from the Retail sector are associated with energy consumed in heating and cooling, lighting, and appliances.
“This includes the consumption of gas, wood, oil and electricity. Of existing commercial buildings, the Retail sector is expected to represent approximately 28% of energy consumed in 2020. This is followed by Offices and Education, representing 20% and 11% respectively.”
They note reducing costs comes down to three key factors:
- Improved efficiency through technology
- Energy waste reduction, and;
- Construction and refurbishment of new buildings.
With that in mind here are the actions you can take…
Audit your store
A careful walk around your store will reveal a host of areas where you can take small but significant action. Along with noting systems you can put in place to reduce energy consumption, it’s worth keeping an eye out for traditional items that could be improved.
These include things like staffroom fridge or even your security pedestal system. Both of these innocuous appliances can be upgraded now or in the future to operate more efficiency.
For example, the Crosspoint AM pedestals use about 20% of the power that some competitors’ pedestals require and can be set to run in “green mode”.
To explain further, in this scenario the Crosspoint pedestal features one AM transceiver, and two AM receivers. If it runs in one store for 363 days of the year at a cost of $0.3 per kilowatt (local rate), that equates to annual savings of $486.13 running in normal mode, or energy savings of $4861.30 during 10 years of operation.
In green mode, the savings are even greater, resulting in annual savings of $502.46 annually, and $5024.65 over a 10-year period.
Meanwhile, when auditing your store, these are the other areas to watch:
Modern technology like low energy lightbulbs, timers and sensors offer a wealth of opportunity to reduce the energy required to light the average store. Simple measure to reduce the cost of lighting include:
- Replacing old lightbulbs with energy efficient options
- Auditing your lighting and repositioning it to have a single light cover more ground.
- Set lights to operate on a timer to ensure they switch off when the shop is closed
- Install sensors in low-use areas (like bathrooms) so lighting only activates when someone is in the room.
- Label light switches so staff only turn on what they need.
Heating and cooling
With retailers seeking to create a welcoming and comfortable ambiance, temperature control is one of the biggest costs for the retail environment. Options to increase efficiency include:
- Improving or retrofitting insulation
- Upgrading HVAC systems to more energy efficient ratings
- Having a closed-door policy or installing automatic doors to reduce temperature loss
- Using natural ventilation
- Downsizing your HVAC after implementing options like insulation.
Whether your point of sale is left on standby overnight, or the appliances within your shop are aging, upgrading to more energy efficient options and taking heed of their usage also works to reduce electricity costs.
- Switching off displays, laptops, computers, signage and appliances overnight, rather than leaving items on standby.
- Using smart technology that enables you to remotely shut appliances down.
- Retrofitting energy efficient water heating
- Looking to more energy efficient product offerings for refrigerators, security antennas, displays, ovens etc.
Habit is one of the major drivers of reducing energy usage, and benefits can be enjoyed simply by educating your staff and implementing systems and procedures.
- Switch off lights in storerooms or bathrooms after use.
- Have a closing procedure that includes turning off appliances, the POS, displays and lighting.
- Alter the instore thermostat the most energy efficient yet comfortable temperature. In Australia, Canstar Blue recommends 25 to 27 degrees for cooling in summer, and around 18 to 20 degrees for heating in winter.
- Close doors to unused areas or the exterior when heating or cooling.
- Use natural ventilation when the environment suits
Climate Works notes simple improvements like those above have the potential to significantly reduce the energy consumption of retail.
“If fully implemented, the measures included in this report could result in an average energy savings of 18% per year across the opportunities. This represents total annual savings of A$1 billion across the Retail sector with energy waste reduction, retrofitting of HVAC systems and appliances etc representing the largest savings.”
They further tip these improvements come at an estimated cost of just $2 per square selling metre.
Meanwhile in the UK, the Carbon Trust notes a 20% cut in energy costs represents the same profit savings as a 5% increase in sales.
But it’s not just in monetary figures where going greener reaps a return, with statistics indicating 93% of global consumers expect more of the brands they use to support social and environmental issues.
The upshot is, an eye to energy efficiency in retail just makes financial, environmental and customer service sense.