Cutting energy costs by 20% gives the same bottom line benefit as a 5% uplift in sales
How increased energy efficiency cuts your overhead – and boosts margins and profits
Growing competition from online retailers and rising input costs mean margins are shrinking across the retail and distribution market. According to Deloitte, the net profit margin across the top 250 global retailers in 2016 was just 3.2%1.
That means simply staying in profit is a major challenge and reducing costs for your retail or distribution business is crucial. One key area where you may be able to reduce overhead is energy. It’s been estimated that reducing energy costs by just $1 is equivalent to increasing sales by $592, and other estimates suggest that for retailers, cutting energy costs by 20% can represent the same bottom line benefit as 5% uplift in sales3. Any reduction in energy costs can have a significant impact on your profitability.
Why you need to look at your energy use now
Energy costs are due to rise – while your energy needs may actually be increasing. You’ve probably invested in technology such as self-serve terminals and automation to drive efficiency.
In the cold chain market, refrigeration costs already account for 60% of the energy bill for supermarkets – up to 70% for cold chain distributors4. It means that energy efficiency and access to scalable, low-cost energy supply is vital simply to keep checkouts and your business open.
Fortunately, new technologies and new approaches to managing energy can help retailers and distributors improve efficiency and reduce costs – but you need to understand and act on them now.
New energy solutions that can help you cut your energy bills
Central to cutting energy costs is visibility into how energy is currently used and where the inefficiencies are. Real-time energy sensors and analytics solutions can help you see how to save on energy costs.
Lighting is often one of the first areas to be identified and accounts for 20% of energy consumption in an average retail environment3. Replacing older lighting technologies with LED can improve efficiency by up to 90%5.
Poorly maintained equipment is another factor that is often pinpointed. Effective maintenance of heating and cooling systems is essential, while simply cleaning ventilation systems can increase efficiency by as much as 25%3.
There are also technologies that actively reduce energy costs. On-site generation technologies such as cogeneration and solar can cut your demand on grid energy, while demand response solutions optimize on-site assets such as refrigeration units to minimize consumption and actively generate payments from the grid.
Awareness of technology is not enough. Costs and a lack of expertise mean many retailers struggle to deploy it, and to succeed, you need a coordinated energy strategy and expert support. We helped a US supermarket chain reduce utility bills by $3.7M/year after implementing energy insight solutions, energy storage and refrigeration system adjustments.
The experience we have gained working with leading retailer and distribution companies can help you make better use of energy to support your profitability.
Download our article to discover more about how the right energy strategy can enable you improve profitability by driving efficiency. We take you through the steps you can take now to harness the new energy solutions that deliver the increased efficiency and profitability you need for the future.
1Global Powers of Retailing Top 250, Deloitte, 2018, 2www.energystar.gov, 3The Carbon Trust, April 2018, 4www.dexma.com, 5Centrica Business Solutions - Commercial LED Lighting web page