Doing Good, While Doing Well

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Why Energy Efficiency is a Win-Win in the Grocery Business

Running a grocery store in today’s world of consumer expectation can seem like a daunting task: provide a seemingly unlimited amount of inventory from the most popular to the most niche (for that rare time a customer might be looking for something exotic for a new recipe).

As might be well known, due to this modern expectation, plus the downward pressure on prices due to aggressive competition, the margins between revenue and profit are notoriously narrow.

This is why a grocery-store management team must be looking for areas to cut overhead. New technology should be scrutinized and upgrades executed when possible. One such area is the low-hanging fruit of energy efficiency.

Per Energy Star, “supermarkets in the U.S. use, on average, use around 50 kilowatt-hours (kWh) of electricity and 50 cubic feet of natural gas per square foot per year — an average annual energy cost of more than $4 per square foot.

For an average-size (50,000 square foot) store, this equates to more than $200,000 annually in energy costs and results in 1,900 tons of CO2 being emitted into the atmosphere — equivalent to the emissions from 360 vehicles in one year!”

Refrigeration and lighting account for over 50 percent of total energy use in the average supermarket (Figure 1), making these systems the best places to start looking for energy efficiency opportunities. Especially since the profit margins of supermarkets are so thin, on the order of 1 percent, ENERGY STAR estimates that one dollar in energy savings is equivalent to increasing sales by $59.

Although energy only represents about 1 percent of total grocery store costs, it is about equal to a typical grocery’s profit margin. Therefore, a 10 percent reduction in energy costs can mean a 10 percent increase in profits.

In the highly competitive, low margin world of food retail, this might be the very definition of low-hanging fruit. 

And here are the numbers….                                                                                     

Related Bonus! Bill does the numbers based on a FridgeWize case study.