Beyond the low-hanging fruit: What’s next for retail energy and sustainability?
If you were to read an article about leaders in savvy energy and sustainability management programs and initiatives, who do you think that would be? Government? Manufacturing? Actually, it’s the retail industry, which has been a leader in energy efficiency investments since 2008.
For years, thin margins and increased investor expectations combined to force conservative technology and operations budgets on retailers. Ironically, as it relates to energy management, the exacerbation of those problems during the Great Recession sent retailers looking to energy efficiency investments in an effort to reduce costs. As early adopters of energy and sustainability management initiatives, retailers are continuing to enjoy the rewards of reduced operational costs even as the economy improves.
According to Ecova’s 2015 Energy Outlook: Findings from Retail Professionals report, cost is the number one driver of energy and sustainability initiatives in the retail industry, followed by regulation and investor/stakeholder concerns. Historically, many retailers have focused on low-cost initiatives that have a quick return on investment, such as lighting. In fact, 44 percent of retail respondents indicated that lighting was the smartest energy and sustainability investment they made in 2014, which was more than 50 percent higher than the rest of the industry, with only 28 percent.
As initial programs reach maturation, the retail industry is left asking, “What’s next?” While retailers will continue to pursue the remaining low-cost initiatives, there’s also a strong desire to focus on holistic, long-term energy and sustainability strategies and capital investments that will result in a sustained impact. Fortunately, the early successes will be instrumental in laying the groundwork for a long-term strategy and obtaining executive buy-in.
Strategies begin with data
No matter how determined an enterprise may be to make energy and sustainability a business priority, the fact is that resources dedicated to these projects are most likely not going to increase. For retailers, limited budget and resources are the biggest challenge to resource management and they expect that budgets will remain the same or increase only slightly in future months.
Data is retailers’ most important tool when gaining buy-in at the executive level to implement a long-term strategy, and luckily most are on the right path. While it can be challenging to collect, record and analyze utility invoices, this helps establish baselines that can then be leveraged to spot usage trends and anomalies across multiple sites. With this knowledge of the baseline usage and spend, retailers can show how long-term strategies and capital investments in more efficient equipment or processes can affect costs.
Energy Management Systems for real-time data
Because you can’t manage what you don’t measure, investing in some form of Energy Management System (EMS) is essential. Earlier this year, Ecova conducted a survey of nearly 200 energy and facility professionals across several industries, including retail, and 68 percent indicated they had EMS installed at more than half of their facilities. Companies are leveraging EMS to manage alarms, standardize operational set points, implement demand response, and collect integral electric, gas and water data. However, to get the most value from these systems it’s important to have a knowledgeable, dedicated resource to track and analyze the data, which can be used to identify troubled assets, benchmark energy savings, and more.
Leverage data to find opportunities in waste management
While energy is the number one opportunity savings or improvement, waste was viewed as the second greatest opportunity for savings. Therefore, waste optimization is a crucial component of any sustainability management strategy that cannot be overlooked.
Quick wins can be identified through procuring waste hauling services (where allowed) and right-sizing containers to ensure that the business is not paying for more service than it requires, which is in alignment with the top waste priorities in 2015 for retail respondents with waste management responsibilities.
Both activities, however, are only short-term fixes. The only way to deliver sustaining value through waste is by pursuing a zero waste business model and following the 3 Rs: reduce, reuse and recycle. And again, it comes back to the data. Insights based on data – including where the organization is producing waste and how much– will help determine where to best allocate resources in order to achieve Zero Waste goals. One of the first and most essential steps is a waste characterization study across the entire enterprise to get a sense of where waste is being generated, and how often, and where it ends up. Then develop a thorough understanding of what is happening at each location. Who are the vendors, how many collections happen each week, what is the volume of the pickups, and what does it cost? This data will be the foundation to tracking your zero waste efforts. Once you’ve layered this onto your billing data, you’ll soon get a more comprehensive picture of what is going on in the chain and can look for opportunities for diversion and zero waste activities; for example, investigating where in the country it may be cheaper to recycle waste (in some areas up to 80 percent less) than dispose in landfills.
Commit for the long haul
The most successful energy and sustainability programs require a holistic view at the organization's scope of resources and how it impacts the entire organization. This also includes collaborating with all parts of the business, from store managers to finance to the C-suite.
For retailers to continue to be successful far into the future, it is critical that they take this holistic, long-term approach to energy and sustainability management. This model will not only influence the company’s environmental impact, but also grow the business and ensure that that the organization is prepared for the future.