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How Retailers are Improving Operational Efficiencies by Implementing Enterprise Wide Energy Management Programs

Superior retailers operate within extremely tight budgets. Any deviation from the budget results in a hit on the bottom line profit. However, tightening up on critical line items leads to a profitable and sustainable retail chain.

Energy is one of the largest line item expenditures for retail companies worldwide, and its cost is constantly increasing. In fact, excess energy consumption in retail can exceed 30%: waste which undermines the business and damages the planet.

According to Adam Siegel of Retail Industry Leaders Association, "A retailer's energy costs could represent 5.5 percent of its store's operating costs. If the store operates at a 4 percent profit margin, driving a 15 percent reduction in energy costs would increase its profit margin to 4.75 percent — an 18.7 percent increase in store profit."

Reducing energy consumption, while promoting operational excellence, comes down to eliminating waste and improving operational efficiencies. The potential for return is huge and retailers are taking note.

Industry leaders are taking measures to gain visibility into the consumption patterns of each of their devices, which in turn enables them to optimize the performance of their systems by managing energy consumption, optimizing BMS operations, avoiding equipment malfunctions, and transitioning to predictive maintenance schedules.

Retailers like The North Face improve operational efficiencies and expand sustainability initiatives while reducing costs and increasing profits.

The North Face cut energy costs and improved operational efficiencies

When The North Face faced rigorous new sustainability requirements, they sought a scalable solution that would to identify energy waste and drive savings and efficiencies. As a first step, they installed a circuit-level energy management solution in four of their most popular California locations: Corte Madera, San Francisco, Palo Alto and San Jose (Valley Fair). The sensors were placed on critical systems that included HVAC and lighting in each store in an effort to optimize energy consumption, infrastructure, and behavior.

Insights gained from these four locations allowed The North Face to implement enterprise-wide optimizations. They discovered inefficiencies and anomalies like:

  • In one store, the AC fan system was not working properly. Through early detection, the store management identified 69,420 kWh/year ($10,500) worth of savings and avoided an equipment failure.

  • The HVAC system in another location was not operating correctly and air handlers were over cycling. Through the early detection, the store was able to save 16,016 KW.

  • Through real-time monitoring in San Francisco, managers got an alert on Mother's Day that the store's security cameras were down on that busy retail shopping day.

  • One store changed lighting schedule during off-hours and realized a 10% annual energy savings.

Based on these results, The North Face plans to use this kind of energy management system in more locations to help them identify further opportunities for reducing energy consumption, better plan and execute a predictive maintenance policy, improve procedural and operational efficiencies by studying behavioral patterns of employees, and benchmark equipment and systems at multiple locations against each other. Read the full case study here.

A 400-store international fashion retailer reduced energy consumption

A global fashion retail chain that operates in over 50 countries used granular energy data that contributed to the retail chain's global environmental policy commitment to minimizing energy, and striving for continuous improvement by measuring and reporting on its carbon footprint.

By integrating a device-level energy management system with the existing Building Management System, the retailer realized unparalleled visibility and control of device level energy use per location. Implementing the solution at 60 stores across North America, Europe, and Asia provided a 15% reduction of energy consumption.

They were able to immediately reduce their energy consumption thanks to real-time alerts that identified waste, operational problems, and BMS overrides. By benchmarking systems and locations against each other, they uncovered further inefficiencies and revealed the root cause. They saved costs of periodic maintenance that was exposed as unnecessary by ongoing commissioning and benchmarking.

Read the full case study here.

Big savings from small devices

While large retail chains may view the energy consumption of each device as a "small drop" in the bucket of their total energy spend, it is only by granularly analyzing the individual systems that we can understand usage, waste, behavior, and opportunities for optimization at the device level, the system level, the location level, and eventually, the enterprise level.

When retailers efficiently gather data and intelligently analyze it, they are presented with insights that propel them to action. This action reduces consumption across the enterprise, saves energy costs, increases bottom line profit, and enables corporate social responsibility and sustainability initiatives.

> Originally posted on Green Retail Decisions.