Sophisticated energy management technology provides grocers with insights to help curtail skyrocketing operating costs.
By Deena M. Amato-McCoy
Even as grocers strive to keep a tight lid on operating expenses, costs related to energy consumption seem to increase on a daily basis. By focusing attention on information systems that measure power consumption, supermarket chains are in a better position not only to lower operating costs, but also to fulfill their overall sustainability missions.
While controlling operating costs has long been a hot-button issue for the retail industry, energy consumption received renewed attention several years ago as the economy faltered and energy prices soared.
“There was almost a perfect storm that erupted in 2008,” explains Scott Beaver, vice president of marketing for Atlanta-based Prenova.
Simultaneously, sustainability issues were growing in importance for consumers. Not only were they interested in learning about how retailers were committed to sustainability, but more importantly, a chain’s green mission statement played a strong role when it came time for shoppers to choose a retail store.
“It was perfect timing for a dual opportunity,” he says. “Not only was energy management a way to reduce operating costs, it was also a way to show consumers their good will and commitment to the environment.”
As the industry settles into a new decade, grocers now put energy near the top of their list of expenses, second only to investments in store-level inventory. And as supermarkets continue to operate on razor-thin margins, it is no wonder energy consumption has risen to the top of cost-cutting lists.
“With an eye on slashing costs and operating more efficiently, grocers are in a great position to influence the industry’s green agenda,” says Darin Yug, managing partner, and vice president of Chicago-based Diamond Management & Technology Consultants.
Yug says retailers are displaying their green efforts, such as energy efficient lighting, solar panels and new irrigations systems, to the world through their stores and they are also making strides to cut carbon footprints throughout their supply chains. “More importantly, chains are eager to extend the lifecycle of equipment and gain longer returns on investments,” he says.
Experts say the way to achieve this level of efficiency is to improve overall equipment maintenance and operating costs. “Over the course of five years, retailers can reduce the actual cost of equipment by 50%,” says Yug. “By adding in the multiplier effect based on the number of stores they operate, energy efficiency is a pretty compelling project to lower operating costs.”
While the technology is available, experts say many chains still struggle to get energy management projects off the ground. For starters, some retailers don’t have a wealth of historical data regarding energy consumption. While most regional and national chains use sophisticated systems to measure cooler display door openings, temperature changes and overall energy consumption, “there are so many smaller grocers that are not measuring at all,” says Cardie Saunders, CEO for eCube Solutions LLC, based in Mendon, N.J.
Another issue stymieing efforts is a lack of ownership when it comes to energy consumption. “All energy consumption is recorded on utility bills, however too many companies’ accounts payable teams, not facility or department managers or staff, are managing these,” says Michael Bailer, director of engineering at Spokane, Wash.-based Advantage IQ.
Unaware of how much demand or kilowatt per hour charges are, all divisional executives see are the charges deducted from their respective monthly budgets, “which makes it hard to collect data on consumption levels, normalize and benchmark it, then compare stores side by side,” he says.
Yearning for deeper insight into the impact that power consumption has on the enterprise as a whole, chains are taking stronger interest in analytics-based energy management solutions that provide a deeper understanding into energy levels.
These electronic monitoring systems help grocers analyze, control and manage consumption at the front lines across store level, as well as the back end and within corporate office and remotely operated data centers.
According to Prenova’s study, 65% of chains are investigating energy management technology. “Interest was higher in grocery than other segments of retail mainly because refrigeration must operate correctly all of the time, and one failure can cost thousands and thousands of dollars,” says Beaver. “An EMS can keep executives on top of power consumption, and related operating costs, as well as ensure that equipment is working at top levels at all times.”
While industry experts say EMS solutions can help keep tabs on the power used by coolers, refrigerators, lighting and HVAC systems, they can also monitor the status of computer servers, monitors and other hardware.
Experts explain that by deploying remote monitoring management systems that provide insight into the status of IT equipment and alert users to conduct proactive maintenance of technology, chains are primed to increase energy efficiency and reduce downtime.
One example is the Microsoft System Center Operations Manager from the Redmond, Wash.-based Microsoft, which monitors store-level servers and applications. It also alerts users to potential problems, allowing chains to correct or repair issues before they result in a system failure.
Prenova offers a similar business service to retail clients, including Meijer and Costco. As grocers use energy management systems to monitor what is happening across the enterprise, “many alarms and alerts are producing streams of trends data, and at times, many of these alerts can be disregarded.
“Our solution helps to uncover the most critical information so the chain knows when it is important to react by calling a service technician or remotely address the issue,” says Beaver.
Algorithms monitor every alert from every store linked to the monitoring system. EMS systems monitor unit temperatures, humidity levels and the status of economizers—reservoirs in a continuous-flow oxygen system.
Prenova’s analytics are able to compare weekly store-level performance to reveal if a system is operating efficiency. “Our solution gives users the ability to figure out which alarms are important and proactively fend off potential loss or inefficient performance,” Beaver says. “It keeps the equipment functioning properly and keeps the facilities management team efficient as well.”
Chains using the solution are seeing strong results, according to Prenova officials. They say one retailer was able to save $4.7 million by controlling energy consumption and another retailer, which also used it to maintain refrigeration power consumption, has kept energy levels 10% below baseline metrics.
Since EMS systems capture information regarding air temperature and distribution, errors can occur if doors are opened frequently, for example. According to officials from eCube, its device that fits over the valve of a refrigeration thermostat probe takes energy management technology to the next level.
Rather than respond to rapidly changing air temperatures caused by units’ on/off compressor cycles that are impacted by open cases and unsealed display doors, officials say the unit measures the temperature of fresh and frozen food. The EMS dashboard can be customized to report food temperatures, rather than air temperatures, giving users a more accurate view into what is happening inside coolers and refrigerators, company officials note.
“If compressors are cycling less and remain in on positions longer, grocers are creating thermal inertia, which keeps food colder longer at more consistent temperatures,” eCube’s Saunders says. “Compressors are running 30% less with our solution, which lowers refrigeration’s impact on power consumption, and equipment maintenance. More importantly, temperature consistency upholds food safety.”
Sometimes the key to controlling energy consumption is as simple as paying closer attention to utility bills, according to industry executives. Even so, only 52% of retailers regularly audit their utility bills to make sure they aren’t being overcharged, according to Prenova’s study.
Company officials say Prenova’s Advantage IQ system, which captures costs and usage figures on utility bills, helps to keep all departments in the know about energy expenses. The system analyzes, audits and organizes information from the utility bills, allowing retailers easy access to the information from a centralized database. This enables chains to identify errors and anomalies, better manage energy expenses, identify areas for immediate cost savings and improve energy efficiencies.
“Supermarkets can also categorize stores by type, sales or square footage, and compare sister sites,” says Bailor. “It keeps all departments accountable and shows upper management where pain points may be.”
Industry experts say giving store-level managers some ownership can be a vital component of energy management.
One area that store-level managers can help with is managing local utility costs—an area that could garner more attention as more dynamic pricing makes its way into the marketplace. Unlike traditional pricing that requires paying flat specific rates for all kilowatt-hours used throughout an entire month, dynamic rates fluctuate throughout day.
“During peak periods, rates will be higher than off peak hours, for example,” explains Prenova’s Beaver.
Today, very few grocers take advantage of real-time pricing mainly because they are unsure of how to manage consumption, and benefit from the rate.
“As dynamic pricing becomes more prevalent and energy intensity increases, they will figure how to manage usage throughout the day so they are not using more than they may need to at the highest-cost portion of day,” he says. “It’s not easy to do, but it is possible.”