Why energy needs to be higher on retailers’ shopping lists

Retailers need to be much bolder and recognise that improving energy efficiency is an investment in the future of our businesses and our planet – not just another cost.

This year, the UK will host arguably the most important climate summit since the landmark Paris Agreement in 2015. As anticipation builds for COP26 in Glasgow, the spotlight is firmly on the UK.

The historic step taken by the government, becoming the first major economy in the world to pass laws to end its contribution to global warming by 2050, must be followed with further steps by industry leaders. If the UK is to meet this net zero target, it’s vital that every sector takes steps to cut emissions – and that includes retail.

Many across the retail industry have already made significant progress in their emissions reduction efforts. Last year, a study conducted by the British Retail Consortium (BRC) found that a group of more than 25 of the UK’s largest retailers had collectively reduced their absolute carbon footprint by more than a third since 2005. However, with the range of financial pressures that retailers are under, energy efficiency may no longer be at the top of many retailers’ shopping lists.

Energy costs among retailers’ top concerns

According to our new research, wholesale costs of goods (63 per cent), business rates (38 per cent), and energy costs (30 per cent) are the three biggest concerns for UK retailers at the beginning of an uncertain 2020.

More than half (56 per cent) of UK retailers expect their energy costs to rise this year, but two-fifths (38 per cent) have not yet implemented energy management solutions to improve efficiency, cut their consumption and reduce operating costs. A third (30 per cent) of retail leaders went as far as saying that energy costs affected their business competitiveness, more so than paying rent (29 per cent) or insurance (20 per cent).
Many retailers are implementing lower-cost measures to help reduce their energy use. In the past year alone, 46 per cent have installed LED lighting and 35 per cent have asked staff to be more energy efficient. But while these small and important steps are being taken, retailers need to be much bolder and recognise that improving energy efficiency is an investment in the future of our businesses and our planet – not just another cost.

Cut consumption and boost your bottom line

Retailers have several measures available to improve the sustainability of their operations, including on-site energy generation through rooftop solar or heat pumps, purchasing electricity from 100 per cent renewable sources, or installing a building energy management system (BEMS).

Despite these options, Eon’s survey of senior retailers reported a continued hesitancy to invest in more impactful measures: only 10 per cent have upgraded their BEMS or implemented building control strategies. Meanwhile, only 3 per cent have invested in on-site energy generation with the help of their energy supplier.
More than a third (38 per cent) of retailers say perceptions of the upfront cost of these technologies had put them off from introducing them, while a fifth (21 per cent) said they do not believe they would make a return on such an investment. This is despite the Carbon Trust estimating that a 20 per cent decrease in energy costs has the same impact as a 5 per cent increase in sales.

It’s important to acknowledge that improving the ­sector’s approach to energy management is not just down to retailers. Energy providers have a responsibility to not only advise retailers on the important measures they can implement to save energy, but also reiterate both the business and environmental benefits of such actions and system upgrades. Some of these technologies can play a major role in managing a building’s energy-consuming assets, including lighting and air-conditioning, enabling retailers to cut their consumption and boost their bottom line.

Our energy management experts recently identified a high street retailer’s lighting as being responsible for inefficiencies across its stores. By working closely with its retail consultants, we connected the lighting, heating, ventilation, air conditioning and submetering systems of 550 stores to our state-of-the-art Energy Management Centre. Monitoring the energy data 24/7 enabled our experts to see how much energy it was using in each store and provide solutions to improve efficiency – ultimately helping it to achieve energy savings of some 34 per cent across 550 stores.

Investing in the future

The time has come for retailers across the UK, both small and large, to tackle the inefficiencies that lie within their own stores and embrace investment in sustainable measures, which will alleviate concerns around energy costs and bear fruitful returns.
At a time of unprecedented disruption, energy technologies and efficiency measures offer retailers not only a genuine opportunity to help protect their margins, but also help in meeting carbon reduction targets and in improving the air we breathe.