For more than a decade, retailers have grown increasingly interested in environmental initiatives. The public image of being a good corporate citizen is an attractive benefit for retailers, many of whom have long struggled with dual allegiances to shareholder profit expectations and customer desire for environmental priorities.
Those companies who over the past decade or earlier took “green” action often did so at the expense of corporate profits. In 2001, for instance, Burlington, Vt.-based ice-cream giant Ben & Jerry’s changed its containers to “Eco-Pint” packages, more environmentally friendly containers. The company later found the move to be financially untenable and reversed the decision.
For several reasons, the convenience industry has not been at the forefront of the green crusade. This is in part because c-stores’ target demographic is generally less passionate about environmental issues and sustainability than the customers of retail brands in other industries, such as Ben & Jerry’s or Starbucks. This is also because most operators lack the scale to forgo percentage points on their takehome pay.
However, as environmental moves increasingly make better business sense, the trend is changing. According to a PricewaterhouseCoopers study, companies that report their sustainability initiatives achieve overall higher returns on their assets than companies that do not report sustainability efforts.
By following the data, many convenience stores have discovered that corporate profit and environmentalism are no longer mutually exclusive priorities. In fact, well-crafted green initiatives are becoming seamless stitches in the corporate fabric of ROIs and profit expectations.
Rick Wisler, director of engineering for Quick Chek Corp., says the Whitehouse Station, N.J.-based chain recently went through the LEED (Leaders in Energy Efficient Design) certification process, which would certify one of its new builds under energy- and water-efficiency standards. The certification process was intensive— and educational—and the company is now in the process of applying much of this knowledge.
“We’ve taken a lot of what we’ve learned from LEED about energy efficiency, and we are switching over to many of the things that we’ve learned, particularly those with good ROI,” Wisler says.
Examples are plenty. The multi-generational company, with more than 120 sites in New Jersey and southern New York, plans to install white roofing materials and reflective glass to minimize energy costs inside the store. Already, the company has installed solar panels in its corporate headquarters, a move that reduced energy usage in the office by about 25%. And Quick Chek is researching whether to install the panels on the stores’ gas canopies. The company also won plaudits for a site built last year, in the gritty municipality of Bayonne, using recycled construction materials and installing lowflush toilets.
Other retailers have achieved similar financial benefits by prioritizing green initiatives. Reggie O’Donoghue, director of marketing for Sidney, Ohio-based Emerson Climate Technologies, says the company often works with c-store clients to save money by adding controls to their systems.
A glut of operators continue to operate inefficiently, unnecessarily triggering higher utility costs at a time when the c-store is becoming more multi-dimensional, offering foodservice, expanded cold vault and other services that run on costly power. O’Donoghue says, “When we go in, they have things like the HVAC controlled just by a bunch of thermostats, lighting is manually turned on and off, and refrigerated cases are powered by just electromechanical controls.”
All of these inefficiencies are bad for the environment, and bad for corporate profits. In addition, anti-condensation heaters are poorly monitored, and are nearly always on.
Transitioning to a controlled environment, O’Donoghue says, can typically save clients 13% of their usual heating costs—an appreciable savings, considering utilities cost c-stores an average of more than $4,000 a month per store, according to preliminary figures from the NACS® State of the Industry Report of 2010 Data. “The bottom line is, we’re about saving energy,” O’Donoghue says. “We add value by adding controls in this previously uncontrolled environment.”
Wayne Howell, principal for Clive Samuels & Associates Inc., a Princeton, N.J.-based consulting engineering affiliate of Emerson Climate Technologies, has worked with several c-store chains that operate full-scale foodservice programs. In such cases, where equipment can rapidly drive up cost—too often not even factored into a total foodservice budget—it is critical to deploy energy-efficient systems equipped with automatic control systems that drop exhaust-fan consumption by half when cooking facilities are not in use.
“And that is the majority of time that these places are open,” says Howell. The technology, he says, can shave fan energy usage by more than 80%. According to Melink Corp., a manufacturer of this exhaust technology, most customers see a payback on the investment in a year or two.
Another initiative Howell considers a wise investment is “demand control ventilation,” a form of outside-air introduction. The system monitors carbon-dioxide levels through the use of CO2 sensors and modulates the amount of air funneled in through air-conditioning units based on the need to offset the set point. Grouped together, the energy-efficiency systems coupled with the demand-control ventilation and the modulating cooking exhaust save up to 25% of energy costs related to the mechanical cooling of a building. However, Howell cautions that payback varies greatly based on the climate and power costs specific to an operator’s geographical region.
Do You See What I See
From homes to home offices, lighting is often one of the first areas to undergo an environmental makeover. The easiest way to cut lighting costs is by using LED lighting. Until recently, the staggering upfront costs of LED lighting discouraged many c-stores, but that impediment is no longer much of a factor. Wisler of Quick Chek says companies are now able to achieve an ROI on LED lighting within 18 to 36 months.
More advanced lighting initiatives can also have a notable effect on energy efficiency. Yoram Perelman, a senior project manager for Clive Samuels & Associates Inc., says light harvesting is another emerging initiative. The new technology uses diffused skylights accompanied by a light-sensing system that maintains a fixed lighting level for each indoor area.
Simply put, this system cuts down consumption based on the weather. So, on those brilliant sunny days, power usage can drop as low as 1% of its normal level, says Perelman. “That could be about six hours of daylight or more,” he says. “It can be a substantial cost savings for the client.”
Of course, technology and complex efficiency systems come at a hard cost. Retailers will need to assess which investments to undertake. At the same time, they should not rely on last year’s numbers when budgeting capital outlays. Costs continue to slide on items from cooler sensors to LED lighting, making going green a more profitable venture than even three or four years ago.
Also, beyond the energy savings, there are less tangible benefits that come with sustainability efforts. For instance, Quick Chek adopted an energy-management system that controls store temperature and has reduced the company’s electric bill by more than 15%. Wisler estimates that the ROI for this system was approximately five years, but other benefits were far greater.
“The ROI was multifaceted,” he says. “It wasn’t just energy, although the energy did pay for it. The ancillary benefits were huge for us.” He values the ability that he now has to control store temperate uniformly, through a system in which store managers are alerted by an alarm system if a freezer case fails.
This trend applies in other domains as well, Wisler says: “You start to look at things that have an energy-saving component to it, and find that sometimes there are other benefits to it.”
The use of ultra-high-efficiency packaged air-conditioning units is another example of such complementary benefits. These rooftop units provide up to 20% energy savings over the minimum federal standards of air conditioning, but they also have two other significant benefits, says Howell of Clive Samuels & Associates. The units use waste heat from the compressor cycle to control instore humidity and increase customer comfort. This also lowers the need to run door heaters and reduces the amount of electric defrost time an open-air cooler case needs to run to melt any ice buildup.
Along similar lines, Howell encourages operators to undertake a holistic approach built on a broader game plan centered on energy efficiency. “They are all combined on top of one another. If you choose to do one or the other, the savings are much less realized,” he says. “When you implement all of the technologies, you can see a real benefit.”
For instance, reducing a company’s water load not only decreases the water bill but also lowers the water heating, and delivers a greater aggregate impact. By implementing technologies that work in tandem, many stores are capable of saving at least 30% of their energy costs, depending on local costs and geographical region, Howell says. Another aspect in which a green initiative translates into significant financial ROI is water conservation. Wisler says Quick Chek uses all low-flow toilets, automated flushometers and automatic water faucets. According to Howell, these efforts can reduce water usage by 30% to 40%. “Many c-store businesses are looking at water reduction,” he says. “They are looking at technologies like low-flow toilets, dual-flush toilets and waterless urinals to significantly cut water consumption.”
While these environmental initiatives can create impressive cost savings for c-store operators, inexperienced operators may attempt to execute a one-time fix. O’Donoghue believes this is a mistake. Owners typically see immediate savings when a more efficient device is installed, but he warns that those savings can erode as quickly as 10 to 12 months if the systems are not properly maintained.
This is most often the result of human intervention. Although a c-store chain may establish a corporate policy to set an established temperature throughout the year, if a particular clerk is uncomfortable with the temperature, it is not uncommon for the person to try to override the settings. To prevent this situation from running amok, many environmental and energy consultants offer a service in which an energy-savings protocol is established within the store, and the stores are continually serviced by contractors to prevent the loss of savings initially achieved. “When you look at the data, you are able to track discrepancies and find the root cause of inefficiencies,” says O’Donoghue. “These systems can provide so much data that you are able to do a much better job managing your fleet and containing your energy costs.”
Of course, not every green initiative has a clear financial benefit. Advanced energy-reduction technologies have a much longer ROI than standard technologies. By implementing a well-planned strategy that pairs corporate pragmatism with energy conservation, convenience operators can quickly discover that environmental stewardship is an ROI win.
Quick Chek takes the position that it will implement any green initiative if the cost of the green item is equal to the cost of a nongreen item. If the cost of the green item is greater, says Wisler, “We may do it. Our core values demand that we look at things like energy efficiency. We think it’s the right thing to do.”
Green Tips to Consider
Sustainable technology ranges from relatively simple replacements of supplies and materials to intensive engineering projects. Below are several initial steps operators can take to make their stores more sustainable while also improving their profits.
- LED lights: Replacing traditional lighting equipment with more energy-efficient LED lights is one of the easiest sustainability initiatives to implement. The move to LED lights can lead to 75% savings on lighting costs, with an ROI of 36 months.
- Water conservation: The ranks of c-store operators who are interested in water-reduction technologies are growing. Water conservation methods such as low-flow toilets, dual-flush toilets and waterless urinals can reduce water usage by 30% to 40%.
- HVAC control systems: Energymanagement systems control store temperate uniformly. Not only do they prune electricity costs substantially, but they also enable early detection of refrigeration problems.
- Energy-efficient construction materials: When planning new construction projects, early choices about which construction materials to use can have a lasting effect on the energy and heating expenses of a building. The installation of white roofing materials, reflective glass and solar panels are among the most popular trends.
- Set-point management: Contractors provide an ongoing service to monitor any changes to the stores’ temperature and electricity settings, providing in-depth analysis to prevent human intervention.
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