05 Oct Top 5 energy and consumer trends impacting your grocery store’s bottom line
Last week I got to attend one of my favorite conferences – the Energy and Store Development conference hosted by the Food Marketing Institute. I love it because it’s a great crowd of people, most of them energy geeks like myself, who’re fascinated by trying to get more cooling for less energy in one of the most energy intensive market sectors. It’s ground zero for what’s happening in the grocery energy efficiency world and it’s also a great window in on the energy concerns of commercial clients in general.
Here’s some of the trends that were on people’s minds this year.
1. Timing is Everything
Commercial energy markets are getting more complicated on a daily basis, and that complication is opportunity. Big retail clients are very aware of the big changes coming down the pike, as evidenced by big upcoming structural changes in the electric markets. In the perennial high-cost markets of California, Massachusetts, and New York, life is getting a lot more complicated with energy efficiency, Distributed Energy Resource (DER) options (including storage), Demand Response, and cheaper renewables all competing for customers attention and investment.
Rafik Sarhadian of SCE summed the situation up nicely; “Those who can adapt will save money, and those who can’t will get stuck with the bill.” He was specifically referring to a trend we’ve seen with our customers – more and more of their bill is for peak demand (i.e. $/kW), and less and less is for commodity ($/kWh). Those “peaky” rates, and the tendency of that peak to migrate later due to solar coming online really changes the economics of all these potential solutions.
This increase in options means that, the sophisticated energy consumer is going to have to manage supply and demand-side options, and the frequency of how they will need to do that is going to get quicker. Your energy spend is going to be more and more of a function of when you need energy, and how much you can store or put off until later. Those who can optimize those decisions will do well.
2. California’s “Lara Bill” was noticed around the World
We knew that the California Cooling Act (AKA SB 1013) was going to be a big deal when it was passed a few weeks ago. The bill, which backs CA’s efforts to phase out HFCs and offers incentives to do so, will have a profound impact on the future of refrigeration in California.
What I hadn’t expected was how important it was to so many around the country and the world. When I heard folks from Ireland and Atlanta discussing “the Lara Bill” I was shocked at how familiar they were with it and its implications for the industry. Nothing like seeing your home from afar to offer a new perspective. If you want to know about the bill and it’s implications for CA and beyond, see my previous post.
3. RCx Savings are Real and on the Meter
Well, we knew this four years ago when we presented at FMI on retro-commissioning commercial refrigeration. But it was nice to hear independent confirmation from others that what we’ve seen running programs in Utah, Illinois, and now New York; you can typically get 5-10% savings on the bill with low- or no-cost commissioning in grocery stores. This isn’t necessarily a reflection of poor O&M as much as it is the economics of staffing in a market sector where we have fewer technicians responsible for more stores due to:
- Very low margins
- A very competitive marketplace with scary new threats from disruptive companies like Amazon
- A “graying” workforce who increasingly don’t like to work off hours (did you know we lose a lot of refrigeration technicians to HVAC because it’s less “mission critical”?)
Which is a good segue to…
4. We’ve Got a Big Need for Refrigeration Workforce Training
That “graying” labor pool is contributing to a real labor shortage in the refrigeration service and repair industry, and this spills over into energy efficiency. With the coming phaseout of HFCs, we’re going to need a lot of training because this time the replacements are not going to be just like the old refrigerants. When we phased out R-22 for R-410a in commercial HVAC we saw slightly higher operating pressures, but overall systems work pretty much the same. With the next generation of refrigeration replacements, that’s no longer going to be true – each of the new options comes with some “game changer” accommodations that is going to make service and safety different. Here’s a short list of what I mean:
Bottom line is that we’re going to need to train a whole new generation of professional to work very differently with refrigerants. Unless we can get that magnetic refrigeration plane off the ground.
It may not seem like it, but even “mild” flammability is a big deal. To put into context, all the 1st and second generation of refrigerants used in grocery have always held an “A1” safety designation – essentially non-toxic and nonflammable. Our regulations allow only very small quantities of flammable refrigerants and frankly we’ve not pushed those boundaries much. To use propane for a refrigerant for example requires the use of less than 150 grams per system – that’s less propane than you probably had on you the last time you went car-camping.
5. “Non-Obvious” Trends
I can’t tell you how many plenary speakers that I’ve heard talk about “thinking outside of the box” but I have to admit I liked Rohit Bhargava’s take on the topic. For starters, I don’t think he ever said “think outside the box” per se which is, now by definition, inside the box. He did an interesting discussion around his process for identifying “non-obvious” consumer trends. The first step in his process; “read/watch things you’re not supposed to.” Now that’s something we could all use right now – what if we stopped watching our own favorite echo chambers and actually listened to someone else’s point of view. Requirement for citizenship? Hmmm…
Rohit’s 7 Trends for Changes in Consumer Behavior for this Year:
- Enlightened consumption
Customers are thinking about what they buy and making a difference with their consumption. Think Warby Parker
- Lovable imperfection
Showing your work – warts and all – can inspire trust (hey write a blog, or better yet vlog)
- Backstory telling
Tell the story of how/why you got here to your clients or prospective ones. Find the meaning in it.
- Light-speed learning
What can you not learn on youtube now? How does this change our relationship to knowledge and experience
- Predictive Protection
Fault detection to anticipate compressor failures? I think that was the idea
- “Human Mode”
The trend here is that customers are looking for an experience they love, and that starts with empathy. E.g. the supermarket that has a “slow” checkout line especially for customers who need more time – such as seniors – or “quiet hours” where you can choose to skip the muzak.
- Disruptive distribution
Flexe is the Airbnb of warehouse space where they can handle your logistics and you focus on your product.
- Enlightened consumption
With razor-thin profit margins, a bigger utility bill could result in failure for any supermarket. Using energy as usual and paying the bill later is no longer a viable grocery business strategy. Changes to time of use, peak demand, legislation, workforce instability and consumer behavior are important trends smart grocers should be considering now for long-term success in this evolving industry. If you’re interested in energy saving solutions for your store or have any questions about operating more efficiently, contact us anytime.