Why retailers should prioritise energy

Why energy needs to be higher on retailers’ shopping lists in 2020

The historic step taken by the Government in 2019, where the UK became 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 one-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 research1wholesale costs of goods (63%), business rates (38%), and energy costs (30%) are the three biggest concerns for UK retailers ahead of an uncertain 2020.

More than half (56%) of UK retailers expect their energy costs to rise next year, but two-fifths (38%) have not yet implemented energy management solutions to improve efficiency, cut their consumption and reduce operating costs. A third (30%) of retail leaders went as far as saying that energy costs affected their business competitiveness, more so than paying rent (29%) or insurance (20%).

To combat this, many retailers are implementing lower cost measures to help reduce their energy usage. In the last year alone, almost half (46%) have installed LED lighting and more than a third (35%) have asked staff to be more energy efficient.

But while small and important steps such as this 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.

 

Reducing your consumption whilst boosting 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% renewable sources, or installing a building energy management system.

Despite these options, our survey of senior retailers reported a continued hesitancy to invest in more impactful measures: only 10% have upgraded their buildings energy management system or implemented building control strategies. Meanwhile, only 3% have invested in on-site energy generation with the help of their energy supplier.

More than a third (38%) of retailers say perceptions of the upfront cost of these technologies had put them off from introducing them, while a fifth (21%) said they do not believe they would make a return on such an investment. This is despite the Carbon Trust estimating that a 20% decrease in energy costs has the same impact as a 5% increase in sales.

 

A shared responsibility

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 buildings’ energy consuming assets, including lighting and air conditioning, enabling retailers to reduce their consumption and boost their bottom line.

Our energy management experts recently identified Marks & Spencer’s lighting as being responsible for inefficiencies across the retailer’s stores, and with our help they were able to achieve energy savings of some 34% 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.

 

1. Survey of 100 senior retailers (director level or above) conducted by OnePoll for E.ON UK between 27th November 2019 and 3rd December 2019

Written by Iain Walker

Iain Walker is Director of Business Energy Sales at E.ON UK, responsible for energy sales and management offerings for cities and business customers, from microbusiness and SME customers large industrial and corporate clients

Iain was instrumental in creating the TPI Code of Practice, a set of standards that helps to protect business customers by making sure third party intermediaries are fair, honest and transparent when they sell energy.

Published March 2020