Given the ongoing economic crisis, retailers are under more pressure than ever to operate more effectively and get more out of their existing assets. Perhaps no area of store operations offers more opportunity for savings than energy. Despite the potential for savings, however, the why and wherefore of energy management remain a mystery to many top executives.
“Energy has never gotten the high-level attention it deserves,” said Dean Lindstrom, president, Novar, Cleveland. “But my experience has been that once a CEO understands and realizes the potential opportunities for savings, he or she wants to take action right away.”
Most important, according to Lindstrom, is for a CEO to understand that energy costs, similar to labor costs, are something that a company can have control over as opposed to being a budgeted item year after year.
“It’s pretty simple: A company can do something about energy, or spend more money to open more stores to get the equivalent results,” he said. “You’re talking about a return on investment of 20% to 40% on initial energy-related technology and equipment. On an ongoing basis, in terms of strategic energy-management programs, the ROI can be 100% or more.”
Lindstrom noted a company’s energy strategy has to be consistent with its overall business strategy.
“For that reason,” he said, “the chief executive should be the one to drive the strategy.”
With so much on their plates, chief executives obviously don’t have time to get into the nitty-gritty of energy management. But essentials they need to know, according to Lindstrom, include:
“The takeaway here is that energy prices are extremely volatile,” Lindstrom said. “This is not one of those things a company should just sit back and do nothing about. It calls for a strategy.”
While downward spikes may offer some relief, they are only short term, according to Lindstrom.
“Energy prices will only go up over the long term because there is not enough growth in generation capacity to keep up with the increases in demand,” he explained.