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Greater Efficiency

BY Marianne Wilson

Heating and air-conditioning systems are major targets for reducing energy use in retail stores. It’s easy to see why: Together, heating and cooling systems consume approximately 38% of the energy used in such facilities (according to the Environmental Protection Agency’s Energy Star program).

While energy use in buildings is affected by a range of other factors, including climate, optimizing the HVAC system can yield significant energy savings. The most cost-effective ways to enhance HVAC performance is through controls and system upgrades. But improved heating and cooling performance along with substantial energy savings can be achieved by implementing energy-efficiency measures. Here are a few suggestions from Energy Star:

• Consider implementing efforts to reduce heating and cooling load before selecting equipment.

• Avoid over-sizing equipment at all costs. Over-sizing equipment increases the capital cost at the time of the installation and the costs of operation of the equipment.

• Consider energy-recovery ventilation systems to reclaim waste energy from the exhaust air stream and use it to condition the incoming fresh air.

• In humid climates, consider supplemental dehumidification. By controlling humidity, you can increase occupant comfort and allow for further downsizing of equipment.

• Consider specifying economizers. Common control strategies include Energy Star qualified programmable thermostats, multiple zones and CO2 demand sensors.

• At a minimum, specify National Electrical Manufacturers Association (NEMA) premium motors on HVAC equipment, and consider specifying variable speed drives (VSD) on condenser and evaporator fans.

• In dry climates, consider evaporative coolers. These coolers use the evaporation of water to cool spaces, eliminating the need for energy intensive compressors.

• For facilities with heat-generating processes such as cooking, or on-site distributed generation equipment, consider heat recovery as a way to capture free waste heat and use it to offset facility heating and cooling costs.

Proper maintenance is critical to effective and energy-efficient HVAC operations. To improve efficiency and help ensure reliability and long life, consider the following:

• Engage a qualified HVAC firm in a maintenance contract with seasonal tune-ups. During these tune-ups, a technician should check combustion efficiency, refrigerant charge and belt tension as applicable.

• Replace air filters regularly. Accumulated dirt and dust make your fans work harder. Clean or replace filters as recommended by your system’s manufacturer.

• Clean the evaporator and condenser coils on heat pumps, air conditioners and or chillers. Dirty coils inhibit heat transfer; by keeping them clean, you save energy.

• Inspect ducts and piping for leakage or damaged insulation. Leaky ductwork is one of the biggest contributors to cooling loss in buildings. Apply duct sealer, tape and insulation as needed.

Incorporating control strategies that ensure systems are used only when necessary is a critical element in improved HVAC efficiency. Two examples:

• Multiple Zones: By dividing a facility up into multiple heating and cooling zones, a system can deliver more efficient heating and cooling by eliminating inaccuracies from a central sensor point.

• Demand or CO2 Sensors: Most heating and cooling systems draw in ventilation air by assumed occupancy, however modern technology has sidestepped this by designing systems that can actually regulate the air quality of your facility by measuring the amount of CO2 present. The result is more energy-efficient operation and better air quality.

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Feb-28-2013 05:44 am

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Weathering the Storm

BY CSA STAFF

By Kumar Venkataraman

Over the last decade, America’s Atlantic shores have faced the wrath of more than a dozen hurricanes, causing damage worth several billion dollars. Year after year, retailers have been learning and fine-tuning their strategies to respond to the critical needs of consumers in the impacted areas, both in preparing for a disaster and immediately after.

Examples of such refinements include capabilities such as forecasting and inventory planning. Many retailers such as Walmart and The Home Depot now have the capability to plan adequate inventory to cater to natural disasters. However, many retailers are limited by their infrastructure, most notably their distribution network, to respond quickly to natural disasters.

In the 1980s and 1990s, retailers built their supply chain focusing on cost and efficiency. Simply put, retailers created a distribution network that enabled them to move products from suppliers to their stores at the lowest possible cost. This approach resulted in a distribution network that was built for scale — i.e. consolidating inbound merchandise from suppliers upstream so that they could save on inbound transportation costs.

These large warehouses also provided other benefits. First, such large distribution centers were able to justify capital investments on automation, substantially reducing handling costs. Second, these distribution centers also allowed retailers to send full truckload shipments to the stores, saving precious dollars on outbound transportation. Lastly, scale-based networks were suited well for relatively stable demand patterns and lower SKU assortments.

However, in today’s environment, these strategies are crippling brick-and-mortar retailers. Ability to respond to markets impacted by natural disasters highlight the lack of speed and flexibility of these retailers — a result of their own making. The scale-based distribution network impedes speed and flexibility in several ways. First, the distribution centers are located far from individual stores; in many instances they are 200 to as far as 500 miles away. The fewer the number of stores in the network, the farther the distribution centers are located. Theoretically, the response time to ship merchandise to a store is at least a day, but realistically, it will take two days to fill a truck with merchandise and service individual stores.

Second, in most instances, stores are “hardwired” to a distribution center. What this means is that a store can get its merchandise only from a predetermined distribution center. So, if the designated distribution center is out of stock on an item, the store demand cannot be fulfilled by the next nearest distribution center. The store will have to wait until the designated distribution center receives the item (either from the supplier or from the nearest distribution center). This limitation is mostly a result of the lack of IT enablement — the systems are designed to single-source from a distribution center.

The irony is that, the same network that once was designed for low cost has not only become a high-cost-to-serve model but has become a source of competitive disadvantage for brick-and-mortar retailers. Some online retailers such as Amazon.com are experimenting with same-day delivery. Meeting these service levels can only be possible if inventories are deployed closer to the consumer, not in a distribution center that is say, 300 miles away. Online pure plays do not have to deal with high-cost, low-speed distribution networks.

Bottom line, there are several reasons why retailers should go through a reset of their supply chain infrastructure, enabling systems and processes. Such a reset is not easy. Many retailers are already embarking on this complex and costly exercise of resetting their capabilities to move from a “low-cost” network to a network that focuses on “speed and flexibility at optimal cost.” The recent hurricane event only accentuates the issues brick-and-mortar retailers face in serving consumer needs, quickly and efficiently.

Kumar Venkataraman, a supply chain expert, is a partner at A.T. Kearney, a global management consulting firm, and leads its retail operations practice.

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Mar-26-2013 07:51 pm

The forces of nature are can
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Focus on: Mystery Shopping

BY Laura Klepacki

Mystery shopper reports served as a wake-up call to Kroger’s 131-store Fred Meyer division.

In 2009, Fred Meyer stores scored a meager 68.3% in overall customer impression in the reports. But over the past three years, the number has jumped to 83.8%, according to data provided by Reality Check of Seattle, the retailer’s secret shopper service provider.

A key reason for the increase has been a renewed focus on customer service, which makes greeting and acknowledging shoppers a top priority ahead of stocking and non-interactive tasks. The training and operations areas put more energy behind getting information directly to stores. The improvement has been so great that in one of the most important measurements — ‘Would you recommend this store to a friend?’ — Fred Meyer currently earns an 86% ‘definitely’ compared with a 47% ‘definitely’ in 2009.

Connecting with the consumer has become more important as shopping options have grown, according to Ross Thomas, president of Reality Check. And for Portland, Ore.-based Fred Meyer, whose stores feature grocery along with multiple other departments such as home improvement, jewelry and apparel, a good rapport is necessary. This retailer, Thomas said, “is tied to the community and seen as its local store.”

In data collected from 17,129 shoppers across its multiple grocery retail clients, Reality Check found that good customer service is crucial if you don’t want negative word of mouth. Even though when recommending a store the survey found the most important reason is price at 32.28% followed closely by service at 31.43%, the top reason for NOT recommending a store far and away is service at 73% with price only 9.78%.

ROCHE: At Roche Bros., an 18-store upscale supermarket chain in Wellesley Hills, Mass., mystery shopping is a way to monitor and ensure the effectiveness of its long-standing programs. According to Maribeth Grant, customer service merchandiser, the company takes a “Golden Rule” approach to shoppers.

“We use [mystery shopping] as a tool to help us maintain the leadership [in good customer service]. The principles of treating others the way you want to be treated is so fundamental to who we are,” she said. Grant added that Roche holds training classes, offers department mentorship programs and also sends employees to Dale Carnegie courses.

“We consistently give associates feedback, and they are definitely aware that the stores are shopped. It helps associates know they have to be on the game all the time,” said Grant, who noted when the results arrive they are immediately emailed to the store manager. “They are published in the store, and people are recognized for the services they are doing, such as a $5 reward or letter from the president.”

Judi Hess, president of Customer Perspectives, of Hooksett, N.H., which provides the service to Roche, said that Roche has mystery shopper visits once per month, per store, with the reviewer required to visit at least four of its departments and “sometimes as many as eight” per trip.

“What doesn’t get measured doesn’t get done,” Hess said. “Retailers are much more aware now of how customer service drives consumer loyalty and the ROI on it.”

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