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Lighting: LED technology still a hot topic

BY Marianne Wilson

Although LED lighting (also referred to as solid-state lighting) is one of the hottest topics in the industry, it’s not always easy to distinguish between the reality and the hype of this still-emerging technology. But speaker Kraig Kasler did just that at the SPECS/2007 session, “LED Lighting: Inside and Out.” The workshop, part of the conference’s energy management track, offered a comprehensive overview of LED technology, including the benefits and challenges therein.

There are hundreds of different LED “package” types (indicator, standard, high current and high power, to name but a few). And once a package is selected, there are still many other factors to manage, including, color bins, voltage bins, intensity bins and optics.

“LEDs are a complicated business and science,” said Kasler, VP of marketing and product development, Lumination, LLC, GE Consumer and Industrial’s LED business. “They are highly technical products, and performance varies significantly by color and material type. It’s important to do your homework [in selecting a system].”

Solid-state lighting has many benefits, including efficiency, long life, durability, compactness and color (and color-changing) capabilities.

“All the talk about LED efficiency is causing a lot of confusion in the marketplace,” Kasler said. “The reality today is that LEDs are much better [in terms of efficiency] than incandescents and halogen, but are not as good as fluorescents. However, the efficiency of LEDs is improving every year and we expect the trend to continue. The technology has the capability to get to 150 lumens per watt, but that’s not where it’s at today.”

LEDs vs. Fluorescents Savings Comparison (based on a five-door refrigerated case)

Energy Savings

Maintenance Savings

*Estimate based on: 24 hours/day FLU and 15 hours/day LED, 365 days/year, $0.082/kwh, 0.453W in compressor savings per lighting watt reductionSource: Lumination, LLCEnergy Savings + Maintenance Savings=$263 + $190=$453/year on a five-door case
Light Source T8FLU LED Light Source FLU LED
Five-door reach-in case 360W 205W Scheduled re-lamp $/door $8
%energy savings   43% Unscheduled maint. $/door $35 $5
Lighting energy $/year* $278 $97 Total maintenance $/door $43 $5
Compressor energy $/year* $117 $44 Annual maintenance savings $190
Energy savings $/year $263  

LEDs are very robust, with no filament or cathode failures. Plus, end-users don’t have to worry about shattered glass, as there is no glass to break.

“The durability of LEDs is a big advantage,” Kasler added.

The color capabilities of LEDs allow end users to create interesting effects with the technology that are not doable with traditional light sources.

But LED technology is not without its challenges. Cost tops the list.

“While the cost is coming down,” Kasler said, “it is still significantly above incumbent technologies.”

Performance in terms of brightness also needs to be improved.

‘We’re doing 15 to 20 company-owned stores and 50 licensed ones. We’re also starting a new franchise program.’

“It’s getting better, but further improvements are needed,” Kasler said. “Another hurdle to overcome is color consistency, or uniformity. There are lots of variations, and different shades. You can live with this in certain applications, but in some retail applications this can be a problem. It’s important to remember that not all LEDs are created equal.”

What’s on your schedule for 2007?

Acceptance is another challenge.

“We still have a long way to go in terms of acceptance,” Kasler said. “The end user has to understand the value of LEDs and, as an industry, we have to get standards out there. And we have to continue to improve on efficiency—lumens per watt—and cost.”

The LED industry is growing about 15% a year, with strong growth potential. Currently, the vast majority of LED use is found in mobile applications, primarily cell phones, which accounts for about 58% of the overall LED market. The auto industry is next, at 13%.

“Retail illumination, at 5%, is a small slice of the pie,” Kasler said.

To date, LEDs have not been widely adopted for general illumination. But as the technology advances, it is expected to become more widely used.

“We believe that violet chip and multi-phosphor technology has a lot of potential for general illumination because it allows you to get a high quality of light,” Kasler said.

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Weekly Retail Fix

BY CSA STAFF

THE NEWS: SAM’S REALIGNS STORE-LEVEL MANAGEMENT

BENTONVILLE, ARK. Sam’s Club is changing the management structure in its stores. In the realignment, approximately 250 positions will be eliminated, Wal-Mart Stores announced last week. The company said it’s replacing five lower level management positions at each Sam’s Club location with three new higher level and higher paying assistant manager positions.

“This is not a cost cutting effort. We expect a slight increase in payroll upon completion of this change,” said Sharon Orlopp, senior vp of Sam’s people division.

THE FIX: Differentiation would better help Sam’s

Since Sam’s decided that its refocus on the business customer was too narrow, it has sought to find ways to make its clubs more attractive to primary shoppers, i.e., women. And that’s a pretty tough row to hoe, as Costco has done a pretty good job at satisfying the club customer in general and BJ’s has been going after female shoppers for several years now, with some success.

Having fewer managers with more direct responsibility could create a tighter knit club-level management and shorten lines of responsibility and accountability. Yet, without differentiating the offering, execution isn’t going to overcome all of Sam’s challenges.

That being said, a store-level management realignment might be overlooked at other retailers, but, this being Wal-Mart, everyone has to make a big deal about it. But that’s the price you pay as the big guy on the block.

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BY CSA STAFF

THE NEWS: TOYS ‘R’ US EARNINGS GAIN 40.1%

WAYNE, N.J. Toys “R” Us today posted net earnings of $199 million for its critical fourth quarter, which meant it turned a profit for the fiscal year ended Feb. 3. But special charges and gains had an impact on its numbers.

Sales for the previous fiscal annum were $142 million, the difference translating into a net earnings increase of 40.1% year over year. For the last fiscal year, Toys “R” Us posted net earnings of $85 million versus a net loss of $384 million for the previous period.

Operating earnings in the fiscal 2006 fourth quarter gained 53.1% to $571 million versus $373 million for the fourth quarter of fiscal 2005. For the last fiscal year, operating earnings were $649 million versus an operating loss of $142 million for the previous period.

THE FIX: Improved shopper experience ups comps

Of course, any observer has to take into consideration special financial circumstances. Fiscal 2006 operating earnings were positively impacted by $96 million from gains on property sales, slightly offset by restructuring and other charges. In fiscal 2005, operating earnings were negatively impacted by $410 million in costs relating to the merger of the company, as well as $58 million of costs and charges relating to contract settlement fees, restructuring and other charges.

Still, sales were trending up at last year’s end. Net sales gained 15.8% to $5.7 billion. In the full fiscal year, net sales advanced to $13 billion, up 15.2%.

Comparable-store sales for the Toys “R” Us’ U.S. division gained 0.6% in fiscal 2006, and that represents the division’s first comps increase in six years. Comps at Babies “R” Us were up 4.8% and those at Toys “R” Us international were up 2.6% for the fiscal year.

Jerry Storch, chairman and ceo of Toys “R” Us, said the company is “pleased with the strides we made in fiscal 2006 to improve at all levels of the organization and reposition the company for profitable growth over the long term.”

He said the company’s new management team has been focusing on executing a strategy that would turn the retailer into a global toy and baby products authority.

“This translated into higher overall sales, positive comparable-store sales, improved gross margins and strong operating earnings growth for the 2006 fiscal year,” Storch asserted. “The key to our strategy has been improving the customer shopping experience in our stores. We are accomplishing this by delivering a more compelling merchandise selection, better service and a cleaner and more comfortable shopping environment.”

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