Taking Lighting On the Road
GE Lighting devised an innovative way to educate retailers about lighting trends and products, and has been on the road since February with its GE Lighting Revolution Tour. Chain Store Age talked with GE’s Cate Gutowski about the tour, its objectives and what lies ahead for retail lighting.
This month marks the conclusion of the GE Lighting Revolution Tour. Can you briefly describe the tour and its objectives?
Lighting has changed more in the past five years than in the past 50 years, and the GE Lighting Revolution Tour has been a great way to demonstrate innovative lighting solutions. Each year we typically have around 9,000 customers travel to the GE Lighting Institute at Nela Park (Ohio) for lighting education. However, the benefit of the GE Revolution Tour is that we can reach more customers faster.
The Revolution Tour has been on the road since February, and has enabled customers in more than 40 cities in North America the opportunity to interact with the hands-on displays of our new LED products and other products of ecomagination. The goal of the Revolution tour is to provide education on energy-efficient lighting technologies, as well as the upcoming legislation.
What did you glean from the tour with regard to the current state, and future, of lighting?
From the cities I visited, I’ve seen that customers are struggling to find new ways to reduce their energy usage, and they are looking for help. Many customers have done projects that they consider to be low-hanging fruit, for example T12 to T8 linear fluorescent conversions, and now they’re looking for their next big opportunity for energy savings, so naturally they are looking at LED.
One of the common challenges that we heard while on the tour is that retailers want to invest in LED and other energy-efficient technologies, but they are struggling with how they can get their CFO to commit to fund it. We’ve been listening to these problems, and we’re working with GE Capital on solutions to help. For example, we are hosting our 3rd Annual LED for Retail Conference at Nela Park Nov. 2 to 3, and this will be one of several key topics that we’ll be addressing for customers.
What trends should we all be watching for?
We are now at the front edge of a new solid-state lighting age. For years, GE technologists at our Global Research Center have envisioned all-LED rooms and spaces, and now that vision has become a new reality. Earlier this year, we introduced our new line of LED Edge Lighting fixtures. These new, design-forward fixtures feature an ultra-thin light guide with built-in LED technology that will offer full dimming capability and unique architectural styling. We’ve had tremendous response from customers on this new product line.
In fact, there has been a lot of excitement around the 2×2 ceiling troughers, as well as the suspended fixtures that appear to float in thin air through a dramatically framed light source. This new technology allows lighting designers to eliminate hot spots, which has been a common issue among today’s fluorescent options.
Will LEDs continue to be at the forefront of our lighting discussions in the years ahead?
LED has evolved tremendously. In the past, LED only made economic sense for applications such as signage, refrigerated display cases and traffic signals. Over the past three years that I’ve led our national accounts sales team, I’ve witnessed firsthand how a variety of retailers and restaurant customers globally are adopting this technology for a multitude of applications, such as accent lighting, cove lighting, display cases, parking lots and now for general lighting.
We’ve executed on a variety of large-scale LED project installations and, years later, those LEDs are still burning with low failure rates. The technology is amazing, and it will only continue to improve and provide more opportunities to enhance design.
Deploying Retail to Support Our Troops
In the 39 years Michael Howard has been with the Army & Air Force Exchange Service (the Exchange), he has traveled the world and proudly held leadership roles in one of the nation’s oldest and most far-flung retail organizations. Now in its 116th year of operation, the Exchange is responsible for some 3,024 facilities worldwide, including sites that serve troops deployed in combat locations or the most remote areas.
From a humble start as a part-time custodial worker at Lowry AFB Exchange in Colorado, Howard worked throughout college and then joined the organization as a full-time accountant in 1977, becoming VP real estate in 2003, CIO in 2004, then CFO and COO in 2006. As COO, Howard directs overall operations and supervises staff at Exchange sites around the world. Speaking with Chain Store Age contributing editor Connie Gentry, Howard joked, “I can still sweep a mean floor,” as he gave an update on the Exchange.
What initiatives does the Exchange prioritize?
We focus on our customers, associates and operational excellence to improve productivity and reduce costs. Recently we’ve done quite a bit with transportation and logistics.
Increasingly, our customers live outside the military base. In fact, 70% live off the base and drive past other retailers to shop in our stores. We have to provide exceptional service and the right merchandise for each demographic, which varies from newly enlisted recruits, living paycheck to paycheck, to retired officers, with two or three incomes.
Working at the Exchange is different from other retailers because serving the military is personal: 25% of employees have a family member in the military, and 50% have a personal connection to the military. We also exercise preferential hiring to help family members transition quickly to new locations by providing continuity in employment from one Exchange to the next.
How do you make sure the merchandise at each Exchange matches the demographic?
We know the demographics of military bases — active military versus retirees, unmarried soldiers versus young families — and we cluster groups based on shopping habits. We use business analytics to collect customer data at the point of sale so we know the shopping habits of each location and identify purchases by category. From the POS data, we merchandise to each location based on the demographic and the established shopping habits. When there are major moves from one installation to another, the shopping data from the previous installation helps us prepare merchandise plans for the next installation.
Can you elaborate on supply chain improvements?
We’ve increased utilization of our fleet, which has around 500 tractors and 1,800 trailers, and make 85% of all store deliveries, saving about $2,000 per shipment. Our fleet converted to aluminum wheels on tractor trailers, which produced a 5% savings, and installed trailer skirts for better airflow. A recently implemented transportation management system allows us to efficiently utilize backhaul runs from stores to pick up merchandise at vendors and deliver to our DCs, which saved another 15%. Last year we installed a warehouse management system in our West Coast DC that facilitates cross-docking and will yield continued inventory reductions.
In view of the current business climate and global dynamics, does the Exchange receive funds from the government, and if so, are potential budget cuts a concern for your operations?
We are 98% self-supporting — about 2% of our funding comes from the federal government to support active-duty > military positions within AAFES and supplement the cost of shipping goods overseas. Our unique mission is to go wherever troops go and ensure the pricing of goods and services are consistent no matter where our customers are. Even with cuts in the federal budget, I don’t anticipate an impact on the Exchange.
How would a withdrawal of troops from Iraq impact Exchange installations?
When the conflict in Iraq will draw down is a government decision, but as installations in Iraq downsize, those in Afghanistan are building up. Merchandise and people working in our Iraq stores will likely migrate to Afghanistan.
A large percent of Exchange earnings support Morale, Welfare and Recreation programs. Has the recession and economic downturn impacted these donations?
MWR donations are doing very well — over the last 10 years we’ve given $2.4 billion to MWR programs, and in 2010 we donated $248.7 million. In addition to our main Exchange stores, our convenience stores and food operations generate strong profits.
Can you share details about the Exchange’s partnerships with other retail brands?
We have a number of very successful concept shops, including Coach, Pink by Victoria’s Secret, Michael Kors and Affliction clothing. We don’t just mix these brands in with other merchandise; we make a special shop to showcase the brand.
We have 15 Martha Stewart concept shops that offer a 30% to 40% savings for our customers. In hardlines, we have Serta mattress shops and cosmetic beauty bars where popular brands, like Estée Lauder and Clinique, can be changed to fit the demographic. In electronics, we have 20 Apple stores that look just like Apple stores in a mall, and we expect to add 15 to 20 Apple stores next year.
Are there unique aspects to your food service brands?
All the leading fast-food brands are in the Exchange — Burger King, Taco Bell, Pizza Hut — but the interesting thing is how these partners have increased healthy menu choices because people in the military are conscious of staying fit. Even our convenience stores sell salads, wraps and fruits. In fact, we sell 70,000 bananas every week in our convenience stores, which actually sell more bananas than Snickers bars!
Are there other trends you would highlight?
We sell 18 million items online, and over the last year we’ve updated and improved our website to make it an easier experience for customers. Since we increased our focus in this area, we’ve seen a 20% to 30% sales increase in website sales each month. As I mentioned, 70% of our customers live off the military installation. They often shop online, and if a customer pays with our in-house credit card, the shipping is free.
What are the greatest opportunities for the Exchange?
The Internet creates huge opportunities to increase sales and connect with customers. We are tweeting and using Facebook to deliver coupons and incentives to customers. There are also opportunities to use our business analytics tools to gain more insights. By identifying what, when and where product sells, we can better forecast promotions so we send the right quantity of the right product to the right store to avoid missed sales or markdowns.
After 39 years with the Exchange, can you share a favorite memory?
It’s exciting to visit installations and see how associates help and serve those who protect our freedoms. My job is to say thank you, especially to the 300 or 400 associates who volunteer to deploy with the troops. These associates spend six months or a year living in tents or whatever conditions the military is living in, working 16- and 18-hour days, but they all say it is a life-changing, rewarding experience. I’ve seen that too, on the trips I’ve made to Iraq and Afghanistan, but one soldier in Baghdad captured the essence of the Exchange. He said he visited daily because it made him feel like he was at home, not in a war.
Focus on: Signage
For commercial, on-premise signs, luminance (brightness) emerged as a key issue in 2005, when the California Energy Commission (CEC) first adopted the Title 24 regulations for electric signs.
Because a major thrust of energy legislation is to upgrade the efficiency of components used in electrical systems, a key challenge for the International Sign Association (ISA) and the sign industry at large is to ensure that energy mandates do not adversely impact the quality of electric-sign products. Consequently, beginning in 2006, ISA and the California Sign Association (CSA) organized relevant stakeholders to work with the CEC in developing the Title 24 standards. These standards currently affect component specifications for electric signs built and used throughout the United States.
As state and federal rules on energy consumption become increasingly strict in the future, however, preserving the performance properties of electric signs becomes an even greater challenge. Because the appearance of internally illuminated signs represents an artful marriage of specific light sources and plastic media, implementing alternative lighting systems poses a far more complex task than merely changing the types of light sources.
Phasing out conventional lighting components for electric signs implies a sea change in sign-manufacturing practices, which would entail complete redesigns of typical lighting configurations. Similar to the process that occurred during initial development of electric cabinet signs, such a transition would require considerable time and effort to complete successfully.
Sign dimming is another issue raised in recent years in connection with demand response systems widely utilized by electric utilities to reduce peak loads on regional power grids. Additionally, certain local jurisdictions recently have adopted regulations that limit allowable levels of nighttime lighting. In certain cases, these requirements have been applied to illuminated signs.
Technical and marketplace barriers also affect the feasibility of dimming for internally illuminated signs. For example, dimmable ballasts for high-output sign lamps are not currently available, nor do manufacturers anticipate availability of such ballasts in the future. As a result, if sign dimming is mandated in particular jurisdictions, sign manufacturers would need to substantially alter established sign-lighting systems to utilize the lower-brightness lamps for which dimmable ballasts are available. Such a change would imply negative impacts on the luminance and effectiveness of internally illuminated signs.
Because the sign industry has not established specific luminance guidelines for internally illuminated signs of various types, no basis currently exists for comparing the luminance of similar signs that incorporate different light sources. Faced with new regulatory challenges, however, the critical role of brightness in the impact and value of electric signs makes the luminance issue a major challenge for the 21st century.
Responding on behalf of sign companies and end users, the ISA Sign Luminance Task Force currently is defining a comprehensive approach to this issue. Specifically, the Task Force is identifying the major categories of electric signs in today’s marketplace and developing useful profiles of typical lighting configurations for each category. Once this information has been compiled, ISA will determine corresponding research needs for developing appropriate industry guidelines or standards.
ISA’s efforts directly support the long-term interests of sign companies and their retail clients in maintaining the quality and effectiveness of electric signs. The central goal of the current effort is to provide a reliable index for evaluating and effectively addressing the impact of new technology and new developments in the regulatory sphere. We welcome the participation of all stakeholders in the sphere of commercial electric signage.
Bill Dundas is director of Technical & Regulatory Affairs for the International Sign Association ([email protected]).