March 20, 2008
Wal-Mart’s Cool New Competitive Edge
Energy costs have always been one of the major expenses behind labor when it comes to store operations, particularly in locations running frozen and refrigerated food cases. Merchants understand that reducing energy consumption can provide stores with a competitive edge in the tight margin food retailing business and announcements are made almost daily to herald the opening of the latest green building.
One of the latest along that line comes from Wal-Mart, which opened a Supercenter in Las Vegas this week that uses a new cooling technology that promises to reduce energy consumption in the store up to 45 percent.
The HE.5 prototype, which uses a water evaporation system to cool the store, is built specifically for the western climate. The new system reduces the temperature of water by pumping it through roof-mounted cooling towers. The cold water then runs underneath the floor to provide ambient cooling to the shopping area.
The Las Vegas store uses other energy saving technologies employed in Wal-Mart’s HE.1, HE.2 prototypes including recycling heat from refrigerators and using sensors in freezer cases that turn off LED lights when there are no shoppers in the area.
Terry Townsend, past president of the American Society of Heating, Refrigerating and Air-Conditioning Engineers, was impressed with Wal-Mart’s new prototype that exceeds the 25 percent energy savings of its other prototypes.
“This is not just a baby step. This is a big step,” Mr. Townsend told The Associated Press.
Richard Bourne, associate director of the Western Cooling Efficiency Center at the University of California, Davis, said, “We believe this is the most efficient cooling system implemented in a major retail facility.”
While there is an advantage to be gained from having lower facility operating costs than your competitor, Wal-Mart has maintained that it is not looking to guard any secrets regarding its green building systems.
Charles Zimmerman, Wal-Mart vice president of prototype and new format development, said, “We are committed to openly sharing our learnings with the retail industry and the world because being more energy efficient is something everyone can benefit from.”
Discussion Questions: Where does energy cost reduction rank among retailer priorities today? How much of a competitive edge can a retailer gain by achieving the kind of energy savings projected for Wal-Mart’s HE.5 prototype?
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To David’s point, I don’t think the consumer is necessarily the first (or even most important) target here. Faced with decreasing opportunities for top-line growth, Wal-Mart needs to pursue serious bottom-line savings to remain successful. Keeping the bottom line under control in several areas–like energy for example–will have the aggregate impact of allowing Wal-Mart to remain price competitive, and that’s where the customer re-enters the equation.
Leaders in industry are always the first to spend money to test and learn. If the returns are significant, following their lead is good for any retailer to adopt. Wal-Mart continues to behave as a serious leader in our industry. Their Sam’s Club store in Fayetteville is another example of great sustainable building and site management implementation. We applaud them.
Energy cost reduction is a valuable component in the mix to achieve greater profitability, and it’s a component that is rooted within, rather than reliance from vendor partners. Wal-Mart’s HE.5 prototype can only be applauded if for no other reason than because it’s well intended and Las Vegas is certainly a good spot for trial.
Wal-Mart is showing they are committed to building a better planet. This is noble and smart business all at the same time.
Energy cost reduction is a growing priority for retailers. It is not only important for cost savings and environmental benefits, but it can give a retailer a competitive advantage. It is important to communicate what a retailer is doing to customers, associates, and the industry. Wal-Mart’s willingness to share their learnings can lead to best practices for more retailers.
If Wal-Mart can save real dollars reducing energy costs and pass the savings on to the consumer, then it gives Wal-Mart an edge. If they are just projecting the image of being green with no dollars going back to the consumer, then the consumer couldn’t care less.
Amen to David and Anne. Wal-Mart has the most to invest and potentially, I suspect, the most to gain from exploring sustainable retail solutions. And, no question, David is right–if it will keep their Vegas store cool it should work anywhere they might want to open stores.
It’s really a simple strategy: good for us, and just plain good to do. Win-win.
Energy savings gives you a competitive advantage in the same way saving on ANY cap-ex spend can; better prices/value to the customer=more customers, more loyalty, more sales. Is there anything superior to that? Just look at how Wal-Mart has performed during this downturn for your answer.
In terms of being green though, packaging and overall waste rank just as high as energy, and clearly, there’s much more work to be done on those fronts.
But first things first, right?
Before the economic downturn, Wal-Mart was getting hammered almost daily for a variety of issues; from living wages to killing the small family retailer to manufacturers with questionable labor practices (I’m not stating or assuming on the accuracy of the accusations simply stating the political environment at the time).
Presently, most Americans are more concerned with the economy and more forgiving of low price retailers. Wal-Mart is very smart in promoting green activities. Besides the monetary savings, they will benefit from a more positive perception that can carry them beyond this downturn and make them more acceptable to all consumer segments when the economy swings back.
In an environment of ever-shrinking margins, any areas where expenses can be reduced, and cost structures altered, can have a profound impact on the bottom line. As the cost of energy rises in this environment, any savings in utility and overhead expenses have an increasingly positive impact on profitability.
When it comes to sustainability, there’s a lot of low hanging fruit. A few weeks ago, I discovered that a client of mine wasn’t recycling cardboard and hadn’t considered sharing a compactor with adjacent stores. And their warehouse was buying new cartons instead of recycling used cartons.
As a taller-than-average person, I can’t tell you how many times I’ve felt the uncomfortable heat from wasteful spotlights in many stores.
You don’t have to be Wal-Mart to be green.
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To David’s point, I don’t think the consumer is necessarily the first (or even most important) target here. Faced with decreasing opportunities for top-line growth, Wal-Mart needs to pursue serious bottom-line savings to remain successful. Keeping the bottom line under control in several areas–like energy for example–will have the aggregate impact of allowing Wal-Mart to remain price competitive, and that’s where the customer re-enters the equation.
Leaders in industry are always the first to spend money to test and learn. If the returns are significant, following their lead is good for any retailer to adopt. Wal-Mart continues to behave as a serious leader in our industry. Their Sam’s Club store in Fayetteville is another example of great sustainable building and site management implementation. We applaud them.
Energy cost reduction is a valuable component in the mix to achieve greater profitability, and it’s a component that is rooted within, rather than reliance from vendor partners. Wal-Mart’s HE.5 prototype can only be applauded if for no other reason than because it’s well intended and Las Vegas is certainly a good spot for trial.
Wal-Mart is showing they are committed to building a better planet. This is noble and smart business all at the same time.
Energy cost reduction is a growing priority for retailers. It is not only important for cost savings and environmental benefits, but it can give a retailer a competitive advantage. It is important to communicate what a retailer is doing to customers, associates, and the industry. Wal-Mart’s willingness to share their learnings can lead to best practices for more retailers.
If Wal-Mart can save real dollars reducing energy costs and pass the savings on to the consumer, then it gives Wal-Mart an edge. If they are just projecting the image of being green with no dollars going back to the consumer, then the consumer couldn’t care less.
Amen to David and Anne. Wal-Mart has the most to invest and potentially, I suspect, the most to gain from exploring sustainable retail solutions. And, no question, David is right–if it will keep their Vegas store cool it should work anywhere they might want to open stores.
It’s really a simple strategy: good for us, and just plain good to do. Win-win.
Energy savings gives you a competitive advantage in the same way saving on ANY cap-ex spend can; better prices/value to the customer=more customers, more loyalty, more sales. Is there anything superior to that? Just look at how Wal-Mart has performed during this downturn for your answer.
In terms of being green though, packaging and overall waste rank just as high as energy, and clearly, there’s much more work to be done on those fronts.
But first things first, right?
Before the economic downturn, Wal-Mart was getting hammered almost daily for a variety of issues; from living wages to killing the small family retailer to manufacturers with questionable labor practices (I’m not stating or assuming on the accuracy of the accusations simply stating the political environment at the time).
Presently, most Americans are more concerned with the economy and more forgiving of low price retailers. Wal-Mart is very smart in promoting green activities. Besides the monetary savings, they will benefit from a more positive perception that can carry them beyond this downturn and make them more acceptable to all consumer segments when the economy swings back.
In an environment of ever-shrinking margins, any areas where expenses can be reduced, and cost structures altered, can have a profound impact on the bottom line. As the cost of energy rises in this environment, any savings in utility and overhead expenses have an increasingly positive impact on profitability.
When it comes to sustainability, there’s a lot of low hanging fruit. A few weeks ago, I discovered that a client of mine wasn’t recycling cardboard and hadn’t considered sharing a compactor with adjacent stores. And their warehouse was buying new cartons instead of recycling used cartons.
As a taller-than-average person, I can’t tell you how many times I’ve felt the uncomfortable heat from wasteful spotlights in many stores.
You don’t have to be Wal-Mart to be green.