What is a “sustainable supermarket” and should competitors fear this new “eco-friendly” business model?
A sustainable supermarket, from an engineering perspective, is designed and constructed by using methods and technologies that ensure:
- Minimum amount of electricity consumption
- Usage of environmental refrigerants
- Utilization of natural – renewable resources of energy
There are several KPIs that are critical for the financial sustainability of a commercial chain. One of them is the consumption of electrical power. The budget that is spent for the electricity needs of a retail chain must be less than 1.5% of the annual turnover.
The operational expenditure of a supermarket is highly affected by the energy cost, which means that an “eco-friendly” designed supermarket is more competitive and profitable. Just imagine:
- An ECO convenience store (from 100 -350 m2 of sales area) spends 15,000 € less per year for electricity.
- An ECO medium sized supermarket store (350-1000 m2 of sales area) spends 35,000 € less per year for electricity.
- An ECO hyper market (over 1000 m2 of sales area) spends 50,000 € less per year for electricity.
Now, for example, imagine a commercial chain that is consisting of 100 convenience stores, 30 medium sized supermarkets and 5 hyper markets. This means that if the above mentioned commercial chain is consisted by ECO Stores, then it saves 2,800,000 € per year. This is a very serious reason for the competitors to fear this new “eco – friendly model”.
Please share examples of the environmental waste that occurs within current supermarket practices and how this created the push for more “eco-friendly” stores?
There are several types of waste that are produced by a commercial chain (like food waste that is not only an ethical and economic issue but it also depletes the environment of limited natural resources) but for the purpose of this interview I will focus on CO2 emissions which are very critical for the environment.
Global warming is caused by the emission of greenhouse gases. A total of 72% of greenhouse gases emitted are carbon dioxide (CO2).
Average Carbon emission due to electricity production of 1 kWh is 0.47kg (figure for electricity production methods that are used in the UK).
With that said, let’s imagine a commercial chain like the one described above, which is not made up of ECO stores. It operates 24 hours per day & 7 days per week. This commercial chain consumes 43,750,000 kWh/year and produces 20,562 tons of CO2 emissions.
A same sized commercial chain that is composed by ECO stores, produces 12,337 tons of CO2.
According to the Kyoto Protocol roll out plan and negotiations that were held in Lima in 2014, there was an agreement on a post-Kyoto legal framework that will obligate all major polluters to pay for CO2 emissions in future.
That means an ECO commercial chain will not only spend less on electricity, but will also pay less on environmental penalties.
One result of the Kyoto agreement is also the F-GAS Regulation that was voted by the European Parliament on 2014 (No 517/2014), which forbids the use of hydrofluorocarbons (HFC) as refrigerants because of their high GWP value. (GWP stands for the climatic warming potential of a greenhouse gas relative to that of carbon dioxide (CO2), calculated in terms of the 100-year warming potential of one kilogram of a greenhouse gas relative to one kilogram of CO2).
Due to F-gas regulation restriction, HFC refrigerants are going to disappear from the market and their price is going to be multiplied, so a possible leakage will cost to retailers a fortune.
Thus, by upgrading the refrigeration installations of a supermarket, retailers achieve two targets at once:
- Usage of low GWP environmental refrigerants and regulation compliance
- Lower electricity consumption
Consequently, in order to conclude in addition to energy – expenditure saving, retailers have to comply to the relevant regulations in order to avoid penalties.
Can you share an example of a supermarket that made the transition to a “sustainable” initiative and succeeded? Please share the details of the overall process, i.e. timeline, prices, etc.
I will refer to two different examples. The first is from a scratch design and construction of a supermarket and the second is the modification of an existing commercial chain.
1. Creation of new ECO Store
Around 14 months ago, I undertook the design & project management of three 700 m2 supermarkets in Greece, more specifically, Santorini, Kyparisia and Akrata. The owner was a franchisee of AB Vasilopoulos SA, which is a subsidiary company of the Belgian Delhaize Group.
When I explained to the owner the benefits of an ECO Store, he was immediately convinced to follow through with my proposal and agreed to award me the study of the stores.
In the end, these stores included several new technologies in refrigeration, lighting and air-conditioning:
Usage of floating condensation technology in refrigeration (a technology where the condensation set point is dynamically adjusted according to the external environment temperature). – Saves up to 25% energy.
Usage of a liquid sub-cooler in negative refrigeration. – Saves up to 20% energy.
Usage of CRO technology, which is a technology that is based on an algorithm in order to adjust dynamically the suction pressure, according the achievement of the set point of the temperature of the refrigerators. – Saves up to 10% energy.
Usage of asymmetric set up of compressors rack by applying an inverter to a small compressor of the positive temperature rack and one to a small compressor of the negative compressors rack (with this method partial loads were managed accurately) – Saves up to 10% energy.
Usage of electronic expansion valves at the refrigerated self services and cabinets – Saves up to 7% energy.
Usage of “eco-friendly” refrigerant
Installation of T5 ECO electronic lamps for the linear lighting (lighting of the corridors) – Saves up to 40% energy.
Installation of LED lighting for the spot lights and the parking lights. – Saves up to 50% energy.
Movement sensors in warehouses
- Installation of inverter air conditioning of high energy class.
Automation for opening and closing of the store
Automation that permits personnel to turn on and off all the equipment of the store by using a single button (This way personnel doesn’t forget to turn off one equipment during the closing of the store, like air conditioning, boilers, lighting, etc.)
After one year of operation, the stores energy consumption statistics were astonishing and my client was very happy. Every store consumed 40% less electricity compared to the average energy consumption of similar commercial chains of AB Vasilopoulos S.A.
This was translated to a saving of 90,000 € per year for my client.
Regarding the capital expenditure, we succeeded to keep the cost down compared to standard solutions because we succeeded to assemble the refrigeration equipment and all necessary automations in a Certified Greek factory with lower costs.
2. Energy improvement of an existing commercial network.
One success story of optimizing the energy footprint of a commercial chain is the Greek Super Market Company Market in SA. Market has been a client of mine for 4 years and the owner was willing to improve the sustainability of his network.
This company owns 140 stores, so we started to study the electricity consumption statistics of the network. For every store, we prioritized our moves and began, for every store, to run the below procedure:
By this way, we optimized 40 stores and the company was awarded by an annual 720,000 € decrease in electricity costs.
The modifications that we implemented to the 40 stores had a cost of about 1,800,000 € and the payback of the investment was 2.5 years.
Many consumers expect sustainability to be built into their purchase, but they also expect it not to change the price point. For example, Whole Foods was named the winner of Greenpeace’s Carting Away the Oceans report the second year in a row. But for those with lower than average income, Whole Foods is too expensive. Will this rise in prices cause sustainable supermarkets to be a luxury to only those with wealth?
I really disagree with the opinion that creating a sustainable commercial network rises the prices for the consumer.
Reducing the operating costs of the network is making it more competitive and the final result equals better prices for the consumers.
Supermarkets operate in a highly competitive market and selling more remains is the dominant driver. For many corporations, the effect on the environment is not priority. How would you persuade one of these “eco-wasters” to become sustainable when cost is their main issue?
I believe it is very easy for me to persuade the ECO wasters by:
- Presenting to them success stories of my other clients and their financial savings
- Explaining to them the upcoming directives and the new European Commission regulations and penalties for the non adopters.
- Explaining to them that spending on sustainability is investing in their jobs by upgrading their equipment and their stores and that they will increase the market value of their companies
If some retailers miss the train of sustainability, then this is definitely going to cause a negative effect on their sales.