Grocery and convenience stores are a vital part of their communities, supplying fresh foods, quick snacks, jobs, and even gathering spots. They also create a significant environmental impact. These impacts are becoming more scrutinized by regulators and other stakeholders, and the industry must manage increased regulations on food waste as well as bans on plastic bags and other single-use plastics. To manage resources, satisfy stakeholders and more positively impact their communities, these stores can turn to sustainability solutions to reduce resource use and related operating costs.
What challenges are groceries facing today?
From ‘superstores’ that offer both grocery and retail offerings to standalone convenience stores, this industry’s biggest challenges include razor-thin profit margins, high energy and water consumption and waste generation, and evolving customer preferences for greater variety at competitive prices.
The high cost of doing business (i.e., labor, food and resource costs) greatly impacts profit margins, so any efficiency improvements can drive significant profits. While other retail businesses may operate for less than 12 hours a day, grocery and convenience stores often operate for 24 hours a day, seven days a week, minimizing the equipment, lighting and HVAC downtime where savings are typically found.
Consumers have increasing online options to the traditional grocery store such as shopping and delivery services or meal kits delivered straight to their door. They want greater convenience, so in turn grocers are responding with new in-store buying experiences. Salad bars, prepared food and meal kits are on the rise, requiring additional equipment such as ovens, heating elements and increased water consumption and single-use plastics. Grocers must balance creating an environment that’s attractive to customers and increases product visibility while considering sustainable business practices.
What grocery trends support the sustainability transformation?
- Regulations in states like California, Massachusetts, and Vermont are requiring grocers to better manage food waste either by composting or donating food that is nearing expiration dates. France has also issued a law banning grocery stores from throwing away edible food, changing $4,500 for each infraction. To stay ahead of these laws and resulting fines, companies should conduct regular waste audits to inform their waste diversion strategy.
- The ‘ethical consumer’ is searching for healthy, organic, local products as well as a transparent and sustainable supply chain, eschewing superstores for brick-and-mortar or online stores that make organic and healthy foods more accessible. As grocery and convenience stores change layouts, displays and products, they must understand the costs associated with these changes. Leveraging insights into resource consumption and waste generation can inform smart efficiency projects, which can then be leveraged and promoted to the new ethical consumers.
- New equipment technology is allowing for more than just energy reduction in stores, adding diagnostics capabilities that can improve maintenance and identify equipment failures. In addition to the equipment storing the food, grocers will soon be more broadly investing in improved payment technology, increasing the number of internet-connected devices within a store.
What should groceries and convenience stores be thinking about?
Some of the following actions can help grocers address current trends and external pressures while maximizing savings and resource efficiency.
- Look for ways to reduce consumption. Simple, regular maintenance, such as cleaning, checking for refrigeration or water leaks, and adjusting settings can not only reduce energy consumption but extend asset lifetime. More efficient upgrades, such as LED lighting, light sensors and refrigeration doors, can help reduce energy usage. In fact, for larger supermarkets, a $1 decrease in utility costs could be equivalent to almost $60 in sales.
- Tackle larger equipment upgrades. Larger systems like HVAC and refrigeration are huge energy consumers, and the less efficient these systems become, the more they cost. With EMS systems in place, stores can use sensor data to identify inefficiencies and the highest potential project ROI, then install more efficient systems. Use early results to make the case for larger portfolio-wide rollout. If capital is an issue, explore green financing programs.
- Implement a holistic waste program. Recycling bins are not enough –implement a combination of training, signage, equipment and service changes. Conduct a waste audit to inform your strategy for diversion and food waste programs.
- Keep up with regulations. Be aware of and understand the financial and operational impacts of federal, state and local regulations on food preparation, food safety, and the handling and disposal of hazardous waste.
- Communicate sustainability efforts. Formalize a sustainability program and track the results year over year. As consumer and investor interest in sustainability continues to grow, sustainability reporting will become table stakes.
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