As the world grapples with scarcity and price volatility in gas, oil, and electricity markets, many businesses are being forced to rethink how they source and use energy in their day-to-day operations. In the food industry, rising energy prices pose a critical challenge, as energy use is essential for the production, processing, storage, and distribution of food products.
In recent years, the food service and retail sector has been hit particularly hard by this trend. Food retail is an extremely energy intensive industry, as products are frequently transported long distances and stored in refrigerated conditions. Rising energy prices have increased operational costs for retailers, harming profits and contributing to higher consumer prices. These challenges are exacerbated by supply chain disruptions and government policies aimed at securing domestic food and energy supplies, often at the expense of global market stability.
Reducing energy costs has become a priority for many retailers who are exploring more energy-efficient practices and renewable energy sources to mitigate the impact of the crisis on food availability and affordability. For the many progressive businesses, this challenge can be turned into an opportunity to lower energy input costs while also switching to smarter, cleaner energy solutions that meet long-term sustainability goals.
The scope of the problem
The food retail industry is extremely energy-intensive, with many supermarkets often requiring twice as much energy per square meter compared to non-food retailers. Retailers primarily use energy for refrigeration, lighting, HVAC (heating, ventilation, and air conditioning), and logistics – all of which is essential for ensuring food safety.
These processes contribute heavily to global energy consumption. Research in the UK has shown that major supermarkets consume approximately 3% of the country’s electricity, while studies in the US have revealed that an average grocery store uses 52.5 kilowatt-hours (kWh) of electricity per square foot annually. Moreover, energy use correlates with CO2 emissions, making retail outlets a major contributor to greenhouse gases and climate change.
Although energy costs are a small percentage of annual turnover in this sector, profit margins are notably thin, meaning that volatile prices can pose an existential threat to stores. This became clear during the height of the energy crisis, with many retailers resorting to laying off staff, reducing opening hours, or simply closing on certain days to keep costs down. Ultimately, though, it is consumers who are hit the hardest, as retailers increase prices to maintain profitability. In 2022, the EU experienced the highest rates of food inflation for over forty years, putting pressure on low-income households, sparking concern over food insecurity, and triggering calls for increased price regulation and cost caps.
Energy efficiency strategies for retailers
To reduce input costs and keep prices down, more energy-efficient measures must be implemented in the food service and retail sector. Striking the right balance is crucial though, as stores must keep their produce safe while also making sure the environment is welcoming and amenable to customers.
One of the simplest and cheapest places to start for retail outlets is lighting. LEDs, for example, are more efficient and last longer than traditional fluorescent lightbulbs, using up to 80% less electricity and significantly cutting costs. Despite this, LEDs are not universally adopted due to replacement cost aversion. LEDs are also ideal for lighting refrigeration units, as they emit less heat and are not affected by colder temperatures, unlike fluorescent lights.
If the conditions allow, stores can also incorporate natural light through windows and skylights to reduce the need for artificial lighting, and many sustainable supermarkets have successfully integrated motion-sensitive lighting systems to further reduce costs.
Refrigeration is vital for maintaining perishable products. However, it is also extremely resource intensive, accounting for as much as 40% of total energy use in supermarkets and grocery stores. Open-air refrigerators are a primary culprit, consuming roughly 30% more energy than closed refrigerators. While many retailers maintain that open-air fridges promote impulse buying, their excessive energy use has sparked petitions in the UK to ban their use. Blackout blinds can also prove beneficial for retailers, particularly in hotter climates as they can help keep ambient light and temperatures low and further reduce the load on refrigerators.
Another crucial component of energy efficiency in retail is ensuring the regular maintenance and inspection of equipment, particularly when it comes to refrigeration units. Ensuring that fridges and freezers are well insulated and free from leaks is critical to preventing energy wastage. Over time, seals can wear out, and insulation can deteriorate, leading to increased energy consumption as the equipment works harder to maintain the same level of performance.
By implementing a consistent schedule for the inspection and maintenance of these units, retailers can detect and address issues promptly, thereby maintaining optimal energy efficiency, extending the lifespan of the equipment, and ensuring the safety and quality of the food products. This proactive approach not only contributes to energy conservation but also supports the broader goal of reducing operational costs and minimising the environmental impact of retail operations.
In some cases, larger retailers are generating their own energy to offset requirements. Newly constructed supermarkets are being designed with large roofs fitted with solar panels and heat capture systems designed to recover and reuse excess heat from refrigerators. Government subsidies can further reduce the upfront costs associated with installing renewable energy systems such as solar panels, though the efficacy of them relies heavily on environmental factors, institutional support, and location, and may not be scalable or feasible for smaller retailers.
Improving energy efficiency in retail
As financial pressures mount, improving energy efficiency in retail is key. Conducting regular energy audits can help food service and retail outlets identify inefficiencies and provide insights and guidance for optimising energy use.
At Farrelly & Mitchell, our sustainability and ESG consultants provide essential support to food service and retail outlets looking to reduce costs, improve ESG performance and transition to more sustainable energy systems. Our experts use on-site audits, market intelligence, and data-driven insights to assess your operational performance, and develop customized strategies to enhance energy efficiency.
With the help of our team, you can reduce your energy requirements, transition to cleaner alternatives, and ultimately improve your commercial and ESG performance. Contact us today to discover how we help to improve energy efficiency in retail.
