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BEST PRACTICES: Efficient execution

Shopko Inc., based in Green Bay, Wis., established an energy efficiency plan in 1991 to cut expenses and has implemented it in its 141 specialty discount stores in the states of the Midwest, Western Mountain and Pacific Northwest regions.

Last year, Shopko earned the U.S. Environmental Protection Agency's Energy Star Partner of the Year award. The award stems from the EPA's Energy Star Buildings program that encourages efficient energy usage.

Shopko joined Energy Star in 1994 and has since shaved 20% off its energy consumption while increasing its hours of operation by 22%. These reductions translated into some $3 million in savings.

Now Shopko is expanding its program into 229 Pamida stores. Shopko bought Pamida, an Omaha-based discounter in the North Central, Midwest and Rocky Mountain states, in 1999.

Emphasizing efficiency

“One of the reasons I joined Shopko was because of the systems it had in place,” says Mary Beardmore, director of facilities management, who joined the company in late 2000. “We really are on the cutting edge.”

Shopko's strategy focuses on lighting and heating, ventilation and air conditioning (HVAC) in a blend of efficient equipment and sound company policy. For example, Shopko dims its upgraded lighting system by a third after closing and during cleanup and then by another third for final cleanup before shutting it off. In addition, motion sensors control lights in the back rooms of stores.

Shopko's HVAC systems are part of a monitoring network that anticipates heavy loads. On a hot day, when energy usage approaches high rates during peak periods, the network executes a rolling shut-down of air conditioners on a store's roof — a few turn off while the rest run, then fire back up and others shut off.

Taking advantage of outside help

When it acquired Pamida, Shopko already had an efficiency program in place. But Shopko went a step further by taking advantage of the fledgling Wisconsin Focus on Energy program, which helps businesses become more efficient (see accompanying sidebar) by giving guidance and helping to identify potential savings. Pamida operates more than 15 stores in the state.

“Shopko had done a lot with its stores,” explains Fred Dreher, director of commercial programs for Wisconsin Focus on Energy. “But when Shopko bought the Pamida chain, it wanted us to take a look to see what kind of recommendations we might have for improvement.”

So far, Beardmore says, Shopko is gradually implementing its efficiency program in the Pamida stores, initially focusing on lights. Part of the measured phase-in stems from the sluggish economy, which is forcing companies to carefully weigh capital outlays. Becoming efficient may save money tomorrow, but it costs money today. A Wisconsin Focus on Energy case study on its work with Shopko provides an idea of how expensive it can be.

A survey of a Clintonville Pamida store yielded a suggestion that upgraded lighting could save nearly $6,600 a year, but at a $14,500 cost — that means a more than two-year payback period. It would take eight years for a $41,600 conversion of natural gas heat from electric heat to pay for itself. “Senior management has to buy into the program,” Beardmore says. “There's a certain amount of up-front investment that has to be made.”

Broadly speaking, the initial expense may short circuit efficiency plans other businesses are considering. This is particularly true without the main ingredient — executive level commitment. But as Shopko clearly proves, it can be done.

Joe Gose is a Kansas City-based writer.

Energizing Wisconsin

Thanks to its initial success, the Wisconsin Focus on Energy endeavor is expected to become a fully established, statewide benefit by the end of 2001 after starting out as a pilot program in the northeast section of the state in 1999.

Among other things, inspectors will survey buildings of more than 25,000 sq. ft. and recommend how to upgrade items such as lighting and HVAC components. Boutique operators and other occupiers of small space can attend seminars within their communities to learn how to conduct their own surveys and how to cut energy usage.

Fred Dreher, director of commercial programs for Wisconsin Focus on Energy, sees a lack of retailers taking advantage of the free state-sponsored resource, even though Shopko is living proof that an energy efficiency plan saves money.

“It's a trickier bag,” he says, comparing retail with other industries, such as manufacturing. “Suggest changing lights, and now you're messing with something that's going to make the store look different than they want.”

“One of the things that retail stores have going for them is their long hours of operation,” he says. “So any little thing they can do will have a big impact.”

Dreher remains optimistic that a potential 10% to 15% cost savings will help retailers see the light — preferably one that shines just as brightly while using less energy.
— Joe Gose

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