EXCLUSIVE: New Lighting Helps Retailers Cut Utility Bills, Boost Sales

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EXCLUSIVE: New Lighting Helps Retailers Cut Utility Bills, Boost Sales

By Barbara Grondin Francella
NEW YORK -- C-store designers and other industry players are pushing new lighting technology as a relatively low-cost way to improve customer experience while reducing utility bills.

"Lighting is one of the most undervalued ways retailers can enhance what they are doing in the store," said Paul Pizzini, director of design for Miller Zell Inc., a retail design firm based in Atlanta. "We have seen operators of older stores adjust their lighting to save energy and the store comes alive. If you go into a store that hasn't updated their lighting in the last seven or eight years, it will look dated, not as well-presented. Changing lighting can have a significant impact on sales."

Indeed, there are not many capital improvements c-store operators can make that will give them as significant a return on investment, said Jim Borland, president of Greensboro, Ga.-based U.S. Energy Capital, which specializes in providing financing to c-store operators. "I've seen c-store operators report sales increases of 3 to 5 percent after interior and exterior lighting improvements."

As a cost center, interior lighting for a typical c-store represents approximately 18 percent of the site's total electricity bill, Borland noted. Canopy lighting may account for another 28 percent.

"A one-store operator's electric bill is probably close to $2,500 or more per month and he can cut that 20, 25 percent or more with the right lighting and energy upgrade," Borland said.

Retailers with older stores may find now is the time to upgrade. Utility deregulation could lead to a 15-percent increase in electricity costs each year over the next three years, warned Mark Holman, a lighting contractor with Prizim Lighting of Dublin, Ohio. "If your monthly lighting electric bill is $502 now, that would mean it could rise to $581 the first year, $669 the year after that and $769 the third year. Who knows what the future holds? One thing is for sure, electricity will cost more next year than it did this year."

At York, Pa.-based Rutter's Farm Stores, President Scott Hartman and his team are testing various energy-efficient lighting tactics. "Lighting is a high priority when [considering] strategic investments," he said.

In one remodeled store, the chain replaced ceiling fluorescent tubes with more energy efficient T-5 lighting. "It improved lighting inside the store considerably," Hartman said, noting many studies have supported the cost benefits of such a move. "We feel positive about that and are ready to replace tubes in other stores as it makes sense."

The chain also has installed LED (light emitting diode) lighting in cooler doors. "It is more efficient and a little brighter and helps eliminate sweating on doors," Hartman said. "That saves on energy too."

Savings on Site

Perhaps the biggest misconception retailers have about lighting upgrades is the potential savings, said Borland, who works closely with the Environmental Protection Agency's (EPA) Energy Star program. "C-store operators don't understand the new lighting technology. Stores that are open at least 18 hours and pay more than 8 cents per kilowatt hour are likely to find investing in lighting upgrades a very attractive deal."

While the credit squeeze has made store improvement loans tougher to get, operators with good credit who want to upgrade their lighting should find an excellent return on investment, Borland said. C-store retailers in need of upgrades are likely to generate positive cash flow, making the project a self-funding one. "In almost all cases, the savings are greater than the loan payment," Borland said.

In most retail situations, operators who upgrade to energy-efficient lighting will cut electricity costs by 30 percent or more, provided they are starting from an industry average rate of usage, according to Jerry Lawson, national manager of Energy Star Small Business. (For specifics on Energy Star's no-cost services, a list of Energy Star products, guides for analyzing businesses' energy use, and information on possible tax credits and rebates, go to www.energystar.gov/smallbiz.)

Illuminating Design
In terms of lighting design, c-stores face challenges other types of retailers don't have. "Many c-stores are open continuously, easily doubling the time they run their lights compared with traditional retailers. Energy usage, lamp [light bulb] replacement and light fixture maintenance become very significant issues," Holman said. "Lamps seem to be constantly burning out and the light fixtures can really take a beating from all this use. Ballasts fail sooner. Lamp sockets get brittle and can be broken during the increased lamp changing. The fixtures have an increased chance for damage due to frequent handling."

Among the most common mistakes c-store operators make: Buying the lowest initial-cost light fixtures. "This usually costs more in the long run because of increased maintenance costs over time, lower optical performance and sometimes higher installation costs," Holman said. "You end up with a higher electricity bill and less light. Since the fixtures are driven so hard, a moderate-quality fixture should be the minimum standard in an effort to reduce maintenance and electrical costs."

C-stores face another challenge: illuminating many merchandising areas in a small space. In the past, this led to over-lit stores. But the industry's most innovative retailers are transforming c-stores into better-lit, more efficient energy users as local building codes demand it, Miller Zell's Pizzini said.

"New requirements and a focus on LED and energy-saving initiatives force us to watch very closely the amount of wattage and high-level foot-candles previously desired by c-stores," he said. "We will see an increase in the use of LED for cooler cases and specialty displays, because LED gives off a clean, white light and uses less energy."

In the past, c-store operators would open with a grid of fluorescent lighting on the ceiling. "They were missing an opportunity to introduce specialty lighting to highlight promotional areas or present an aggressive merchandising story," Pizzini said, "then back off and develop some kinder, gentler lighting areas, especially around the coffee bar and beverage and condiment areas.

Stores operated by industry innovator Sheetz Inc., for example, evolved from earlier prototypes that "were a bit like Las Vegas [with zebra-striped ceilings]," Pizzini noted. "The idea was high-energy and in-and-out fast."

Later prototypes, designed by Chute Gerdeman Retail, sent a different message. "To appeal to a broader audience, specifically women, Sheetz launched the world's first convenience restaurant," said the firm's Elle Chute. "Our goal was to attract their target customer using feminine architecture with elements like curved soffits and pendant lights."

Over-using halogen accent lighting is another common misstep, Holman said. Customers lose focus because too many areas are highlighted. "You create no identifiable focal point and spend extra money to accomplish nothing," Holman said. "Identify two or three focal points in the store and concentrate on those areas."

What's more, the cost of replacing all of those halogen lamps is substantial. Most halogen lamps used by c-store operators have a rated life of 3,000 hours. If the c-store is open 24/7, then half of the halogen lamps can only be expected to last 125 days, Holman said.

To highlight specialty areas for ExxonMobil's globe-spanning On The Run chain, the designers at Miller Zell needed to be creative and flexible. "We went with more-efficient metal halide wall-wash lighting, where previously a retailer would more likely use an incandescent spotlight," Pizzini noted.

In the past, c-store operators have relied on neon or other energy-draining signage to highlight key areas. "Now, we're using more efficient technology, such as digital media, inside the store," Pizzini said. "Digital media can be a real advantage, because c-stores frequently have changes in merchandise and pricing. Neon and other specialty lighting is really a thing of the past because of the energy use."

With security a major concern for most c-store operators, some stores have been over-lit outside, too. "We believe extra light between midnight and daybreak is a crime deterrent," said Rutter's Farm Stores' Hartman. "But there are so many governmental approvals over light leaving the property, you have to be very careful about outdoor lighting."

For example, while typically Rutter's Farm Stores have backlit canopies, some older stores do not. "We have been installing a lighting system that shines down on the canopy so that it displays our brand much nicer than a dark canopy at night does."

Increasingly, energy efficiency and quality of lighting are not mutually exclusive, noted Energy Star's Lawson. "In the early days of compact fluorescent lighting or LED, you weren't seeing quality, even if they were the best quality technology at the time. But there has been a sharp ramp up. LED is very exciting and will supersede all types of fluorescent lighting for quality and efficiency and longevity, though right now applications are limited."

Pizzini agreed, and said LED technology is improving. "When it first came out, it didn't have the desired brightness. We are using LED now primarily for accent lighting and in light-box graphics, which used to be cumbersome-looking. We're not using it for overall illumination yet; it’s not quite there."

One other point: Retailers may want to herald their new energy-efficient lighting. "Going green is a good way to distinguish yourself from the competition," Lawson said, noting Energy Star helps retailers determine the amount of greenhouse emissions they save through new lighting and can help get that message across to customers.

"It is something your employees can be proud of too," he said.

Still, c-store operators should be cautious in their green claims, Hartman said. The chain lists its energy-efficient lighting moves as one of many green initiatives if asked by the media or other interested parties, but isn't advertising them yet. "We want to make sure we have our act together before we jump out in front of the consumer," he said. "Retailers need to be astute in their approach to that. If there is anyone folks will be skeptical about, it will be a retailer selling fuels."

Lighting Design Tips for C-Store Operators
Holman, of Dublin, Ohio-based Prizim Lighting, offers these c-store design tips:
* Identify focal areas with good sight lines and rotate the product or graphics to keep the focus fresh. Use a bare minimum of focal lighting to create visual intrigue and interest, while keeping expenses down. "Lighting influences customer behavior and can be used to boost impulse sales and attract customers to areas of the store they had no intension of walking by," Holman said.
* Use wall-washing illumination to draw customers through the space and add a sense of pleasantness. "Wall-washing also provides great lighting for customer evaluation of merchandise and if the space is narrow or small, it will make it feel larger and more spacious," Holman said.
* Consider bi-level switching for day and nighttime light levels. "C-stores often seem too bright at night," he said. "Reducing the light level by one-third or one-half can save energy and create a more comfortable environment.

Tips To Save On Utility Bills
Energy Star's Lawson offered these suggestions for cutting c-store energy costs:

* Have a heating and air conditioning contractor in the store for a system tune-up at least once a year, before the winter or summer peak season.

* Consider lighting controls, timers and sensors. "A c-store is small enough that you don’t have a lot of people in the storage area and restrooms," Lawson noted. "It doesn't cost much to install occupancy sensors there. They are cheap and do-it-yourself. It's human nature to leave the lights on."

* Realize programmable theromstats pay for themselves quickly. "Some c-stores are not open 24/7. You can come into a store that's comfortable, wtihout having to run the air conditioning all night to achieve that. Some stores, depending on location and what diretion the glass faces, may be able to coast for the last 45 mintues before closing without the air condition blasting."

* Use security lighting strategically. "You don't want to leave security lighting on all the time," he said. "You ought to be able to reduce lighting somewhat, anywhere you can, and save money. Retailers will have to trust their own judgment on this, depending on other security measures and the store's location."

* Figure in the role of the store's glass front. "C-stores probably have more glass per square foot than most businesses," Lawson, "It is the luck of the draw what the site's orientation is."

If south facing, a retailer is in good shape, because in the winter the store is getting free solar heating and in the summer, the sun is straight overhead and overhangs may keep direct sun from coming in, Lawson said. If facing east, the store will get morning sun and depending on the climate and time of year, may or may not welcome that. Once that sun is gone, there maybe a larger benefit of day-lighting.

"If west-facing in the Sunbelt, retailers should give thought to solar energy and perhaps some shading from the gas canopy or trees," Lawson noted. "The energy bill isn't the only concern, customer comfort is too -- an overhang is a great deal of help."

If a retailer uses solar film on the windows to block the western sun, he may lose some day-lighting, but since air conditioning uses more electricity than lighting, it may be best to use the film and reduce cooling-season heat gain, he said. "It is very unlikely that a c-store would actually turn off lights to save money with day-lighting. Solar film's benefits are a function not only of solar orientation of the front glass, but also local climate or 'degree days.'"

Unforunately, franchisees who use a standard design are destined to deal with the luck of the draw. "They may need to find ways to overcome the whole issue of orientation of the sun."

* Rework your exit signs. "C-store operators will only have a couple exit signs, but they are on 24/7," Lawson noted. "Many operators are using compact flourescents in their signs, which are good, but LEDs are better and available as low-cost retrofit kits."
* Consider LEDs for freezer cases. Unlike fluorescent tubes, which no not like to operate in cold environments or vertically, LED light output increases with colder temperatures. "It's a slam dunk application for better lighting and cost savings," Lawson said.