Going Green: How to Save Energy and Cut Retail Business Expenses

Retailers spend almost $20 billion on energy every year.

That’s huge, especially considering small businesses spend more than $60 billion a year on energy — meaning the retail industry is responsible for a third of those energy costs. In fact, retail buildings incur more energy-related costs than any other commercial sector in America. And those stats alone are enough to make retailers consider how to save energy.

You might think that’s just part of the cost of doing business. But a 10% decrease in energy expenses has the potential to increase net profit margins by up to 16% in certain retail environments.

But going green isn’t just about cutting energy costs. There are other ways you can be a more environmentally friendly retailer, including things like going paperless and bagless. Below, we outline some ways you can get started going and earning green while learning how to save energy.

How to Save Energy: A Retailer’s Checklist

Figure Out Where You Stand

Before you can set goals to go greener, you have to establish a baseline. Many energy companies will perform energy audits for free, so contact your utility company to find out more details.

An energy audit can reveal areas where you might not realize you’re wasting money and resources. This can be extremely valuable, especially considering that energy is the fourth most expensive in-store operating cost for retailers.

Get Reimbursed for Your Efforts

Learning how to save energy has more benefits than you might expect. Going green is great for both the environment and your bottom line, potentially saving thousands of dollars annually. But beyond the savings, being eco-friendly can also earn you money — in the form of tax incentives.

These incentives are often available both on a federal and state level, and sometimes even on a local level. For more information, check out these resources to help you decipher which credits are applicable to your situation:

• Office of Energy Efficiency & Renewable Energy, Tax Incentives for Energy Efficiency Upgrades in Commercial Buildings
• List of business tax credits from the IRS
• IRS, Energy Incentives for Businesses in the American Recovery and Reinvestment Act
• ENERGY STAR, Tax Deductions for Commercial Buildings

Apply for Funding

Investing in energy efficiency can cost a lot, especially up-front. There are creative ways retailers can find the funds to make the worthwhile investment, like loan programs.

The U.S. Small Business Association (SBA), for example, offers financial assistance programs and information about other organizations that do the same. Check with your government, business organizations, and environmental groups to see if they have more information about local programs.

Look at Your Lighting

One of the most well-known ways of reducing costs and increasing energy efficiency is to give your lighting an upgrade.

Energy efficient lighting can make a huge change in your electricity costs. Look for compact fluorescent lamps (CFLs) and light-emitting diodes (LEDs). LED lights last longer than traditional bulbs, so you get a better bang for your buck. T8 fluorescent lights are a great option for showcasing products — they save energy, illuminate well, and minimize glare.

If you go solar, you could save even more. One entrepreneur cut emissions by 65% and electricity bills by 40%, largely thanks to his business’s move to solar-powered electricity.

Motion detectors can also help cut costs. Macy’s slashed their energy bill by nearly a third just by adding sensors to the lighting in stockrooms. You could also invest in smart lights or programmable lighting.

If your space allows for it, get as much natural lighting as possible. Add windows and skylights, and make sure windows are unobstructed by signage outside.

Always prioritize areas in your store where customers and products will frequently be located or pass through. While it’s important for all areas to be well-lit, those make the biggest impact on sales.

Inspire Your Employees to Join

Your employees are assets who can help you reach your green goals. Without their support, you’ll have a tougher time making the transition.

Educate them on your plan and why you’re passionate about it, and encourage them to share their own ideas as well. They might think of things you never would’ve considered on your own.

Host a training session that explains the measures you’re implementing, and instruct them on how to save energy during their own shifts. Each employee plays a part in your energy-saving goal.

How to Cut Utility Costs Across the Board

Much like lighting, examining your utilities more closely will reveal many opportunities to be greener and save money.

The first steps you can take are to make sure windows and doors are properly sealed when closed. You could consider installing double-pane windows to help with insulation as well. Heating accounts for 40% of energy used in retail locations, so any steps you take to reduce those costs could make a noticeable impact on your bottom line.

Blackout curtains can eliminate the heat of the sun in warm areas of your store. Just make sure you don’t sacrifice lighting completely, as the customer experience comes first.

Programmable thermostats will allow you to schedule your heat or air conditioner to go to predetermined temperatures. Make sure the temperature is comfortable during operating hours, and then ease up when your shop is closed. You could save up to 15% on heating and cooling by changing the temperature by 10 to 15 degrees when no one is in the store.

A more out-of-the-norm example of a retailer aiming to reduce air conditioning costs is Walmart. Some stores have painted the roofs white, reflecting light from sun, which in turn reduces the need for air conditioning.

Purchase the Right Appliances

Water-efficient toilets and sinks can reduce your water consumption, and ENERGY STAR appliances can have major effects on your utility costs (not to mention, some are also eligible for those tax deductions we mentioned).

Replacing an older toilet with a newer, water-efficient one can lower water usage by up to 60%. To reduce consumption even further than water-efficient toilets, consider composting toilets. These are still rare to see in retail settings, so it depends how committed you are to the mission and on your target customers.

Eliminate All Paper

Americans use more than four million tons of copy paper at work every year. That’s about one 100-foot-tall tree per worker per year. Imagine the difference it would make if just a quarter of businesses and retailers went completely paperless.

Going paperless means many things for retailers. Here are some ways you can make your retail business less reliant on paper:

• Pay your business expenses online, such as utilities, contractor invoices, and other monthly costs
• Send email receipts to your customers in lieu of a printed receipt on paper in-store (bonus: you get to build a list for your email marketing while you’re at it!)
• Distribute staff schedules via email instead of on printed-out sheets of paper (this will also allow them to access it at any time)
• Conduct payroll paperlessly, either through direct deposit or some other system

For more information on how to cut down on printed materials, read our guide on how to take your business paperless.

Go Virtual

Along the lines of going paperless, going virtual can also minimize your environmental footprint and reduce costs.

Outsource certain tasks, like marketing or accounting, eliminating the need for another employee to commute to work. Allow your employees to work from home when possible.

The average commute to work is 26 minutes, and more commuters on the roads means more carbon emissions and more environmental harm from road maintenance and new construction.

For retailers, it’s difficult to allow staff to work from home, especially when it comes to the sales associates. They need to be physically present on the floor to help create the full shopping experience for your customers.

Make it easy for your sales associates to get to work in an environmentally friendly way. Offer bus passes or bike rentals, provide free parking or parking passes, set up a bike rack with a pump, or organize a carpooling program.

Say No to Bags

When IKEA set a goal to reduce the usage of plastic bags by 50%, they created reusable bags that customers could purchase for less than $1. They found a way to profit off a policy that saves them money — you could argue they’re double-dipping: eliminating the cost of plastic bags, adding the revenue from selling branded, reusable bags.

Many retailers incentivize the no-plastic-bag concept and offer discounts to customers who bring their own reusable bags.

In 2014, California passed legislation that banned plastic bags at large retailers, as well as imposed a fee for other types of bags at specified locations.

Natural Grocers, a grocery and vitamin store chain committed to going green, has a store policy that they do not provide bags for customers. They only provide recycled cardboard boxes.

If you can’t do away with bags completely, consider charging for them. This will make them less appealing for your customers, encouraging them to bring their own bags. If you’re really committed to the cause, donate the money to an environmental non-profit.

Own Your Green Identity

While benefitting the environment if one of the biggest draws of going green, it can also give a major boost to your brand identity.

Share your green initiatives with the public, and get your customers in on the movement. Consumers care about your products, but they also care about what you stand for, so this is a great way to differentiate yourself and garner support.

How to Save Energy: Moving Forward

Regardless of how extreme you are in your green philosophy, going green can be a huge asset both to the environment and to your bottom line.

How will you cut your energy costs? What methods have worked in the past? Share your tips in the comments below.