Two presenters at the 27th Annual Food Marketing Institute Energy & Technical Services Conference looked at big picture issues facing supermarkets and why these should be of interest to those who design, install, and service mechanical refrigeration and air conditioning equipment.
According to Michael Sansolo, FMI’s senior vice president, “Refrigerant and air conditioning is not high on the list of worries.” That list is topped by rising health care costs and the cost of accepting credit and debit cards. But, he said, those issues do impact all aspects of an industry that on average has a 1.15 percent profit margin, he said.
The key, he said, is to look to supermarkets that have higher profit margins, and therefore more to spend on the mechanicals, and those who work on them. For example, he said, the top 25 percent of the supermarket companies in the industry have an average 3.5 percent profit margin.
“Companies that are exceptional are also the most profitable,” he said. “They give exceptional service that surpasses customer expectations. And this doesn’t have to be upscale supermarkets.”
One trend that is in some ways linked to this is that the emphasis on mega-stores seems to be waning. The conventional-size, 30,000-square-foot store has become more common. There also is a move toward the stores “fitting into different neighborhoods,” Sansolo said. For example, cities are starting to see more “grab and go” stores of 7,000 square feet. They were designed for those who work and live in a city and are just picking up something for dinner that evening. Suburbia continues to have larger stores, where several days’ worth of shopping for a variety of meals can be done at one time and location.
Finding “the right store for the right market doesn’t mean there is one answer for every question, because there isn’t one question.” But that isn’t necessarily bad, he said. “We live in a world that is complex. The problem is, we want to battle complexity when we should be embracing it.”
The supermarket industry, he said, should be involved in such health issues as overweight Americans. “We are the folks that supply the food. People know they are eating badly. They know they should be eating better. But they don’t know how to do it.”
The issue of energy efficiency is one the HVACR industry is most directly involved in, he said. It’s one that needs to be explained to customers, and that results in stores that are both energy efficient and environmentally friendly. “We need to convey to customers the value of that.”
He admitted that predicting future trends is difficult; in fact a bit of a mystery. Who could have forecast the success of upscale coffee shops, when once people just bought their coffee at the grocery store, or a department store, becoming a highly successful supermarket chain as well?
“Where our industry is today is where nobody expected it to be,” he said.
The Energy IssueCosts and supplies of energy remain uncertain, which is why many decision makers in the supermarket sector want their engineers to design energy-efficient systems, and they want their technicians to keep it that way.
Steve Kiesner, director of National Markets for Edison Electric Institute, noted “price volatility” that may be affected by damaged wells recovering from hurricanes, high demand, economic growth, the international market, and the world oil market.
He noted that the cause of outages is weather related in 67 percent of such cases; in 12 percent of the cases, it is an animal like a squirrel getting into a mechanical system.
The demand for more power plants comes with construction and operation risks, he said, as well as having such plants themselves operate in an energy-efficient manner. Security has also become a consideration at power plants.
Kiesner noted a range of power-generating options such as coal, nuclear, and natural gas. He told those in the supermarket industry, “There is a risk in a lack of diversity of fuel sources. You can’t just rely on natural gas in one region of the country or you are going to get whacked by gas prices.”
He said the power-generating industry is committed to meeting issues it is facing, such as by spending $19 billion to shore up the transmission infrastructure over the next two years, and $13 billion to shore up distribution over the next 10 years.
He acknowledged other countries are increasing their demand for power. But, he said, while China currently consumes 2.72 trillion kWh each year, the United States is at almost 4 trillion kWh and growing. He encouraged commercial users like supermarkets to look at tax incentives that may be available for demonstrating energy reduction efforts.
Next ExpoThe 28th Annual Food Marketing Institute Energy & Technical Services Conference will take place Sept. 9-12, 2007, in Denver.
For more information, visit www.fmi.org.
Publication date: 12/04/2006