After a visit to Bed Bath & Beyond stores, Bank of America analysts are accusing the retailer of cutting its air conditioning in an attempt to “quickly trim expenses to align costs with [sales] declines.”
In April, Bed Bath & Beyond reported its sales sunk 22%. Bank of America analysts project sales to plunge another 20% this quarter and foresees more store closures as a response. According to Fox Business, analysts reported mounting concerns such as the home goods chain reducing store operating hours, cutting employees’ hours, replacing rewards programs, and cancelling remodeling projects.
Bed Bath & Beyond denies these allegations and stated that any changes in store temperature did not come from corporate.
“We've been contacted about this report, and to be clear, no Bed Bath & Beyond stores were directed to adjust their air conditioning and there have been no corporate policy changes in regard to utilities usage," a Bed Bath & Beyond representative told CNN.
But is turning off the a/c even worth it?
“Let’s say I’m closed for a day and I just turn the a/c off — it’s 85° out and there’s 90% relative humidity,” said Ken Misiewicz, president and CEO of Pleune Service Company, a commercial and industrial HVAC contractor serving markets in Lansing and Grand Rapids, Michigan. “It’s going to run the entire next day trying to catch up. There is no free lunch here.”
If a business isn’t worried about freezing or customer comfort, it can cut some minor costs. But the pros don’t outweigh the cons. If it’s 84° inside of a store, customers or employees won’t want to be there.
Customers will walk in and walk right back out, especially in southern states.
“But is that a good business decision? Well, it might be a good electrical consumption decision,” Misiewicz laughed. “However, it might save you a nickel to cost you a dollar.”
Bed Bath & Beyond has already been offering elevated promotions, but analysts at Riley Securities report that those promotions aren’t helping, CNN said. A decrease in store traffic caused Riley Securities to reduce their price target for the retailer’s stock from $17 to $7.
President and CEO, Pleune Service Company
Strategically speaking, setback is an approach businesses can take when it comes to wanting to cut a/c costs each month, without having to sacrifice customer or employee comfort. But taking into account enthalpy, or the amount of humidity and moisture that is contained in the air, Misiewicz would say it’s not a good decision during extreme cooling seasons.
“We don’t want [the enthalpy] to get beyond a certain point. If it does, then the work it’ll take to get it out will still cost you the same amount of money, but it won’t be comfortable for customers or employees,” Misiewicz said.
In other words, turning off the a/c does save money, but it’s not ideal. A sudden really cold or warm night asks a lot of HVAC equipment.
“The idea of on-off control is not taught in school for a reason,” Misiewicz said.
During the shoulder seasons, it does make sense to turn the a/c off at night and then back on during the day, Misiewicz said.
“It’s never going to get back to the setback temperature anyways. So it’s almost irrelevant.”
If a business can do proper setbacks and avoid problems with the building’s total enthalpy, and not lose out on business due to lack of employee or customer comfort, it’s supposed to save about 10% of a/c costs a month, Misiewicz said.
But before a business can think about setback, they have to start with preventive maintenance, making sure that things are clean and operable and ready to start. Then start looking at more delicate or sophisticated strategies like setback, Misiewicz said.
“Because once you go too far with setback, which turning off the system is an extreme example of that, you’re not recovering your dollars; you’re just losing comfort.”