The rising costs of fuel is causing many retailers problems, and as the price of gas and electricity all increase, retailers are scrambling to reduce costs in all areas. In recent months, this has become the biggest topic of conversation in boardrooms, with pressure being passed down to property and logistics teams to find answers.
‘We are moving into a place where whoever can minimise passing on increasing costs to their customers will be the winner,’ says Jason Murphy, Director for Global Retail at IMS Evolve, a Milton Keyes based Internet of things (IoT) technology solutions company. ‘Luckily, retailers are great in a crisis because they can quickly adapt to changing circumstances, for example the significant shifts in demand, footfall, stock levels and staffing throughout the pandemic. But this is the second big crisis they’ve faced in a short period of time after Covid, and they need to work with partners to become more efficient and reduce margins.’
Energy prices rising
Energy prices were predicted to shoot up back in 2012 and many supermarkets and retailers took measures to cushion the blow.
However, the increase in energy prices never rose to the heights that were expected, and most organisations decided to scale back on their preparedness, reducing investment in energy reduction initiatives.
‘The risks have suddenly become reality without any ability to forward plan,’ says Murphy. ‘Due to the size of the change and how quickly prices have risen, it’s much harder to deal with and this will spur a reactive response from all retailers to reduce their costs, drive efficiency and sustain their margins.’
Murphy points out that consumers may start reverting to efficient, leaner discount stores after months of traditional retailers dominating the industry, as they were quicker to adjust to increased demand for ecommerce during the pandemic.
Driving energy savings
Whilst the price of fuel is difficult to mitigate due to the external causes of cost inflation, looking specifically at energy efficiency, a lot can be done to reduce fuel consumption.
IoT software can be used to extract data from the underlying infrastructure within retailers’ estates, especially the highest energy consuming, mission critical areas (refrigeration, HVAC and lighting). Murphy says: ‘You can then start to run Artificial Intelligence (AI) algorithms across that data to look for several things: What’s the energy efficiency of this asset? Is it running to how it’s specified? Is the stock or environment at risk?’
By deploying this software on top of existing controls and sensors to monitor machine efficiencies and failures, retailers can increase visibility and control of assets. ‘We can either see a problem very early or predict it will happen based on an asset’s behaviour,’ added Murphy.
These unprecedented levels of monitoring and management also allows organisations to optimise the conditions in which food is kept, extending shelf life and keeping food fresher for longer.
‘For example, if a fridge is running just one degree off, we are looking at about one to two days reduction in the product life. To avoid this, retailers can monitor processes to identify inefficiencies immediately so that real time, automated adjustments can be made to reduce energy waste and ensure food quality,’ said Murphy.
In recent trials for customers, IMS Evolve managed to reduce food waste by nearly 80% by monitoring the performance of refrigerators and taking corrective actions to increase efficiency.
Retailers, who are generally very cost sensitive, do not have to worry about having to update their full range of refrigerators to employ IoT software. Instead, retailers can layer software over the top of existing infrastructures, bringing older equipment into the new millennium to increase efficiency.
When working with retailers, Murphy suggests starting with a trial to help establish the benefits of IoT and AI software.
‘Often many companies throw the same words in a proposal like AI and cloud and there is a level of scepticism from retailers,’ Murphy admits. ‘In practice, these technologies take the knowledge of experienced people and automate it. It’s like having a fridge engineer looking at the data all the time and flagging when there is an issue.’ Such algorithms can be used to
ensure that retail stores continue to run as close to 100% efficiency as possible. ✷