Retail Accounting

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Get mean – cutting your operational costs in a retail business

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Cutting retail business costs, retail accountingOne of the easiest ways to improve the profitability of a retail business is to regularly review controllable cost such as electricity usage, heating etc. In some cases investment in new technology may be required, in other cases simply running existing equipment more efficiently may be all that is needed. Here are two examples:

1.    Chiller cabinets

There are two problems with chiller cabinets:

a. They make the surrounding area cold!

b. Ironically they also generate excess heat as part of the cooling process which may even lead to the need for air-conditioning to keep the rest of the store cool in some installations.

Historically open chiller cabinets were seen as the best approach in retailing as they present no barrier to the user selecting items for purchase however this view is beginning to change. The customer may in fact find the area around the chiller area too cold making them less likely to browse the products.

A high penalty is being paid in terms of energy usage and the fitting of clear sliding doors to cabinets is becoming the preferred solution (see for example http://www.globalcstorefocus.com/1007/7.html) with the return on investment in reduced energy costs being only twelve months in many cases.

If retrofitting of doors to existing chillers is not practical complete replacement may still be an option as modern compressor designs are often more efficient as well as being quieter. In this case the return on investment will take longer and will require a more detailed analysis.

2.    LED lighting

Over the last 5 years considerable improvements have been made in the amount of light which can be generated by an LED. Most people will be familiar with digital LED clocks and tell tale light on electrical equipment but many have not yet realised that complete lighting units are now available to replace fluorescent tubes and traditional bulbs. The units have a number of benefits:

a. They have long life expectancies even compared to fluorescent tubes. Up to 50,000 hours or around 6 years even if run 24 hours a day.

b. They are highly efficient.

c. As a result of the efficiency they are relatively “cool” light sources which make them ideal for food displays and can generally reduce the need for air conditioning when used in-store.

Factor in all of the above and even at current prices the return on investment is looking good compared to fluorescent lighting. Costs continue to fall and it is likely that the LED will become the standard lighting replacement.

A number of interesting case studies are presented on the Bä-ro website, one of the leading European suppliers.

http://www.baro.co.uk/casestudies

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Author: retailaccounting

CounterBooks is an online retail accounting management suite which is used by retailers across the world.

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