Gazprom Energy recently conducted research among over 200 energy decision-makers, working in large businesses to better understand the challenges they face today. The research highlights the unique pitfalls that retailers face when it comes to managing their energy effectively across complex and varied retail estates.
Here, Phil Ivers, Head of UK Operations at Gazprom Energy, explores the successes and challenges of managing energy in the retail sector:
The recent COVID-19 pandemic has put life as we know it on hold. Certain sectors have been dramatically impacted, with retail being one that is having to completely rethink every aspect of its processes. While online shopping has remained steady, with spikes in some industries like household goods and groceries, there has naturally been a drop-off in brick-and-mortar shopping as people embrace social distancing as our new normal. We don’t fully know what the future of retail will look like but for now, companies are doing everything they can to develop plans for a steady and successful return to our high streets. With margins already extremely tight, energy should be a key consideration for retailers in order to ensure that they are not overspending or mismanaging usage.
There are many aspects of energy that the retail sector is leading the way in, particularly when it comes to environmental factors. Our research shows that retailers come out on top when it comes to introducing energy efficient technology – 73% have put, or are currently putting, this into action, compared to the 54% average of businesses overall. We also saw that 60% of retailers are implementing reduction targets compared to the overall average of 47%.
There is one major challenge for retailers that outweighs all others – the requirement of managing energy needs across complex and varied property estates. In fact, three in five respondents claimed that they find managing energy effectively across multi-site estates to be the biggest challenge within the retail sector. Varied billing rates, different utility companies and geographical areas can bring up pitfalls for even the most energy conscious retailers. In order to mitigate risks of mismanaged energy, retailers should ensure they are on contracts that allow the removal and addition of sites without impacting their overall rate.
Retailers should have a real-time, in-depth insight into the energy market to analyse changing costs and potentially secure more favourable prices on their energy procurement. There are tools available, such as Gazprom Energy’s InSight, that help retailers oversee the energy market at all times, from any internet-connected device. By accessing detailed market information in real time, users can test how their spending could be affected by certain purchases and trades. And with less time spent analysing the market and anticipating activity, retailers can spend more time developing and implementing a risk-management strategy.
A risk-management strategy for energy must not be mistaken for basic market insight – companies need more than this in order to predict and manage risk. Forecasting enables retailers to understand potential future risks, but this is only a small part of a successful strategy. Risk management takes forecasting further by identifying, assessing and prioritising a range of possible risks, before carefully applying resources that help to minimise, track and control the probability and impact of events that may result in a negative effect, as well as realising the opportunities that the market brings.
Retailers need to ensure that they understand the average energy consumption across their entire estate. This can allow the energy buyer to tailor procurement strategies – adjusting swiftly and easily to cover changes that may occur – if they have a flexible purchasing agreement with their supplier. Retailers rely on suppliers to provide accurate and timely billing information and comprehensive insights into their energy consumption. There is accessible technology to support this, including the use of automated meter reading (AMR) devices, which provide granular consumption data at half hourly time periods. AMR is especially useful for multi-site purposes as it allows the user to take a meter reading and monitor use, without having to physically visit the site.
Competitive pricing is an important consideration when selecting an energy supplier, however, customer service should also be a priority. A supplier offering good customer service will provide you with access to market and consumption information to enable you to save money in the long run. This reliable and strong relationship between the retailer and supplier is the key to helping many retailers develop energy management strategies for their estates that are not only fit for purpose now but are future proofed.
Suppliers should be offering a transparent and simple service to assist energy managers and procurement teams working within retail, to make strategic and informed buying and selling decisions. Billing and reporting structures are crucial to energy management and for retailers operating across multiple sites, this can be supported by combining all properties into a single bill saving time and money in processing.