Watts Up Doc? Part 3: Energy costs are rising, but home furnishings retailers can cut overall costs with new technologies and some easy quick fixes.
Gasoline price boards are getting pretty scary. Maybe you have wondered if the skyrocketing price of oil will cause your electricity bill to go up. In some places it might. Oil prices are going to drive all business costs up.
Lighting your sales floor is as essential as fuel for your delivery truck. You can’t stop putting fuel in the truck, nor can you turn the lights off and still grow or sustain your business. What you can do is make your lighting more efficient without compromising the appearance of your sales floor. It is possible to make a few adjustments and cut your lighting bill by 18%. If you change your way of thinking, you might cut the lighting bill by 55% or more.
Too many times storeowners and managers make the wrong choices when seeking to cut lighting expenses. Buying cheap fixtures or bulbs is like putting cheap motor oil in a truck. It may save a few bucks today but there are consequences. Making a poor decision could mean an overhaul for the truck or a drop in sales because the showroom – and the products, look dark and dingy.
So how can you reduce lighting costs without taking away the impact your merchandise displays? This article takes you through the steps to reduce costs and still have a great looking store. The first step is to know your costs.
Lets assume, you’ve decided that your electricity bill is too high. You conclude that your showroom lighting is the problem, and are seeking a solution. First you need to answer the following simple questions.
•What is your operating schedule?
•What is your electricity rate per kilowatt-hour?
•What kinds of lights do you have and how many?
Armed with this information, you will be able, for example to calculate that lighting on your sales floor accounts for perhaps 26% of the bill. It is fairly typical for lighting to account for 26% of the electricity bill if a store has an efficient lighting design. Efficiency in lighting design is a fairly recent phenomenon and may not apply to your store. Now let’s run through the actual calculations to find out what your total lighting costs are, and how you can cut them dramatically.
Getting The Easy Answers
Answering questions about operating hours and electricity rates is simple. What are your store hours, and how long, before and after, are the lights on? For our discussion I’m going to assume that your lights are on 4,000 hours per year or 333 per month. That’s a typical schedule but use your real numbers when you do the math.
To get your real number for electricity rate, you will have to get a copy of your electricity bill. When I ask owners their electricity rate I usually get something like “6 cents per kilowatt-hour (kWh).” Most bills give you a clear statement like that, but then add demand charges, fuel surcharge, capital recovery and a host of other charges. Fortunately, the bill also states the total kWh used. Take that number and divide it into the amount of the check you need to write, and that is your real rate per kWh. That number will be higher than the stated, kilowatt-hour rate.
The third component, the kind of bulbs you use, may be harder to answer. Most owners or managers don’t know what kinds they have in the store. I get about two calls a week from stores saying, “Send me some more of those track light bulbs.” That’s not a problem because they know that I designed the store’s lighting and know what they need. If I didn’t design your store, you need to take an inventory of what you have in the ceiling.
Track Lighting Savings
Most of the cost of showroom lighting is in the track system, so we will consider this first. You will need to count the heads, and while you are out there counting, find out what kinds of bulbs you are using or check your light bulb invoices. Incandescent bulbs follow a pattern showing watts, shape, size and beam spread. I would hope you find something like 90PAR38/FL30, 120V. The numbers mean that this is a 90 watt, halogen PAR, 38 eighths of an inch across the face, with a beam spread of 25 degrees at 120 volts. The second most common is 75PAR30/NFL, which is a 75 watt, 3.75 inches (30/8) across the face. The first position, Watts, is the number we need for computing energy cost. I’m going to assume your inventory of track heads found 500 of the 90PAR38 lamps. All we need to do now is to plug in the numbers to the formula:
Operating Hours x (Heads x Watts)/1000 = kilowatt-hours x rate = Energy Cost per Year.
4000 x (500 x 90)/ 1000 = 180,000 kWh x $0.10 = $18,000
In words the formula says, “We operate 4,000 hours per year and have 500 track heads, 90 Watts each. Because we are billed per 1,000-Watt hours (kWh) we need to divide the total watt hours by 1,000.” I assume an electricity rate of 10 cents per kWh, which makes the annual cost $18,000. To lower the annual cost we need to lower one of the components of the equation. Getting a lower electricity rate is unlikely as is reducing the number of operating hours – maybe.
Saving Track Lighting Hours
If you have a combination of fluorescent and halogen, using only the fluorescent lighting during the opening prep and closing could save an hour of “burn time” on the track system or 45,000 watts every day. So, 500 x 90/1,000 x 360 days open = 16,200 kWh x $0.10 = $1,620.00 saved. That simple change didn’t take much effort and didn’t effect the appearance of your merchandise.
The next step is to make sure each track head is required. Stuff on the sales floor moves around but my observation is lighting isn’t adjusted to match those changes even for opening day. Some track heads really aren’t required to properly display the merchandise. Now that you know the math you know that each 90-Watt track head costs $32.40 per year if your rate is $0.10 per kWh.
(3,600 x 90/1,000 = 3240 kWh x $0.10 = $32.40)
If the number of “underemployed” or excess heads is 10% your potential savings is $1,620.00. $32.40 x 50 = $1,620.00
These two simple steps result in 18% savings or $3,240.00 per year. Our computation now looks like this:
4000-360 x (500-50 x 90)/ 1000 =
147,420 kWh x $0.10 = $14,742 per year
Now if we reduce the watts per bulb from 90 watts to 60 watts and plug the numbers into the calculation below, we find that we’ve put another $4,914 into profit for a total savings of 55% compared to our original $18,000 per year.
4000-360 x (500-50 x 60)/ 1000 =
98,280 kWh x $0.10 = $9,828 per year
The catch here is that reducing the amount of watts will lower light output and also the appearance of your store. Like turning out the lights... that is not a good option. There are some folks who will tell you that you can use a screw-in, compact fluorescent bulb in your track lighting for energy savings. If fluorescent light gave the look we wanted we wouldn’t have put track there in the first place. Sorry but if you want a nice store, one that looks better than your average Target, you need track lighting with halogen lamps or a comparable source. What bulb can we use to trim 30 watts per head and save $4,914 in energy?
Philips Lighting Company has a new (2005) bulb that has almost the same output as a 90-watt halogen. It is what we call an “infrared” bulb. That’s not a new concept because the technology has been around for years. What is new, is that the bulb not only has higher output per watt but also a longer service life. Of course there is a technology premium, but for the first time it makes good business sense.
How Infrared Technology Works
Any incandescent makes light by heating a filament. Halogen bulbs heat the filament in a capsule containing halogen gas (hence the name) and are more efficient in converting watts to light. More efficient, but far from perfect, because most of the energy used still produces waste heat. One watt of electricity results in a watt of heat, infrared energy that normally isn’t useful. More about heat later.
What bulb makers do is coat the inner capsule of a halogen bulb with a substance that reflects infrared energy, waste heat, back onto the filament making it hotter without using more electricity. A hotter filament produces more light. Of course this adds to the cost of manufacturing and therefore the cost of the bulb. Is using this bulb a good business decision given the added cost? Let’s do the math.
* Prices are delivered prices per lamp based on a full case.
|Cost per 100 hours:
Like any equation, changing a variable like price, changes the outcome. But these are pretty representative data. It says that getting the 30 watts savings for roughly the same price is a good deal. In fact there could be a major difference in price, and the outcome would still favor the Philips 60PAR38 infrared lamp because of energy savings and longer lamp life.
The conclusion has to be that saving 55% on track lighting without detracting from the beauty of your displays is possible with today’s technology. Paying more for a bulb that saves money is a good management practice. Similar savings are possible with PAR30 and MR16, low voltage, infrared lamps as well.
The knee-jerk reaction when I mention any light bulb is “How much does it cost?” The real question should be, “How much will it save?” or “How much will my profit increase?” We have seen that using a 60-watt infrared makes good business sense even though it is more expensive. Could we do better? Taking our best case, original formula, we see that:
4000-360 x (500-50 x 90)/ 1000 =
147,420 kWh x $0.10 = $14,742 per year.
It turns out that by using a new technology (Ceramic Metal Halide), we can alter this calculation to read:
4000-360 x (500-200 x 44)/ 1000 =
48,048 kWh x $0.10 = $ 4,048 per year.
So by reducing the number of heads from 500 to 300 and the watts consumed from 90 to 44 we can save more than $10,000 per year. But how can we reduce the number of heads and the watts consumed without changing the appearance of the sales floor? If we change the technology we use, we can take 200 heads out of the sales area, reduce the watts per head and still have great looking displays. This concept has been proven so far in designs completed for about 500,000 square feet of showrooms.
Ceramic Metal Halide (CMH) is a technology that offers energy savings and powerful merchandise presentations. The numbers show CMH to be about twice as powerful as the 90-Watt halogen.
|Cost per 100 hours:
||2600 (3400 Initial)|
* Replacement cost for lamps in Janmar track heads.
So why, in the previous example was the number of heads cut from 500 to 300 instead of in half? The simple answer is “You can’t cover a “U” with two.” A typical livingroom group is a sofa, loveseat and chair presented in kind of a “U”. Two lights can’t be aimed in three directions to get the presentation we want. But if there are five, 90-watt track heads per length of track, they can be replaced with three ceramic metal halide heads without sacrificing display quality, if the right one is used.
Before getting to the question of the “right” head I want to reinforce my point on cost. Looking at the data comparing halogen to CMH we can see that “How much does it cost” doesn’t matter because of the difference in service life between the two. The cost per 100 operating hours for the lamp is about the same. Fewer heads, lower watts per head, and significantly longer service life means the more expensive bulb is actually much cheaper to own.
Getting the “right” track head is important because the head makes the CMH bulb work. The halogen bulb you now use reflects and focuses light on the target. The track head performs this function with the CMH bulb. The other thing to look for is a way to “condition” the light that comes from the CMH bulb. CMH doesn’t heat a filament to generate light, so the output is “correlated” to incandescent light color temperature, but it is not the same. There are ways to give metal halide light the characteristics of halogen but most either degenerate over time or reduce the amount of useful light leaving the fixture.
Perhaps the best optical system comes from Janmar Lighting. Janmar has developed a way to change the molecular properties of glass to give the look of halogen without reducing the amount of light coming from the fixture. The combination of quality and quantity of light produces a really powerful display. There are other features as well, but color is king. (Read “Its All About Color” published in the April/May issue of FURNITURE WORLD and posted to the Operations Management article archives on www.furninfo.com)
CMH track heads have ballasts, so they are more expensive, maybe ten times more expensive than conventional track heads. But energy and labor savings let the additional investment be paid back over time. Several utilities will also pay part of the purchase price, which reduces the investment and the payback period. The computation of payback is more complicated than the formula we have discussed. But if your electricity rate is 10 cents per kWh or more, and a rebate is available, you should consider using CMH technology. Remember, the question is not how much the bulb costs but is it a good business investment?
Thinking about lighting as an investment with a rate of return applies to those fluorescent workhorses in the ceiling as well. Utilities have offered rebates to replace inefficient fixtures for years and now old style fluorescent fixtures are outlawed by federal and state energy regulations for new construction. The reason, plain and simple, is energy efficiency.
By “old style” I mean the 1.5-inch diameter (T12) tubes with magnetic ballasts. Each tube is rated for 40 watts, plus the ballast uses electricity, so the typical four-lamp, magnetic ballast fixture draws 192 watts. You are probably using “energy saver” T12 bulbs at 34 watts but my bet is you still have the old magnetic ballast in most of your fixtures because they last forever. Each of those four lamp fixtures is probably drawing 164 watts which is a lot more than the new fixtures at 87. If we plug those potential savings into our formula we get:
4000 x (100 x (164-87)/ 1000 =
30,800 kWh x $0.10 = $3,080.00 saved per year.
We have also met the criteria for not degrading the appearance of the store because we actually get more light from fewer watts. Here’s how that works.
Fluorescent fixtures need to reflect and direct light out of the fixture. Half of the light generated by the round, fluorescent tube goes up and half goes down. Not all of the light that goes up will be reflected by the surface of the fixture and the percent reflected decreases over time, (Strike one). The “old Style” fixture with four, 1.5 inch diameter lamps has a lot of surface area that blocks reflected light from getting out of the fixture, (Strike two). To make matters worse, most of the fixtures I’m talking about have “prismatic” lenses – those sheets of translucent plastic covering the entire face of the fixture. When they were new they cut light output by about 10%. Over time, the UV radiation generated by fluorescent light turns them yellow and restricts light from leaving the fixture even more, (Strike three and you’re out!).
There really is no complicated inventory required to assess this problem. Just look up. If you see plastic sheets, yellowed with age, it really is time to replace the fixtures. You are paying more for electricity than you need to, and get about 50%, maybe less of the light you’re paying for out of the fixture.
The New “T-s”
The new fluorescents are T8 and T5, 1 inch and 5/8 inch in diameter respectively. The smaller diameter makes these products more efficient per se. The reduced size means that less light hits the tubes and is allowed to escape the fixture.
They are driven by electronic ballasts which means no delightful hum or flicker common to the old magnetic ballast. The typical showroom with a suspended ceiling below 16 feet will use T8 fixtures while the high ceiling of a “big box” will use T5 fixtures and lamps.
Fluorescent fixtures with T8 lamps have a “parabolic” lens. These are relatively big, open squares that reflect the light down from the ceiling. The openings let more light out of the fixture while reducing glare. These fixtures visually disappear when compared to the white glow of a solid plastic lens. The efficiency earned by the electronic ballast, T8 lamps, and the lens enables an 87-watt, three-lamp fixture to put out more light than the 164-watt, four-lamp fixture. If you are still using the “old style” it is probably a good business decision to replace them.
To illustrate the concept of lighting as a good business investment, a power company in chronically energy short California offered a rebate program with $27 million in the kitty if businesses would replace metal halide fixtures with T5 fluorescent fixtures. The money was fully obligated in three days. Why? Owners did the math and saw it was a good business decision. The utility knew it was good business because they saved more energy than they could produce or import for $27 million.
Each watt of electricity that you burn is a watt of heat that must be dealt with by the HVAC system. Customers in northern states say that their air conditioner runs in the dead of winter because of the heat generated by the lighting system. At the beginning of this article it was mentioned lighting accounts for 26% of the average furniture store’s electricity bill. HVAC uses a significant portion of the rest. If we can reduce the direct energy used for lighting, then the indirect energy cost can be cut as well.
The first question a mechanical engineer asks a lighting consultant on a new construction job is how many watts per square foot will be used for lighting. The answer not only determines the amount of electrical service required for the building but also the tons of air conditioning needed as well.
Years ago when I could afford to buy gas, I traveled to furniture stores to sell light bulbs. I could tell three steps into the store if the sales call would be a waste of time. (See the “Store Lighting- Light Up Sales!” article in the April 2001 issue of FURNITURE WORLD Magazine. It is also posted to the Operations Article archives on www.furninfo.com. The article describes how to perform an after hours store lighting survey). If it were a waste of time I usually noticed the store was gone or had posted GOB signs during later trips. I can’t say for sure that poor lighting caused the business failure. I will say that poor lighting generally indicates poor business decisions and under-performing stores.
Thinking right about lighting can energize the sales floor and drop money to the bottom line. If you kept track of the changes suggested in this article you know that we saved $11,234. Even if your number is half because of the number of track heads or your electricity rate, $5,617 will still put a lot of fuel in the delivery truck.
Monte Lee is a Regional Manager for Service Lamp Corporation, a distributor of lighting products and services. Inquiries on any aspect of furniture store lighting can be sent to him at firstname.lastname@example.org or call him direct (in High Point) at 336-847-4164. See all of Monte Lee’s articles on store lighting posted to the Operations Management Article archives section of the www.furninfo.com website.You can also visit Monte during the upcoming High Point Show (IHFC-M12, NHFA Retailer Resource Ctr.). Service Lamp 800-222-LAMP (5267) is based in New Jersey.