Wal-Mart saves energy costs to boost profits

Updated: Jul 1 2008, 03:29am hrs
The new Wal-Mart Supercenter in Las Vegas is like those in any other part of the country. Except when the monthly power bill arrives.

Despite its location in the middle of the desert, where 100-degree days are the norm, the power bills at the store here are about half as much as those at similar-sized Wal-Marts in the region.

Its the most efficient store in the US, said Charles Zimmerman, Wal-Marts vice-president for prototypical design.

A special evaporative cooling systemakin to an old-time swamp coolerpushes air-chilled water through a mesh of tiny pipes beneath the floor of the store, all but eliminating the need for traditional air- conditioning.

More than 200 skylights provide almost all the lighting the store needs on bright days. The skylights are part of a daylight harvesting system that automatically dims or brightens electric overhead lights as needed.

Display cases for food are equipped with LED lights that turn on only when a customer trips a motion sensor. Waste heat from equipment is used to warm the water in the bathrooms and elsewhere. Waste cooling from freezer chests is all thats needed to keep some parts of the store completely cool.

Its definitely the most energy-efficient store Wal-Mart has ever built. Its probably the most efficient that any retailer has ever built anywhere.

The store, developed with the lessons Wal-Mart learnt at experimental Supercenter stores it built in McKinney, Texas and Colorado is attracting a lot of attention. Since opening in March, store manager Lynne Leckie has given more than 20 tours, for everyone from executives of competing retailers to the US Department of Energy to a busload of foreign shopping centre executives that showed up at the entrance one day.

You dont really appreciate everything were doing here until others come to see it and tell you what they think about it, Leckie said.

Some of the innovations were adapted from other Wal-Marts and simply improved and expanded for the Las Vegas store. Others, such as the evaporative cooling and radiant floor system, are new. The store is just one example of how the worlds biggest retailer is also becoming one of the worlds most energy-efficient businesses, not necessarily because its the right thing to do, but because it saves money and boosts profits.

Ever since CEO Lee Scott issued an ultimatum in 2005 to make Wal-Mart a more sustainable businessenvironmentally and otherwisethe retailer has been on a tear to cut energy costs.

It has pledged to invest $500 million a year in new efficiency technologies and eliminate 30% of the energy used across all of its thousands of stores. It is working on ways to increase its truck efficiency by 25%, which alone could save the company more than $310 million a year by 2015.

It is reducing packaging that it can, which saves millions in freight shipping costs and also saves trees. By eliminating some packaging materials on one of its private-label toy lines, for instance, Wal-Mart estimates it could save 3,800 trees, 1,000 barrels of oil and $2.4 million in freight costs.

And thats just the beginning.

One thing (CEO Scott) likes to say is that we havent even gotten to the low-hanging fruit yet, Rand Waddoups, Wal-Marts senior director of corporate strategy and sustainability, said in an interview earlier this year. Were still too busy picking the $1,000 bills off the ground right now.

Even so, Wal-Marts efficiency and environmental efforts are winning accolades from other groups who in the past have criticised the company.

I love what theyre doing because theyre game-changers, said Kert Davies, research director for Greenpeace.

By pioneering energy saving technologies and rolling them out among numerous stores, Wal-Mart is helping bring down prices for the new systems and creating a bigger market for them in the process, he said.

Thats what happened with the mesh-like cooling system Wal-Mart installed in the concrete floor of the Las Vegas store.

Such systems have been used before, but traditionally have been too expensive for use in big stores like Wal-Marts.

But working closely with suppliers, Wal-Mart helped design a new roll-out radiant flooring mesh system that cut the cost from about $8 a sq ft to less than $2 a sq ft, according to Jim McClendon, Wal-Marts chief mechanical engineer.

Though some of the advancements at the Las Vegas store are designed specifically for dry desert conditions, Wal-Mart plans to apply whatever it learns at the store wherever possible.

Already, it is considering using radiant floor systems for heating its new stores in colder climates.

And while the evaporative cooling system might not work as well in the humid South, engineers are working on ways to improve dehumidification systems to cut air conditioning costs in places like Georgia, Florida and Texas.

Just as important, other retailers are watching Wal-Mart closely, and are working on ways to make their own stores more energy efficient, McClendon said.

Thats whats really excitingwere watching the entire industry start to change, said McClendon.

NY Times / Bob Keefe