Woolworths Limited - Business Case and Beyond

Woolworths Limited – Business
Case and Beyond
Key points
 Woolworths’ Sustainability Strategy has helped to increase the focus on energy efficiency across the
 business by clearly communicating management commitment and establishing a number of
 sustainability goals, including a significant carbon emissions reduction target.
 Since the launch of the Sustainability Strategy, business case templates for sustainability projects
 have been redesigned to include a requirement to report on projected reductions in carbon
 emissions.
 Rising energy prices mean that the financial returns on many energy efficiency projects provide a
 compelling case for funding.
 Trials that include comprehensive monitoring and evaluation of costs, benefits and operational issues
 facilitate the rollout of energy efficiency initiatives across Woolworths’ facilities.

 IN THIS SECTION                                                                                   [HIDE]

 Key points
 Woolworths Limited: Approach to energy efficiency
    About the Company
    Energy use at Woolworths/Safeway supermarkets
    Energy policy, targets and approach
    Getting support for energy efficiency projects
 Woolworths Limited: Supermarket refrigeration retrofits
    Genesis of the project
     Investment/ project challenges
    The solution and outcomes
    Tips for success
 Woolworths Limited: Supermarket refrigerated display cases – door retrofit trial
    Genesis of the project
    Investment challenge and solutions
    Tips for success

Woolworths Limited: Approach to energy efficiency

About the Company
Woolworths Limited is Australia’s leading national retailer with over 3,100 outlets including
Woolworths/Safeway supermarkets, BIG W department stores, Dick Smith Electronics stores, Woolworths
petrol sites and BWS and Dan Murphy’s liquor stores. Woolworths has over 188,000 employees and
serves around 26 million customers each week.

Energy use at Woolworths/Safeway supermarkets
Woolworths Limited used 12.9PJ of energy in the 2009/10 financial year with the majority of this used by
the supermarkets division. Major energy using processes within a supermarket are refrigeration (47%),
lighting (23%) and air-conditioning (18%).

Energy costs are a significant proportion of a supermarket’s total operating costs and are projected to
grow strongly into the future.

Energy policy, targets and approach
Woolworths has made public commitments and established targets to reduce CO2 emissions. Energy
efficiency plays a central role in achieving these targets.

The targets are:

Facilities (stores, offices and distribution centres)

   Reduce carbon emissions by 40% by 2015 (from projected growth levels), bringing emissions back to
   2006–07 levels.
   Achieve a 25% reduction in carbon emissions per square metre for new sustainable store designs
   compared with business-as-usual designs.

Transport

   Reduce carbon emissions per carton delivered by Woolworths owned trucks by 25% by 2012.
   Reduce carbon emissions from the company car fleet of 3,100 cars by 30% on 2006 levels by 2010.

During the development of Woolworths’ nine year Sustainability Strategy in 2006, energy use and carbon
emissions were forecast based on business-as-usual development and expansion. In financial year 2010
carbon emissions from electricity use and refrigerant loss were 500,000 tonnes less than the business-as-
usual projection.

Getting support for energy efficiency projects
Since the development of the Sustainability Strategy, Woolworths’ project evaluation model has been
modified to include consideration of carbon emissions reductions that may be achieved through the
implementation of projects.

A dedicated project engineering team has responsibility for the identification, analysis, trialing and
implementation of energy efficiency projects across all trading divisions. The team also monitors, reviews
and reports on the energy and other savings achieved following the implementation of projects.

When potential projects are identified, the team follows a structured project development approach that
involves investigating the concept, getting funds approved for trials, conducting trials, reviewing

performance, measuring results and then developing a model for rollout across the stores. The success
of a trial is a major factor in determining the extent to which the technology or initiative will be rolled out
across the business.

Approvals for project trials and funding for the roll out of projects is made by various levels of
management, depending on the magnitude of funding required.

Woolworths Limited: Supermarket refrigeration retrofits
Genesis of the project
A number of new refrigeration technologies had been installed in new ‘green’ supermarkets such as
                    1
Rouse Hill in NSW . Based on the lessons learnt in design, installation and operation of these new
technologies, the project engineering team identified a number of improvements that could be made to
the refrigeration systems in existing stores to deliver significant energy savings.

Investment/ project challenges
Since the changes were being retrofitted on refrigeration systems within existing stores, it was important
to minimise the potential impact of the installation process on store operations. Although the energy
savings that could be achieved in new stores was well known, the energy savings that could be delivered
through the retrofit process needed to be confirmed.

The solution and outcomes
A trial was conducted in eight stores. Detailed monitoring and evaluation of performance during the trial
built confidence in the reliability, costs and benefits of the retrofit process. It confirmed that the simple
payback period (http://eex.gov.au/glossary/letter/P/#Payback+Period) for the projects would be under four
years and they would deliver significant reductions in energy use and greenhouse gas emissions. The
lessons learnt from the trial have also been used to streamline the retrofit process, which will minimise
the impact on store operations.

A progressive roll out of these new refrigeration technologies is underway, with the aim of completing the
retrofit in all stores by June 2015. The initiatives that are being implemented include:

   High efficiency electric motors to drive fans in refrigerated display cases
   Night blinds on refrigerated display cases to reduce loss of cold air overnight
   Breeze fences at base of refrigerated display cases to reduce loss of cold air in normal operation.

Early results show an average 7% improvement in total energy use within each store in which the suite of
initiatives has been implemented.

     Night blinds on refrigerated display cases

Tips for success
   Innovation incorporated in the design of new equipment can highlight opportunities to improve the
   energy efficiency performance of existing equipment.
   Use project trials to increase the accuracy of cost/ benefit analysis for new technology or new
   applications of existing technology to facilitate the roll out of initiatives across other facilities.

See the section on monitoring, verifying and promoting
                                                  successful projects (http://eex.gov.au/energy-
                                                  management/the-business-case-and-
                                                  beyond/influencing-company-culture-systems-and-
                                                  processes/monitor-verify-and-promote-successful-
                                                  projects/) for further information.

          Display case night blinds
                                                  Woolworths Limited:
                                                  Supermarket refrigerated display
cases – door retrofit trial

      Detailed monitoring and evaluation of the performance of our trials is essential. It
      allows us to demonstrate that we have appropriately tested a project, quantified
      all costs and benefits and addressed any potential business risks. This makes it
      much easier for us to roll out the trial projects across our stores and to build
      confidence in other projects as well.

                                          - David Shearsby, Manager - Systems, Analysis & Support
                                         Engineering, Maintenance & Services, Woolworths Limited

Genesis of the project
Many of the refrigerated display cases in Woolworths’ supermarkets do not have doors. They were
designed in this way to make it easier for customers to select and access products. However, open display
cases can also impact on customer comfort as cold air spills into supermarket aisles, and more energy is
needed to keep the products at the required temperature in these open units.

The development of Woolworths’ Sustainability Strategy, together with rising energy costs, led to
engineering personnel and retail managers investigating the installation of doors on these display cases.
However, retail managers were concerned about the impact of the doors on customer selection and
access to products.

Investment challenge and solutions
A trial is being conducted to quantify the energy savings from installing the doors and to evaluate the
impact on customers’ shopping behaviour.

The engineering and retail outcomes from the trial will be communicated to the relevant decision-makers
through Woolworths’ structured project development approach.

Tips for success
   Trials provide an opportunity to gather data and provide feedback on a range of issues related to your
   project including customer perceptions and feedback. It is important to use trials to provide

information that will address the specific
                                                      concerns of key decision makers.

                                                      Refer to the sections on involving the right people
                                                      (http://eex.gov.au/energy-management/the-
                                                      business-case-and-beyond/developing-your-
                                                      business-case-six-strategies/involve-the-right-
      Refrigerated display case door retrofit         people/) and identifying and managing project
                                                      risks (http://eex.gov.au/energy-management/the-
business-case-and-beyond/developing-your-business-case-six-strategies/identify-project-risks-and-
develop-strategies-to-manage-them/) for further information.

Footnotes

 1. Woolworths.com.au – Our first green store
    (http://www.woolworths.com.au/wps/wcm/connect/website/woolworths/about+us/our-
    story/green+store+2007)

Page last reviewed: 22 February 2012

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