Retailers are transforming the in-store experience in response to changes in shopper behaviors, fierce competition from online sellers and ever-changing building energy codes. These transformations typically include a conversion to LED as a sensible low risk tactic. The newest LED systems provide unequalled light quality, controllability and energy efficiency to reduce overall operating costs. While retailers have a basic understanding of what an LED lighting system does, many are unaware how advancements solid state lighting and building controls can help them address and prepare for upcoming changes. From dynamic tuning to indoor positioning, better performing LEDs deliver a better payback.
To stay ahead of industry changes, retailers should rethink their LED upgrades as a means of future-proofing their operations. To achieve this requires rethinking the payback model for a lighting retrofit.
Short Term Payback – Long Term Headaches
Most retail relight projects are still being evaluated using a simple short-term payback/ROI model. While this may work well for products with a short lifespan, using it for an LED conversion that could be around for 10 or more years can cost retailers millions of unaccounted expenses due to early obsolescence, increased maintenance costs and inability to address future retail challenges and requirements.
Increasing complexity with additional technology in retail lighting systems need to be taken into account. New codes, for example, require additional controls capabilities and Marketing and IT departments are introducing new equipment into retail spaces that can affect maintenance requirements. Service calls were easy when it was about some T8 tubes or ballasts that had burned out. Depreciating LED boards, battery-powered beacons and bad Wi-Fi routers are another thing.
A Tale of Two LEDs: Tubes vs. Integrated LED
When comparing LED conversion costs using the simple payback model, LED tubes clearly have the lowest upfront cost and would be the way to go.
However, when you factor in energy costs of a 10-year period, and the fact that LED tubes suffer 15% light loss within the first five years, often requiring at least one tube replacement over that same timeframe, no one would choose LED tubes because its maintenance costs are too high! Meanwhile, the practically maintenance-free LED system integrated with controls is ready to easily adjust to changing codes, trends and beacon technologies with simple software updates, not hardware overhauls. And has the lowest total cost of ownership (TCO). When evaluating the TCO, there is a strong financial case for an integrated LED system.
The New Relighting Mantra: Payback Today and Tomorrow
Relighting a retail space is no longer a “three-years and relamp” scenario. With today’s a long-lasting LED systems, the simple energy-payback model is no longer appropriate. The time has come for retailers to embrace TCO as the ROI model to provide savings today and to prepare them for the future.
Jay Weiland is the Director of Vertical Marketing for Acuity Brands. He graduated with his MBA, magna cum laude from Vlerick Business School in Brussels Belgium and received his B.S. in Finance from Arizona State University. For more information, please visit www.acuitybrands.com/retail.