Lessons from Cole Haan on making sustainability fit
An energy efficiency overhaul started with a store walk-through.
As many retailers will tell you, one of the top challenges in implementing a successful energy management program is securing financing. The challenge is twofold: Energy professionals first have to understand their projects’ value through a purely financial lens using the right metrics and language. Then, they have to communicate those value drivers to the internal finance department while competing with numerous other business areas seeking capital.
The Retail Industry Leaders Association (RILA) recently sat down with retail energy veterans representing finance, energy management and construction perspectives to discuss how they recommend bridging the gap between energy and finance, and lessons learned.
In this second of three interviews of the series, RILA interviewed Bob Bedard, construction manager for Cole Haan, to explore tactics for small-format retailers to overcome barriers to finance energy efficiency upgrades. The following interview has been edited for clarity. Find the first interview, with REI's Mark Lester, here and the third interview, with Hudson's Bay Company's Gary Levitan here.
Erin Hiatt: Tell us about the internal process at Cole Haan to take advantage of energy efficiency projects.
Bob Bedard: Cole Haan is a global lifestyle brand with a focus on men’s and women’s footwear and accessories. We have over 115 small-format retail locations throughout the U.S. and Canada, primarily in malls and outlet locations. As the company’s construction manager, I am focused on expanding outlet locations and managing our fleet of stores.
Like most retailers interested in energy efficiency, we decided to pick the low-hanging fruit first, namely to upgrade our store lighting systems. Additionally, we decided that although we will not pursue Leadership in Energy & Environmental Design (LEED) certified, we are working to follow the LEED path.
Hiatt: Regarding lighting upgrades, tell us more about how you were able to get your finance department on board to move this project forward.
Bedard: It is necessary that you work with the finance department, because at the end of the day, if you don’t have their approval, a project isn’t going to move forward. We are a small company, so I have direct access to the people in the finance department on a personal level.
It is necessary to frame energy efficiency upgrades as long-term investments. For lighting upgrade projects, for example, we moved from 60-watt lamps to really efficient LED lamps and we worked with our finance team to show them that this was really a sound, long-term investment.
Hiatt: What sort of cost savings did you find were possible and how did you communicate that to your finance team?
Bedard: We had an instant savings of 21 percent just by switching to energy-efficient LEDs. By reducing energy costs, we immediately got the attention of the finance team, which then enabled my team to explain all of the other cost benefits of the lighting upgrade. For example, LEDs last for 10 or more years, compared to a previous bulb replacement rate of six months. Therefore, the benefits include not only cost savings, but precious sales hours that employees can now spend on the sales floor, instead of on a ladder.
If you can show your finance team that, for example, your energy-efficient lighting upgrade will translate into 500 additional hours of selling time, then that will really get their attention.
Hiatt: You mentioned that developing personal relationships within the company are important. Could you tell us a little a more about that?
Bedard: Before any big projects move forward, they have to get sign-off from the top. That’s why it’s critically important that retail energy managers work with those right below the chief financial officer, including the senior vice president for finance, facilities, store design, etc. and to get buy-in from multiple departments and at various levels. With multiple voices reiterating the same idea from different perspectives, we were able to communicate that these were sound investments and educate staff on costs, the technology and the way the upgraded lighting would look in the store.
At Cole Haan, our process first engaged the design and operations teams to prove out that upgrading the lighting system would not interfere with the look and feel of our stores. We did an in-store walk through, where we showed the operations and design teams what the LED lighting system would look like. Once the store design team confirmed that it wouldn’t change the look of the store and the operations team confirmed that it would cost less to run the stores, then we went to the finance team with our proposal.
Hiatt: Measuring success is such an important part of energy efficiency projects. How does Cole Haan judge the overall success of energy efficiency projects and what metrics do you use to measure this success?
Bedard: We’ve had to develop an understanding of all past costs and inventory. That can be tricky when you’re going back five years or more, but we’ve started to compile that information. We are also compiling information on all of the costs of doing the work for these projects: the cost of materials, rebates and incentives — we are even looking into the amount of time spent replacing old, inefficient bulbs with new LEDs. If we want to replicate these investments and expand into other energy efficiency opportunities, then it is important to develop an internal system to value energy efficiency projects. If our success isn’t being properly measured and communicated, then our finance team will likely not be as supportive of these projects going forward.