How to Reduce Monthly Energy Costs for Small Retail Businesses
Energy costs are a direct margin issue for small retail businesses. Lighting, heating, cooling, tills, display units, refrigeration, security systems and staff areas are unavoidable and the energy needed to power them adds to monthly business energy bills.
Some of that energy use is essential. A shop still needs to be well lit, comfortable and safe for customers and staff. But some usage is waste, and in some cases, the cost may have little to do with usage at all.
The amount your shop pays also depends on the business energy tariff in place. This sets the unit rate for each unit of gas or electricity used, along with the daily standing charge attached to the supply. It means two retail businesses with similar energy usage could see very different monthly costs.
In this guide from the retail business energy comparison experts at Business Utility Hub, we discuss what affects monthly energy cost for small retail businesses, what reductions are in your power to control, and when you should speak with an energy comparison expert to make sure you aren't overpaying compared to your competition.
What affects the monthly energy cost for small retail businesses?
Every store uses energy differently. A small shop with long trading hours, bright display lighting, refrigeration and regular door traffic may use more than a larger retail space with shorter opening hours and fewer energy-intensive tasks. The following will likely have the biggest impact:
- Trading hours and opening hours
- Lighting across the shop floor, window displays and staff areas
- Heating and cooling demand
- Air conditioning systems and HVAC systems
- Refrigeration, drinks fridges or display units, where used
- Security systems and equipment running outside business hours
- Stockroom and back-office usage
- Door use, draughts and heat loss
- Seasonal demand during colder months or warmer periods
- Smart meter data and usage patterns
- Business energy unit rates and standing charges
- Whether the shop is in contract, out of contract or approaching renewal
This is where retail energy becomes both operational and commercial. A retailer may already know where gas and electricity are being used, but the important question is whether that usage is being reflected properly in the business energy contract.
If the business has changed since the last renewal, the current energy deal may no longer be the right fit. Longer opening hours, new display units, extra refrigeration, extended seasonal trading or changes to heating and cooling can all affect energy consumption.
Where retail businesses use the most energy
Retailers need to keep their store lit, comfortable, safe and ready to trade. However, there are ways you can look to reduce the amount of energy you use for basic and necessary operational costs:
Lighting
Lighting is one of the most visible energy costs in retail, elevating displays, customer experience, staff safety and security, but it can also become wasteful if fittings are outdated or areas are lit when they do not need to be. LED lighting uses less energy than older light bulbs and usually has a longer lifespan, which can make a noticeable difference across stores with long business hours. Motion sensors, daylight sensors and better zoning can also help reduce lighting energy consumption in stockrooms, staff areas, toilets and corridors, where the same level of artificial lighting as the main shop floor is not always needed.
Heating and cooling
Heating and cooling can be difficult to manage in retail environments. Doors open and close throughout the day, cold air can enter during winter and heat can build up in summer. Air conditioning systems and HVAC systems, which stands for heating, ventilation and air conditioning systems, can add to energy costs if they are poorly controlled or not maintained properly. Programmable thermostats can help keep heating and cooling aligned with trading hours, while regular servicing can improve efficiency during peak seasons. Preventing heat loss through draughts, poorly sealed doors, single glazing and badly managed entrances can also reduce the energy needed to keep the store comfortable.
Refrigeration and display equipment
Not every small retail business uses refrigeration, but for convenience stores, food retailers, florists and other specialist shops, it is usually one of the biggest electricity demands. Fridges, freezers, drinks fridges and chilled display units run for long periods. Poor seals, blocked vents, incorrect temperature settings or old equipment will increase electricity usage. Replacing equipment with energy efficient models will reduce consumption over time, but the commercial case will depend on how heavily the equipment is used and the cost of replacement.
Security systems and out-of-hours usage
Retail businesses often use energy outside trading hours. Security systems, tills, back-office equipment, external lighting, display lighting and some heating or cooling controls often continue running after the shop closes. Some are necessary, some may not be. Smart meters can help show when energy is being used and whether usage patterns match the way the shop operates. If electricity consumption stays high overnight, it may point to equipment being left on, lighting running unnecessarily or systems that need better controls.
Retail energy savings... what makes a difference?
Retail energy savings usually come from two areas: reducing avoidable energy use and making sure the business energy contract still suits the shop.
Operational changes can help reduce consumption. LED lighting, motion sensors, smart thermostats, well-maintained air conditioning systems and better use of smart meter data can all support lower energy usage.
But energy efficiency will only go so far if the business is paying too much for each unit of energy consumed.
Unit rates, standing charges, renewal timing and supplier terms all affect what a small retail business pays each month. The unit rate is the price paid for each unit of gas or electricity used. The standing charge is the fixed daily cost for keeping the supply available, whether the shop uses a lot of energy that day or very little.
For retailers, both must be reviewed. A busy shop with long opening hours will be heavily affected by the unit rate. A smaller shop, or one with lower usage, may still find the standing charge makes up a noticeable part of the monthly bill.
Why retail energy bills can change month to month
A higher energy bill does not always mean the shop has suddenly become less efficient.
Sometimes the reason is operational. Longer trading hours, colder weather, more heating, warmer weather, more air conditioning, seasonal displays or higher footfall can all increase energy consumption.
But the less visible changes often sit in the business energy contract.
Retail energy bills can change because of:
- Unit rates on the business energy contract
- Electricity and gas standing charges
- Contract renewal timing
- Out-of-contract rates
- Deemed rates after moving premises
- Changes in wholesale energy prices
- Estimated bills being corrected by actual readings
- Supplier terms changing at renewal
- Different usage patterns from the previous contract period
Business energy is also different from household energy. Domestic customers are covered by the household energy price cap, but business energy contracts are priced commercially. That means small retail businesses need to review energy suppliers, unit rates and contract terms rather than assuming costs will move in the same way as household energy.
If a business energy contract ends without a new agreement in place, the retailer may move onto out-of-contract rates. These are almost always less competitive than negotiated business energy tariffs and will leave you paying increased costs until you take action.
How Business Utility Hub helps small retail businesses manage energy costs
Business Utility Hub reviews business energy costs for small retail businesses, comparing supplier options across the market. It only takes a few minutes on the phone to find a competitive deal.
Our experts monitor business energy prices daily and understand how unit rates, standing charges, wholesale costs and renewal timing affect retail energy costs. We will review your current business gas and business electricity contracts and explain whether they still suit the way your shop operates.
If you are on deemed rates, out-of-contract rates or approaching renewal, we can help you understand your options quickly. Even if you believe your current energy deal is competitive, it is always worth checking. The market changes, and what worked for your retail business before may not be the right fit now.
We can also help if your business uses the same supplier for gas and electricity and you want to know whether that is still the most suitable arrangement. Some businesses benefit from keeping energy with one supplier. Others may find better value by comparing separately. The right answer depends on usage, location, contract terms and market conditions.
If you want to review the monthly energy cost for your small retail business or compare business energy suppliers, get in touch now.
Call 0800 781 2700 or email savings@businessutilityhub.co.uk.
Take control of your shop energy costs today
If you want to review the monthly energy cost for your small retail business or compare business energy suppliers, get in touch now.
