Retailer Energy Alliance Supplier Summit Webinar—Target Presentation (Text Version)
Below is the text version of the Target presentation from the Retailer Energy Alliance (REA) Supplier Summit Webinar, presented on June 5, 2008. Scott Williams from Target was the presenter. You can also view the slides for this presentation (PDF 1.1 MB). Download Adobe Reader.
(Slide 1)
Doug Brookman:
Our next presenter is Scott Williams, who is senior manager, mechanical engineering, for Target Corporation.
Scott Williams:
First, thanks for everybody coming here. This is a great turnout, and it certainly meets our expectation for the summit.
(Slide 2)
You see a lot on energy now, both from these conferences that you can attend that are sustainable or energy, but just from a personal headlines-in-the-news. So I think that's why we're here is because energy's a very important part of our business, but I think it goes beyond that as a personal responsibility on the technical side to do something about it.
(Slide 3)
From Target's standpoint, what we sell is general merchandise, photo processing, pharmacy, food avenues in our typical stores. We have another format, SuperTarget, which includes an expanded grocery selection, bakery, deli, meat, produce.
(Slide 4)
Target's considered an upscale discounter, also including online business, Target.com. 2007 our revenues were $63 billion. We have around 210 million square feet in our stores, 360,000 employees, and our headquarters are based in Minneapolis.
(Slide 5)
Our range of format — you might hear me reference a P prototype. A P prototype is our general merchandise store. It has some market refrigeration, about 110,000 square feet of sales floor. There's 1,395 of those in the United States, in 47 states and the District of Columbia.
Our SuperTarget, which we expand the grocery selection, with 140,000 square feet of total sales floor, we include in 22 states across the country. And 218 of those. More and more stores are having a unique format, multilevel. This is a store in downtown Minneapolis. Two-story. We have around 34 multilevel stores, more in the urban environment, reducing the footprint of the stores. And then our distribution centers and warehouses, 30 significant locations around the country, so all those make up a significant energy use.
(Slide 6)
Where are we going? We continue to build about 100 new stores a year. Alaska and Hawaii are coming in 2009. We have approximately 50 significant remodels a year, which there's a significant amount of the store rebuilt. There's market remodels and updates for certain strategies, retrofit program, rooftop unit, either based on end-of-life or efficiency improvements. Same with lighting. Might be an opportunity for increased efficiency through a lighting retrofit or just an end-of-life opportunity. Going forward, our formats are generally similar to what you've seen out in the stores today.
(Slide 7)
The structure in general for Target — and we're part of property development on the design group, and property development at Target manages three to four billion dollars of construction operations per year, so it's a big operation.
And I just wanted to show the format. I'm involved with the store design side, which we have the store planning, architectural and engineering. We've got around 80 team members in engineering that are focused on store design, mechanical, electrical, structural. And a good part of that, especially lately, has been on the energy efficiency expenses in our stores.
(Slide 8)
How we manage our design process. All our stores are built from a standard prototype. And you've seen Targets; most of them look the same. There's good reasons for that. It makes it very cost-effective in focusing on that prototype. We do use site-specific variations for heating and cooling and code variations, so all stores are designed per site, even though they might look the same.
There is more regional variation in prototypes, because we're recognizing that the same HVAC systems or other systems might not work equally well across the country. We use consultants or an internal team to complete the site-specific construction documents. Our unique store process starts with our prototype design, but as you saw with the two-story store in Minneapolis, there's a lot of unique aspects to it. And often we're in a developer shell or using much different systems than you'll typically see on a Target store.
Our construction process goes through selected general contractors, and we bid the subcontractors. From your standpoint in the construction process, most of our energy-consuming equipment we direct-purchase at Target. We own and operate our stores for the long run, so we find that the best value is for us to make those purchasing decisions.
Another important opportunity, if you haven't worked for Target, we open stores in March, July, and October. So from a construction standpoint, that creates some big peaks in equipment design and ordering, so that's always a challenge for the number of stores that we open at those times.
(Slide 9)
We've incorporated a commissioning process that's based in our headquarters, and we're doing a — retro-commissioning approximately 50 stores a year and doing some form of commissioning on all our stores, just making sure that what was designed is actually incorporated into the final turnover at that store. And what we've seen from that is the largest opportunity continues to be in refrigeration as far as the energy opportunity.
On the operations side, we manage a call center in Minneapolis. All of the stores would call in issues to that call center, and that call center will dispatch local service contractors. And just another fact from Target operations, our store hours are typically 8 a.m. to 10 p.m.
(Slide 10)
Overall, in general on the energy use, we certainly look for reducing our energy intensity through effective design and buying improved equipment. We've seen our energy intensity increase as we've incorporated more refrigeration systems into our stores.
Going forward, we continue to grow, so our energy footprint continues to get larger. But we are trying to at least partially offset that through energy retrofits and the retro-commissioning effort that would help make sure the stores that we have out there are running at their peak efficiency.
(Slide 11)
I just put together a quick profile on a couple stores, and, again, this varies by area and region, but understanding where our energy is used is very critical in understanding where we put our resources. But you can see a typical P store. HVAC, 32%; lighting is still the biggest component for us at 47%; and refrigeration and miscellaneous plug loads makes up the rest. As you can expect, the refrigeration load in the SuperTarget increases in importance.
(Slide 12)
As we look at the overall energy profile, then we break it down into the specific components of those energy profiles. So, for example, in the lighting sector, how much of that is our sales floor lighting versus parking lot lighting versus offstage lighting? So by knowing what components make up that energy use, it helps us focus our resources on where we have opportunities to go after, as Jim mentioned.
(Slide 13)
Another important aspect is the peak load analysis, so not just the energy use but what's happening during those peak days. It's peak demand issues from utilities, and also there's a stress on the grid system. So if we can do things to help reduce our demand during those peak periods, it's equally important as just an overall energy reduction. So you can see that, under a peak analysis, outside air for ventilation makes up a big part of our HVAC energy use. So that's, again, an area that we concentrate on. And then lighting conduction and just miscellaneous loads making up the rest.
(Slide 14)
The question was thrown to us, in the ideal world, what's your most energy-efficient building look like? And certainly, we like to strive for lower, net-zero energy where practical and economical, but in addition to that we have to look at how do we minimize the impact on permitting and construction. So we typically like to do a fairly quick turnaround on the construction process, so as the buildings become more complex, we don't want that to slow down the permitting and construction process. We have to maintain our guest-friendly environment to keep people coming in our stores. The flexibility in merchandise offering for our merchants to keep our stores viable. Another important point is just simple to operate and maintain. And I focus on this a little later as well.
(Slide 15)
Again, just good engineering, I think, has always incorporated energy efficiency as one of the components. We always look at energy lifecycle as part of a procurement event, so oftentimes we're not buying the lowest capital cost; we're buying the lowest long-term energy cost. It can make a big difference. We also look at retrofit opportunities into existing stores. Where can we take some of this technology and push it into the stores?
Why we're involved with the Retail Energy Alliance is, I think there's a corporate responsibility to the energy environment. By sharing the best practices, we can help manage the energy footprint of retail in general.
(Slide 16)
New opportunities, going forward. Again, I think there's more regional opportunities. Target in the past has focused on — we want the same exact store, same products throughout the country, because it makes it more complex as we look regionally. But I think, going forward, to maximize efficiency, we're going to have to look at more regional-based technologies. I think there's a big opportunity to roll some of those new technologies into our existing store base from an energy efficiency standpoint. And we're certainly open to assisting suppliers and creating a market for new technology by demonstrating on our buildings. And, as it's been emphasized several times, the whole building integration of energy solutions is looking beyond your typical product that you sell.
(Slide 17)
Cost is always an inhibitor. I think that as — in general, energy efficiency technologies, as you add water systems and other systems, they become more complex. And at the same time, I think we're getting reduced level of technical competence in contractors and service personnel. So there's sort of a difficult problem there of how do we run these more complex systems in an energy-efficient way with maybe reducing quality of personnel.
And, again, the bottom line for us and, I think, everybody, lifecycle cost of technology must meet financial benchmarks. We'll certainly pay more for technology that saves energy, but it has to meet the benchmark that we can invest in for our shareholders.
(Slide 18)
Some of the specifics in lighting. Generally, our stores use fluorescent lighting throughout. LED lighting has been in use in our exterior signage, on our buildings. We're going to LED refrigerated case lighting in 2009. Metal halide parking lot lighting currently used, and then our DC uses HID lighting, which is currently under review for opportunities.
(Slide 19)
Projects in the lighting side. Going from the year 2000 to our current prototype, we've gone from four-lamp to three-lamp to two-lamp fixtures, and we're now 30% less watts per square foot, getting the same light output. So that's a significant advantage, and we're retrofitting those lower-wattage bulbs into our existing stores. And, again, this is a good one, and in addition to the energy savings, there's significant maintenance savings, there's sustainability efforts by having less waste product in the long run.
Photovoltaic, we have 18 stores operational by the end of 2008. A picture of one of them is shown there. We've looked at skylights. We have a number of stores and we're continuing to investigate that. Demand control, I think, is a big opportunity that we're looking at. Again, how do we reduce our use during certain times of the day that might be critical for the utility?
(Slide 20)
Some inhibitors. Again, lighting quality is very important to us, so how do we maintain those lighting qualities at the reduced lighting output? Dimming systems, we've looked at. Great opportunity, but they're very high cost, and there is some loss of efficiency at full output. And looking — challenging you, again, from the lighting side, light quality. Very important. Are there demand control opportunities? Is there a low-energy mode that the lighting systems can go into in order to help reduce demand again during certain critical times. Combining the energy and operational cost savings, don't just look at the energy look at the long term life cycle of that bulb or whatever you are selling, and can that help justify the sale of it. Exterior LED lighting, I think is a great opportunity that we are partnering with some of the REA members to look at.
(Slide 21)
On the envelope we have the typical insulation, wall systems, other things that every body is challenged with. And some of the projects we've incorporated, we just went through and looked at all our insulation strategies and increased the level of insulation on all buildings throughout the country, finding that we could do it cost effectively. Again by looking at the whole building integration, we were able to take some of the cost savings on our HVAC system into account as we helped pay for our insulation. So again it is looking at the whole building as one not just as individual initiatives. Light colored reflective membranes have been a great asset I show a couple pictures neat technology but in reality from an energy savings creates nice photos.
And some of the projects we've incorporated. We just went through and looked at all of our insulation strategies and increased the level of insulation on all our buildings throughout the country finding that we could do it cost effectively. Again, that was by looking at the whole building integration in order to — we were able to take some of the cost savings on our HVAC system into account as we helped pay for our insulation. So again, it's — looking at the whole building as one not just individual initiatives. Light color reflective with membranes have been a great asset for us for a number of years to help reduce energy use reduce energy use.
(Slide 22)
I show a couple of pictures of some green roofs in the Chicago area and again I think it's a neat technology but in reality it's — from an energy saving savings standpoint it doesn't do a whole lot for us but it creates some nice photos.
(Slide 23)
Some of the inhibitors there the high cost of adding insulation or changing wall systems. Green roofs — some of the green roofs issues we've had have been pest control. We've had pigeons roosting and other varmints roosting in our green roofs. So any potential savings have been more than made up for in our pest control costs.
(Slide 24)
Looking at suppliers, what should the R&D effort be on? Superinsulated wall panels. I think there's a great opportunity there. We've gone from block construction to looking at factory made walls to a tilt up walls. I think there's some great opportunities to integrate those wall systems both for energy efficiency and then just the long-term durability. But in doing that we need flexibility in the finishes that we use in our buildings. Consistency in the finishes that come on our buildings, looking again at the integration of the envelope as part of the whole building system.
As Jim mentioned, radiant floors for heating and cooling, we're looking at. Again, more using the building mass for thermal storage. Looking at our roofs to gather rainwater or potentially use for night radiant cooling, integrated water thermal storage systems, integrated water reuse. So again, it's looking at how do we use some of the components that are a necessity in our building as assets?
(Slide 25)
On the refrigeration side generally our — a piece to our general merchandise format has an enclosed case market area with a roof top compressor refrigeration rack. And some compressor condenser units as well. On our SuperTargets, we have both enclosed and open cases and a compressor room to serve those. Some of the projects that we've been focusing on just better control of our anti soot heaters has been a good past opportunity for us that — looking at the roof top compressor rack that's helped us gain some efficiencies and controllability on our typical merchandise — general merchandise stores.
Automation has been a big resource there in controlling our refrigeration system. Turnover commissioning — again, big opportunity in commissioning, making sure they get installed right and then maintain operations properly.
And then just always — we've from an engineering side push enclosing the cases versus open cases on our store wherever possible.
(Slide 26)
Inhibitors — we're looking at the requirements for refrigeration reduction, material reduction. That's just a goal from both an environmental and a cost standpoint.
Another big inhibitor I think on the refrigeration side is the merchants. The engineers always like to look at the energy efficiency and the merchants like to look at the ability to market product out of that in this case. And so there's an open and close case debate I'm sure for a lot of retailers. So that's often an inhibitor from an energy standpoint. And then there's regulations that control much of this — much of our use of refrigeration.
Looking to the refrigeration side, I think there's still opportunities in anti-sweat heaters. Looking at the refrigeration on HVAC energy combination. Again, looking at not just the two as a whole but looking at the combination of HVAC and energy together. Working with our merchants to maybe develop an acceptable enclosed close option rather than continue to look at open cases.
(Slide 27)
LED lighting in open cases I think some people are working on it but it's not there yet. Ultimate refrigeration designs using secondary systems. And then water systems for the condensing side to help improve efficiencies.
On the water side our typical stores — from an energy standpoint looking at — water heat is our big use there. I think there's some opportunities in point of use water heaters that are more effective and efficient. Heat recovery from refrigeration systems for domestic water. We use that and I think there's some opportunities to expand upon that. Just in water itself, low flow urinals are incorporated in our new prototypes. We've had low flow aerators and sensor faucets on various prototypes over the years.
(Slide 28)
Inhibitors in the water side there's still — we looked at the no flush urinals but there's still some issues with those and there's some code and other concerns with — regarding those. I think on the kitchen equipment there's a lot of opportunity to look at better water efficiency on equipment that cleans our components in our kitchens. And so from a supplier standpoint what could you look at? Again, heat recovery from refrigeration I think is a big opportunity for hot water heat and other areas. Effective instantaneous water heaters and then just water treatment systems to help avoid backwash and waste of water.
(Slide 29)
On the control side we have energy management system or building automation system for our — one for our building and one for our refrigeration system centrally located in Minneapolis that control all our stores. All of our lights and temperatures are controlled based on standard schedules. Now we've got — we've been dropping into a web-based system, which gives us a lot more ability to track specific store issues.
Current projects in the controls performance test using our control systems do better performance testing. Using our control systems to diagnose faults before we actually find those faults as failed equipment in the field. And so we have some tests going on — or studies going on with that. I think there's opportunities in using increased diagnostics. Sub-metering electric power, we've been using that. That's a great opportunity for both the operations standpoint but also even from a design standpoint to better understand where the power's going.
(Slide 30)
Some of the inhibitors on the control side — it's always frustrating when systems can't talk to each other — the one energy management system can't talk to another. One manufacturer's piece of equipment can't talk to a central automation system. So I think that's an inhibitor that we could work on as an industry.
Complexity of programming on some of the systems and just from our standpoint it's always a difficult stand — to control — leverage a control system to make changes at 1600 locations at one time if we want to make a global change.
So what should you do as suppliers? Open protocols. I think that's a great area. I think there's opportunities — beyond the typical HVAC and refrigeration controls, but how do you tie that into the automatic doors which we also have a big opportunity in vertical transportation equipment generator switch gears. And so I think going beyond what you typically would look as the control systems in your stores.
Again, auto-fault diagnostics I think is a big opportunity for vendors as well as us. Embedded sub-metering. So in a lot of control systems is there a way to get that sub-metering embedded in components so that we can more easily track performance of them?
(Slide 31)
On the HVAC side, we use the typical single zone roof top units for the most part. Our grocery area of our Super Targets has a large custom roof top unit that we use that for dehumidification control. We user VAV in the front of our house, offices, pharmacy, etc.
Current projects underway just generally, that's always been an emphasis on looking at the life cycle costs on the roof top equipment. We've had some projects where we've optimized our outside air based on air quality study and been able to reduce our demand and use through that.
Our supplier volumes dropped significantly as our lighting energy has dropped and other things have dropped over the years we've been able to save them energy.
And then balancing the humidification returns. The humidity control requirements of our refrigerated cases which HVAC system has been a big energy saving. There's the photo there's a new air distribution system we're using in our prototype to try to optimize our HVAC system and it's just sort of a neat picture with the octopus looking backward in there. But believe it or not that saved a lot of money over the typical single rectangular ductwork.
(Slide 32)
I just threw this in there and as Jim mentioned with the, regional prototypes we look at the different prototypes. And I think everybody's going to have to look more at that as again one thing doesn't fit all across the country and using maps like this to help improve efficiency in each region and maybe make it a little bit more complex but take advantage of the efficiency gains.
(Slide 33)
So in HVAC some of the big inhibitors dehumidification there's some great opportunities there. What we're looking for from suppliers I think again climate specific optimization of equipment. Water based systems are going to become a bigger and bigger opportunity. Automatic commissioning, trying to do a plug and play of a piece of equipment when it gets started off to make sure it starts off operating properly. Demand control features on HVAC equipment. And possibly integrating HVAC and refrigeration package roof top units. And taking some of the requirements of both and incorporating them into one package.
(Slide 34)
Plug loads. The typical we have pop coolers, cash lanes, check lanes, kitchen equipment makes up a fairly significant part of our loads and some of the opportunities we're looking at those. Just the ability to shut down pop coolers at night, turn them back on in the morning and have cold pop when the people come. That saves significant amount of money per year but it's a difficult process to go through currently. Some opportunities there. Another thing is just the education of team members to shut down equipment when it's not in use.
(Slide 35)
I think some opportunities for vendors. A lot of these small pieces of equipment don't have good energy efficiency data associated with them even knowing how much energy they actually use so just providing some of that. As I mentioned the nighttime shutdown, just the — a better ability to put equipment into a — either a very low energy mode or a shut off mode to help reduce some of that nighttime or off peak — or off hour operation. Self-diagnostics for any piece of equipment is important.
(Slide 36)
O&M. Many opportunities throughout our stores.
(Slide 37)
I think some of the — again, opportunities there. I mentioned before decreasing availability of skilled technicians. So what can the suppliers do in making sure that the equipment is simpler to install, simple to start up, simple to operate and then self-diagnostics. I mean that's our ideal. And again, I think some of that goes against some of the improved energy efficiency because that sometimes makes it more complicated.
(Slide 38)
Opportunity process at Target. The financial aspects of the company that we're dealing with is very critical. The ability to deliver the equipment as promised is critical. Good capital cost is important but life cycle cost is the most critical thing for us. And we try to run competitive yet fair procurement events. So we want to go into partnerships with vendors to make sure that it's a fair and equitable partnership.
(Slide 39)
So in conclusion — so what can suppliers do? What we've seen a lot as we've talked to different suppliers about technology is it's very difficult to get some ideas into that mass production mode. And so the technology cost initially is very expensive. So maybe it's helping us understand what this technology might do in the long term if it were mass produced so we're not looking at the doubling of cost of equipment for a certain minor — what we see as a minor — add on feature because it throws off the typical production line process.
So more flexibility in mass production is I think is a need from a supplier's standpoint. What will we do — certainly sharing our energy profile is important. We'll work with you to do that. Pilot for — partner for test opportunities at our stores and continue to emphasize energy and operation as part of the life cycle cost for procurement events.
(Slide 40)
And to move these technologies to marketplace we — again, we're willing to look at any opportunity. I think more willing now going forward. Some of these designs are very site specific. So becoming more open to look at technology that might work in one area of the country but not another. But we do ask you to provide realistic performance information. Oftentimes vendors will come in with performance information that is vastly overstated or performance opportunities that are vastly overstated.
From DOE, we're looking forward to working with them and the national labs to help look at new technology, validate technologies that's out there and potentially help fund some of the new technologies, removing some risks from the retailers.
So that's all I have.
Doug Brookman:
Thank you.
Scott Williams:
Thanks for your time.
[End of Audio]