Breaking the Rules 2011

MICHAEL GARRY

THIS YEAR'S SN SUSTAINABILITY EXCELLENCE AWARD winners all have one thing in common — doing something that has rarely if ever been done before in the food retailing business.

For example, Mahomet IGA, winner in the independent category, has implemented a geothermal system that uses well water to cool refrigerant gas and ease the burden on compressors — unprecedented for a supermarket. The well water is also used to heat and cool the store by means of geothermal heat pumps.

A few years ago, experts doubted that supermarkets could ever get their refrigeration leak rates under 10%. But Giant Eagle, winner in the chain category, proved the experts wrong, bringing its corporate leak rate down to 6.9% as it won a series of awards from the Environmental Protection Agency's GreenChill Partnership. The chain was also the first in the industry to open a LEED (Leadership in Energy and Environmental Design)-certified store.

Nature's Best, winner in the wholesaler category, is among the few grocery wholesalers that have gained LEED gold certification for a distribution center.

The profiles in the following pages describe how these companies have defied orthodoxy in their environmental initiatives.

INDEPENDENT: Mahomet IGA Pioneers Geothermal System

IN JANUARY 2006, when Brooks Marsh left his longtime position at Supervalu to purchase Mahomet IGA, a one-store independent in Mahomet, Ill., he had no idea that within a few years he would be on the cutting edge of green-store technology.

Mahomet IGA

What did become apparent over time was that he would need to expand the store to accommodate more refrigerated perishable items and meet the demand of shoppers in Mahomet, a bedroom community of Champaign-Urbana, home of the University of Illinois in the central part of the state. By early 2010, the store grew to 40,000 square feet from 23,000 square feet, including a new food court, at a cost of about $3 million; the store remained open during construction.

Before going forward with the remodeling, Marsh recruited Smart Energy Design Assistance Center (SEDAC), a private energy consulting company based at the University of Illinois, to assess the energy efficiency of the store. In addition to suggesting that he invest in garden-variety energy improvements, SEDAC recommended an open-loop geothermal system that would bring well water from the earth into the store to cool refrigerant gas entering the Hussman compressors — something that was unprecedented for a supermarket. The well water would also be used to heat and cool the store via a series of geothermal heat pumps staged throughout the store, also an unorthodox investment for a food retailer.

“When the engineer told me I'd be the first one to ever do it, I was thinking, ‘Maybe you should do this somewhere else,’” Marsh said. But he decided to go ahead, using a design created by Lon Hoover, a system designer for Illinois Geothermal Engineering, Urbana, Ill., and SEDAC.

Marsh is now reaping more than $85,000 annually on energy savings of about 950,000 kilowatts (enough energy to heat and cool 90 homes) from all of his technology investments, according to a study by the Sustainable Technology Center at the University of Illinois. The study indicated that the geothermal systems would have accounted for half the energy savings in Mahomet IGA's original 23,000-square-foot store.

Marsh also invested in more conventional energy-saving technology, such as T8 fluorescent lights that replace T12 lights in cases and for ambient lighting; T8 lights use two-thirds as much energy as T12s while maintaining similar output. He also installed anti-sweat heaters, with digital moisture detectors, in glass case doors, and PSC motors in display-case fans; required that beverage vendors install Energy Star-rated vending machines, reducing the number in the store from nine to four; and employed sub-cooling of refrigerant in condensers.

Coupled with a $34,000 utility grant (from Ameren Illinois), tax benefits and a grant from the US Department of Agriculture, the store realized an ROI of less than two years on the $220,000 premium spent on green store technology. Now other retailers are visiting his store and studying his geothermal systems. “This is part of what we need to do with energy in our country to get out of the hole we're in,” he said. “I have no competitive concerns.”

Last year, Mahomet IGA received an Illinois Governor's Sustainability Award. This year, for pioneering the use of geothermal systems in a supermarket, and using other energy-saving techniques, Mahomet IGA has been selected to receive SN's 2011 Sustainability Excellence Award in the independent category.

Helping Compressors

In a typical supermarket, hot refrigerant gas that has just cooled the cases throughout the store is itself cooled by fans before re-entering the compressors. “We had 360-square-feet of fans to cool the [gas] pipes somewhat,” said Marsh. With its new system, the store is taking chilled water (53 degrees Fahrenheit) from two nearby 130-foot deep wells drilled by Marsh to cool the refrigerant (R-404A). The movement of water is managed by a flow center located in the compressor area.

The water is a much better cooling agent than the fans, which means that the compressors — the most energy-intensive part of a supermarket — work less than half as hard (190 pounds per square inch compared with 400 pounds per square inch) in compressing the refrigerant gas back into a liquid. “The compressor room is a lot quieter than it used to be,” he said.

“It's as simple and as complex as putting cold water on hot [gas],” he added.

The gas and the cold water meet up at thin metal plates in three large heat exchangers in the flow center, where the gas cools down and the water warms up to near 70 degrees. The heat exchangers and other flow center equipment were provided by Alamar Industries, Houston.

All geothermal equipment was installed by Bratcher Heating & Air Conditioning, Champaign, Ill.

The Mahomet IGA's new refrigeration technology is tightly linked to the store's heating and cooling (HVAC) systems. For example, even before the refrigerant is cooled, one hot-gas pipe winds around a 300 gallon tank of potable water, producing hot water for the store.

After the refrigerant is cooled, the warmer well water is used to heat the store in the winter; in the summer, the water from the wells is used to cool the store by exhausting heat from store systems. Both heating and cooling processes are managed by 10 ground-source geothermal heat pumps inside the store that replace rooftop units that used gas-fired and air-source heaters. This summer, one of the hottest on record in Illinois, shoppers “were too cold” with the new system, said Marsh, who had to raise the temperature. The heat pumps were supplied by GeoComfort Geothermal Systems.

A ground-source heat pump system, known as geoexchange technology, has been described by the U.S. Environmental Protection Agency as “the most energy-efficient, environmentally clean and cost-effective space conditioning system available.” It does the work that ordinarily requires two appliances and can be located indoors because it doesn't need to release heat to the outside air. It is able to lower heating bills, eliminate the need for natural gas, and cut summer peak electric demand, according to Marsh. Because the heat pumps are located indoors, equipment maintenance is also reduced.

According to reports, 70% of the energy used in a geothermal heating and cooling system is renewable energy from the ground.

Once the well water makes its circuit around the store, the 68-degree water is channeled into a nearby detention pond. “There's no downside environmentally,” said Marsh. He believes that sources of water like this are available to many supermarkets around the U.S. “In the 1800s people dug wells everywhere and mostly got water,” he said. “There's lots of water everywhere.”

CHAIN: Giant Eagle Racks Up Green Accolades

GIANT EAGLE may lead the industry when it comes to awards for environmental excellence.

Last year, Giant Eagle, which operates 164 corporate supermarkets, received perhaps its greatest honor — an Environmental Protection Agency Montreal Protocol Award, for its efforts in protecting the ozone layer, climate and human health. The chain was among two food retailers that received this international recognition — Food Lion was the other — along with a wide range of honorees from science, law, government and pop music.

The company conducts campaigns to educate employees about corporate sustainability efforts and steps they can take, noted Shelly Sponholz, senior vice president of real estate. A bigger factor is the company's culture of sustainability, added Michael Palotsee, senior director, asset procurement, engineering and construction. “When new team members are walking through the building they can't help but be immersed in it.”

The Montreal Protocol Award was based on Giant Eagle's exemplary work as a member of the EPA's GreenChill Partnership that is aimed at reducing refrigerant leaks and testing new forms of refrigeration. The chain won GreenChill's most prestigious award — best emissions rate — from 2008 through 2010, reaching its lowest rate (6.9%) last year. The chain also has two stores that are GreenChill gold-certified stores and two that are silver-certified.

Giant Eagle was “the first [GreenChill] supermarket partner to reduce their corporate-wide refrigerant emissions rate to below 10%, a feat that most in the industry said couldn't be done,” said Keilly Witman, manager of the GreenChill Partnership. The average leak rate across the industry is 25%.

In EPA's Energy Star program, 131 out of 170 Giant Eagle stores have earned the Energy Star label for buildings while the chain as a whole received Sustained Excellence Awards from 2006 through 2010. Five of its supermarkets (and two convenience stores) have also been granted LEED (Leadership in Energy and Environmental Design) certification from the United States Green Building Council (USGBC).

Giant Eagle has also made strides in pursuing alternative energy, ranking 13th on the EPA's latest quarterly Green Power Partnership list of the top 20 retail purchasers of alternative energy; the chain's 20 million kilowatt-hours of wind energy credits accounts for 3% of its total electricity usage. And EPA's SmartWay program gave Giant Eagle its highest rating - 1.25 - for the fuel efficiency and general environmental performance of its transport fleets.

Giant Eagle's recycling efforts were recognized with a Business Leadership Recycling Award in 2009 from the American Forest & Paper Association, for which it competed against all U.S. companies. Last year the company collected more than 154 million pounds of materials including cardboard (134 million pounds), plastic film, office paper, organics, electronic waste, hazardous waste and beverage containers.

For receiving all of these environmental accolades and accomplishments over the past several years, SN has decided to add one more, the 2011 Sustainability Excellence Award in the chain category.

Ingrained Practices

Giant Eagle's exceptional focus on its environmental impact began almost two decades ago, in 1992, when its conservation department was charged with saving energy, recycling packaging and supporting long-term environmental initiatives. Over time, however, that department became absorbed within the corporate infrastructure as green practices became “ingrained into what we do,” said Kevin Shelton, the chain's vice president, store planning, equipment buying, engineering and construction.

As a formal matter, Giant Eagle's retail facilities management team is focused on waste management and recycling while energy management resides more with the energy/construction and utility management departments. But the chain now challenges all of its employees “to look for ways to reduce waste and energy usage,” added Brad Morris, the chain's manager, engineering. Sustainability, he said, “has morphed into a mainstream practice.”

Asked about its remarkable success in reducing leak rates, Giant Eagle executives pointed to the chain's interaction with service contractors who maintain refrigeration equipment. All stores are constantly monitored for potential leaks using infrared leak detectors; once a leak is detected, an email is sent to contractors, who need to respond within a set timeframe.

The chain maintains a dashboard that records leak rates per store and per contractor. “When we meet with contractors to review performance, it's one of the talking points,” Morris said. “They're judged on leak rates, service and response time.” Palotsee added that this fosters competitiveness among contractors. “Nobody wants to have a bad store,” he said.

Giant Eagle's success in the EPA's Energy Star program is related to a series of energy-saving initiatives such as installing variable frequency drives; replacing T12 lights with T8; using white roofing, occupancy sensors and staggered lighting; and recommisioning stores. The retailer also employs software that generates an Energy Star rating for each store.

Another program tells the company “how much energy a store should use,” said Morris, and whether actual usage is over or under the projection. Contractors are engaged in addressing stores that are overconsuming energy, while practices of stores that underconsume might be shared with other locations.

LEED stores also serve as a guide for other locations. For example, daylighting was initially piloted at Giant Eagle's first LEED store in Brunswick, Ohio, in 2003 — the first LEED-certified supermarket in the U.S. — and has since become a standard for new construction as costs have come down, said Morris.

Giant Eagle has also pursued sustainability in the products it sells. In sourcing seafood, for example, the retailer leverages the expertise of the World Wildlife Fund and the National Fisheries Institute “to assist us in making buying decisions,” according to its website. For its private-label water, Giant Eagle has introduced the Eco-Light Bottle, a 100% recyclable water bottle with 50% less plastic than the average one-half-liter bottle

Most recently, Giant Eagle opened its first two compressed natural gas fueling stations in the Pittsburgh area, consisting of both a publicly accessible station and one dedicated solely to its 10 CNG-equipped delivery trucks. “We are confident that these stations will deliver improved air quality through emissions reductions and reduced dependence on traditional fuels,” said Sponholz.

New sustainable opportunities the chain is planning in the coming months, noted Sponholz, include charging stations for electric vehicles and solar-based alternative technologies.

WHOLESALER: Nature's Best Builds LEED DCs

USGBC established the LEED certification program in 2000 as a national standard for the design, construction and operation of environmentally friendly buildings. When it comes to distribution centers, some CPG companies, such as Kraft Foods and Smucker's have built LEED-recognized facilities, but food retailers and wholesalers have for the most part not done so. One exception is United Natural Foods Inc., which has two DCs with LEED Gold certification, and was awarded SN's 2008 Sustainability Excellence Award in the wholesaler category. (LEED has four levels of certification: certified, silver, gold and platinum.)

This year's Sustainability Excellence Award in the wholesaler category goes to another distributor of natural and organic foods, Nature's Best, Brea, Calif., which operates a LEED Gold DC (for new construction) in Chino, Calif., and in July opened a DC in Flower Mound, Texas, that has applied for LEED Gold certification for commercial interiors. The company plans to build additional DCs with the same environmental profile as it expands its operation beyond its traditional Western markets.

WHILE MANY supermarkets constructed in the past few years have earned LEED (Leadership in Energy and Environmental Design) certification from the United States Green Building Council (USGBC), the same can't be said for distribution centers.

The factors that go into obtaining LEED certification for new construction and commercial interiors include the sustainability of the site, water efficiency, energy and the atmosphere, materials and resources, and indoor environmental quality.

Nature's Best opened its 410,000-square-foot Chino facility in 2008, replacing multiple distribution buildings that had been on that site. “We worked closely with our developer to build a LEED-certified building from the ground up,” said Jim Beck, president and chief executive officer of Nature's Best. “That made it feasible to get points for Gold certification.”

For construction of the Chino DC, 20% of the materials were locally sourced, 30% were post-consumer recycled, and 95% of the waste created during the project was reused. For example, cement, originally part of cattle feeders on the property when it was a cattle farm, was recycled and used for the pavement around the DC. In addition, by using local drought-resistant plants in the landscaping, the company reduced the amount of water needed by 50%, and by installing water-conserving fixtures, it cuts water use by 30%.

A rainwater capture system at the Chino DC transfers rainwater to a recycling pond where it is run through a biofiltration system; the water is then either used to irrigate the landscape or released to the sewer system.

Nature's Best increased energy efficiency in the DC by 45%, Beck said, through its selection of refrigeration and HVAC equipment, including efficient compressors, heavy duty insulation and a computer-controlled temperature system. The temperature system “monitors how you use cold storage, uses energy when it is less expensive, and drastically reduces the amount of energy used to cool that much product,” he said. The refrigeration equipment was provided through Clarion Construction, Walnut, Calif.

The floor of the 100,000-square-foot cooler/freezer area in the DC is designed with special insulation — consisting of gravel on the bottom, concrete on top and glycol oil in between - that “keeps the floor from freezing in a low-temperature environment,” Beck said. Concrete removed to make room for the insulation was recycled.

Other energy-savers at the DC include individually programmed motion & illumination sensors, as well as natural outdoor light furnished by means of skylights that take up 5% of roof coverage and large perimeter windows.

The total energy savings garnered by the DC enabled Nature's Best to achieve a “first-year payback” on the premium paid to make the facility LEED gold certified, Beck said, declining to disclose the amount of that premium.

Beck pointed to the multitude of “small things” that go into a LEED certification. For example, the DC is painted with non-chemical-emitting paint, which is rolled or brushed, but not sprayed, onto walls. Another small but telling detail: the parking lot offers preferred parking to people with fuel-efficient, low-emission vehicles and has dedicated space for vanpools and carpools; bicycle racks are also available.

The 308,000-square-foot Flower Mound DC, an existing building that was remodeled and is being leased, employs the same environmental features as the Chino facility, grooming it for LEED gold certification. “Because we've been through this process once before, and understand what can be done to a facility, we've taken every opportunity to do that,” Beck said.

One difference at Flower Mound is that more than 90% of its appliances and consumer electronics are Energy Star-labeled for energy conservation. “That's a point-getter for LEED,” said Beck.

In addition, as an existing building, the Texas DC differed from the Chino facility. At least 40% of the existing building interior was maintained, and more than half of construction debris was recycled.

Though not part of its LEED certification, Nature's Best has adopted new technology that improves its sustainability profile. For example, a warehouse management system it implemented in 2009 maximizes the space used on trucks, allowing them to make fewer trips. The company also employs routing software to minimize the number of miles driven.

Recycling of cardboard, plastic, pallet wood and paper is another environmental mandate at Nature's Best. “We engage with our executive management team to continually research ways to cut down on waste and increase recycling,” Beck said.