Remodeling and the Bottom Line
PrintRemodeling and the Bottom Line
By Maura Keller
Judging the ROI of remodeling projects is tricky, but paying attention to certain principles can make it easier.

Faced with slim margins and an extremely competitive landscape, retailers are constantly looking for ways to differentiate themselves. Many are turning to store remodels to enhance the shopping experience and increase trip frequency.

When evaluating the potential return on investment in a store redesign or remodel, there are key elements that can affect the impact on your bottom line.

Tim Morrison, studio principal of the supermarkets studio at Little, a diversified architectural consultancy, says all supermarkets have four main areas of remodeling expenditures outside of internal and external design efforts: equipment, lighting, flooring and décor.

  • Equipment: Energy-efficient equipment, particularly Energy Star-certified refrigeration equipment, adds efficiency and durability to the equation–outperforming old technologies dramatically. According to Morrison, Giant Eagle, H-E-B and Food Lion are heavy investors in energy-efficient equipment in their remodeling efforts. "Food Lion lowered their energy expenditures by 27 percent," Morrison says.
  • Lighting: Morrison stresses that LED lighting will save the average supermarket 17 percent on its annual energy costs. According to Joseph Bona, president of brand environments at CBX, a retail/environment design firm, lighting can sometimes be the single most important part of any remodel.
    "Good lighting, when used effectively, creates highlights and contrast, making the space feel more interesting and allowing for more focused and direct presentation of key categories," Bona says. "Also, while the initial investment may be high, LED lighting can generally result in lower operating costs."
  • Flooring: Each year supermarkets spend more than $450 million in slip and fall damages, says Morrison. "The National Flooring Safety Institute estimates that at least 50 percent of these are due to the condition of the flooring itself," he explains. "Long-term approaches to flooring, with attention to maintenance, are a big factor in remodels. Flooring changes are the number one move recognized by existing supermarket shoppers."
  • Décor: Typical suburban décor packages average $200,000, says Morrison. "Designing within that budget hits the mark and is key to saving money on this critical piece of the store environment," he says. "A décor improvement strategy alone will not significantly improve sales. It is generally a combination of in-store elements that contribute to a retail experience that translates into a good ROI."

"It is generally a combination of in-store elements that contribute to a retail experience that translates into a good ROI."