Retailers vs. Power: A Practical Playbook for Getting Costs Under Control

Retailers have absorbed years of supply chain disruption, labor pressure and inflation. Throughout it all, one persistent challenge has remained: controlling electricity and natural gas costs without compromising store operations or the customer experience.

Power is one of the costliest operational line items that retailers face, with retail stores utilizing 14.3 kilowatt hours (kWh) of electricity and 30.9 cubic feet of natural gas per square foot annually, according to the U.S. Energy Information Administration (EIA). This is in comparison to the average home which used less than 11 kWh in total power in 2022.

For a large portfolio, even a modest change in unit price or consumption can have a meaningful budget impact when multiplied across hundreds of locations. Retailers should therefore manage energy as a controllable financial and operational category, not merely a fixed cost of doing business.

The following considerations can help retailers build a more disciplined approach to energy cost management.

1. Make sense of the retail power landscape.

Retail energy costs are shaped by more than the wholesale commodity price. Capacity and transmission charges, utility tariffs, taxes, load shape, contract terms and regional market rules can all affect the final bill. At the same time, retailers must maintain lighting, comfort and — in grocery and other food formats — temperature-sensitive operations, while addressing reliability and sustainability expectations.

Automation, expanded refrigeration, electric vehicle charging, changing store hours and portfolio growth can alter both total consumption and when demand occurs. Multisite organizations also face fragmented responsibilities: facilities may own usage data, finance may own budgets, procurement may own contracts, and real estate may control openings and closures. A clear governance model is essential to keep those inputs aligned.

2. Turn competition into cost control.

Retailers should separate two related opportunities: reducing consumption and improving the price and structure of supply. Efficiency projects address how much energy a location uses; competitive procurement addresses how that energy is sourced in deregulated markets. For multisite portfolios, a disciplined sourcing event can consolidate buying power, expand supplier participation, and test multiple terms or products against a consistent benchmark. The objective is not to promise savings in every market, but to establish a defensible market price and select the contract structure that best matches the organization’s budget and risk tolerance.

3. Build a reliable data foundation.

The No. 1 building block that organizations must focus on when trying to make power decisions today is the quality of their data. The most impactful power decisions depend on inputs from so many different organizational arms having access to all the necessary data. Furthermore, making it easily accessible is pivotal in driving better power decisions. The most effective power procurement infrastructure doesn't just integrate insights on load profiles, peak demand drivers and seasonal trends, it transforms that data into actionable intelligence by connecting procurement, operations, finance and other stakeholder data into a single, unified view.

4. Rethink procurement processes.

Because power has historically been perceived as a fixed “cost of doing business” for retailers, many haven’t changed the way they're procuring power in decades. For example, it's still commonplace that organizations continue to leverage “traditional” processes for procurement, relying on a single broker to source a shortlist of quotes with very little clarity over exact prices and fees.

Technology-enabled competitive procurement can address those gaps. Where market rules and credit conditions permit, retailers can aggregate eligible locations, issue a standardized bid specification to a broad supplier group, and compare offers across contract terms, products and risk structures. A live reverse auction can add price discovery and competitive tension, while a well-documented request-for-proposal process may be more appropriate for complex or highly structured requirements. In either case, retailers should expect a transparent audit trail showing supplier participation, bid movement, product assumptions and all fees.

Looking Ahead

Energy cost management should be treated as a repeatable discipline rather than a one-time sourcing event. The strongest programs combine accurate portfolio data, forward-looking market intelligence, broad supplier competition, and clear governance around timing and risk. In our work at Transparent Energy, the most durable results come when retailers can see how the market was tested and make an informed choice among price certainty, flexibility and budget objectives, not simply select the lowest headline quote.

Dustin Scarpa is co-founder and CEO at Transparent Energy. He is a leading expert in energy procurement strategies and solutions for Fortune 500 and other large energy buyers.