Refrigerated or freezer merchandisers are a key investment in your retail marketing program. Well-built equipment can conceivably offer an average lifespan of 10 years or more.
So when is it time to upgrade? The logical answer might be, “When repair costs exceed the unit’s depreciated value”. But there are other factors you may not have considered.
At Minus Forty we speak the language of LCO (Lifetime Cost of Ownership). LCO captures the notion that there are ancillary costs that should influence upgrade decisions. Some of these would be as follows;
- Improvements in Energy Efficiency
- The Cost of Reliability
- Aesthetic Value
Over the lifespan of your equipment, it’s likely that improvements in energy efficiency have occurred. For example, in our July 6 blog, we refer to a new efficiency standard (coming in 2017) that will reduce energy consumption by as much as 50%. The savings in operating costs can help to offset the investment in newer equipment.
Like cars and HVAC equipment, as commercial refrigerators and freezers age, their repair costs increase (not to mention the potential cost of lost product). If your fleet of assets has reached a point where more than 10% of the total units require high dollar repairs within a 12 month period, it may be time to consider retiring the older merchandisers within the fleet. This rotation cycle will ensure that your newest units will never exceed the 10 year mark in service.
A recent study by MARC Research found that a store’s condition and appearance had a dramatic impact on consumer traffic, reducing return visits by as much as 28%![i] If your merchandisers are tired looking, old or dirty, they may be negatively impacting product sales. Moreover, merchandiser designs are constantly evolving, offering more options for brand visibility and communication as well as product layout.
Still not sure if upgrading to a more efficient, reliable or aesthetically pleasing merchandiser is right for your organization? Give Minus Forty a call to consult with one of our Refrigerated Merchandising Gurus!
[i] www.marcresearch.com The study offers insight into the impact of store appearance by store category which includes Grocery, Mass Merchandiser, Club, Consumer Electronics, Drug, Office Supply and Department stores. The study includes responses from 6,400 in-store audits as well as over 30,000 shoppers.