The theme of this year’s Stewardship annual report is “Investing in the Future” and there is no better example of Tractor Supply’s willingness to invest in projects today that will protect the environment for future generations than our LED lighting retrofit project. As the largest single investment in an environmental sustainability project in the company’s history, the LED retrofit project will reduce energy consumption in all of Tractor Supply’s existing stores. Combined with the company’s earlier decision to install LED lighting in all new stores, this project will have a positive impact on the environment for many years to come.
Over the past few years, the company has invested in a number of projects that are reducing our impact on the environment. These projects have included the installation of solar power arrays at our Store Support Center and our store in Hendersonville, Tennessee, as well as the design, construction and operation of two LEED® Silver Certified facilities in the last two years. The company has also made a number of environmentally friendly changes to our stores, including more efficient heating and air conditioning systems and energy management systems. All of these projects have also reduced expenses for the company.
We began exploring LED lighting several years ago as an area of opportunity. We first began by testing LED lamps in exterior lighting applications such as signs, wall packs and parking lots. After several successful tests, we began exploring the possibility of bringing the LED lighting indoors.
At the completion of the trial phase, results showed that LED lighting saved electricity because the lamps required much less energy than CFL or incandescent light bulbs. They also reduced maintenance costs since they last longer than incandescent and CFL bulbs. From a consumer-facing standpoint, the lamps provided brighter and more consistent lighting than fluorescent bulbs, making the store look crisper. The LED lighting also didn’t create as much heat as other light bulbs, which reduced air conditioning costs.
The results from the trial were so successful that the company’s leadership team determined that all new stores would have interior and exterior LED lighting going forward. And in 2016, we greatly expanded the program to retrofit all existing Tractor Supply stores with LED lighting by the end of 2017. Replacing the existing fluorescent lighting in the company’s stores is a large undertaking, which requires a great deal of coordination with the stores and outside vendors.
The implementation of this project is being led by James Masters, the company’s energy manager. James spearheaded the project from day one, convincing management to conduct the first LED lighting trials and then developing the plan to retrofit all existing stores. James worked closely with the company’s operations, real estate and finance teams to make the project a reality. After getting the go ahead on the project in late 2015, James quickly put together a plan to roll out LED lighting to the chain over a two-year period. More than half of the stores were retrofitted in 2016 with the remainder scheduled to be retrofitted in 2017.
By the end of the project, more than 1,350,000 linear fluorescent lamps stores will have been removed and replaced by 771,000 energy efficient LED lamps. The new LED lamps are not only more energy efficient, but the materials in the lamps are more environmentally friendly than the materials in the florescent bulbs they are replacing.
In addition to the positive environmental effects of the retrofit, the project will result in significant savings for the company, not just in terms of reduced energy consumption in stores, but also due to the reduction in maintenance costs. While the fluorescent bulbs had to be replaced frequently, the new LED lamps only need to be replaced every eight to ten years, depending on usage. The financial impact of this project was already evident in the early months of 2017, with cost savings even greater than expected. The company is expecting the entire project to pay for itself in less than two years, with an ROI in excess of 40 percent.
The large investment of capital in the LED retrofit project demonstrates Tractor Supply’s commitment to continuously look for ways to reduce the company’s impact on the environment while improving the company’s bottom line.