The frozen food section is a significant expense for many independent retailers. It’s one of the most costly areas in the store to run, and it offers some of the lowest-priced goods. But as many retailers know, if you have a good strategy in place for your frozen food section, it can be a profitable center and help offset the cost of running it.
However, in the coming years, the cost of operating a frozen section may rise even higher because laws limiting the usage of hydrofluorocarbons (HFCs) are being implemented. The AIM Act of 2020 proposes the phasedown of production and consumption of HFCs in the United States by 85% in the next few years. Karen Meyers, chairman of the Alliance for Responsible Atmospheric Policy, says, “The AIM Act is one of the most significant environmental policy laws passed in recent years. This HFC allocation rule is key to achieving an orderly HFC phasedown in the United States, creating a uniform federal approach to this effort, and capturing significant projected environmental and economic benefits.”
What are HFCs?
Commercial refrigeration units are one of the most significant causes of HFC gases. These gases are especially significant in the fight against climate change because they have a high global-warming potential. How bad are they? The refrigeration units in one supermarket produce as much CO2 gas as 300 cars, according to the Food Industry Association. In stores, HFC gases are easily released from the opening of the refrigerator doors in the frozen section or open-air freezer displays. According to Climate-Friendly Supermarkets, US supermarkets leak 25% of their refrigerant gas annually. Overall emissions from supermarket leaks add up to the equivalent of 49 billion pounds of coal burned in one year!
Smaller retailers are not prepared for the transition
The coming transition to refrigeration systems that produce less HFC has been slow to take place in the United States compared to other areas like Europe. Only major retailers have outlined their plans for reducing HFC gases in their stores, while many smaller, independent stores have yet to make any changes. Smaller stores don’t have the resources or information to start the transition process, so they put it off.
Experts say the coming transition to HFC free systems will be very challenging for smaller stores. For example, the cost of switching to an HFC-free cooling system is more than $1 million per store, depending on the store’s refrigeration section’s size. And some retailers in states like California that have passed more ambitious HFC laws may need to act fast to comply with new regulations. In addition, the EPA and other industry associations predict that as the HFC phasedown process begins to ramp up, the transition cost will increase due to an increased demand for equipment, supplies, and technicians. As a result, smaller retailers who wait to make the transition may find themselves paying higher markups on new equipment or stuck waiting for the resources to retrofit their current refrigeration systems.
What can smaller retailers do now?
This transition may be difficult for smaller retailers, but it’s best not to put it off too long. You can start preparing now to make the shift. Here are some steps from the Food Industry Association you can take now:
- Stay up to date on state and federal regulations.
- Monitor your current refrigeration systems’ HFC levels.
- Start researching alternative HFC-free cooling systems.
- Begin creating a plan or schedule for installing HFC-free cooling systems.
These changes are coming to the grocery market, and it’s best to start preparing to make the shift. It will save your business money instead of waiting until costs rise.