Energy matters

The debate aimed to asses the level of customer awareness and understanding of the energy efficiency issues and what impact these issues have on retailers’ business. It was also to provide insights on what the EST, electrical manufacturers and retailers could do  to communicate better the energy efficiency messages to all customers, and what support retailers need to achieve it. 
The participants of the debate were: Frances Galvanoni, partner marketing manger at EST, Alex Whitelaw, managing director, The Lamp Company, Steve Pressley, marketing manager/MD, BIASCO, Simon Metson, managing director,  The Appliance Warehouse ltd, Debbie McCready, operations manger, 247 Electrical, Ian Fursland, sales director, The Lamp Company and Anna Ryland, IER editor*.
Anna: What impact do climate change and energy efficiency issues have on your business?
Ian: A small minority of online customers are interested in the energy efficiency of our products, ie lamps. The majority of our consumers, many of which are distributors, don’t know how much it costs to run a 60W bulb in comparison with the energy saving one. It is not clear what the savings are, as all manufacturers don’t work from the same rule book and they don’t include the information about the savings or the product performance.
We need consistent measures of the cost and product benefits. This is essential to change customer behaviour. This information should appear on the PoS material and packaging. It could simply say:  “By the time this bulb has popped it has saved for you eg. £8.50. It is also saving you £X per unit of electricity.”
Simon: Similar lack of clarity exists in the domestic appliance sector where standards have changed so dramatically that, for example, a washing machine has to be AAA rated to carry the Energy Saving Recommended logo. Also we have different ratings for refrigeration – A+, A++ etc – than laundry which confuses the customer. Moreover, where we are going to go from here – to an A++++ rated appliance? On some labels there is information on how much energy an appliance uses but when people buy online, they don’t get this information because there is no legal requirement to display energy label information online. Online retailers are reluctant to clutter pages with product specifications.
Anna: In his regular column in IER, Douglas Herbison, chief executive of Amdea, reported on the European Commission’s review of the energy efficiency labels and the proposed changes to the system, which would involve replacing letters with numbers, with 1 being the least efficient and 7 most efficient. This system would allow for further extension of the system beyond number 7.
Frances: I believe that one of the areas which is also examined by the EU review is how the labelling system is used and how it is perceived online.
Alex: Why can’t we just put: ‘this appliance uses so many kWph’?
Frances: Our research shows that not many consumers understand the term ‘kWph’.  More of an incentive would be such information as: “Buy this product and it will save you £X of your bill”, or “it will generate so much less carbon”. The energy saving labels have been on the market for a long time and people are familiar with them but now there is a need to get more information which will go deeper into the issue.
I would be interested to know whether your consumers ever ask about the details of energy labels or what they mean. Do you feel that the consumers need more detailed information?
Simon: In general, people understand that they need to look for an A-rated appliance, and recognise the EST logo, but they don’t ask how this really works. It is not always easy to explain the difference; for example in tumble dryers there is only one A-rated model which costs over £500 so if the customer cannot afford it, they had no choice. Therefore it would be helpful if we had some means to guide customers in the areas where there aren’t energy recommended products. There are big differences between B and C-rated appliances, and although you don’t want to be seen as though recommending these products, it looks as they are neglected.
Frances: At the moment we endorse C-rated appliances if they have an automatic drying function.
Simon: There is also a gas tumble dryer which is neglected all together. It has been in the market for a while and I have been looking for ways to promote it, but can’t find means to do this.
Frances: We currently endorse gas tumble dryers and we review our products criteria annually. We are now asking ourselves whether there are any products we are not endorsing although we should be.
Simon: Which? reports are very good signposts to recommend products. They help consumers to compare various product criteria and make their minds up on what is important to them. A good retailer can advise them on a number of issues but people buying online won’t benefit from such a consultative approach, therefore they need more information from bodies like the EST.
Ian: The energy efficiency information should be clear and widely available so, in the same manner as when people buy double espresso they know what they get, people buying appliances would know what to expect in terms of energy performance.
Steve: I also think that another type of information which should appear in the public domain is that of how much energy has been used to produce a given appliance by indicating where or how it was made. If a manufacturer brings a triple AAA washing machine to the market which was produced in China and transported half way across the globe, the consumer will realise that even with all the savings the appliance may produce for them during its existence, it will not balance out its environmental cost.
There is also a challenge here for the retailer who should be able to answer why they are stocking such an appliance. 
Frances: Our research shows that an increasing number of customers start voting with their feet.
Ian: If a machine had a label saying that it uses 3kWh the customer could compare this with a different one which uses eg. 1.5kWh. I don’t see domestic appliance manufacturers doing this for a long time yet, so this sort of information should come from an independent body.
Simon: The rating is based on a certain wash programme. Ideally the appliances should be programmed in a way that they default to the most energy efficient programme, but this is not the case at the moment.
Anna: Some brands already are doing this.
Simon: But these are the exceptions. The standard is that the consumer has to select an economy wash by pushing the right button; if the standard was the economy wash the consumer would have to make a conscious decision to change it and then they may think again.
Anna: Do many of your customers ask for energy saving products? Is this more of an exception than the rule?
Debbie: At the moment there are few people who are interested in energy saving products but you can see that more are thinking about this. Over the next couple of years this is going to be in the forefront of their interest.
Alex: In the lamp sector people do ask for energy saving alternatives but closely look at their prices.
Simon: In white goods, especially online, so much of what people are asking for is driven by price. Many customers look for the cheapest 1600 spin washing machine, since the 1600 spin is now seen as a standard. If you take a price out of the equation, you need other things to differentiate products by. Energy efficiency and the cost savings will become these differentiating factors, especially in the products areas which are similar, such as laundry.
We get consumers from different economics backgrounds asking for products with EST labels because they have seen relevant information somewhere in the media or online.  However many of them will still go for cheaper products. Therefore we have used EEC funding to offer consumers energy efficiency products, for example we offered A++ fridge/freezers with £100 discount. It worked because it brought some products into a price bracket of the less affluent consumers. At the moment, however, this kind of funding from energy companies has dried up.
Frances: The Energy Efficiency Commitment (EEC) is a piece of legislation which covers different areas, inc white goods and lighting. The EEC funding scheme, obliging various energy suppliers to meet certain reduction targets based on their size, has ended and is going to be replaced by a new scheme called Carbon Emission Reduction Target (CERT) starting in April 08, but how different suppliers will take it up is yet to be seen.
However, if you give customers a choice of buying a £50 more expensive product with an energy efficiency label, and inform them that it will save them £70 over the next five years, will this appeal to your customers?
Simon: It will definitely work with certain customers, especially more affluent ones but not all of them. Paying money up front could be an obstacle for poorer customers.
Anna: Do your consumers ask about specific energy labels?
Simon: There is still some confusion about the meaning of the labels – especially across different product categories: what level of efficiency they should be looking at.
Steve: It would be good to have some benchmarks, for example an A-rated washing machine with a spin of 1200 uses XkWh while a A+ rates uses YkWh. Everyone knows that a A+ machine uses less energy than A-rated, but no one knows how much less.
Ian: This sort of information should be standardised across all sectors.
Frances: The EST was considering providing more in-depth content information on the labelling system which could be uploaded on retailers’ websites. Would this be of use to you?
DM: Yes, but it needs to be integrated into the website with the products.  For example by clicking on the EST logo the customer would go to the information source.
SM: I also like the idea of information from EST which could be uploaded into the retailer’s site in a user-friendly format.