Leading neighbourhood retailer sees significant return on LED light investment
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About McColls Retail Group
The leading neighbourhood retailer in the independent managed sector, McColls Retail Group runs 933 convenience stores and 433 newsagents under the Martin’s brand name in England and RS McColls in Scotland. It’s a rapidly growing organisation, having more than doubled its number of convenience stores over the last eight years.
What did they want to achieve?
Lighting accounts for almost a quarter of the total energy consumed in McColls' stores. As part of a commitment to reducing its energy costs and carbon footprint, the business decided to introduce LED lighting across the vast majority of its 1,300 store estate. LED lights are up to 80% more energy efficient than fluorescent or incandescent bulbs and last up to 6 times longer, meaning reduced maintenance costs.
How we helped
Our Green Energy team outlined the finance options and LED suppliers that could help. Since LED assets are largely intangible and therefore not suited to lease purchase agreements, we arranged £2.7m in commercial loans for McColls to access on a drawdown basis. This meant individual loans could be drawn against costs as they arose during the LED installation programme.
"Lombard are renowned for their expertise in arranging funding for ‘green’ initiatives and we found their guidance on capital allowances and tax treatment of such investments was very helpful.”
Chief Financial Officer, McColls Retail Group
Alongside improved in-store ambiance, the LED lighting has brought McColls significant and tangible business benefits.
Spreading the cost of the roll-out over time helped conserve working capital and liquidity within the business.
The LED systems will cut overall electricity costs by about 11%, translating to around £1m in cash savings per year.
LED lights will reduce McColls carbon footprint by around 1,000 tonnes per year.