Nov 30, 2023
By Ben Gardner

Maximizing the Store Asset Lifecycle: From Planning to Disposal

The retail environment is more dynamic than ever before and there continues to be a shift in the way consumers shop and experience brands.

As a result, it is imperative that retailers utilize technology to their advantage, which includes managing critical assets as effectively as possible. However, this is not just a matter of convenience, it’s also a matter of strategic responsibility.

Unfortunately, when issues arise, facilities leaders often find themselves tasked with overseeing support staff, such as in-house maintenance technicians or 3rd party contractors, rather than concentrating on enhancing facilities operations at a strategic level.

This inefficient approach can eventually result in asset downtime, equipment failures, and other problems that accumulate over time. These issues often remain hidden until it’s too late and they suddenly manifest into bigger problems, impacting the customer experience and sales. For example, one leading supermarket chain experienced a series of refrigeration malfunctions, leading to the disposal of significant amounts of food products. This not only incurred direct financial losses but may have had an impact on the store’s reputation for freshness and quality.

Without a well-defined asset lifecycle strategy, retailers are likely to continue encountering hurdles like this, including aging assets, unscheduled downtime, high maintenance costs, and decreasing asset values.

What is the asset lifecycle?

The asset lifecycle is a process that enables retailers to ensure operational efficiency at every level and generate a greater return on investment.

There are typically five stages in the lifecycle:

  1. Planning
  2. Acquisition
  3. Operation
  4. Maintenance
  5. Disposal

By understanding each stage in greater detail, facilities leaders can better manage how their assets perform and how much value they can provide.

1. Planning: Laying the foundation

The first stage is where retailers must identify the assets they need to keep their stores operating and customers satisfied. It doesn’t matter whether this is a slushie machine in a local convenience store or a series of escalators in a prime location flagship store, extensive planning is the key.

It’s important to cover everything from shelving and refrigeration units to escalators, HVAC systems, and more. In fact, over two-thirds (67%) of retailers cited HVAC systems as their most critical assets. The best way to determine which assets are the most important is to answer critical questions such as:

  • What assets are required to meet the operational needs of the store?
  • What are the assets’ specific purposes?
  • How will these assets improve store operations?
  • Which assets are critical to customer experience?
  • What budget is available for asset acquisition?
  • What is the estimated depreciation value of these assets?

2. Acquisition: Getting the right assets for the job

The next step is to acquire these assets either through purchase, lease, or rental. As part of this phase, facilities leaders may find themselves searching for reliable vendors and negotiating prices or contract agreements with them.

According to a study by Retail Insider, vendor relationships significantly impact asset management for 45% of retailers. Therefore, this stage should not be rushed.

Once the assets have been acquired, they need to be properly installed and integrated in-store. Storing detailed documentation of the installation process, warranties, and service contracts is absolutely essential to maintain these assets effectively in the future.

3. Operation: The heart of the retail experience

Operation is the longest stage of the asset lifecycle, as each asset acquired is used in the day-to-day running of the business. These assets will contribute to the efficiency of the store, the customer experience, and the generation of revenue.

Regular maintenance and monitoring is critical to ensuring these assets function properly, by establishing a preventive maintenance schedule. This could range from daily cleaning to routine inspections, repairs, and upgrades.

Regular maintenance can also play a role in energy-efficiency improvements. This can help to decrease facilities’ energy use by up to 40%, leading to substantial savings for the retailer.

The same study also found that more sustainable and energy-efficient retail environments experience a 7% increase – on average – in asset value compared to traditional buildings.

4. Optimization: Extending asset life

Adopting a proactive maintenance approach is essential. Instead of simply reacting to issues as they arise, retailers should strategically plan maintenance schedules. Regular inspections, preventive measures, and timely repairs contribute to the overall health of critical assets, preventing unexpected breakdowns and extending their life.

Incorporating modern technologies, such as work order automation, IoT sensors, and predictive analytics, enables retailers to monitor asset health in real-time. This data-driven approach allows for predictive maintenance, identifying potential issues before they escalate. By leveraging technology, retailers can optimize asset performance and enhance their lifespan.

Regularly upgrading and retrofitting assets ensures they stay aligned with the latest industry standards and technological advancements. This strategic approach not only extends asset life but also positions the retail business to remain competitive.

5. Disposal: The end of the line

The final stage of the life cycle is disposal. This can occur at any point after acquisition, and the decision will depend on factors such as current value, functionality, and relevance to the business.

As an asset reaches the end of its useful life, retailers must decide whether to replace it with a more efficient model. If they choose to replace it, they must dispose of the outdated assets responsibly to minimize the environmental impact.

There are several methods they can choose, either selling or repurposing the asset or even returning items that have been rented from a vendor.

The importance of capital planning in strategic asset management

Careful capital planning is crucial to ensure retailers have the right funds at every stage, whether they’re acquiring, maintaining, replacing, or upgrading their assets.

This enables them to get the most from the organization’s assets and infrastructure in the long term.

Effective capital planning is something that must be managed throughout the asset lifecycle, but particularly during the initial planning stage.

It allows facility managers to pinpoint immediate expenditures, allocate capital budgets more effectively, and reduce the risk of unexpected expenses. Not only that, but it gives them a clear picture of how they can maximize business funding for store maintenance and improvement. For example, a store refit and HVAC replacement could be coordinated during a planned closure. When combining major projects, funds can be allocated more strategically to cover both the HVAC system replacement and the store refit. This helps in preventing overruns and ensuring that there are sufficient resources to complete both investments successfully, reducing the overall downtime and revenue loss associated with individual closures for each project.

However, this is a complex process that involves coordinating many moving parts and collaborating across departments, which can be a more complex process for bigger organizations with more assets and facilities to manage.

Why you need facilities management and capital planning software

Modern software like Nuvolo Connected Workplace enables companies to track and manage their store maintenance, critical equipment, processes, and data from one place.

This gives them access to deeper insights into the performance of their facilities and enables them to make more informed decisions.

Integrating facilities management and capital planning software makes it possible to streamline reporting for the lifecycle of all store assets, set budgets, and develop long-range strategies. It also gives retailers the ability to track asset lifecycles and predict when they’ll need to be replaced.

In conclusion

By understanding and optimizing these five key stages of the asset lifecycle, retailers can make data-driven decisions, minimize operational costs, and ensure their assets contribute to a seamless shopping experience.

In a landscape that demands agility and cost-effectiveness, understanding and implementing best practices for asset management ensures retailers stay ahead of the curve and support long-term growth.

The combination of facility management and capital planning software like Nuvolo makes all of the above possible, helping to streamline the retail store asset lifecycle from planning to disposal and everything in between.