Client

A private equity-owned Fortune 500 discount retailer operating more than 18,000 stores in 47 states. 

 

Challenge

The retailer is rapidly expanding with approximately 1.000+ new store openings per year.  General contractors put utilities in their name during construction.  Responsibility for the utilities transfers to the corporate office once construction is completed. Unfortunately, the transition was not happening in a timely manner. As a result, the client was missing utilities turnover deadlines and the shutoffs were occurring frequently.  

Once permitting is complete and build out dates are set, a lack of organization in initializing utility accounts can delay store openings up to 30 days.  In addition to lost sales, committed salaries are paid out with no actual work attached. These factors have a direct negative effect on EBITDA.  

Additionally, stores were often caught off guard when initial utility bills went unpaid and services were turned off with no notice.  When this happened, stores have only two to four hours to save refrigerated and frozen foods. Water, heating, and air conditioning was turned off and stores were forced to close down until utilities came back online. The company could lose $15,000 – $20,000 in perishable food products in addition to the opportunity cost of lost revenue while closed down.

 

Solution

The client hired Cost Control Associates (CCA) to help them proactively avoid missed store opening dates by managing the utilities open and close process for all new stores. CCA established a one-month pilot project to ensure success and is now working on a multi-year project to manage an effective opening and closing of utilities accounts. 

 

Results

$6.75 million in lost revenue avoided through utility account open and close services.

CCA manages the utilities transfer process and ensures that stores remain open and that all new accounts are set up properly in the client’s system.  As part of our process, CCA confirms that the first bill is properly sent and that the store numbers are correctly assigned to utility accounts.  Additionally, CCA created a process to review existing store billing errors and rectify legacy issues that they was unable to address with internal resources. 

 

 

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