The need for refrigeration in the food retail industry and specifically in supermarkets, currently accounts for about 30% to 60% of the total energy consumed in the UK stores. A key characteristic of this consumption, is the high amount of low-grade heat rejected by the condensation units to the ambient air. The aim of this study, which focuses on transcritical CO2 (R744) refrigeration cycles, is to assess whether the use of a water-cooled condenser rejecting heat to the soil via an intermediate closed-loop water-circuit, can improve the overall cooling performance, while also considering the economic implications of this modifications. In this work, a detailed model simulating the operation of an existing supermarket refrigeration system is presented and validated against field data measurements taken from a refrigeration system in a UK supermarket. The examined direct-expansion system comprises an air-cooled condenser coupled with two sets of compressors for the provision of intermediate and low-temperature cooling. This baseline model is then modified and used to evaluate the performance of a similar system, in which a water-cooled condenser is used instead of the existing air-cooled unit or in parallel to it. Preliminary results indicate that the use of water-cooled condensers has the potential to reduce the energy consumption of these refrigeration systems by up to a factor of 5 when the external temperature is high. However, in cold ambient conditions, the air-cooled condensers reject 10% less heat, resulting in a better system performance. Furthermore, a more thorough case study is developed in order to examine the yearly operation of the existing system, and to compare this to various water-cooled alternatives. The analysis indicates a reduction of approximately 3% in the energy consumed by the water-cooled system (compared to the reference benchmark air-cooled system), and a reduction of almost 6%, for a hybrid system with coupled air-cooled and water-cooled condensation units in parallel operation. The economic evaluation of these systems shows that electricity costs can be reduced by up to $4000 (£3450) per year for a large supermarket (1400 m2 (15000 ft2)) with a system using a water-cooled condenser. The annual maintenace costs of the system are increased by about $600-$1000 (£500-£800) per year, and the capital costs are marginally reduced by less than 5% leading to a promising investment for commercial refrigeration with a payback period of less than 5 years, when the system is installed in a new store.