SUPPLY CHAIN

Big-Box Construction: Cement and signage in the spotlight

BY Marianne Wilson

The big-box construction track at SPECS/2007 covered such topical issues as the impact of today’s global economy on the construction industry and suggestions on how best to deal with increasingly restrictive sign ordinances. In the “Don’t SWPPP This Away!” workshop, the risks and costs of non-compliance were discussed. The session included permitting case studies of non-compliance and strategies for dealing with regulators.

The sessions included ample opportunities for audience interaction. In the “Comparison of Construction Contracting” workshop, attendees were given an overview of the various types of construction contracting methods and provided with an analysis of risk/reward for each type. They participated in roundtable discussions to analyze specific scenarios.

In the session, “Pardon the Interruption” workshop, a retailer and a contractor debated nine hot-button topics, including bidding, regular bidding vs. reverse auctions, and change orders.

Cement: The “CSI: Concrete” workshop provided an in-depth look at concrete-and moisture-related issues. Industry expert Howard Kanare, senior principal scientist, CTL Group, Skokie, Ill., presented common problems and proven techniques for preventing and/or fixing concrete moisture complaints.

The workshop examined the different modes that concrete-floor moisture failures may take, from curling, flooring expansion and staining to condensation, debonding and adhesive breakdown. The speaker outlined several key concepts for attendees to keep in mind, starting with the idea that the floor is part of the building envelope. Leaks are not acceptable.

“Design and build to avoid moisture-vapor intrusion from below and around the floor,” Kanare said.

Attendees were also urged to remember that the floor is a system and, as such, compatibility of components is key.

“Design for resistance to moisture vapors,” Kanare said, “and always consider contingencies, such as warping, flatness and moisture.”

Kanare also discussed vapor retarders. He made the point that every floor slab-on-ground should have a vapor retarder directly under the slab, properly detailed, and protected from damage during construction of the floor.

Drying is critical to avoiding moisture problems at a later date. Kanare recommended the use of a concrete mix that will dry quicker (look for such features as moderate water-cement ratio, 0.45 to 0.50; low-absorption aggregate; maximize coarse aggregate size and volume; moderate cementitious factor and water-reducing admixtures). He said the drying process should be measured and monitored and that active drying means should be provided.

“Avoid air stagnation, which slows drying,” Kanare explained. “Circulate the air. “And be aware of daily weather cycles.”

It is important to measure moisture, Kanare said, for a number of reasons. These include meeting the flooring manufacturer’s requirements, minimizing potential indoor air-quality problems, minimizing moisture-induced failures, meeting warranty requirements and minimizing liability.

The session also examined the various approaches to remediation. Understanding the root cause of the problem is essential, according to Kanare, who added some recommendations.

How would you describe SPECS?

“If it’s external moisture, cut off the supply. If there is no external moisture source, dry the floor,” he said.

Signage: In “Size Matters: Signs of the Times,” Peter Hauser, president, Site Enhancement Services, South Bend, Ind., shared strategies for maximizing exterior-signage visibility and ways to deal with restrictive sign ordinances. The speaker noted that municipalities restrict signage based on aesthetics as well as safety.

Typically, signing is regulated by the zoning ordinance contained in the city plan.

“New signs must meet the sign standards [of the municipality] or go through a variance process,” Hauser said. “If the applicant is denied, he can often appeal to the city council.”

However, some municipalities create design review boards that review all signage regardless of size or design. These boards can enforce requirements on the business owner whether or not the sign is code-compliant, according to Hauser.

The speaker emphasized the importance of developing an effective permit strategy.

“Permit the signs early,” he said. “Design your sign standards to maximize code allotments.”

The speaker urged the audience to research the city code before choosing a site to determine if the code is restrictive or lenient.

“Survey the area to see if a variance is possible,” he added. “For instance, do other businesses have non-conforming signs?”

To deal with restrictive sign codes, Hauser recommended creating a flexible sign program, with signs that can be built at different heights and in different sizes.

“Choose a sign that is a reasonable variable,” he said, “and have an option two if your variance fails. For instance, a smaller sign that still provides adequate identification, or a secondary logo in case the primary one causes problems.”

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Weekly Retail Fix

BY CSA STAFF

THE NEWS: SAM’S REALIGNS STORE-LEVEL MANAGEMENT

BENTONVILLE, ARK. Sam’s Club is changing the management structure in its stores. In the realignment, approximately 250 positions will be eliminated, Wal-Mart Stores announced last week. The company said it’s replacing five lower level management positions at each Sam’s Club location with three new higher level and higher paying assistant manager positions.

“This is not a cost cutting effort. We expect a slight increase in payroll upon completion of this change,” said Sharon Orlopp, senior vp of Sam’s people division.

THE FIX: Differentiation would better help Sam’s

Since Sam’s decided that its refocus on the business customer was too narrow, it has sought to find ways to make its clubs more attractive to primary shoppers, i.e., women. And that’s a pretty tough row to hoe, as Costco has done a pretty good job at satisfying the club customer in general and BJ’s has been going after female shoppers for several years now, with some success.

Having fewer managers with more direct responsibility could create a tighter knit club-level management and shorten lines of responsibility and accountability. Yet, without differentiating the offering, execution isn’t going to overcome all of Sam’s challenges.

That being said, a store-level management realignment might be overlooked at other retailers, but, this being Wal-Mart, everyone has to make a big deal about it. But that’s the price you pay as the big guy on the block.

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Weekly Retail Fix

BY CSA STAFF

THE NEWS: TOYS ‘R’ US EARNINGS GAIN 40.1%

WAYNE, N.J. Toys “R” Us today posted net earnings of $199 million for its critical fourth quarter, which meant it turned a profit for the fiscal year ended Feb. 3. But special charges and gains had an impact on its numbers.

Sales for the previous fiscal annum were $142 million, the difference translating into a net earnings increase of 40.1% year over year. For the last fiscal year, Toys “R” Us posted net earnings of $85 million versus a net loss of $384 million for the previous period.

Operating earnings in the fiscal 2006 fourth quarter gained 53.1% to $571 million versus $373 million for the fourth quarter of fiscal 2005. For the last fiscal year, operating earnings were $649 million versus an operating loss of $142 million for the previous period.

THE FIX: Improved shopper experience ups comps

Of course, any observer has to take into consideration special financial circumstances. Fiscal 2006 operating earnings were positively impacted by $96 million from gains on property sales, slightly offset by restructuring and other charges. In fiscal 2005, operating earnings were negatively impacted by $410 million in costs relating to the merger of the company, as well as $58 million of costs and charges relating to contract settlement fees, restructuring and other charges.

Still, sales were trending up at last year’s end. Net sales gained 15.8% to $5.7 billion. In the full fiscal year, net sales advanced to $13 billion, up 15.2%.

Comparable-store sales for the Toys “R” Us’ U.S. division gained 0.6% in fiscal 2006, and that represents the division’s first comps increase in six years. Comps at Babies “R” Us were up 4.8% and those at Toys “R” Us international were up 2.6% for the fiscal year.

Jerry Storch, chairman and ceo of Toys “R” Us, said the company is “pleased with the strides we made in fiscal 2006 to improve at all levels of the organization and reposition the company for profitable growth over the long term.”

He said the company’s new management team has been focusing on executing a strategy that would turn the retailer into a global toy and baby products authority.

“This translated into higher overall sales, positive comparable-store sales, improved gross margins and strong operating earnings growth for the 2006 fiscal year,” Storch asserted. “The key to our strategy has been improving the customer shopping experience in our stores. We are accomplishing this by delivering a more compelling merchandise selection, better service and a cleaner and more comfortable shopping environment.”

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