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Building Value By Association

BY CSA STAFF

When the Retail Contractors Association (RCA) was formed some 17 years ago, it was with the idea that contractors-and those in retail, specifically – would benefit both from the relationship-building activities and the networking functions that a professional association of peers could offer, and also from a unified commitment to following standards of professional conduct. Chain Store Agesenior editor Katherine Field talked with Art Rectenwald, president of Rectenwald Bros. Construction, Inc., and a member of the RCA board of directors since 2004, about the RCA and about the unique challenges presented by retail construction.

Chain Store Age:Why is it advantageous for a retail chain to hire a contractor who is a member of the Retail Contractors Association (RCA)?

Art Rectenwald: When a retailer considers hiring an RCA contractor, the retailer can be assured that the contractor has passed a rigorous approval process by the RCA board of directors, a process that has been honed over the RCA’s 17-year existence.

CSA:What does the approval process consist of?

Rectenwald: The RCA confirms that the contractor has successfully performed in the retail industry for a minimum of five years and that the contractor has provided five credible and confirmed recommendations from retailers and architects. In addition, the retailer can be assured that the RCA contractor is registered and licensed in every state in which they work, and that the contractor is financially stable, as confirmed by review of AIA qualification statements and proof of the contractor’s ability to provide performance and payment bonds from a carrier with a rating of A or better.

But, the board doesn’t stop there. All RCA contractors must re-qualify every year; in this process, the board re-verifies licensing, registration, bonding requirements and AIA qualification statement review.

Retailers are encouraged to utilize the search engine on the RCA Web site that can quickly sort which contractors are licensed and registered in each state.

CSA:What is it about retail construction that requires a certain level of expertise?

Rectenwald: Retail construction has unique challenges that experienced RCA contractors are accustomed to handling. Retail construction involves complex interactions with many parties, including landlords, building officials, architects, engineers and the retailer’s construction, design and operations personnel.

The general contractor is often the hub of these many interactions and processes, which in retail come fast and furious; experienced RCA contractors are well-equipped, and regularly handle these issues successfully.

RCA contractors understand the retailer’s challenges when embarking on prototype projects and large scale rollouts, and the specific design, scheduling and budgeting issues that go with them.

CSA:We all talk about the burgeoning green movement. How have the RCA and its members been affected by it?

Rectenwald: The green movement is certainly on the move. Many of our contractors have been involved in LEED- certified projects, and the list is growing. I believe this issue will increase in importance as more and more retailers choose to build green. This is a perfect example of the type of industry issue that the RCA will take head on and “LEED” the way.

CSA:What is the advantage to a contractor to join RCA?

Rectenwald: The RCA is an invaluable source for networking and education. RCA has many active programs available to its members including:

Acomprehensive safety program that covers all federal requirements. This is provided at no charge;

Aquality-assurance program that facilitates customer feedback and fosters improved performance and communication;

Project management and superintendent training courses specifically designed for retail construction; and

The RCA communicates current industry issues as well as RCA activities through monthly e-bulletins, quarterly newsletters, annual meetings and its Web site—allowing the membership to stay on top of what matters in retail construction.

For more information on the Retail Contractors Association, visit www. retailcontractors.org.

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Home Depot Projects Lower Profit in 2007

BY CSA STAFF

Atlanta, The Home Depot Inc. said Wednesday it will pump $2.2 billion into improving its business this year even as it expects lower earnings and slim sales growth. Home Depot said that for fiscal 2007 it expects sales growth in the range of flat to an increase of 2%, a decline in comp-store sales in the middle single digit percentages and an earnings per share decline of 4% to 9%.

Including the effect of a 53rd week in its fiscal year, consolidated sales are expected to increase by 1% to 2%, and earnings per share are expected to decline by 3% to 8%, Home Depot said.

CEO Frank Blake told investors at Wednesday’s conference that like last year, “2007 also will be a difficult year.” But he said it will be a year of focus on Home Depot’s priorities and a year with “hopefully less noise.”

The “noise” was apparently a reference to the investor furor over former CEO Bob Nardelli’s hefty compensation in light of the company’s lagging stock price. Nardelli resigned in early January after six years at the helm of the company. He took with him a severance package valued at $210 million.

To improve its business, Home Depot said it will invest $2.2 billion this fiscal year in key priorities, including the opening of 115 stores. The investment includes $1.6 billion in capital spending and $600 million in expense.

Home Depot said it will recruit master trade specialists, simplify its staffing model, use more technology to aid customer service, and redesign employee compensation and reward plans. It also will invest in new merchandise and review its pricing strategies. Additionally, the chain will spend money on customer loyalty programs, direct-ship programs, credit programs and other specialty sales initiatives.

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Federated Plans Name Change

BY CSA STAFF

New York City, Federated Department Stores on Tuesday said it would ask shareholders to approve changing the company’s corporate name to Macy’s Group Inc. A vote to amend the corporation’s charter to accommodate the new name will be held in conjunction with Federated’s annual meeting on May 18. If approved, the company will be known as Macy’s Group Inc., effective June 1. The move comes on the heels of the company changing most of its store nameplates to Macy’s.

“Macy’s Group is the appropriate name for our company, given that about 90% of our sales involve the Macy’s brand. That said, Bloomingdale’s is—and will remain—a very important part of our company,” said Terry J. Lundgren, Federated’s chief executive. Federated Department Stores also said stronger sales at established stores and lower costs drove a 5% rise in fourth-quarter earnings. For the quarter ended Feb. 3, net income rose to $733 million from $699 million the prior-year period. Sales fell 4% to $9.16 billion from $9.57 billion, as the company shuttered 80 “duplicative” store locations. Comp-store sales rose 6.1% in the quarter.

During the quarter, Federated lowered its selling, general and administrative costs 11% to $2.31 billion.

The company also announced a $4 billion increase to its stock buyback program and said it will immediately repurchase 45 million shares for $2 billion under the plan.

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