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Office Max swings to profit in Q4 on cost controls

BY CSA STAFF

Naperville, Ill. — OfficeMax swung to a fourth-quarter profit as the company retailer continued to cut costs, though sales declined in both its contract and retail segments.

OfficeMax reported earnings of $12.7 million, compared with a year-earlier loss of $2.58 million. Revenue decreased 2.4% to $1.77 billion. The chain expects sales to be flat for 2011.

“To date in 2011, we have experienced a variety of challenges for our business including adverse weather conditions, heightened promotional activity, and a lack of favorable economic conditions, and we anticipate that some of these challenges may persist," CFO Bruce Besanko said.

For the full year, total sales decreased 0.9% to $7.1 billion. It reported net income of $68.6 million.

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Battle to end North Dakota’s restrictions on pharmacy ownership continues

BY CSA STAFF

New York City — Months after a voter initiative to abolish North Dakota’s strict restrictions on pharmacy ownership foundered, the long-running debate resumed Tuesday in the state’s legislature, the Associated Press reported.

North Dakota is the only state in the nation that requires pharmacists to have majority ownership of most pharmacies. The law prevents major retailers, such as Wal-Mart Stores, from operating pharmacies in their own stores.

The latest attempt to repeal the ownership restrictions is being sponsored by Rep. Thomas Beadle, R-Fargo, who said he was not doing so at the behest of large retailers, many of whom have lobbied in the past to end the restrictions.

"I’m not arguing that we ought to prefer chain stores over independent retailers," Beadle said. "I’m arguing the citizens have the right to choose for themselves wherever they feel is best."

The North Dakota House’s Industry, Business and Labor Committee took no action on the bill after holding a four-hour hearing Tuesday.

North Dakota’s law has been in place since 1963, surviving a number of repeal attempts and a legal challenge that reached the U.S. Supreme Court.

Two years ago, the House defeated repeal legislation despite a high-profile organizing and lobbying effort backed by Wal-Mart and other large retailers.

An array of pharmacy organizations supported the law, which they said makes North Dakota the envy of pharmacists across the country.

Pharmacies operating when the law passed in 1963 can operate without the restrictions, and some have passed on their permits through changes in ownership. Several CVS pharmacies in the state still operate under the exception.

The law also allows grocery stores and other businesses to lease space to independent pharmacies, and own up to 49% of the pharmacy.

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Being ‘green’ just became a little easier

BY CSA STAFF

By Kenneth A. Gruskin, [email protected]

As Kermit the Frog often sang, “It’s not easy being green.” But for large-scale retailers seeking USGBC LEED certification for their brick-and-mortar locations, being “green” just became a little easier.

Until now, many organizations committed to going “green” faced a costly and repetitive submission process. To address this, the USGBC developed the LEED Volume Program, which allows companies that have prototypical buildings with similar designs to apply for LEED certification in bulk, which can save them time and money over the current, individualized process.The following can help you learn how the Volume Program works and whether your prototype design can take advantage of it:

  1. What types of projects lend themselves to the Volume Program? Most chain-type facilities that utilize a standard building or facility design such as retailers, restaurants, convenience stores, banks and gas stations are prime candidates for the Volume Program.

  2. How does the new program differ from the current certification process? The standard process certifies each store individually, incurring repetitive registration and review costs. With the Volume Program, companies can submit retail stores in batches, simplifying the submission process as most credits will be pre-certified within their prototype. Additionally, they have the option of having the commissioning process carried out by their own quality control or construction management teams rather than their LEED and design consultants.

    To validate that the facilities being built are conforming to the approved USGBC volume design, USGBC inspectors will undertake periodic spot checks.

  3. What are the initial steps to get started? First, a company that utilizes a standard prototype to roll out its non-LEED locations will need to determine what aspects need to be altered to qualify for the program.

    Since the USBGC requires technical and managerial uniformity across the organization’s portfolio, a company needs to prepare a LEED prototype document that represents the baseline standard for the portfolio, including a detailed description of quality-control processes and employee training curricula.

  4. Will adapting our (non-LEED) prototype for the program alter our stores’ brand and customer experience? Prior to submission to the USGBC, the design/LEED professionals in conjunction with the company’s real estate/construction team will need to evaluate the existing prototype, branding elements, and customer experience to ensure that the LEED version of the prototype will not adversely impact the brand/customer experience. If building a “green” store in some way undermines the brand or customer experience, then only “green” elements that do not cause negative impacts should be included — even if it means a store cannot ultimately be LEED certified or included in the Volume Program.

  5. What are the key differences between a LEED and non-LEED store prototype? To meet the quality control requirements of volume certification, a LEED prototype design is generally far more detailed than a non-LEED prototype.

    For example, a LEED prototype document would express a threshold range for mechanical units, approved manufacturers and well-defined, typical installation requirements, whereas a standard prototype document might include a simple list of approved vendors and standard construction details.

  6. How can we be sure our stores will not fail a USGBC spot inspection? As long as each location is designed and built according to the approved specifications and quality control processes, it is likely to pass a spot inspection.

  7. What is the greatest challenge and benefit of participating in the program? The most important factor is both a key benefit and a challenge — uniformity. Without it, all of the stores that have been certified under the Volume Program could be brought into question. This could lead to fines or a suspension of the prototype’s LEED pre-certification.

  8. What are the most important considerations for the design team when creating a LEED prototype? The design team should utilize the company’s inherent culture and existing processes to shift its standard procedures towards the LEED certification criteria.

    The team should incorporate “green” features that can be reproduced consistently over a broad range of localities such as lighting, plumbing, materials and furnishings.

    However, it is important to properly explore the feasibility and lifecycle costs for any major “green” feature, especially for more elaborate systems like green roofs, day-lighting strategies, rainwater systems, and on-site power generation, for example, prior to incorporating them into the prototype.

    Lastly, the design team should establish a set of performance criteria for site-specific items such as mechanical systems and exterior/site elements, ensuring the action plan meets the retailer’s quality-control and management requirements.

  9. Do we have to use one architecture firm to roll out LEED stores in the program? No. It is typical for chains to use a variety of local architects, engineers, and vendors for different regions. It is important, therefore, to lay out strong guidelines both in the prototype set and the quality control/education plan to maintain a high level of uniformity.

    It is advisable, however, to have one architecture firm be the central LEED contact and maintain the prototype specifications and drawings to ensure consistency. It is also highly recommended that the retailer designate an internal “green” portfolio administrator to help guide the program and ensure the plans are being utilized correctly.

  10. What advice do you have for those just starting down the LEED road? The new USGBC Volume Program may be the most cost effective, efficient approach to integrating sustainability into an existing chain store portfolio; but keep in mind that being “green” is not an end unto itself. It is important to balance the retail brand and customer experience against the goal of building a “green” store, making certain that the changes needed to adapt the store prototype to achieve a LEED certification do not negatively impact or undermine the store’s ability to deliver on its primary brand, retail, and experiential functions.

    As with any new, complex endeavor, a period of trial and error is expected. Work through the initial hiccups and avoid unnecessary costs by identifying project goals early and establishing a LEED team and “captain” at the onset of the project. Then, develop and stick to a highly integrated and well-orchestrated plan.

    Finally, when being “green” becomes an integrated feature of a company’s retail rollout, it benefits the designer, the client and most importantly, the planet. As Miss Piggy said to Kermit in Muppets from Space, “I love it when you take charge!” The time is right for chain store retailers to take charge of their “green” ambitions and channel them through the USGBC’s new Volume Program.

Kenneth A. Gruskin, AIA, is principal and founder of Springfield, NJ-based Gruskin Group (gruskingroup.com), an integrated retail design firm that builds unified brand experiences through architecture, brand development, visual communications, web/interactive, industrial design, interior design, strategic consulting, and sustainable design. He can be reached at [email protected].

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