Store Improvements: Remodels, Refreshes and More
Whether it’s a complete remodel or just a refresh, retailers have a variety of options — and decisions to make — when it comes to updating their store interiors. BrandPoint Services’ Steve Hearon talked with Chain Store Age about store update programs.
What are some of the most common mistakes retailers make when undertaking a refresh, remodel or rebranding program?
The primary mistake retailers make is not having a clearly defined scope of work, which often leads to misunderstandings, complications and a prolonged time line. Another mistake is not getting the site surveyed or using old survey data that is incorrect.
Lastly, not having the store manager onboard to the scope of work corporate has identified. If crews survey the site in the quoting process, there is an opportunity to engage with the store manager prior to the start of the project to set expectations, as well as address concerns outside the scope of work.
What is the optimum time that should elapse between refresh or remodels?
Retailers should plan on refreshing high-traffic areas every three years, before visitors notice the environment looking shabby. And they should plan on remodeling their locations every five to seven years.
Ideally, retailers should look to remodel when leases renew and retailers can get landlord participation, or when the brand imaging changes.
Are you seeing an uptick in remodels and refreshes these days?
Yes, we have seen steadily increasing activity for the last 18 months. Many of our clients are investing in making their stores look clean and modern for their customers.
Do most stores stay open during the process?
Yes, we are almost always able to keep the stores open, as the majority of our work is done after hours.
What services does BrandPoint offer retailers?
BrandPoint Services manages multi-site refresh programs, requiring painting, flooring, graphics, decor and general repair services across the United States and Canada. We work with some of the largest national retail, healthcare and banking brands, as well as their facility managers and general contractors. We are multi-site rollout experts.
How do you work with retailers to stay open during a refresh/remodel project?
We typically work overnights, cleaning up daily so that the store can operate during business hours. We will work with clients to develop a phasing plan to the store so they can properly allocate the necessary store employees each night to demerchandise. Our crews are well-versed in retail work and know how to keep a store clean so merchandise can be put back in place quickly to get the store open on time each day.
When we are asked to work during retail hours, we stage the work to minimize the impact to the environment and customers, as well as block off the area as designated by our clients.
How does BrandPoint handle multi-site rollouts?
We have a staff that specializes in refresh project and program rollouts, offering a single point of contact with trades and accounting.
Multi-site rollouts require a significant amount of pre-planning, including coordination of schedules, vetting and approval of vendors. BrandPoint Services partners with our clients to ensure understanding of scope of work, articulating it to teams and crews to ensure a successful launch, as well as revisions along the way.
As we finalize jobs, we ensure there is a back-end process in place to gather the necessary documentation from the field to close down jobs with both the customer and the accounting systems so that clients receive timely invoices.
In addition, we give portability to best practice methods to multi-location scopes of work. Trade networks and company Enterprise Resource Planning systems have been vetted and designed to handle the unique issues of rollout initiatives efficiently and in the most cost-effective way.
BrandPoint Services’ vast network of painters is the largest in North America, allowing us to roll out entire programs in a short period of time. In the past 12 months, we have worked on nearly 4,000 retail locations.
IRS offers safe harbor for store repairs, eliminating tax compliance confusion
The Retail Industry Leaders Association on Thursday welcomed a safe harbor rule from the Internal Revenue Service regarding the deduction and capitalization of expenditures related to store remodels, repairs, and refreshes.
The rule, Revenue Procedure 2015-56, comes after more than four years of negotiations between RILA, its members and the IRS. It is aimed at eliminating the substantial confusion that exists about which costs of store remodels and refreshes should be expensed and deducted immediately, or must be capitalized and depreciated over time.
Under the new safe harbor, retailers are now able to apply a percentage (75%) to a base dollar amount of expenditures. The resulting amount will be considered deductible immediately while the remaining percentage (25%) will be capitalized and depreciated over time.
“Retailers welcome this safe harbor rule, which helps to ensure that federal tax policy better reflects the real world realities for retail businesses that undergo store remodels and repairs,” said Christine Pollack, VP for government affairs, RILA. “The repair regulations are key to determining how expenditures made to refresh or remodel stores should be expensed.”
The group noted that retailers have substantial tangible property investment in the form of improvements to their stores, such as replacing floor and ceiling tiles, updating hardware and displays, and repainting and plastering walls. Because most retailers refresh their stores every five to 10 years, major retailers may refresh dozens if not hundreds of store locations each year with expenditures that could easily run into the tens of millions of dollars.
The safe harbor rule applies immediately to tax filings for 2014 and tax years beyond.
Walmart meets key sustainability goal early
It’s been 10 years since Walmart launched its sustainability agenda, and on Tuesday, the discounter detailed the progress it has made to date.
In two important milestones, Walmart said it has achieved its goals of reducing 20 million metric tons of greenhouse gas (GHG) emissions from its global supply chain, and doubling its fleet efficiency. It also expanded an existing commitment to preserve wildlife habitat.
“Our company has made major strides since we embarked on this journey, and our focus for the next decade will remain the same: doing the right thing for our customers, our communities, people working in the supply chain and the planet,” said Doug McMillon, president and CEO, Wal-Mart Stores. “Our approach to global responsibility not only makes sense for the environment, but it’s also good for our customers, and our business.”
GHG: Walmart achieved its goal of eliminating 20 million metric tons of GHC emissions from its global supply chain ahead of schedule, eliminating 28.2 million metric tons to date. It is the equivalent of taking more than 5.9 million cars off the road for an entire year.
Collaborating with EDF, Walmart implemented various measures across both its global operations and those of suppliers, including enhanced energy efficiency, the execution of numerous renewable energy projects and collaborating with suppliers on the Sustainability Index to track progress towards reducing overall carbon footprint.
Fleet Efficiency: Walmart doubled the efficiency of its fleet by working with its associates to establish innovative solutions for loading, routing and driving techniques, as well as collaborating with tractor and trailer manufacturers on new technologies. With these new efficiencies, in the current fiscal year alone, the company expects to save nearly $1 billion compared to a 2005 baseline, and avoid emissions of almost 650,000 metric tons of CO2. The reduction to a cleaner environment and lower prices for customers.
Wildlife: Walmart is renewing its conservation efforts by committing $35 million over the next ten years to Acres for America to conserve at least one acre of priority wildlife habitat for every developed acre of the company’s current and future footprint. Since 2005, the retailer, in collaboration with the National Fish and Wildlife Foundation, has helped preserve and restore more than 1 million acres of wildlife habitat through 61 projects in 33 states, the District of Columbia and Puerto Rico.
Food: In keeping its commitment to create a more sustainable food system, Walmart worked to improve food affordability; increase access to food; making healthier eating easier; and improve safety and transparency in the supply chain. To date, the chain has:
• Affordability: Beginning in 2011, Walmart committed to helping customers save on healthy food, including $1 billion in annual savings on fresh produce. The company has exceeded this commitment year over year, totaling over $4.69 billion in customer savings to date.
• Accessibility: July, 2011, Walmart committed to opening up to 300 stores serving USDA-designated “food deserts.” By the end of January 2015, Walmart had exceeded this goal, a year earlier than planned, by opening 375 stores.
• Health and transparency: Walmart committed in 2011 to reduce sodium by 25%, added sugars by 10% and to eliminate industrially produced trans fats in private label and national brand packaged foods sold in the company’s stores. So far, Walmart has reduced sodium in these products by more than 16% reduced added sugars by over 10% and ensured that fewer than 6% of contain partially hydrogenated oils. Walmart also created a Great For You front-of-pack seal, which is now on more than 30% of the company’s private label products, to help customers easily identify more nutritious choices.