October  2004

Big Box Bulletin

Big Box Chains Undergo Facelifts
Many community groups across the country have asked big box chains to redesign their buildings so they aren’t such an “eye sore,” according to an article in The Wall Street Journal. 

Wal-Mart has heard the complaints, and, according to the article, its store in South Los Angeles, “looks more like a hotel in … [the] art deco district than a giant retailer. The three-story building is eggshell-colored and flanked by palm trees. It features long, horizontal, ribbon windows along two sides that meet at a soaring, blade-like tower. Even the usually familiar logo is in art deco lettering.”

Community activists haven’t been able to persuade Atlanta-based The Home Depot to build multi-story buildings in suburban and rural areas in order to preserve land, said Al Norman, who organizes community battles against big-box retailers, in the article.

“They wouldn’t budge,” Norman is quoted as saying.

In response, The Home Depot, said that it “works hard to situate its stores in an environmentally responsible manner … It has been our experience that the typical shopper prefers a single-level shopping experience. If done appropriately, with an environmentally sensitive design, often single-level retail development is less intrusive than a multistory structure.”

Home Depot Makes Changes
Home Depot Acquires One More
Atlanta-based The Home Depot has announced that it has entered into an agreement to acquire White Cap Construction Supply Inc. of Costa Mesa, Calif., a distributor of specialty hardware, tools and materials targeting large- and medium-sized construction contractors. The acquisition is part of Home Depot’s strategy to expand its professional customer market base. Headquartered in Costa Mesa, Calif., White Cap will become part of The Home Depot supply division. Terms of the agreement were not disclosed.

Founded in 1976, White Cap Construction Supply, Inc., operates 70 branch locations throughout the United States and employs 1,720 people. 

Approximately 60 percent of White Cap’s sales are delivered to the jobsite, while the remaining 40 percent are purchased at the branch locations. The company offers a selection of more than 65,000 in-stock products including brand-name construction materials, hand tools, fasteners, safety equipment, power tools and equipment, work wear and landscape lighting. 

The Home Depot Inc. also recently said it will purchase as many as 24 stores from Kmart Holding Corp. for conversion into Home Depot stores. According to an article in the Wall Street Journal, the move by Home Depot emphasizes the challenges to big-box retailers in finding new locations in crowded North American 

While neither company disclosed the locations of the stores in question, Home Depot said the properties were “very good” locations. 

Depending on how many stores are ultimately bought, the company has said it will spend up to $365 million. The high cost of re-engineering the buildings roughly corresponds to the price of developing new stores. In addition, the buy provides a partial solution to the problem faced by other big-box stores, including competitor Lowe’s Cos., in finding locations for new stores. Ideal locations have at least 16 acres for the store and parking, said Alan Rifkin, an analyst with Lehman Brothers, in the article. Home Depot continues to open over 100 stores a year, with currently more than 1,550 stores across the United States.

Nardelli Centralizes Store Procedures
Since becoming chief executive officer of Atlanta-based Home Depot in December 2000, Bob Nardelli has launched a series of management processes geared toward centralizing store procedures. Among the changes made were a shift to centralized purchasing to increase negotiating clout with suppliers, tightened control of inventory, standardized store displays and hiring and performance measures. Nardelli also brought in new corporate executives and managers and started leadership-training programs.

“Being an outsider, I had the advantage of not having to stick with the past,” Nardelli said in a Wall Street Journal article. 

In fiscal 2003, Home Depot’s earnings per share grew 21 percent to a record $1.88, while sales rose 11 percent to $64.8 billion. In addition, Home Depot added about 30,000 employees to its payroll, making it the nation’s largest job creator. This year, the company expects to invest heavily in store modernization, continuing to buy new technology and open new stores, bringing its total to 1,882.

Employee Safety: A Priority at Any Business
According to the Occupational Health & Safety Administration, occupational injury and illness rates were 5.3 cases per 100 workers, with 4.7 million injuries and illnesses among private sector firms in 2002. Work-related injuries and illnesses in the manufacturing, wholesale and retail trade, and services sectors accounted for about 78 percent of this 4.7 million.

There were 5,524 worker deaths in 2002, a 6.6 percent drop from 2001. Fatal work incidents occurred at a rate of 4.0 fatalities per 100,000 workers. Exposure to harmful substances or environments was the only grouping that increased in 2002.

To help keep the number of worker injuries declining, every company should have a first aid kit. SHELTER wanted to see for what price big-box retailers are selling construction first aid kits around the country. The mean for a construction first aid kit was $26.21 of the seven big-box stores polled, and the median was $24.98.

Ace Partners with GE Sealants and Adhesives to Award Scholarships
Twenty high school graduates earned $2,000 toward their college education as winners of an essay contest sponsored by the Ace Hardware Foundation, based in Oak Brook, Ill., and GE Sealants and Adhesives, of Waterford, N.Y.

The Ace Hardware Foundation formed a partnership with GE to offer scholarships totaling between $40,000 and $120,000 over three years to Ace customers and Ace employees. To be eligible, applicants had to be high school seniors enrolling as full-time students at an accredited, non-profit four-year college or university in the United States. Students were required to maintain a 3.4 GPA or higher and demonstrate helpfulness through community involvement. This year, five Ace customers, five Ace corporate recipients and 10 winners at the retail store level were awarded the scholarship.

“The students selected for this scholarship are committed to their communities, exemplary in their school studies and active participants in their extracurricular pursuits,” said Jimmy Alexander, vice president of human resources. “Ace and GE Sealants and Adhesives are proud to support our customers and valued members of the Ace family as they pursue their education. 


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