John Caulfield, Contributing Editor
 vol. x, #15 April 12, 2004

IN THIS ISSUE: * Tillmann will retire from Lowe's at year's end * Home Depot launches nursery certification, landscaping design * New buying group targets GSDs * AWARD front and center at Atlantic Show * Wal-Mart gets bum's rush in California, resistance in Chicago * TSC announces new buyer duties * Thornes renews focus on retail business

* * * * * * NOTE: Dollar amounts are stated in the currency of the country from which the story originates. — Michael McLarney, Editor & Publisher * * * * * * NEW: We are very, very pleased to offer our faithful readers yet another way to stay on top of the industry! Real time stock quotes for home improvement companies are now available with a click of the mouse. Check out the lower left area of our homepage for the Hardlines Stockwatch. * * * * * *
"Freedom is indivisible and when one man is enslaved, all are not free." — John F. Kennedy
MOORESVILLE, N.C. — Less than a week after giving an ambivalent response to questions about his retirement plans, Lowe's chairman and CEO Bob Tillman said he would step down on January 28, 2005, and turn the management reins over to Lowe's president, Robert Niblock.The 60-year-old Tillman, who celebrates his 42nd anniversary with Lowe's in November, will leave a company in whose transformation from a regional chain into a national warehouse powerhouse he has played a pivotal role. BACKGROUNDER: Tillman began working for Lowe's as a trainee when he was a teenager, and at 24 became the retailer's youngest manager when he was assigned to run a Lowe's store in Wilmington, N.C. That store soon emerged as the chain's highest-volume outlet. Tillman then began his steady ascent up the management ladder to the position of senior vp-operations. After Home Depot passed Lowe's in sales in 1988 to become the industry's largest retailer, Tillman initiated a bold competitive strategy to convert Lowe's stores — mostly small and midsize outlets with attached drive-through lumberyards — into big box home centers. Tillman had the full support of Lowe's president at the time, Leonard Herring, and the company opened its first 100,000-sq.ft. warehouse store outside Charlotte, N.C., in 1990. Lowe's took a $71 million charge against earnings in 1990 to cover the initial conversion costs. Tillman became Lowe's CEO in 1996, and its chairman in 1998. During the 1990s, Lowe's made considerable adjustments to its warehouse format, with an eye toward distinguishing it from Home Depot's down-and-dirty presentation and appealing to female shoppers. Home Depot officials contended that Lowe's did little more than copy their formula (right down to measuring the foundation of its new stores), but they could not dismiss Lowe's consistent sales and earnings gains. In 1999, Lowe's made a big leap into the national arena when it acquired, for $1.1 billion, the 36-unit Eagle Hardware & Garden on the west coast, a purchase that for more than a year gave Lowe's a bad case of indigestion as it integrated Eagle's operation into its own. Between 1990 and the end of this year, Lowe's will have expanded from 330 to 1,092 stores. Its revenues in 2004 are expected to exceed $36 billion, and the company is one of America's most profitable dealers. The 41-year-old Niblock has been with Lowe's since 1993 and was named Lowe's president in March 2003. His expertise is on the financial and accounting sides of the business. Unlike Tillman, who had a tendency to shoot from the hip in his public statements about competitors and suppliers, Niblock is said to be more reserved.
SCARBOROUGH, Ont. — The latest step in the assimilation of the Réno-Dépôt chain by parent company Rona Inc. took place last week. The six big box stores in Ontario, which operate under the Building Box name, were re-bannered Rona Home & Garden during a week-long blitz that started at the store here in Toronto's east end.Rona new signThe switch, which cost Rona more than $2 million, has been timed for the start of the spring reno and gardening season. It's being supported by aggressive advertising and promotion, called the "Rona Big Switch Celebration." Television ads feature the famous — and comical — Building Box mascot, "Hammerhead," who sheds his trademark foam and latex costume for a more conventional Rona vest. The ads will also feature specials on products such as flooring and garden products. In addition, 1.4 million flyers will be sent out each week for about five weeks to reinforce the message of the name change. Rona now has 100 stores in Ontario. The conversions mean not just the end of the Building Box name, but also the end of Réno-Dépôt format in Ontario, which relied on extensive SKU counts to offer the widest selection of products among any of the big box chains in the country. It also enjoyed more contractor business than its Rona counterparts. As the conversions continue into the interior of the stores, assortments will be harmonized with the Rona big boxes, and emphasis on private-label products will be increased. The initial focus is on specific categories. Seasonal is at the top of the list, because of the time of year. "We're taking care of the consumer, who will be spending the most money in this area right now," says James Jones, vice-president store operations for Rona in Ontario. The paint department, always a premier category for Rona, will see the elimination of Building Box's Avanti and other private-label brands, with the addition of Sico and an expansion of the ICI line. Flooring is another key category, says Jones, one that combines the strengths of both banners, especially in laminates and wood flooring. However, the 14 Réno-Dépôt stores in the Montreal and Quebec City areas will continue to operate under the existing name, and maintain their distinctive breadth and depth of assortment. The Réno-Dépôt store in Sherbrooke, Que., which Rona must sell to a home improvement competitor to meet the terms of the Competition Bureau's approval of the Réno-Dépôt acquisition, has yet to find a buyer.
VANCOUVER — The expertise of a landscape designer is just the latest at-home service from Home Depot. Landscape design has been tested in stores here for the past several weeks. It's being rolled out in selected markets over the next two weeks, with a wider Canadian rollout through the rest of the year.For a flat fee of $100, a landscape designer will provide a plan for a homeowner's yard or garden. The fee can be applied against any installed landscape project done by Home Depot in future. The service is being promoted through a new At Home Services flyer, the first of which came out this month. The program has been developed under the auspices of Mike Clements, merchant for At Home Services. He currently has some 300 project managers working under him to execute the program at store level.
ATLANTA — Home Depot recently began using a computer-based training program to increase the number of its store employees who are Certified Nursery Consultants.Home Depot developed this e-learning program, which includes 16 hours of interactive courses and exams, with the University of Georgia College of Agricultural and Environmental Sciences and the interactive agency Macquarium Intelligent Communications. Two of Home Depot's biggest lawn and garden suppliers — Pennington Seed and McCorkle Nurseries — provided content for such topics as plant care instructions and landscape design and maintenance. The certification program launched in February, and through early April more than 4,000 Home Depot associates have completed at least 10 hours of the training modules and more than 1,700 associates have successfully completed all coursework to achieve full certification, according Steve Jansen, the retailer's vp-gardening merchandising. Consultants are identified with a certification badge on their signature orange aprons.
Adam West as BatmanCONCORD, Ont. — Okay, I was just pulling your leg on April Fool's Day with the announcement that Peter Parker (aka Spiderman) and Adam West (shown here) had joined a new "Super" buying group. But there really is a new buying group in Canada, and it started out by calling itself the "Super Group."Since its inception last September, however, the new group has gone through a number of changes, including arriving at a new name: The Signature Group of GSDs Canada Inc., or TSG for short. The group's president is Doug Skrepnek, who spent four years before this as a vice-president at CGC. Why a new group, when there are at least 12 buying groups for building materials dealers in Canada already? "None of these buying groups focuses on the commercial side of the business. Our company is fully involved in the gypsum, insulation and steel business," says Skrepnek. TSG already has six heavy-weight members. Guelph, Ont.-based Patene Building Supplies has 11 yards in Southwestern Ontario, stretching into the Niagara Peninsula, and sales of about $75 million. Beauchesne Group, including DL in Ottawa and DSF in Quebec City, has also joined the new group. The other members, all centered around the Greater Toronto Area, are Leon's, Coastal Drywall, Costa Building Supplies and Commercial Building Supplies. (More on TSG in next week's issue — Michael)
LONG BEACH, Calif. — Communities around California have been rising up in opposition to big box invasions, some more loudly than others. Last week, more than 250 residents here attended a public forum and waited as long as two hours to denounce a plan by Home Depot to build a new store that would be part of a 192,000-sq.ft. retail center in East Long Beach.Residents raised concerns about increased crime, traffic, noise and pollution, and suggested the center would decrease their property values, according to a report in the Long Beach Press-Telegram, a local newspaper. Protesters also believed the Home Depot would attract shoppers who would drive through their neighborhood as a shortcut and that large trucks would create noise and pollution problems. Environmentalists added that the project could endanger what some consider to be the highly sensitive ecosystem of the nearby Los Cerritos Wetlands. A draft environmental impact report is due in July. Home Depot wants to occupy 105,000 sq.ft. of the complex, as well as put in place a 54,000-sq.ft. garden center. Spokespersons representing Home Depot's interests said that the retailer is willing to consider measures that would minimize traffic congestion. Vice-mayor Frank Colonna, whose Third District includes this neighborhood, said he is withholding a decision on whether to support the project, noting that the area is zoned for industrial use.
INGLEWOOD, Calif. — Voters here overwhelmingly rejected a ballot measure that would have allowed the construction of a retail complex that Wal-Mart, the world's largest retailer, supported.Even though Wal-Mart spent more than $1 million trying to sway voters, more than 60% of voters in this predominantly black community were against the proposal, which had been criticized by local politicians and community leaders on several fronts. The complex encountered the usual objections to any big retail site: that it would produce too much traffic congestion and noise, and would put smaller competitors out of business. But what makes this particular vote significant was the fact that this development, if approved, would have been the first in this city to be exempt from zoning ordinances, public hearings and other local controls. Elected officials here told the New York Times and other publications that they felt Wal-Mart was, in essence, trying to establish an autonomous municipality. The Inglewood development was to be part of Wal-Mart's plan to put 40 super centers in California over the next several years. So far, the retailer has had mixed results with voters in the state, who recently rejected its plans for a super center in Oakland, but overturned restrictions to development in Costa Contra and Calexico. Other cities are mounting their protests against large-format retailers, besides Long Beach, Calif. Last week, the Chicago City Council ignored the wishes of the local alderman and put off consideration of a zoning change that would have allowed Wal-Mart to build its first store in that city, on the site of a former steel plant. Zoning for another store, on the West Side, is being stalled by the objections of a single alderman. Local residents are not the only ones opposed. Organized labor decries Wal-Mart salary standards, which are considered too low to live on. (So the only place they'll be able to shop at is Wal-Mart! — Editor)
MONCTON, N.B. — The biggest problem with an expanded venue is the perception that the show is not as crowded as in the past. And even though some exhibitors at the recent Atlantic Building Materials Show grumbled about the traffic being "a little light," attendance was comparable to last year — and actually up 2.5%.AWARD boothMoncton's Agrena complex was expanded last year, giving more space to Atlantic Canada's largest fair. The show this year featured 245 exhibitors in 471 booths, and more than 2,600 dealers from the four Atlantic Canadian Provinces came out in force. A number of exhibitors were notable for their expanded presence, such as Richelieu Hardware and Guardian (which had 13 booths), but the biggest was AWARD. The Atlantic region buying group, which for years has had a prime location as the first booth one encounters on entering the show, swelled this year to 22 booths. And it used that space to showcase a range of hardware products from 44 suppliers that are now available through AWARD's new distribution facility, AWARD Distribution Ltd. ADL is an arm of Quincaillerie Matreco Hardware, which was launched by Groupe BMR, in conjunction with two fellow Matreco members: AWARD down east and TIM-BR Mart Ontario in Central Canada. ADL has already begun supplying its own members, who represent 96 stores and $355 million in retail sales in 2003. Tom Smith, president of AWARD, says ADL is "off and running. It's been a real success story." The move by AWARD to create a greater presence at the show may set a trend, as other groups look for ways to showcase their own preferred suppliers on a regional basis. This will not only highlight the service offerings of various suppliers, but add new depth to trade shows, as they look for ways to evolve themselves in light of the mounting consolidation in the home improvement industry.
NEW YORK — Same-store sales at Costco Wholesale Corp. jumped 11% in March, boosted by brisk gasoline sales as customers faced record high pump prices. The U.S. warehouse club operator said total sales for the five-week period ended April 4 reached $4.41 billion, up 14% from a year earlier. PRINCE ALBERT, Sask. — Castle Building Centres Group has signed another new member in Western Canada: M& M Building Supplies Ltd., of Prince Albert, Saskatchewan. Larry Mardell, owner, was previously unaffiliated with a buying group. BENTONVILLE, Ark. — Wal-Mart Stores Inc. reported net sales in March of $25.13 billion, an increase of 14.0% over same five-week period in the prior year. Sales year to date were up 14.0% to $45.29 billion, from $39.74 billion in the similar period in the prior year. The Wal-Mart division's sales for March were up 12.3% to $16.72 billion. Sam's Club sales for March were $3.38 billion, up 9.3%. The International division's sales were $5.03 billion, up 23.6%. Home centre and big box chain Kent Building Materials has opened its newest store, this one at 130 South Albion St. in Amherst, N.S. It's Kent's seventh store in Nova Scotia, and the 24th in the chain overall. DUNCAN, B.C. — International Forest Products (Interfor) has withdrawn from negotiations to buy Doman Industries or any assets of Doman's subsidiaries. It was all about price. But Doman is now being wooed by another company, Ableco Finance LLC, an entity related to Cerberus Capital Management, in an effort to find an alternate restructuring proposal for Doman's secured and unsecured indebtedness. BEIJING, China — Ikea plans to open an additional eight stores in China over the next five years. The Swedish furniture retailer built its first stores there, in Beijing and Shanghai, in the late '90s. A second Beijing will open next year; a total of 14 Chinese cities have been identified as potential locations. Eight million people are expected to visit Ikea's Chinese outlets this year. MISSISSAUGA, Ont. — Wal-Mart Canada has once again fended off attempts by its employees to unionize at one of its stores. The associates in Jonquiere, Que., have rejected being unionized by the United Food and Commercial Workers Union. In June 2003, the union attempted unsuccessfully to organize at a Wal-Mart in Thompson, Man. Lighting and ceiling fan supplier Canarm Ltd. has purchased the assets of Toronto-based Florida Lighting Group. Florida Lighting supplies decorative and commercial fluorescent lighting fixtures to retail and commercial customers. Sears, Roebuck and Co. posted a slim 0.1% gain in March same-store sales, reflecting sluggish demand for women's clothing. However, sales in consumer electronics and lawn and garden products were stronger. Total sales for the five-week period ended April 3 reached $2.37 billion, down 1.3% from a year earlier.
Brad Shaw has been appointed senior vice-president of corporate communications and external affairs at Home Depot, a new position reporting to the company's chairman, president & CEO, Bob Nardelli. Shaw joins Home Depot from Gateway Inc., where he also served as senior vice-president of corporate communications. Prior to Gateway, Shaw spent six years serving in a variety of communications positions for the Pepsi-Cola Co., most recently as director of worldwide communications.A number of changes have been announced in the merchandise department at TSC Stores: George Aitcheson is now category manager for seasonal, plumbing and automotive. Associate for the category is Mike Schneider ... Gerald Robinson is now category manager for farm, animal health, pet, equine and fencing. Kathy Dodd is the associate ... Mia Kielstra has been named category manager for clothing, footwear, paint and sundries, household and building materials. Barb Slota is the assistant ... Dave Street is category manager for tools, electrical, hardware, toys and pressure washers. Bill Gunton is the associate. (519-453-5270)
The number of people filing new claims for unemployment benefits dropped last week to the lowest level in more than three years, a promising sign that companies feel better about the economy's prospects and are less inclined to get rid of workers. The Labour Department reported Thursday that new applications filed for jobless claims declined by a seasonally adjusted 14,000 to 328,000 for the week ending April 3. That marked the lowest level since April 13, 2001.
Housing starts reached 247,000 seasonally adjusted in March, compared with 216,200 in February, says Canada Mortgage and Housing Corp. Urban starts were up 16.2%, with Ontario and British Columbia especially strong. The seasonally adjusted annual rate of urban starts rose 16.2% to 221,400 units, with most of the increase coming from multiples. Urban multiple starts increased 28.2% to 114,700, while urban single starts rose 5.5% to 106,700.Year-to-date actual urban starts were 2.7% higher through March than for the same period last year. Single starts were up 2.9%, while multiple starts were up 2.5%.Builders took out $2.79 billion in housing permits in February, as the value of building permits fell 4.8%. That was the second consecutive monthly decline since the record high of $2.95 billion in December. But thanks to strength in non-residential construction intentions, the overall value of building permits rose 1.6% from January to $4.4 billion.
It's not too late to register for the AHMA Hardlines Technology Forum, April 25-28, 2004 at the Sheraton Hotel and Towers in Chicago. For more information and to register, please visit online at or contact John Hasemann, Manager of Industry Programs, (847) 605-1025.
Wal-Mart, Home Depot, Canadian Tire, Home Hardware! Hardlines Its Fourth Annual Meet the Buyers Breakfast Seminar, April 28, 2004. For more details, call Bev Allen at 416-489-3396 or
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Saint John, N.B. — Thornes is slowly re-establishing its presence in Atlantic Canada as a wholesale supplier to retail dealers. It pulled out of retail distribution almost eight years ago to focus on its industrial business, but in the last couple of years, it's been getting more aggressive offering its programs to retail accounts. Thornes's presence at the recent ABSDA Show for the second year running — after a two-year absence from that show — and the beefing up of its sales team, all mark a quiet, but steady, return to the retail fray.However, the competitive landscape has changed dramatically since 1997. Then, the only other full-line wholesaler was Sodisco-Howden Group, and Thornes made a strong regional alternative, which even had, at one point, some dedicated banner dealers of its own, under the erstwhile Trustworthy Hardware sign. Now Sodisco-Howden is battling with the upstart Groupe BMR and its buying alliance, Quincaillerie Matreco Hardware, so this time around Thornes is maintaining its focus on plumbing and heating, primarily, along with some electrical. And rather than seek to become supplier of choice, it has taken the route of being a fill-in supplier with the buying groups such as AWARD and Castle, and with some of the remaining true independents in the region. Thornes can afford to take its time. Like home improvement retail chain Kent, which is one of its customers, Thornes is part of the Irving group of companies, a private company that's owned by one of Canada's wealthiest families, so the organization's deep pockets will likely let it move ahead in a cautious way. It does about $5 million with Kent, and some business with buying groups such as AWARD.

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