John Caulfield, Contributing Editor
 vol. x, #16 April 19, 2004

IN THIS ISSUE: * Lowe's supports growth in Southeast * OBI sees growth in China, Russia * Ace Hardware gets push by Sodisco-Howden * Wal-Mart expands Supercenter in Japan * Rona adds Western dealers, harmonizes Ontario stores * Nordstrom moves into décor

* * * * * * NOTE: Dollar amounts are stated in the currency of the country from which the story originates. — Michael McLarney, Editor & Publisher * * * * * *
"The foolish and the dead alone never change their opinion." — James Russell Lowell (1819-1891)
MOORESVILLE, N.C. — Lowe's says it will open a regional office in Pensacola, Fla., to support its store expansion in Florida, Georgia, Alabama, Louisiana and Mississippi, which the company refers to as Region 23. The retailer did not say when this office would be operational, but noted that it would employ about 13 associates.In its 2003 annual report, Lowe's stated that its goal in 2004 was to add two divisions, bringing the total number of divisions to five. With the addition of these divisions, Lowe's will increase its number of regions to 22 from 19 and its number of districts to 150 from 135. Lowe's goal is to maintain a ratio of approximately 7-8 stores per district manager and 50-60 per regional vice-president. Lowe's plans to increase its store count nationwide in 2004 by 140, to 1,090 units. Lowe's currently operates 61 stores in Florida, and is building seven stores and a distribution center in the central part of the state that are scheduled to open this year.
Menard'sFORT WAYNE, Ind. — Two of America's largest home improvement dealers have announced plans to open stores in this town, best known, industry wise, as headquarters of the buying group Do it Best.Pennsylvania-based 84 Lumber will spend $1.75 million to build a 12,000-sq.ft. store here on a site that will include 36,800 sq.ft. of storage buildings. 84 Lumber will begin construction in this site in June, and expects to complete the store in September. According to the News-Sentinel, a local newspaper, a local development group has obtained a commitment from Menard's, the U.S. industry's third-largest dealer, to build the retailer's third store in this market. It will be a $7 million, 225,000-sq.ft. home improvement center on 16 acres. The Menard's construction, which should begin by year's end, would be part of a larger redevelopment of a 102-acre property, which would include the razing of an old Sears store. The Menard's outlet will be located in Fort Wayne's southeast quadrant, whose households' buying power equals $33.6 million, second only to the southwest, according to a recent survey by Chicago-based research firm MetroEdge.
MONTREAL — Aggressive rollout of the Ace Hardware banner, now licensed to Sodisco-Howden Group, and a multi-million dollar systems investment, are just a couple of the initiatives Sodisco-Howden is taking to grow its business — and ward off negatives from the industry.The full-line national hardware wholesaler is currently in something of a "quiet period," as it awaits the recommendations by international finance company NM Rothschilds as to its future. Sodisco-Howden's largest shareholder is Les Participations Paribas, a French company, whose chairman, Hubert de la Beaumelle, has to turn over his seat on the board, according to French securities laws. Paribas has been looking for a buyer, and Sodisco-Howden's president and CEO, Jos Wintermans, has had to keep running — and growing — the company under these uncertain conditions. However, several acquisitions over the past years have managed to shore up the company's position, everything from Weber Supply's retail business in Central and Eastern Canada and Smith-Barregar in British Columbia, to the home improvement business of Marchands Unis in Quebec. Then, last year, Sodisco-Howden paid $15 million to buy out of the operations of Ace Hardware in Canada. Sodisco-Howden continues to promote the Ace name. There are now 43 stores in Quebec that have converted from one of Sodisco-Howden's retired banners such as Novico. In addition, about 40 Do-it center dealers, who are also confronting the retirement of that banner in Canada, have also agreed to sign on with Ace. Add in another 60 dealers, many of them co-bannered buying group members, especially from TIM-BR Mart Ontario, and the wholesale distributor expects to have 200 Ace dealers in Canada by year's end. The initiatives seem to be working. Sodisco-Howden's business through its Western DC, Smith-Barregar division, is up 30% last year, and significant inroads have been made to secure more business from key dealers in British Columbia, such as Dick's Lumber in Burnaby and Slegg Lumber, based in Sidney, which has five outlets in the province. In addition, Sodisco-Howden continues to invest in the business. Most recently, a program is under way to implement an enterprise resource planning system (ERP), a state-of-the-art DC operational system by JD Edwards "to get the whole company on the same platform," says Wintermans. "We're expanding, we're going forward. We've stopped playing defence. We're playing offence now."
COLOGNE, Germany — One of Europe's largest DIY retailers anticipates modest expansion in the domestic German market, but strong results from expansion into China and Russia. Harald Lux, president of OBI AG, spoke with Hardlines in an exclusive interview, stressing the importance of emerging markets for the chain.While the 480-store company gained 7% in sales in 2003, to $6.2 billion (5 billion euros), growth in Germany has been slower. The market there remains soft, although signs of a turnaround are emerging. And the DIY sector is rebounding faster than other retail sectors, says Lux. New stores there have largely been replacements of smaller stores with larger ones in existing markets. Since entering China in 1998 with a central warehouse and offices, OBI now has nine stores there, and has grown to four regional offices. But Lux says the potential for that market is tremendous: his goal is to have 19 stores in China by the end of this year, expanding to 24 stores by the end of 2005, and increase that number to 100 by 2010. To facilitate this growth, OBI last month has appointed one of its senior merchants, Markus Maus, as COO of OBI's Chinese operation. Another strong market for OBI is Russia, where the retailer has installed two stores so far, both of them in Moscow. While economic growth and consumer demand are strong in this city, that growth is not yet being reflected in other parts of the country. But "Moscow is phenomenal," says Lux. St. Petersburg is also being considered, and Lux expects to break ground on a store there very soon, for an opening in early 2005.
SEATTLE — Nordstrom, the toney clothing store chain, is in the midst of converting many of its outlets' gift departments into areas for home décor and accessories.The San Francisco Chronicle reports that 63 of Nordstrom's 92 stores are selling such products as beds, side tables and area rugs where porcelain figurines and chinaware previously had been displayed. Products in the updated departments range from a $10 blue champagne flute etched with arabesques to a $185 petite chandelier with beaded pink roses. In the fall, the mix will shift to leather club chairs and ottomans from Mitchell Gold. By making this move, Nordstrom puts itself in more direct competition with specialty dealers such as Pottery Barn and Bed Bath & Beyond, the latter of whose sales in 2003 rose 22.2% to $4.48 billion and earnings increased 32.2% to $399.5 million.
BOUCHERVILLE, Que. — Rona Inc. continues to grow its ranks in Western Canada. Following two much-publicized conversions since the beginning of the year (Newton Enterprises, a two-store operation near Calgary; and Lumber One & Hardware Two in Carstairs, just north of Calgary), Canada's second-largest home improvement retailer has added three more new dealers to its network.Rightway Building Products Inc., in High Level, Alta., and Glacier Building Supplies in Revelstoke, B.C. have signed on in the West. Wood Works of Renfrew Ltd., a yard in Renfrew, near Ottawa, has also joined Rona. "Since January of this year alone, eight new dealer-owners have joined our ranks, including our very first partners from Western Canada," said Robert Dutton, president and CEO of Rona, in a prepared statement. "We're very pleased that they've joined us, especially because it helps confirm that our recruitment goal for 2004 — 50 new points of sale representing some $100 million in retail sales — is a realistic vision of the current market's potential." Rightway Building Products becomes the 25th store in Alberta to operate under a Rona banner. It has 12,000 sq.ft. of space dedicated to hardware and renovation products and two acres outside for storage, building materials and lumber. Glacier Building Supplies is a 6,000-sq.ft. store that sits on five acres. It will become a Rona Building Centre — and the 23rd Rona location in British Columbia. "Brand awareness in the West going well," Dutton says, "as private-label brands keep growing in acceptance." The new Rona dealer from Ontario, the Wood Works of Renfrew features 2,500 sq.ft. of retail space and one acre outside for building materials and lumber. It is converting to a Rona Home Centre. Rona now has 100 home improvement stores in Ontario, plus another couple of dozen Botanix garden centres.
TOKYO — Wal-Mart continues to expand its presence in the Far East with the expansion of its affiliate there, Seiyu.SieyuThe latest store, which opened in the town of Numazu, 65 miles west of Tokyo, is a hypermarket format, bringing the Wal-Mart Supercenter layout, design and supply systems to the Japanese market. While smaller than a typical Wal-Mart Supercenter — at 95,000 sq.ft., it still manages to feature everything from food and clothing to household goods, all served by 30 checkouts — including some self-serve checkouts. Other lines include Wal-Mart's own George brand of clothing, re-branded G for the Japanese market, along with Wal-Mart's Simply Basic brand of men's, women's, and children's fashions. The new mega-store also features a deli section that includes sushi.
Michelle WrightLONDON, Ont. — Canadian country music artist Michelle Wright was the star of the show at the grand opening of two new TSC stores on Saturday, April 17. The stores are located in Essex and Listowel, Ont. Wright, who has been the spokesperson for TSC for the past two years, was on hand to perform live and sign autographs.While the Listowel store replaces a smaller outlet just down the street, the store in Essex, which opened last month, is the first for that community, and marks the most westerly point of sale for the chain in the province. TSC, known as "The Incredible Country Hardware Store," has 22 locations across Ontario. It's loosely affiliated with Tractor Supply Co. in the U.S. and focuses on serving the rural home and farm market.
HALIFAX, N.S. — The new distribution business of AWARD will play an important role in the success of AWARD members in the years ahead, says Tom Smith, president and CEO of the Atlantic region buying group. Called AWARD Distribution Ltd. (ADL), the new facility is located in nearby Bedford. But efficient supply is just part of the equation — Smith expects the group's preferred vendor program to continue impacting rebate levels favorably.The new DC will grow in the first year to carry upwards of 7,500 SKUs, with backup from its distribution partner, Groupe BMR, which has its own warehouse in Longueuil, Que., that carries about 22,000 items. With a warehouse right in Atlantic Canada, dealers will be able to rely on more efficient supply, says Smith. "Once a week, a member gets one truck with everything that they want for their store. So that means greater efficiencies for that dealer." While the cost of investing in the new distribution was $35,000 per dealer, smaller dealers in the AWARD membership are not being excluded from the advantages of ADL, says Smith. But the real growth for the group last year came from rebates. While shipments through the group increased 12.0% to $196 million, rebates grew by an incredible 26%, "which was a huge number, realized through the strategy of our preferred vendors." That preferred vendor program will be translated into the distribution centre, as well. Increasing loyalty among the members for key suppliers has been a goal of Smith's since taking the helm four years ago, and now the group works with preferred vendors in 30 categories. "Getting the rebates requires delivering the volume. It's an absolute buying discipline that's going to benefit the members," he notes.
BROKEN ARROW, Okla. — A man examining the foliage of a tree on sale at the Lowe's store here was bitten by a snake. The customer was bitten on the hand by an 18-inch eastern diamondback rattlesnake, which is not indigenous to Oklahoma, likely hitched a ride when the trees where shipped from Tennessee. The man was treated at hospital for the bite. ATLANTA — Bob Nardelli, the head of Home Depot, got an 11% increase in his pay package in 2003, says the retail giant's latest proxy statement. Nardelli, the chairman and CEO of the company, was paid $2 million in salary, up from $1.9 million in 2002, plus a $4.5 million bonus, up from $4 million in 2002. But wait — he got an additional $5.2 million in "other compensation," most of which relates to forgiveness of a loan, the proxy says. Throw in some stock options and his total pay package for 2003 was more than $22 million. BOISE, Idaho — Boise Cascade Corp. has reached an agreement with Ainsworth Lumber Co. Ltd. to sell its Voyageur Panel Ltd. business to Ainsworth. The deal is worth approximately $193 million, plus as much as $10 million more based on OSB prices between the close of the deal and year-end. Boise should realize approximately $90 million from the transaction, which is expected to close in the second quarter 2004. Voyageur Panel operates an OSB plant in Barwick, Ont., that has an annual capacity of 440 million sq.ft. SACKVILLE, N.S. — Payzant is adding a new store here — in fact, it represents the consolidation of two smaller, existing outlets into one 22,000-sq.ft. store. The store will replace a 3,500-sq.ft. Home Hardware Building Centre and a 4,000-sq.ft. Home Hardware store. The new outlet is expected to open its doors this summer. Additional features of the expanded operation will include an expanded flooring section, a rental program and gourmet shop. BOSTON — Ace Hardware Corp. has begun connecting with its vendors with data synchronization via UCCnet. A data sync provider, TR2, has collected, cleansed and published the product information from one of Ace's suppliers, Magla Products, a household glove supplier. This publication ensures that Magla stays compliant with their retail customers' demands for data synchronization. Ace, along with other leading retailers such as Wal-Mart, Wegmans, Lowe's and Home Depot, has launched the data sync initiative with suppliers to realize global standards. CHICAGO — Federated Department Stores, which owns Macy's and Bloomingdales, is in talks to acquire Marshall Field's department stores from Target. Target announced last month that's it's looking at selling off the Marshall Field's chain and its lower-end Mervyn's stores, to focus on its more profitable discount stores. The deal is estimated by some to be worth up to $3 billion. TEMISCAMING, Ont. — The Department of Commerce has notified Tembec that its duty will be reduced on imports of softwood lumber to the U.S. Since May, 2002 Tembec has been forced to pay anti-dumping duties of 10.21% on softwood lumber its sells to the United States. The reduction brings that rate down to 6.28%. This is the result of a NAFTA Panel decision which instructed the United States to change its dumping calculation methodology.
Housing starts in the United States rose 6.4% in March, marking the biggest increase in almost a year. The vigorous market was driven by lower mortgage rates for consumers and good weather for builders. Starts reached an annual rate of 2.007 million, up from 1.887 million in February, reports the Commerce Department. For the first three months of the year, starts are averaging 2.092 million, a record if sustained for the year.After months of decline, the jobless rate shot up last week, says the Labor Department. The number of newly laid-off workers filing claims for unemployment benefits jumped by 30,000 last week to a seasonally adjusted level of 360,000. The increase was much greater than economists had anticipated.
Hardlines has partnered with to offer the industry an easy and affordable way to place job openings on the Internet. Recruiting for good employees using the Internet is now the preferred method for all types of retailers. The results are fast, efficient and very effective. Instead of exposure for just one day, advertisements on the Internet are posted for a full sixty (60) days. The program for visitors is easy - and specially priced! To post a single job on at the special price of $150.00 plus GST for sixty (60) days, just click here to Register and Post a Job. Click here to read More about the program.
Mag RuffmanTORONTO — A new consumer website using content from some of Canada's leading DIY, garden and home improvement figures is about to launch. Called, the site will feature columns by HGTV's Kimberly Seldon, plus Steve Maxwell, Kathy Renwald, Mag Ruffman (our DIY goddess), and the inimitable Red Green (aka Steve Smith).However, despite the stellar line-up, the emphasis of the new site will be on content that provides meaningful information on home enhancement and décor, including daily tips by contributing columnists. It will also tie in with Habitat for Humanity, to support that not-for-profit organization, which provides housing for less fortunate families. The new initiative is looking for key sponsorship support. For more information, contact Terry Baskin at Footprint Associates:
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 and more! Hardlines will host its third annual Meet the Buyers Breakfast Seminar, April 28, 2004. For more details, call Bev Allen at 416-489-3396 or

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