John Caulfield, Contributing Editor
 vol. x, #14 April 5, 2004

IN THIS ISSUE: * Conference series lines up international speakers * Lowe's Tillmann says he's not ready to retire * New-look Home Depot has specialty store appeal * Sodisco-Howden launches LBM program for Atlantic dealers * Builders FirstSource delays next acquisition * TruServ Canada prepares for national growth * China — the new retail frontier, but are we missing out? * ILDC grows with new members and organic growth

* * * * * * NOTE: Dollar amounts are stated in the currency of the country from which the story originates. — Michael McLarney, Editor & Publisher * * * * * * BUYERS WILL SHARE TIPS WITH HARDLINES SUBSCRIBERS: Four of Canada' leading retail buyers have agreed to lend their insights into the buying process for an audience of faithful Hardlines subscribers. At the third annual Meet the Buyers Breakfast seminar, vendors will get to hear first-hand what strategies you'll need to crack the buyer's office. Find out how to make a proper presentation, how to evaluate in advance whether your company meets the retailer's standards, and even how to leave an effective email message. April 28, 2004, 8:00-11:30 a.m. For list of buyers, click here. * * * * * *
"If your love's the real thing/Then tell me where's my wedding ring." — Wanda Jackson, "Queen of Rockabilly," and former girlfriend of Elvis)
WORLD HEADQUARTERS, Toronto — An incredible lineup of speakers has been assembled for the next Hardlines Conference Series, September 8-9 in Toronto.Joe Scarlett, chief officer of Tractor Supply, will explain the power of the farm and hardware business that has contributed to his company's explosive growth. Jim Inglis, a former vice-president at Home Depot whose background includes Carpet One and Dekor, will give his insider's take on the industry. Guillermo Aguero, general manager of Sodimac in Chile, will tell the story of his company's battle against the arrival of Home Depot, a battle that resulted in Home Depot's withdrawal from that market! And Jos Wintermans, president and CEO of Sodisco-Howden Group, will detail the future of this national hardware distributor. Now in its ninth year, the Hardlines Conference Series is an executive-level gathering of North America's top retailers and vendors. Besides case studies from retail's front lines, the event features speakers who provide insights into the latest trends shaping the industry today. In fact, we've just signed Ira Kalish, global director with Deloitte Research's Los Angeles office. He'll give his amazing overview of the emerging markets, the next wave of consolidation, the changing consumer, and the international threats to national brands. We'll be introducing more speakers in the weeks to come, but mark your calendar today for the Hardlines Conference Series, September 8-9, in Toronto. We're booking up one of the hotels by the airport, so make sure you come for the Outstanding Retailer Awards Lunch, presented by Hardware Merchandising magazine on September 8, followed by the Gala Dinner that evening. For more info, call us at 416-489-3396.
CHARLOTTE, N.C. — Lowe's 60-year-old chairman and CEO Bob Tillman told analysts and investors here that speculation about his imminent retirement was premature.Speaking at Banc of America's Consumer Conference here, Tillman referred to himself as "the only guy left" from Lowe's pre-warehouse old guard. He praised the company's management team, whose members he said are mostly in their 40s. And he signalled out Robert Niblock, whom Lowe's promoted to president and CFO a year ago, as someone who "could replace me tomorrow morning." However, Tillman was quick to note that Niblock should not be seen automatically as his presumptive successor; besides, it doesn't appear Tillman, who earns about $1.3 million per year, is going anywhere in the near future. During the conference, the company disclosed that it would spend $3.4 billion this year and $3.6 billion in 2005 to open 140 and 150 stores in those years, respectively. At the end of fiscal 2003, Lowe's operated 952 stores in 45 states that generated $30.8 billion in sales. Tillman also told the audience that he did not foresee any reduction in plywood prices, which, according to Random Length's benchmark price for Western 1/2-inch 4-ply sheets, were $520 per 1,000 square feet on March 26, compared to $265 for the same period a year ago. "The supply is now pretty well managed," he said, "There's not an oversupply. There are fewer manufacturers."
COLOGNE, Germany — Watch China transform into the next big consumer marketplace, as the populace becomes more consumer savvy, and the housing market there takes off. But we can also expect a shift in the low price sourcing from China, as that country will revaluate its currency within the next couple of years. Ira Kalish, global director at Deloitte Research, was speaking at a Presidents Council lunch here at Practical World /International Hardware Fair.Calling China the "world's factory," Kalish said it's now the fourth-largest exporter in the world and it's only a matter of time before it becomes number-two. Wal-Mart alone bought $15 billion in goods from China and will soon double that amount. As China's housing market opens up, and the populace shakes off the coils of socialism, the country is becoming a big market in its own right. "China is the fastest growing large country in the world," said Kalish. "Its economy grew by 9% last year." However, European companies, not those from North America, are taking advantage of that emerging market. Retailers such as German-based OBI and U.K.-based B&Q have made the Far East a major growth target in the years ahead. (Ira Kalish will speak at the Hardlines Conference Series September 8-9. Click here for more info — Michael)
SPECIAL REPORT — Although the original Home Depot big boxes were big, plain warehouses that captured sales from traditional outlets based primarily on a low price image, once upon a time Lowe's looked at rival Home Depot's bare-box outlets, improved lighting, signing and made the big box "friendlier."Now, Home Depot, having watched what Lowe's did, is raising the bar with its own innovations and improvements in store layout and product presentation. One of its newest stores, opened recently in Crawfordsville, Ind., demonstrates a number of improvements. These include: extensive signing, which identifies aisles by number and lists products in those aisles (much like Lowe's); informative signing by products, explaining product features and benefits; and huge photomural graphics showing people in home settings or using products in departments. The store features other touches, such as specially made wooden fixtures to soften the warehouse look in the Design Center, and a softer-looking off-white for racking in the shelf-goods area. Traditional orange is limited to building materials and lumber. However, other enhancements include clever displays and cross-merchandising. Floor layout signs scattered around the store help customers locate products and departments, as do pass-out sheets with diagrams. These changes give the store many specialty store features, making the new store easier to shop and less intimidating, especially to females. Elements of these new-look stores are being incorporated into existing Home Depots, especially as they are being remodelled. Front aisle Majors Doors Colour centre Rugs
FRANKLIN, Ind. — A deal that would have corralled Davidson Industries, a $60 million independent pro dealer here, into the expanding stable of retail companies operating under the umbrella of Builders FirstSource, is in limbo.That deal, which was disclosed on October 7 and scheduled to close Nov. 25, has been put on hold by both parties, for reasons undisclosed. According to the Daily Journal, a local newspaper, Kevin O'Meara, Builders FirstSource's COO, said he didn't want to "handicap" whether the acquisition would actually happen. Al VanderMeer, Davidson's general manager, reported that the deal was being delayed partly because Builders FirstSource was also working on several other acquisitions. (However, VanderMeer failed to mention that the Davidson deal was the first, and by far the largest, acquisition that Dallas-based BFS has entered into over the past six months.) The 75-year-old Davidson — with 325 employees, a distribution center and a large truss plant — is one of the few remaining large independent dealers left in the United States, after nearly a decade of aggressive acquisitions by pro dealers like BFS, Stock Building Supply, Lanoga and Building Materials Holding Corp.
MONCTON, N.B. & MONTREAL — Sodisco-Howden Group has long sold both LBM and hardware in its home province of Quebec. Now the publicly traded wholesale distributor has developed an LBM program for its customers in Atlantic Canada.Jos WintermansAnd, admits Sodisco-Howden CEO Jos Wintermans, the introduction of the Servimat program outside of Quebec, where it has been in place for decades, is a direct response to new competition by Groupe BMR in Longueuil. It's also a way of asserting Sodisco-Howden's commitment to the market while awaiting an international finance group's recommendations on which direction the company will go as it searches for new investors. A recommendation, or announcement about Sodisco-Howden's future — and possible new investors — is expected within weeks. In the meantime, armed with the full hardware and LBM program, Wintermans says Sodisco-Howden has made significant inroads versus BMR's new venture joint venture, Quincaillerie Matreco Hardware. In fact, he says, Sodisco-Howden is selling more hardware to AWARD members than ever before. "We've signed up a significant part of AWARD's membership," he says, many of them already investors in AWARD Distribution Ltd., QMH's distribution arm in Atlantic Canada.
AJAX, Ont. — Now celebrating its 40th birthday, ILDC, the Independent Lumber Dealers Co-operative, has finally recouped the sales volume it had in its heyday three years ago.That's when Revelstoke, then its single biggest member, was purchased by Rona Inc., removing its presence in Western Canada, about half of retail sales clout, and a significant amount of the group's purchasing power. But ILDC has steadily rebuilt its ranks with the likes of Calgary-based Totem Building Supplies, J&H Builders Warehouse in Saskatoon and McMunn & Yates, which has stores in Brandon and Winnipeg, Man. The addition of Star Building Centres, with a store in Winnipeg and another in Calgary, became ILDC's 25th member on April 1, adding $60 million in sales and bringing the total number of stores in the buying group to 153. ILDC ended 2003 with combined sales of $2 billion, reaffirming its position as Canada's largest single LBM buying group. But part of the growth has come from expansion by the dealers themselves, says ILDC's general manager, Andrew Battagliotti. Many members, such as Totem and Kent, have added stores of their own over the past year. In fact, he notes, "Most of the members have been aggressive in adding stores." Another signing, in mid-February, of Chouinard Brothers/Gibson Building Supplies represents something of a departure for ILDC's membership. This company is actually two vertically integrated businesses. Chouinard Brothers is a 40-year-old roofing company, while Gibson, barely three years old, is a specialty building supplies dealer with two outlets that specializes in roofing. Star is expanding in its own right: the smaller store in Calgary will be replaced, as approvals have just come through for the conversion of a new, larger property into another Star outlet. The old store will be closed down and the new one, in the centre of the city, will open by fall 2004, a 60,000-sq.ft. building on eight acres, that will include a truss plant and warehouse.
HALIFAX, N.S. — The TIM-BR Mart brand, which was a major initiative to unite the disparate Matreco buying group members under one retail banner, is 10 years old. For Phil Otto, whose company, Image Design, first developed the banner for Matreco, that means it's time to update it and take it to a new level.The brand took off, at least with three of the members — AWARD, Tim-BR-Marts Ltd. in the West, and Homecare Building Centres. In fact, the latter group renamed itself TIM-BR Mart Ontario, and managed to get more than 100 of its 150 dealers to change their storefronts to reflect the new name and look. Groupe BMR, which serves dealers in Quebec and French-speaking communities of New Brunswick and Northern Ontario, pushed its own BMR banner. Now, a decade later, Otto, who works closely with AWARD, is consulting with the store design specialists from the other TIM-BR Mart groups, John Irwin in Ontario and David Beck in Vancouver. "We worked up a bunch of ideas, and now we're taking the next step," Otto says. That includes trying to make the stores more appealing to women, and that means bringing some of the atmosphere and texture of one's own home right onto the retail floor. "Part of the new initiative is to bring more a home-like atmosphere into the store." While reluctant to disclose specifics until the overall program is finalized, Otto says an example of this approach would be making signage on softer materials, that might be reminiscent of curtains in the home. The resulting effect, of "billowing," is one that customers will find more soothing. And as AWARD members tap into new lines of hardware, a result of their involvement in AWARD's new distribution arrangement with BMR, Otto faces the challenge of putting them in the stores to best advantage. "Having the product is one thing, but actually having the ability to merchandise it effectively is another."
Kitchener, Ont. — TruServ Canada's new distribution facility in this Southern Ontario city puts the Winnipeg-based co-op wholesaler in a much better position to service Eastern Canada than ever before. And one of the areas that is expected to be really strong this spring is animal feeds and plants. These areas, says TruServ vice-president Tony DiEmanuele, "are just exploding."Since acquiring the retail business of farm co-op Growmark in Ontario, TruServ has been busy developing the hardware business of those stores, while cross-pollinating the strengths of Growmark in pets, feed and live goods with True Value stores across the country. In fact, lawn and garden in general has emerged as a very strong category for TruServ's dealers. "With two warehouses, east and west, we're really well poised for excellent growth," says DiEmanuele.
COLORADO SPRINGS, Col. — Ace Hardware Corp. will expand its regional distribution center here by 50 percent to meet growing demand from Ace retailers in Colorado, Idaho, Kansas, Nebraska, New Mexico, Wyoming and parts of Utah. The new facility will be as large as 20 football fields and handle up to $50 million worth of inventory. SCOTTSDALE, Ariz. — ImproveNet, which provides homeowners web-enabled access to qualified remodelers, distributors, architects and other home improvement professionals, has reverted to a more conventional means of communications, by opening a call center here. Twenty full-time employees staff the center, but the company expects its to expand that to more than 100 by year's end. The eight-year-old ImproveNet, with annual sales around $3 million, continues to look for new ways to attract more customers to its services. Last September, it struck a deal with MSN to integrate its "Find a Contractor" service into MSN's House and Home channel. LIVERMORE, Calif. — Activant Solutions has been chosen by Do It Best Corp. as the exclusive technology provider to its members. This means that Activant's Eagle and Falcon systems represent the exclusively endorsed "next generation" business management systems for Do It Best's 4,400 independent members. Activant will provide a total technology solution including software, hardware, training and support to all Do It Best members. TORONTO — Rona Inc. will officially rename its Building Box stores in Ontario today. The six stores, part of the acquisition of Réno-Dépôt by Rona which closed last September, will all switch to Rona L'entrepôt, including the store around the corner from an existing Rona big box in Toronto's east end area of Scarborough. Rona's 14 Réno-Dépôt stores in the Quebec market will continue to operate under that banner. LONDON, UK — England's largest DIY retailers, B&Q, will share a record bonus with its 34,000-plus employees in 320 stores. The bonus, worth £34 million, is a result of the company's record profit last year, which increased 13% to reach £372 million. The bonus is equivalent to 10% of their salary. NEW YORK — InterTan Inc., the Canadian retail holding company which owns 980 stores under the Radio Shack, Rogers Plus and Battery Plus names, is being bought by Circuit City Stores Inc. for U.S.$284 million in cash. In its 2003 fiscal year ended June 30, InterTan had revenue of $403.1 million and net profit of $7.7 million. The number-two consumer electronics chain in the U.S. follows its rival, Best Buy, which bought up Future Shop to make its entry north of the border. TORONTO — Sears Canada Inc. is gradually exiting the auto repair business, and has turned over 36 of its 49 auto centres to Kal Tire, President Tire and Active Green & Ross to operate starting in May 2004. These three auto service and tire providers will re-brand the Sears outlets under three separate licensing arrangements. MONTREAL — The Ducharme family, which owns a Rona store under the Rona Le Rénovateur banner in St-Césaire, on the south shore of Montreal, decided to invest in another, smaller store under the same banner, which will open on May 11 in St-Pie-de-Bagot. The St-Césaire store will supply the other Rona stores of the district, helping the Ducharmes leverage their position in their own market.
I told you last week that Canadian Tire has had a gift registry online for a couple of years. The gift registry was actually launched online and in stores at the same time last week. — Michael
At Taiga Forest Products Ltd., Arkadi Bykhovsky resigned as president and CEO and a director of Taiga on April 1. He cited personal reasons for his departure. Taiga, Canada's largest independent distributor of building products, will begin a search for a successor. In the meantime, the executive committee of the board will manage the affairs and operations of the company, working closely with senior management.At TruServ Canada, Dave Leonzio has joined the dealer-owned co-op wholesaler as National Growth Manager, True Value/V&S. Working out of the Winnipeg office, he will be responsible for the creation of a business development and recruitment strategy for the True Value banner across Canada, as well as for growth of the V&S brand. He reports to Tony DiEmanuele. (204-453-9511) Laurie Blackwood Pike has joined Sodisco-Howden Group as territory manager for Newfoundland and Labrador. His background in the industry includes stints as an agent repping companies such as Weyerhaeuser and MacMillan Bloedel, as well as working for Ace Hardware Canada. He reports to David Dingwell, regional sales manager, Atlantic. (709-727-5030) David Sparks has moved over from Giles Tools Agency to Robert Bosch Tool Corp., working for the Dremel and RotoZip divisions, as national accounts manager. In this new position, he reports to Dale Elliott, national sales manager for Dremel and RotoZip ... Mike Russell, formerly at Vermont American, has also joined the Dremel and RotoZip team as national accounts manager for the mass merchant accounts. (905-826-6060)
Mark your calendar today for the 9th Annual Hardlines Conference Series, September 8-9, by the Toronto Airport. Click here for more info!
NORCROSS, GA. — Pike Family Nursery, a leading lawn and garden dealer and wholesaler here, this -spring has launched a signage program aimed at injecting new life into its live goods.Erica Breazale, this retailer's marketing manager, told Hardlines that the plant, tree and flower inventory on display at Pike's 17 retail outlets is now being identified with signs that include botanical descriptions and photographs. That signage should also call more attention to the hard-to-find and exotic flora that Pike's has become known for. The company, which has operated in the Atlanta market since 1958 and has weathered the market's warehouse onslaught, generated an estimated $88 million in sales last year, according to Nursery Retailer magazine.
MONCTON, N.B. — While the ABSDA Show was being held at the Coliseum on the edge of town, Bargain Building Materials had set up shop at the Delta Beausejour hotel, meeting dealers interested in its off-price — and offbeat — strategy."This was our first official presence in the Atlantic market, and we had the opportunity to meet in person some of the people who had responded to our ads and promotions in the past," says Jacques Dèry, general manager of Bargain, which is known in francophone markets as Le prix en bas. He points out that Bargain's head office and warehouse, in Rivière-du-Loup, Que., is very close to New Brunswick — and the rest of the Maritime provinces. Dèry also stresses that the off-price products that were the company's mainstay in the early years, have become a small part of Bargain's overall strategy today, accounting for a mere 20% of sales. While some were simply tire kickers, others were definitely interested in what they saw, Dèry says. One New Brunswick dealer had already signed up shortly before the show, and he expects another four to sign on before the end of the year.
While the jobless rate has eased somewhat in the U.S., firms aren't hiring — yet. First-time claims for state unemployment insurance slid 3,000 to 342,000 in the week ended March 27, from a revised 345,000 the prior week, the Labor Department said.
Gross domestic product fell by .01% in January, following a half-percent rise in December. Weak North American auto sales in recent months hampered the manufacturing, retailing, wholesaling and transportation sectors. Weak oil and gas production and exploration reduced the mining sector. Less consumer demand for new housing pushed down residential construction and activity by real estate agents and brokers. Industries in the travel-related sector reported mixed results.
Hardlines has partnered with to offer the industry an easy and affordable way to place job openings on the intenet. Get exposure for a full 60 days for only $150. Click here to learn more!
THe Canadian Hardware and Housewares Manufacturers Association will hold its 38th annual general meeting and an expanded congress program this Wednesday, April 7, at the Sheraton Parkway Toronto North Hotel. They have some great breakout sessions, as well. If you haven't registered yet, click here or call 416-282-0022.

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