vol. ix, 14 April 7, 2003

* Rift in CHS: LBMAO will start own show in 2004 * Kent readies for battle with Home Depot in Moncton * Rona adds new home centre format to mix in English Canada * AWARD evaluates hardware supply options * Independents get electronic advantage with paperless invoicing * Home Outfitters to open nine more this year * Housing starts hit 13-year high in 2002

"To most of us, the leading economic indicator is our bank account." — Joe Moore (American TV news commentator)
Mississauga, ON The major partner of the Canadian Hardware and Building Materials Show has announced it will pull out and form a show of its own. In 2004, the Lumber and Building Materials Association will establish a show on February 7-9, just a week after CHS. The show will take place in London, ON at the Western Fair grounds, two hours southwest of Toronto. The LBMAO joined forces with CHS's owner, the Canadian Retail Hardware Association, after the demise of its own event, the Canadian Home Centre Show. That show took place annually in November at the International Centre near the Toronto International Airport. The LBMAO's challenge, then is to avoid the problems that plagued both its own erstwhile show and CHS itself. Therefore, a strong focus is being placed on getting Ontario dealers out to the new event and getting suppliers to offer substantive show specials. "We're going to take it out of the GTA," says Dave Campbell, president of the LBMAO. "We need to reinvent our approach to the show and get more grassroots. One of the biggest complaints we hear from both our suppliers and our dealers is the cost of the show in downtown Toronto." Although he admits that much of that high cost is a perception, he's confident the London location will work for a number of other reasons, as well. A strong base of dealers is located in that part of the province and the LBMAO is actively developing incentives to get dealers from Northern and Eastern Ontario to attend, as well. Instead of resurrecting a November date, the new show will take place in February because suppliers will have their booking programs ready by then, says Campbell. Not only that, but at the end of the year, dealers often still have a lot of inventory and by February they're in a better position to take advantage of show buys. Campbell insists that his association and its members will attend and participate in CHS in 2004, even though it's right before his own show.
Dartmouth, NS AWARD is the latest buying group to consider new supply options in an industry that has seen the traditional two-step channel undergo tremendous upheaval. The departure of Ace Hardware from the Canadian market has left dealers with concerns about lack of an alternative, but new possibilities continue to emerge. Le Groupe BMR in Québec expanded its hardware distribution in Montréal late last year, and the presence of AWARD members at BMR's annual dealer market last November was a clue to the possibility of the buying groups working more closely together on their hardware purchases. Along with Tim-BR-Marts in the West and Homecare (Tim-BR Mart Ontario), AWARD and BMR belong to an umbrella buying group called Matreco. "We really believe BMR is not just a partner, but a mentor for us to learn how to leverage our buying power in hardware," says Tom Smith, president of AWARD. He remains purposely vague about his ultimate intention for the group, but admits Montréal could supply Atlantic Canada, in addition to traditional distributors such as Sodisco-Howden Group and TruServ Canada. He's also reviewing the possibility of increased direct vendor relationships or specialty distributor relationships closer to home. "It has to be a combination of all these approaches," says Smith. "But it's premature to suggest AWARD will open its own distribution. "Our strategic plan requires that we're not going to talk about hardware as a whole department," he continues, "but rather, we're talking about breaking the business down into 40 key categories and managing each of those categories in the most strategic fashion possible." Smith adds that whatever solution AWARD comes up with will be reflective of a strategy for all members of the Matreco buying group, in addition to AWARD. "We're looking for national hardlines strategies."
Moncton, NB After years of delays, Home Depot Canada will finally open here later this month. But Kent, which has a store here and one across the river in Dieppe, has been getting ready. It's a good thing, too, because the new Home Depot store is being erected in a new power centre development right across the highway from Kent's big box store in the Wheeler Park Power Centre on Trinity Drive. Kent, an Irving company with 22 stores, including seven big box formats, has traditionally enjoyed strong sales and a loyal hometown following. Home Depot first made the deal for the competing property three years ago. As construction got under way last year, Kent began refurbishing its store, doing a lot of work to brighten up the store and improve lighting, endcaps and overall appearance, and beefing up its inventory of about 50,000 SKUs to offer better selection. It's also been focusing on its service. "Ultimately, that's what's going to decide the day," says Stew Valcour, general manager of Kent. "The one with the best service will win." Kent has other advantages, as well. At 170,000 sq.ft., including its drive-through lumber yard, the store is considerably larger than the Home Depot, which will be that retailer's first smaller-sized store in a traditional market, weighing in at 91,000 sq.ft., of which 20,000 sq.ft. will be devoted to a garden centre. One of the changes the Home Depot arrival is expected to effect is Sunday openings. The province of New Brunswick will now allow Sunday openings, but retailers have largely held off invoking the option. Home Depot isn't expected to be so reluctant. Kent will open on Sundays to meet the competition head on. In fact, it had a "soft Sunday opening" on March 31, opening its doors for three hours. While shopping was supposed to be for Irving affiliates only (which applies to one in three people in the province), anyone could walk in. But Kent will open on Sundays, reportedly the weekend before Home Depot's April 24 opening.
Langley, BC Just weeks after launching a new concept Rona Building Centre, Rona Inc. has unveiled a new look Rona Home Centre, which represents a departure from the DIY home centre format of the retailer's Québec stores. The former Revelstoke store in this suburb of Vancouver reopened March 29. Prior to this, the home centre stores in English Canada, including the renamed Revelstoke stores in the West, followed the Rona Renovateur model. The new program represents a fine-tuning of the concept to suit English Canada, including a new SKU base and a different store footprint. The store is 30,000 sq.ft. in size, including the warehouse. Some of the details include multi-coloured racking that cascades from a five-foot height near the front of the store and increases toward the back. The company's signature décor centre is also at the back. The newly refurbished outlet places increased emphasis on hardware and tools, categories with high appeal to the Home Centre's target retail customer. The introduction of Rona's full private label program represents the addition of 1,200 SKUs. Décor and seasonal departments have also been expanded. The concept will be rolled out eventually to all the Revy Home Centre stores. Rona's similar building centres, flying the Rona L'express Matériaux banner in Québec, are likewise getting a facelift. The first Rona Building Centre opened in Midland, ON on February 20, with a "high-end" contractor-oriented format that features a large LBM warehouse, separate "Tool Zone" and boutiques for paint, floor coverings, kitchens, and even one for doors and windows - a new rollout concept. Upcoming expansion in British Columbia includes a ground-up Rona Home Centre in Fort McMurray, replacing an existing Revy Home Centre there, and at least one other store this year at an undisclosed location.
London, ON Within 18 months, AWARD has gone from having no electronic invoicing to become the first Canadian buying group to enable its members put all its invoicing through the buying group electronically. Currently, 85% of invoices going into AWARD are electronic; that's expected to be 100% by June. Using a system created by LBMX out of London, ON, suppliers will send documents to AWARD using a choice of traditional EDI, the Web, or LBMX's own FTP facility. AWARD dealers can also access invoices and statements, approve payments, view and approve flyers, and see status of their rebates year to date, all through the member services area of the AWARD website. While AWARD has got most of its suppliers onside, it is not alone in its efforts to give its members the electronic leg up. Federated Co-op has also just signed a deal for the Saskatoon-based co-op's building supplies side. In addition, Castle Building Centres is targeting its top vendors to go electronic, and now has about 35 onside. Sexton Group, already active with LBMX for electronic document exchange, with suppliers trading electronically, is currently piloting the delivery of invoices electronically to dealers in the same fashion as AWARD.
Canadian Tire 33.65 26.80 30.06
Canfor 11.70 6.83 9.50
Costco 43.05 27.00 31.57
Emco 16.90 8.50 16.64
Goodfellow 13.99 9.88 10.00
Home Depot 50.46 20.10 26.43
Hudson's Bay 15.33 5.87 8.21
Lowe's Cos. 49.99 32.50 43.15
Rona Inc. 14.75 11.75 13.90
Sears Canada 25.10 13.60 14.69
Sodisco-Howden 2.02 1.06 1.38
Taiga Forest 7.00 5.75 7.00
Wal-Mart 61.85 43.72 54.60
West Fraser 39.45 26.27 34.00
Real estate experts expect the Canadian housing market to remain strong into the Spring and throughout the rest of the year. A panel assembled by Century 21 Real Estate Canada expects interest rates to remain low, especially if there's a slowdown in the economic recovery in the U.S. The panel concluded that consumer confidence in Canada has not been significantly eroded, but terrorism in the U.S., slower economic growth, and a deterioration of diplomatic and trade relations could adversely affect the market. Housing starts in the U.S. fell by 11.0% seasonally adjusted in February, to 1.622 million in February from January's 1.822 million. Single-family starts were down 14.0%, suggesting the U.S. housing boom may be over. Meanwhile, the pace of new construction on housing grew 0.3% from January to February, says the U.S. Commerce Department. It reached a seasonally adjusted annual rate of US$328.1 billion in February, while non-residential building construction spending was at a rate of US$158.8 billion, also up 0.3% from the previous month's rate of US$158.3 billion. Canada's unemployment rate slid a tenth of a percentage point to 7.3% in March, says Stats Canada. During the month, 14,000 new jobs were added. The creation of 67,000 jobs in the first three months of this year is the smallest quarterly increase since the last quarter of 2001. Online sales have grown slightly since last year, says Stats Canada, and volatility still pervades the sector. Of the companies surveyed, 43% that were doing online sales last year have discontinued. However, overall online sales increased 27.2% from 2001 to total $13.7 billion. The proportion of private sector businesses selling goods and services online rose marginally from 6.7% in 2001 to 7.5 % in 2002, but the value of online orders rose 28.4% from 2001 to $13.3 billion in 2002. This follows an increase of 84.1% in online sales in 2001. Last year represented a 13-year high for housing starts in Canada, says a new report from CMHC. Resale volumes also reaching new records, as renovation spending continued to expand. The overall cost of owning a home increased by an average of 1.7% in 2002. The cost of owning an average priced home was higher in Toronto and Vancouver and significantly lower in Winnipeg and Québec City. The economy grew by 0.4% in January, following two slow months of growth. According to Stats Canada, gains in motor vehicle manufacturing and their subsequent effect on wholesalers accounted for much of the strength in the Gross Domestic Product. The public sector continued its upward trend, while cold weather in January boosted demand for energy products. Concerns about availability sent energy prices soaring.
Atlanta, GA As part of its ongoing efforts to spruce up its stores' appearance and to accentuate their self-service shopping appeal, Home Depot last week rolled out a brightly lighted, interactive colour matching system into the paint departments of all its stores. The "Color Solutions Center" is a 30-ft.-long display that coordinates the nearly 4,000 colour samples being offered by Depot's four paint brands - Behr, Glidden, Disney Color and Ralph Lauren. Called ColorSmart by Behr, it features an interactive touch screen that allows customers to scan in the colour of their choice, and to see how that colour, which has been prematched with a wide range of trim colour options, would look when applied to different rooms. Corte Madera, CA Restoration Hardware is tweaking the format of its home furnishings stores again, only one year after it launched a $12 million campaign to upgrade the merchandise mix and display presentation within its 105 stores. At the time, the company reduced its SKUs by nearly 30% to 5,000 items, and gave more showroom space to higher-end furniture, lighting, hardware and garden products. Now, the company plans later this year to unveil a prototype that, according to Restoration Hardware's president Gary Friedman, would bring "more clarity and authority" to its stores' core merchandise. New York, NY Warren Buffett's company, Berkshire Hathaway Inc., announced it will buy Clayton Homes Inc., a builder of manufactured homes, for about US$1.7 billion. Clayton will be operated as a wholly owned subsidiary of Berkshire Hathaway and will remain in Knoxville, Tenn. While other home builders have been hit by a souring economy in the U.S., Clayton has remained profitable. Toronto, ON Home Outfitters will open nine more of its home fashion stores this year, including a new urban concept slated for Etobicoke. This will bring the number of Home Outfitters stores launched since the banner appeared four years ago to 46. In addition to the Etobicoke store, which opens April 17, new Home Outfitters stores will open this year in Vaughan and Windsor, ON; Montréal, Laval and Québec City, QC; Halifax, NS; Kelowna, BC; and Calgary, AB. Charlotte, NC Executives of Lowe's Cos. remain optimistic about the health of the U.S. housing market in the near term, a belief that was shared again at a meeting of analysts and investors yesterday. Lowe's still plans to open 130 stores this year. Speaking at a Bank of America Securities conference in New York, Lowe's treasurer Marshall Croom, with Nick Canter, senior vice president of operations for the northern division, said the company's market research backs up the optimistic stance. The retailer also plans to unveil a new store management structure next month that will put five new managers in each store, providing more resources for general store managers. The stores will also get a human resources manager and four new operations managers, including one to handle administrative issues and one to focus on in-store sales specialists, who are key to selling projects, such as kitchen remodeling, and special orders. Santiago, Chile Sodimac, a leading home improvement retailer in Chile, is rolling out a new big box concept that actually combines three stores in one, and puts the focus on DIYers, females and contractors, according to the area of the store. The first new-concept store opened back in December 2001 in a southern neighborhood of Santiago. Early this month, the company will open its first store of this type outside Santiago, in Temuco City, in the south of Chile. Chicago, IL Black & Decker Corp. says its first-quarter earnings would meet or top Wall Street's predictions, but adds that a weak economy will adversely affect the company's sales. The economic downturn is expected to continue through 2003, turning in single-digit sales growth. New York, NY For the second year in a row, Wal-Mart held first place in the Fortune 500 list of the world's top companies. General Motors, which was number one for years, remains in second place again this year. The list ranks publicly traded companies based on their annual revenues. Home Depot made number 13 on the list. New York, NY Bed Bath & Beyond, which pegs itself as the number one home goods retailer in the U.S., had a 4Q jump in profit of more than 25%. Same-store sales rose 4.1%, as net sales increased 19%. Also: the CEO title has been added to president and chief operating officer Steven Temares' duties. He replaces the company's co-founders, Warren Eisenberg and Leonard Feinstein, who will remain as co-chairmen. The company expects to add another 80-90 stores this year, for a total of 600. Troy, MI Another 400 jobs were cut last week at Kmart Corp., this time at its head office, as it prepares to emerge from bankruptcy protection on April 30, 2003. The move is expected to save the troubled retailer about US$90 million this year and US$150 million annually.
Bernie Snider has moved to Wal-Mart Canada as automotive buyer. He was formerly with Ace Hardware Canada, where he was buyer for hand and power tools, hardware and automotive. (905-821-2111) Rob Davidson has been promoted to the position of Ontario/Atlantic sales manager for IKO Industries Ltd. A nine-year veteran of the company, he was most recently sales manager for Ontario only. (905-457-5321) At its latest annual general meeting, the Canadian Hardware and Housewares Manufacturers Association inducted the following people into the CHHMA Hall of Fame: Tong Louie, founder of London Drugs; and Romeo Fillion and Marcel Deslauriers, the founders of Sico Inc. (416-282-0022)
The 49th Annual Atlantic Building Materials Show last weekend was the first in the newly expanded Agrena Complex in Moncton. Using Waterloo, ON-based TS Solutions, the Atlantic Building Supply Dealers Association, which puts on the show, was able to get, for the first time, detailed attendance information using data scanners. This year, 4,353 individuals were scanned at the door over the three days of the show. Of that, 1,914 were retailers and guests visiting 456 booths. For the first time, the show featured a series of workshops, an expanded new product showcase featuring 160 items, and a new caterer with way better food.

****HARDLINES MARKETPLACE**** Dont' miss the products and services on the Hardlines web Marketplace: https://hardlines.ca/html/marketplace.html And check out Hardlines Classifieds on the web: https://hardlines.ca/html/classifieds_new.asp



S’TICS DECO is a dynamic company that developed a great product: Peel & Stick wall tiles. We are actively looking for sales representatives currently serving hardware and home decor stores to represent our product line into these stores across the above provinces. Please contact us at 819-847-4001 or e-mail us at epaquin@sticsdeco.com. See our products at http://sticsdeco.com/ ********************************************************************************** SERVICES OFFERED Your products deserve the best representation they can get. NORAL MARKETING knows the Canadian retail customer. Don't settle for anything less! Contact Al Vanderveen at 519-439-6800, ext. 201, to find out how Noral can boost your sales in Canada. http://www.noralmarketing.com ********************************************************************************** SELL YOUR COMPANY - OR BUY ONE - WITH HARDLINES CLASSIFIEDS! DO YOUR EXECUTIVE SEARCH, FIND NEW LINES OR GET NEW REPS IN THE HARDLINES MARKETPLACE. ONLY $18 PER LINE FOR THREE WEEKS IN THE CLASSIFIEDS, OR ASK FOR THE NEW PRODUCT SPECIAL RATES! TO PLACE YOUR AD, CALL US AT 416-489-3396 OR EMAIL: bev@hardlines.ca
Hardlines is published weekly (except monthly in December and August) by McLARNEYCOM 542 Mount Pleasant Rd., Suite 302, Toronto, Ontario, Canada M4S 2M7 © 2003 by Michael McLarney. HARDLINES™ the electronic newsletter hardlines.ca Phone: 416.489.3396; Fax: 416.489.6154 Michael McLarney, Editor & Publisher: mike@hardlines.ca Beverly Allen, Marketing Manager: bev@hardlines.ca Nancy Wright, Circulation Manager: nancy@hardlines.ca ______________________________________________ THE HARDLINES "FAIR PLAY" POLICY: Reproduction in whole or in part is very uncool and strictly forbidden and really and truly against the law. So please, play fair! Call for information on multiple subscriptions or a site license for your company. We do want as many people as possible to read Hardlines each week – but let us handle your internal routing from this end! ______________________________________________ Subscription: $219+$15.33 GST = $234.33 per year (GST #13987 0398 RT). Secondary subscriptions at the same office are only $34 + $2.38 GST = $36.38. Ask about our reduced rate for branch offices. You can pay online by VISA at our secure website or send us money. Please make cheque payable to McLarneyCom.