Mike Rowe says Canadians are turning more and more to pros to get their home repairs and renovations done. And Home Depot Canada is evolving to meet that demand. Rowe is the president of Home Depot Canada. In conversation with Hardlines, he shared his enthusiasm for the latest, and likely the biggest, step the retailer has made in recent years to cater to pros more effectively.

That initiative is a new flatbed distribution centre, which opened late last year in Mississauga, Ont., west of Toronto. The 300,000-square-foot FDC (which is twinned with an equally large area for stock and flow-through) receives and fulfils pro orders sent in by area stores. Those orders, typically too big for one store to ship, are instead shipped directly to the contractor from the FDC. By June, the FDC is expected to ship orders on behalf of 54 Home Depot stores in and around the Greater Toronto Area.

Rowe says the FDC is part of an overall strategy that Home Depot has been rolling out in recent years to attract more contractors into its stores. Banner-wide, pros now make up almost 50 percent of sales, while accounting for barely 10 percent of its customer base.

The new DC carries more than 1,000 SKUs, including drywall, insulation, and lumber. The facility started out by offering next-day delivery for orders placed by 1 p.m., and that has now been moved to a 4 p.m. cutoff. In coming weeks, Rowe expects that to be move even later, to 8 p.m.

The rollout of the FDC parallels other pro initiatives. For example, by 2025, Home Depot Canada aims to offer payment on receipt for large pro orders, as opposed to payment at time of purchase. And the retailer is looking at ways to offer fixed pricing on commodities to contractors and builders that are pricing jobs for clients months in advance.

Last week, Chrystia Freeland, minister of finance, presented the federal government’s budget for the 2024-2025 fiscal year. The business community has almost universally given the budget a thumbs down—mostly because of the controversial change to the capital gains tax in Canada.

Freeland announced that, effective June 25, the capital gains tax “inclusion rate” will increase from 50 percent to 66.6 percent. In other words, whereas gains (such as the difference between the sale price of an entity such as a business or building—or shares—versus the original purchase price) were historically 50 percent tax free, now they will be 33.3 percent tax free—and the rest will be treated like income.

If you sell a hardware store or a building supply yard—or a manufacturing operation or sales agency—that will cost you big time. The “Capital Gains Tax Advantage” became a buzzword of sorts since capital gains were introduced by the feds in 1972. Now, the “advantage” is going to shrink substantially.

The Canadian Chamber of Commerce was among many business groups to react negatively to the budget. They said the tax changes added to businesses’ burden in Canada. “We oppose any measure which will increase the costs for businesses and Canadians when both are currently experiencing challenging economic headwinds,” said Jessica Brandon-Jepp, director of the Chamber’s fiscal and financial services policy.

The federal government says the new capital gains rules were necessary to raise $19.4 billion over five years—to pay for, among other things, Freeland’s housing industry subsidies, most of which had been announced prior to the budget announcement.

On the plus side, those housing construction incentives that the budget delivers are in the billions—and the stimulated demand should be a plus for building centres and their vendors. But in paying for that increased spending, in part, through an increase in capital gains taxes, all of the pluses come with asterisks.

Hardlines talked to one concerned building supply dealer, Roy Perkins, 65, who owns a BMR store in Cornwall, Ont. “This store is my retirement fund,” Perkins said. He planned to join a webinar put on by his accounting firm, BDO Canada, the day after the budget, to learn about the implications to his business—and his retirement.

There is some good news in the changes for small businesses owners. Along with farmers, they will see their lifetime capital gains exemption rise about 25 percent to $1.25 million.

RONA inc., has been named one of Canada’s Greenest Employers for a fourth consecutive year. The national competition celebrates employers who stand out for their sustainable development initiatives and environmental awareness efforts.

Canada’s Greenest Employers is organized by Mediacorp. Home Depot Canada and IKEA Canada were also on the list.

While proclamations and achievements such as this one play well with the media and even the shareholders, do they matter to customers? According to Mélanie Lussier, senior director, communications, public affairs, and sustainable development at RONA inc., the answer is Yes.

“Our goal is to let our customers know that we’re doing the right things when it comes to the environment,” she says. “We’re constantly looking for new opportunities to make our practices and operations greener and more sustainable, and this recognition shows that our efforts are paying off.”

The organizations in the Greenest Employer rankings have been evaluated according to the following criteria:

• Unique initiatives and programs developed to care for the environment
• Measurable efforts that contribute to the reduction of the environmental footprint
• The participation and degree of involvement of employees in these programs, and whether they possess any unique skills that positively contribute
• The extent to which these initiatives are linked to the employer’s public identity and serve to attract new employees and customers

Canada’s conference for the retail, marketing, and technology community, DX3, returned to the Metro Toronto Convention Centre for its latest edition on April 9 and 10. The event featured a full program of keynotes and panels, along with a trade show showcasing service providers in the digital age.

One breakout, on how to maximize full-funnel sales post-Covid, featured Matthew Bergum, country business director at Bosch Power Tools Canada. Bergum is also responsible for Bosch Power Tools’ North American Amazon business and overall e-commerce strategy development. So he was in a good position to discuss some of the challenges his company has faced through the pandemic.

He admitted that the power tool business went crazy during Covid but has since been flat, even stagnant. Dealing with a post-Covid decrease has meant taking a harder look to full-funnel marketing to optimize marketing spends and ROIs.

Bergum said Bosch has stayed focused on its pro business, using targeted marketing through video ads on Prime, and looking to drive new users across all channels by following through the funnel, from the bottom to the top. He said his team is viewing Amazon as more of a publisher or agency than simply a marketplace.

Panelists all emphasized the need for agility. Their attitude was that if you're not doing it, someone else will. They stressed the importance of adapting to one’s customers and to the marketplace—and using data effectively. Listen, they agreed, to what the marketing stats are telling you. And don’t be afraid to make mistakes. “If you're not failing, then you're not innovating.”

DID YOU KNOW...?

… that the latest issue of Hardlines HR Advisor hit inboxes last week? In this edition, we explore employee retention, stress management, and what makes Generation Z employees tick. If you’re not already receiving HR Advisor, click here to sign up for free!

RETAILER NEWS

Castle Building Centres Group has a new member. Eastcut Wood Building Solutions in Trenton, N.S., is owned by Donald MacDonald, who founded the business in 2019. In response to a shortage of tradespeople available to build homes in the area, he began manufacturing pre-built wall, roof, and floor components for modular homes. The business occupies a 100,000-square-foot space.

Canadian Tire has been recognized as one of Canada’s most trusted brands. In Léger Marketing's Reputation 2024 study, Canadian Tire landed in the third spot, behind international brands Google and Sony. Last year, it ranked number four. Other retailers on the list were Shoppers Drug Mart at number six, Dollarama at number nine, and Costco at number 10.

Wolseley Canada will hold the grand opening of its latest outlet this week in North Surrey, B.C. It’s a 20,000-square-foot facility offering a full range of Wolseley Canada’s plumbing and HVAC products. The facility also includes a studio showroom featuring the latest in kitchen and bath trends and lighting fixtures. The grand opening will take place on April 24.

Amazon has reached an agreement with the Italian state railways to launch a new rail service, which will move products between Amazon’s distribution centres in Italy and Germany. They are setting up two routes: one from Duisburg in Germany to Pomezia in Italy, and one from Herne, Germany, to Verona, Italy. One aim is to reduce the marketplace’s CO2 emissions. Over time, the e-commerce giant intends to increase its shipments to over 100 rail lanes and more than 300 sea routes.

A Miami-area investigation into three suspects accused of stealing $260,000 in merchandise from multiple Home Depot stores has determined that one of the accused works for the retailer—as a loss prevention officer, no less. The Miami Dade Police Department, a local NBC affiliate reports, conducted an investigation into more than a quarter-million dollars of missing merchandise. The three people are accused of stealing products from Home Depot stores throughout Miami-Dade County.

Richelieu Hardware’s first-quarter sales rose by one percent to $407 million, thanks to growth from acquisitions. In the hardware, retailers, and renovation superstores market, sales of $57.3 million were down by $1.6 million compared a year earlier. Canada sales remained stable at $232 million. Net earnings of $15.2 million represented a decline of 35.7 percent.

The number of housing starts in urban centres across Canada rose 16 percent in March to 17,052 units, from 14,756 units a year earlier. The increase was driven by higher multi-unit starts, up 19 percent, but single-detached starts also grew by two percent. Housing starts were 10 percent and 15 percent higher in Toronto and Vancouver, respectively, though single-detached starts declined. Montreal’s edged down by one percent, dragged by lower multi-unit starts. (CMHC)

Sales of existing Canadian homes edged up 0.5 percent between February and March. The actual (not seasonally adjusted) number of transactions came in 1.7 percent above the previous March’s tally. That was a smaller gain than those recorded in the previous two months, impacted by a largely inactive market during the Easter long weekend. (Canadian Real Estate Assoc.)