vol. viii, #47 December 9, 2002

* TruServ throws hat into wholesale ring * Rona completes second phase of IPO * Retail leaders share challenges of decade ahead * Atlantic Show will enjoy new, larger premises * Coopérative Fédérée refurbishes stores

"Every man has three characters - that which he exhibits, that which he has, and that which he thinks he has."- Alphonse Karr (1808-1890)
This is our last issue of Hardlines for 2002. But the World Headquarters will remain open until December 20 and we'll continue posting Daily News Updates on our Website until then. We hope you have a safe and happy holiday season. See you on January 6, 2003. Until then, keep warm! - Nancy, Beverly and Michael
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Winnipeg, MB — It didn't take long after the announced buyout of Ace Hardware Canada by Sodisco-Howden Group for other suppliers to step in to fill the distribution gap. Just days after the deal was announced on October 22, TruServ Canada sent a letter to independent dealers across the country, inviting them to consider TruServ as a hardlines supplier. This marked the latest move in the dealer-owned co-op's bid to become an alternative wholesale supplier outside its own dealer base.

The first step was a pilot project with 20 members of Castle Building Centres Group about two years ago. These dealers did not want an affiliation with any other banner and the new deal gave them access to TruServ's lines, not including its private label products, without having to become member dealers. TruServ already has a strategic alliance with Castle, whereby Castle dealers who adopt the True Value name and colours have access to all of TruServ's programs and inventory, including private label. "We're putting together a strategy that will complement our existing membership," says Léo Charrière, president of TruServ Canada. "In the past, we've only sold to members. We have a directive to go beyond that now," he says. That directive was made possible once TruServ got out from under its ownership by TruServ in the U.S. The Canadian operation was able to buy its way out of that ownership by the U.S. parent and currently pays it a license fee only. "The possibility is certainly there for TruServ to supply more of Castle's dealers," says Pro Wylie, president of Castle. "TruServ offers an alternative. We're pleased with TruServ and always have been. The bulk of our business is currently with Sodisco-Howden, and we're very, very pleased with them, as well." A recent alliance with Growmark in Ontario will give TruServ more critical mass in that province, says Charrière. TruServ has taken over the distribution of hardlines to Growmark's 150 co-op stores and Charrière hopes the deal will enable TruServ to establish its own distribution centre somewhere in Southern or Southwestern Ontario sometime next year.
Montréal, QC — As consumers become more sophisticated and better educated about home improvements, retailers face the challenge of enhancing the shopping experience. This and other observations about the future of the industry were discussed by the who's who of Québec's home improvement industry in a panel discussion hosted recently by ADMACQ, the Québec association of hardware and building supply dealers. The panel featured Claude Bernier of Rona, Jos Wintermans of Sodisco-Howden Group, Roger Plamondon of Home Depot Canada's Québec division, Claude Gingras of Coopérative Fédérée and Yves Gagnon of Le Groupe BMR. The discussion was moderated by Jacques Nantel, a professor at University of Montréal and chair of its e-commerce department. Facing growth by the big boxes, independents have no choice but to seek consolidate among themselves. Rona has been one of the first groups representing independents to become a consolidator on a large scale. As a result, they have big boxes, traditional stores and specialty outlets under the Rona umbrella. "We have a diversified dealer base. We're able to play in different markets at the same time," said Rona's Bernier. "And we have an acquisition strategy, which has helped us to grow quickly." Other independents are seeking strength in numbers, as well. For example, Co-op Fédérée's membership in the new Reliance "super-group" is an example of recent "soft" consolidation - loose alliances that leave the individual groups intact. To face the changes of the decade ahead, retailers must effectively market through a number of channels, including the Internet. Whether they buy online or not, retail websites are effective means of delivering product information, renovation and repair tips, and price comparisons. Succession is an issue that threatens the long-term viability of many independents. Family members, and the larger work force in general, are not enamoured of retail as a profession, let alone a lifetime career. Ensuring a fresh generation to take over the reins is a challenge. Despite this challenge, many groups are prepared. "As far as we're concerned, it's not really a problem for us, because our organization is a network and a new generation is already coming in," said Gingras of Co-op. Another trend to expect more of is the "store within a store," noted the panelists. This can be either a franchise occupying space on a retailer's floor or a section dedicated to one company's program. The practice is a common one with mass merchants.
Boucherville, QC — The syndicate of underwriters of the Rona IPO exercised their over-allotment option on December 3 to buy an additional 1,225,000 of Rona's common shares, for a total of $16,537,500. The over-allotment of shares came from some shareholders themselves, namely dealer owners and former dealer owners, not from the company itself. As a result, Rona did not get any of the proceeds of the offering. The over-allotment enabled these dealers to get a return on some portion of their investment in Rona. Rona's executives have an option to sell off shares, as well. The option was created on January 24, 2002 when the board of directors of Rona set up a share option plan for designated members of Rona's senior management. This plan was set up to induce the participants to take measures to increase shareholder value and to create conditions that were favourable for Rona to make a public offering. Members of senior management have the option to take any options they were granted after the close of the IPO. However, they may not sell the underlying shares for at least six months after the closing date of November 5, 2002. If they do wish to sell, they must keep their options in escrow according to an escrow agreement, which states that 15% of the balance of the shares in escrow can be released on the 180th day following the closing date, 30% of the balance of the escrowed shares can be released on the first anniversary of the first release date, and 50% can be released on the second anniversary. The balance of the escrowed shares can be released on the third anniversary of the first release date. The escrow agreement will naturally apply only to any options that have been taken. In addition, a number of senior managers and dealer owners have placed in escrow a portion of common shares they purchased in the past.
Moncton, NB — The next Atlantic Building Materials Show will be the first event held in the newly completed Coliseum-Agrena Complex. The show, March 28-30, 2003, will utilize the new Agrena C addition, including its own cafeteria. In addition, the expanded facility will accommodate all the exhibitors on one level. In the past, a number of vendors were relegated to a mezzanine apart from the show proper. Business sessions, running simultaneously during off hours of the show, will be introduced to attract a larger retail attendance focused on sales staff. The show's opening night mixer will sport a new format, as well. A Mardi Gras theme in the Ramada Plaza Crystal Palace Amusement Park will feature games, rides and other attractions. The Chairman's Reception and ABSDA Annual Banquet the following evening will take place at the Delta Beausejour Hotel. The show, now in its 49th year, is produced by the Atlantic Building Supply Dealers Association. For more information, contact: 506-858-0700.
Don't miss Practical World 2003, the Cologne International Hardware Fair/DIY'Tec. The 2003 show is March 9-12. For show information, contact Barbara Hills at 416-598-3343 or email colognet@idirect.com. To book your flight and hotel, call Carol-Ann Itel at Trade Show Travel, 1-877-873-7469 or email tradeshowtravel@shaw.ca . And new this year is the V.I.P Reader Trip— ask Carol-Ann!
Canadian Tire 33.15 23.96 32.62
Canfor 11.70 6.83 8.05
Emco 12.77 5.75 11.75
Goodfellow 13.99 9.00 12.00
Home Depot 52.60 23.18 26.10
Hudson's Bay 15.55 5.87 8.72
Lowe's Cos. 49.99 32.50 40.81
Rona Inc. 14.75 13.25 14.35
Sears Canada 25.10 15.15 16.50
Sodisco-Howden 2.20 1.06 1.40
Taiga Forest 7.00 4.78 6.21
Wal-Mart 63.94 43.72 53.04
West Fraser 44.42 28.90 34.55
Coopérative Fédérée has been undergoing a refurbishing program with its stores in Québec. In the past year, 15 stores have been renovated and expanded; a total of 39 have been redone in the past three years. Recent consolidation has had its impact on membership at Mutual Hardware Inc. The buying group for hardlines retailers and distributors will lose Ace Hardware Canada, as that's now part of Sodisco-Howden Group. Growmark's membership will end as the co-op's hardlines requirements will now be supplied by TruServ Canada, another Mutual member. In addition, The Eddy Group will leave Mutual at the end of this year. The Canadian Association for Stock Car Auto Racing will have a booth at the 2003 Canadian Hardware and Building Materials Show. CASCAR will be part of Auto Focus, the new pavilion dedicated to automotive aftermarket products for hardware retailers. CASCAR will display race cars at its booth, conduct autograph sessions with CASCAR stars and feature an interactive display. CASCAR joins a number of other groups that have committed to CHS, including Sodisco-Howden Group, Castle Building Centres and Taiga Forest Products. Home Depot has announced it will integrate its Midwest and Southwest divisions into one combined operating division called the Central division. The new Central division will be headquartered in Chicago, servicing more than 457 stores and employing nearly 67,000. The company said it plans to maintain offices in Dallas and Mexico and says no material financial impact is anticipated as a result of the integration. (see also "People on the move") Task Tools and Abrasives broke ground recently on a new, expanded distribution facility in Delta, BC. The company is currently headquartered in nearby Richmond. It will move from its existing 30,000-sq.ft. facility to the new headquarters, which will weigh in at 70,000 sq.ft., on April 1, 2003. Costco Wholesale Corp. reported net sales of US$3.24 billion for the four weeks ended December 1, 2002, a 7% increase from US$3.04 billion in the same period of the prior fiscal year. For the first 13 weeks of its 2003 fiscal year, Costco had net sales of US$9.84 billion, up 8% from US$9.13 billion. Home Depot has launched FAST, (front-end accuracy and service transformation), a massive initiative to enable customers to scan their own products and check themselves out. It also provides cashiers with touch-screen technology that will reduce price checks and cut down on theft. The new technology will be in place in 300 stores by the end of this year.
Craig Baxter, formerly director of field sales at Black & Decker Canada, has moved over to American Tool Canada as vice-president sales. He will oversee the company's hand tool and power tool accessories business within Newell Rubbermaid. He'll also be in charge of the Lenox brand, part of the recent American Saw Manufacturing acquisition by Newell Rubbermaid, which Baxter expects to be integrated into American Tool by January 2004. (905-890-0334) Home Depot's newly formed Central division will be headed up by Bill Patterson, who served most recently as Midwest division president, which was absorbed into the new division, based in Chicago. Patterson, who has been with Home Depot since 1999, will also oversee the company's Mexico division, which continues to be managed by its division president, Ricardo SaldivarJoe Izganics has been named president, services based in Home Depot's headquarters in Atlanta, GA. Izganics most recently served as Division president of the company's Southwest division, based in Dallas, TX, which is being absorbed into the newly formed Central division. Services is a business unit that specializes in in-home and commercial installation services, including roofing, siding, kitchens and baths, decks and fencing, and heating and cooling.
Canadian homeowners spent 37% more on home repairs and renovations in 2001 than they did two years previously. The latest repair and renovation report from Statistics Canada reveals an average expenditure of $2,580 in 2001, about two-thirds going to contractors and the balance to DIY. About 76% of the 7.9 million homeowner households in Canada indicated they had made at least one repair or renovation expenditure in 2001. Among the provinces, this percentage ranged from 72% in British Columbia to 85% in Newfoundland and Labrador. Painting remained the most common repair or renovation work, reported by 45% of home owners. Plumbing fixtures, patios, fences or driveways, and heating or air conditioning repairs and renos were also common. In total, homeowners spent $20.4 billion on repairs and renovations in 2001. Signs of a slowdown on construction sites have yet to materialize, as the value of building permits in October were on par with July's record high. The value of building permits totalled $4.0 billion in October, up 6.9% from September, due largely to residential construction intentions. the value of non-residential permits totalled $1.4 billion in October, up 10.9% from September.
"For us, acquisitions remain an important element. It allowed us to expand outside Québec, a rapid expansion. Recruiting is a good method, but it doesn't allow for rapid growth and expansion." - Claude Bernier, senior vice-president, traditional stores at Rona Inc. He was part of a panel conducted recently in Montréal that discussed the future of home improvement retailing. The seminar was hosted by ADMACQ.
The Atlantic Building Supply Dealers Association has completed a series of 16 regional meetings throughout the Atlantic provinces. The meetings focused on regional issues pertinent to the markets of independent members in those respective regions.
If you are doing budget planning, developing next year's marketing plan, pitching a new client who needs hard data, a foreign head office that needs the definitive Canadian snapshot, in need of competitive intelligence, call Nancy Wright, 416-489-3396, to find out more!

****HARDLINES MARKETPLACE**** Check out Hardlines Classifieds on the web: https://hardlines.ca/html/classifieds_new.asp

HELP WANTED Goodfellow Inc. is growing again! Two new positions are being created in the building materials/flooring division. INSIDE SALES This position entails telemarketing and customer service from the Campbellville location. The successful candidate must have a minimum of 1 year of sales experience in the hardwood flooring and/or building materials industry. He or she must possess good organizational & detail skills and excel in relationship building. OUTSIDE SALES This position entails territory management in the central Ontario region. It is an outside sales and marketing position with the primary focuses on hardwood flooring and building materials. The successful candidate must have a minimum of 2 years outside sales experience and possess strong presentation and time management skills. Send resumé via email only to:mlohmus@goodfellowinc.com . Please note that no telephone calls will be accepted regarding these postings. *********************************************************************************** KEY ACCOUNT EXECUTIVE Our continued growth in the United States has opened up an opportunity for an energetic and self-motivated individual to join our sales team. We are looking for a Key Account Executive to help grow our business within our Tier 2 accounts in the USA and to assist in developing our secondary markets.   Necessary qualifications: 3-5 years account management experience, highly developed interpersonal and communication skills, good analytical skills and experience with Mass Merchandise retailers is preferred. This is an intermediate position and the successful candidate will be working out of our world-wide headquarters in Woodbridge, Ontario.   Please submit a resumé by email or fax stating qualifications and income expectations to: Camillo Caperchione, Vice President Sales & Marketing, Better Living Products, Telephone: 905-264-7100 Fax: 905-264-3690 Email: camillo@dispenser.com

*********************************************************************************** TERRITORY SALES REPRESENTATIVE, CALGARY As a leader in Specialty Flooring, Torlys Inc. (www.torlys.com) is actively seeking a dynamic Territory Sales Associate to be based out of Calgary and cover from the US Border north to and including Red Deer. *Minimum 3-5 years sales experience required; *Should have experience in Floor Coverings either retail, wholesale or similar home renovation products; *Ability to work independently and be accountable for performance; *Excellent Communication and Computer Skills; *Develop products knowledge within customer base.

Please reply in total confidence to Mary Kerr, Organizational Development Manager, Torlys Inc., 905-696-2374 or by e-mail at HR@torlys.com. *********************************************************************************** TERRITORY SALES REPRESENTATIVE, EDMONTON As a leader is Speciality Flooring, Torlys Inc. (www.torlys.com) is actively seeking a dynamic Territory Sales Associate to be based out of Edmonton and cover from Red Deer north. **Minimum 3-5 years sales experience required; *Should have experience in Floor Coverings either retail, wholesale or similar home renovation products; *Ability to work independently and be accountable for performance; *Excellent Communication and Computer Skills; *Develop products knowledge within customer base. Please reply in total confidence to Mary Kerr, Organizational Development Manager, Torlys Inc., 905-696-2374 or by e-mail at mary@torlys.com.



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Hardlines is published weekly (except monthly in December and August) by McLARNEYCOM 542 Mount Pleasant Rd., Suite 302, Toronto, Ontario, Canada M4S 2M7 © 2002 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: $199+$13.93 GST = $212.93 per year (GST #13987 0398 RT). Secondary subscriptions at the same office are only $28 + $1.96 GST = $29.98. 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.