February 27, 2000 - Volume vi, #8 Michael McLarney, Editor & Publisher Ph: 416-489-3396 Fx: 416-489-6154  
Check out our incredible Classifieds section at the end of this issue!
THE HARDLINES WHO'S WHO   The Hardlines Who's Who (1999-2000 Edition) is a comprehensive guide to Canada's leadinghardware and home improvement retailers, wholesalers, buying groups, mass merchants and co-ops.More than 100 listings include sales, product mix, SKUs, store types, executives and key buyers andtheir responsibilities. The cost for the Hardlines Who's Who is only $105 for Hardlines subscribersand $135 for non-subscribers. Order your own copy of the Hardlines Who's Who today! * * * * * * * Our thanks to the sponsors of our first ever HARDLINES CONTRACTOR CONFERENCE 2000: - Lumber and Building Materials Association of Ontario - Dimensions Retail Systems - American Tools - ITW Paslode (Details of the conference in this issue!)
This week in Hardlines:   ACE WILL DISTRIBUTE GROWMARK PROGRAMS Growmark and Ace Hardware Canada have made a deal whereby Growmark will supply Acedealers with pet, lawn and garden and workwear products. The deal means Growmark's proprietary merchandising programs, or "modules," will have a distribution network across the country via Ace.Dealers can take on either the full modules, complete with training and service, or merely shop the Growmark catalogue. The deal was first introduced to Castle dealers nationally, but Growmark's distribution is limited to Ontario. With the Ace deal, those programs become accessible across the country. Ace already has a deal to supply Growmark's co-op stores throughout Ontario with hardware. The new arrangement means Ace trucks delivering to Growmark's warehouse will bring Growmark products back, where they will be cross-docked at the Ace warehouse before being shipped out. * * * * * * * TOTEM WILL OPEN 11TH STORE BY YEAR'S END Totem Building Supplies will erect a new store with a slightly different format by the end of this year. With 10 stores plus a contract division in Alberta &endash; and sales exceeding $150,000, Totem is one of Tim-BR-Mart's largest members and a dominant player in the province. The new store is about 10 miles north of Calgary in Airdrie, a town of of 20,000 &emdash; about half the size of secondary markets Totem typically targets, such as Red Deer and Medicine Hat. The outlet will be 24,000 sq.ft., about one-third smaller than Medicine Hat. It will also have a 16,000-sq.ft. drive-through lumber warehouse. "It's kind of an experiment for us, because we're going into a community that small," says Colin Robertson, Totem's vice- president, marketing. "If it goes well in a community that size, it opens up a whole range of possibilities throughout the province." Although smaller, the store will carry about the same assortments as its larger counterparts. However, certain lines will be eliminated, such as some housewares and cleaning products that are now carried in the other stores. * * * * * * * TRUSERV LAUNCHES PET PROGRAM A new banner to capitalize on the growing popularity of pets and pet products has been developed by TruServ Canada. Pet Junction is a turnkey program available to existing pet stores. Already, 27 dealers have signed on as members of TruServ and will convert their stores to the Pet Junction banner. Existing TruServ dealers have also expressed interest in enhancing their existing pet departments. "A significant number of True Value stores are considering expanding their pet category," says Gary Hamilton, group merchandising manager at TruServ. To support the program, TruServ has added 3,000 SKUs to its warehouse of food and supplies. All major food brands will be represented. So-called "livestock" is supplied by a network of existing local suppliers. Pet Junction will get its official launch at TruServ's spring market in Winnipeg, April 16-18. There, the number of pet-related booths will jump from four to 24. * * * * * * * CONTRACTORS DOWN ON BIG BOXES, CONFERENCE REVEALS The pursuit of contractors makes for an elusive and often frustrating courtship. Retailers have spent the last half-decade getting smarter about contractor business, especially as it's considered the Achilles heel of the big boxes. But Home Depot has bought a wholesale plumbing business in the U.S. and is preparing to launch its pro mail order business in Canada this spring. So it's time to drill down deeper. That's why we hosted the first-ever Hardlines Contractor Conference: "How to sell to Contractors,"last week. Presented in conjunction with Canadian Contractor magazine, a new Rogers Media publication that intends to mail to 36,000 contractors and builders later in April, and with the sponsorship support of the LBMAO, the event attracted a wide range of dealers and vendors. * * * * * * * SOME CONFERENCE HIGHLIGHTS: The era of the DIYer is over, said Steve Payne, publisher of Canadian Contractor. Citing a Stats Canada survey, he said more than half (53%) of homeowners intending to renovate this year will call a contractor rather than do it themselves. With the belief that one has to "differentiate or die," Brad West, co- owner of Bigford's Castle Building Supplies in Brighton, Ont., developed an installed sales program which ties in his best contractor customers and completes the service loop for consumers looking for installation of the products they buy at his store. It also gives financial security to contractors on the program, as they get paid immediately by Bigford's rather than having to collect from the consumer. While West admitted some trades felt alienated or "left out" by the process, he said overall it's been a good move for the store. Loyalty extends to having contractors even carry the Castle "All-Install" logo on their trucks. Ian Gray, president of Dimensions Retail Systems, demonstrated the necessity of having an online presence to garner loyalty among contractors. More and more contractors won't even consider a supplier who can't be found online. Services a dealer can provide online will include orders and quotes, product catalogues, price look- ups, invoice details and reprints and acounts receivable inquiries. The importance of offering products online and having e-commerce options available to trade customers was borne out by the contractors who participated in a panel discussion at day's end. They also mentioned that pricing is not always their sole consideration. Contractors value their time and need to get in and out fast with knowledgeable service &emdash; something they said they can't always get from big boxes. Cully Koza of Can-Save Distribution gave numerous examples of how he and his brother Larry built the business by going right to contractors onsite to build product awareness and create demand, then pulled in the dealers as the source for those products. Other techniques included coffee breaks in the store with product demonstrations and giveaways.  
COMPANIES IN THE NEWS   Home Depot had sales of US$38.4 billion in fiscal 1999, an increase of 27% from sales of US$30.2 billion in 1998. Same-store sales were up 10% from the previous year. Net earnings totaled US$2.3 billion, up 44%. Sales for the fourth quarter of fiscal 1999 totaled US$9.2 billion, up 26% from US$7.3 billion during the same period a year earlier. While Canadian sales are not broken out separately, Hardlines estimates they were at least US$2.3 billion in fiscal 1999, with all but a couple of stores operating profitably. At the end of fiscal 1999, the company operated a total of 930 stores with an aggregate of approximately 100 million sq.ft. of selling space. The stores include 913 Home Depots: 854 in the U.S., 53 in Canada, four in Chile and two in Puerto Rico; and 15 EXPO Design Centers and two Villager's Hardware test stores in the U.S.   Ainsworth Lumber Co. Ltd. had annual sales of $433.4 million, a 24% increase over $349.1 million in 1998. Net earnings for the year rose to $23.6 million, compared with a net loss of $9.5 million in the previous year. The company reduced its long-term debt by $55 million in 1999, three times as much in the previous year, down to $264 million. Since 1993, the company has invested over $450 million in consolidating, modernizing and expanding its B.C. and Alberta operations, and claims to be the largest supplier of OSB to Japan.   Sears Canada opened a Sears Furniture and Appliances store in Winnipeg on Saturday. The 43,000-sq.ft. store, the first in Manitoba, has a staff of 40, including 18 trained furniture/home decor and major appliance consultants. The company also announced it will relocate its Heritage Mall department store to the former Eaton's location at Edmonton's Southgate Shopping Centre in the fall of 2000.   Home Depot's first environmentally-themed television commercial debuted on February 25 during the ABC broadcast of "20/20." It highlighted Home Depot associates' role in building a habitat for Yang Yang and Lun Lun, two giant pandas on loan from China to Zoo Atlanta. In addition to building the facility, Home Depot President and CEO Arthur Blank donated $500,000 from his Arthur Blank Family Foundation and $500,000 in building materials from The Home Depot, to create the Arthur M. Blank Family Foundation Giant Panda Conservation Centre. The company has a philanthropic budget of more than US$18 million for 2000. The major focuses are affordable housing, at-risk youth, the environment and disaster preparedness.   MAAX Inc. will acquire all of the shares of SaniNova B.V., a Netherlands &endash;based manufacturer of acrylic sanitaryware products with sales of CDN$31 million. As a result of this transaction, MAAX expects to record consolidated sales of approximately $535 million for fiscal 2000-2001  
  CANADIAN STOCK WATCH
COMPANY 52-WEEK HIGH 52-WEEK LOW CLOSE (FRI.)
Canadian Tire 46.00 19.10 22.90
Canfor 19.25 4.25 16.00
Goodfellow 12.25 7.50 10.50
Hudsons Bay 23.85 12.70 13.55
Sears Canada 42.50 18.25 37.50
Taiga Forest 14.75 9.40 10.05
West Fraser 41.00 28.00 37.00
    "Our very business in life is not to get ahead of others, but to get ahead of ourselves." &endash; Thomas L. Monson (1954-)  
PEOPLE ON THE MOVE   Some changes at the head office at Home Depot Canada: Jack Hayes moves from his current position as division merchandising manager to become vice-president of marketing and distribution. He will be responsible for all of Canada's advertising, imports, distribution and installed sales … Eric Peterson is being brought up from the U.S. northwest division, where he was division merchandising manager, to replace Hayes as vice-president of merchandising … Steve Savoie is being promoted from district manager to the position of director of operations, overseeing Tool Rental, contractor sales and installed sales, and involved in new business development. (416-609-0852)   Peter Fealy joins Moen Inc. as director of retail sales, effective March 6 … He's replacing John Hammill, who will assume the position of vice-president, wholesale sales.   CORRECTION: Seems I reversed Ray Falkenberg's career path a bit last week. He was just appointed to at TruServ Corp., but as business development manager. He was director of marketing when he was at the North West Co. … Also as mentioned last week, Michael Nolan lso comes over to TruServ from North West Co. as sporting goods buyer. He was previously in outerwear and footwear at North West. (204-453-9511)   Bob Emmell has been appointed national sales manager for Selkirk Canada. His responsibilities include sales, marketing and manufacturing functions for both Selkirk and Supervent. He was previously vice-president and general manager of Supervent … John Vukanovich has been appointed national marketing manager for the Canadian operations, responsible for overall marketing for both Selkirk Canada and Supervent. (905-662-6600)
Overheard… "If you're selling tools and you don't know what torque is, you shouldn't be in the business … Go do hair!" &emdash; Martin Richards of Martin Richards Design and Contracting, commenting on his dissatisfaction with Home Depot. He was a member of the panel that capped off our latest conference, "Selling the Contractor Market," which was held last Wednesday in Markham, Ont.    
MARKET INDICATORS   Retail trade was up 5.8% in 1999, according to Stats Canada. This follows a 3.6% gain in 1998. While all provinces posted higher sales, increases were strongest in Ontario (+7.8%) and Atlantic Canada(+7%). Wholesale trade in 1999 advanced at more than twice the pace of 1998, says Stats Canada, and one of the reasons for the gains was the lumber and building materials sector. LBM wholesalers saw sales rise 14.4% last year, while December was up 2.7%, the third consecutive monthly increase. Higher prices contributed to the gain. They increased 12.3% in 1999, following an 11.3% drop in 1998 and a 0.8% drop in overall sales in 1998. Metals, plumbing and heating wholesale sales were up 4.6% in 1999. Total sales in the U.S. of existing homes dropped 10.7% in January to a 4.59 million annual rate, the National Association of Realtors reports. December's level was revised up to a 5.14 million annual rate from the 5.06 million level originally reported.  
Hardlines Classifieds   Need to build your sales team? Looking for agents or new lines? Use Hardlines classified ads. They're read by more than 3,000 people every week &emdash; and they get results fast. Only $16 per line for two weeks. Call Beverly Allen at 416-489-3396, ext. 2, for more details. * * * * * * * HARDLINES the electronic newsletter. Michael McLarney, Editor & Publisher. Published weekly (except monthly in December and August) by McLARNEYCOM 283 Belsize Dr., Toronto, ON Canada M4S 1M5. 416-489-3396; fax: 416-489-6154. E-mail: hardline@terraport.net © 2000 by Michael McLarney. Reproduction in whole or in part is strictly forbidden. Subscription: $185+$12.95 GST = $197.95 (or $27.75 HST=$212.75) per year (GST #13987 0398 RT). Please make cheque payable to McLarneyCom  
  February 27, 2000 - Volume vi, #8 Michael McLarney, Editor & Publisher Ph: 416-489-3396 Fx: 416-489-6154  
Check out our incredible Classifieds section at the end of this issue!
THE HARDLINES WHO'S WHO   The Hardlines Who's Who (1999-2000 Edition) is a comprehensive guide to Canada's leadinghardware and home improvement retailers, wholesalers, buying groups, mass merchants and co-ops.More than 100 listings include sales, product mix, SKUs, store types, executives and key buyers andtheir responsibilities. The cost for the Hardlines Who's Who is only $105 for Hardlines subscribersand $135 for non-subscribers. Order your own copy of the Hardlines Who's Who today! * * * * * * * Our thanks to the sponsors of our first ever HARDLINES CONTRACTOR CONFERENCE 2000: - Lumber and Building Materials Association of Ontario - Dimensions Retail Systems - American Tools - ITW Paslode (Details of the conference in this issue!)
This week in Hardlines:   ACE WILL DISTRIBUTE GROWMARK PROGRAMS Growmark and Ace Hardware Canada have made a deal whereby Growmark will supply Acedealers with pet, lawn and garden and workwear products. The deal means Growmark's proprietary merchandising programs, or "modules," will have a distribution network across the country via Ace.Dealers can take on either the full modules, complete with training and service, or merely shop the Growmark catalogue. The deal was first introduced to Castle dealers nationally, but Growmark's distribution is limited to Ontario. With the Ace deal, those programs become accessible across the country. Ace already has a deal to supply Growmark's co-op stores throughout Ontario with hardware. The new arrangement means Ace trucks delivering to Growmark's warehouse will bring Growmark products back, where they will be cross-docked at the Ace warehouse before being shipped out. * * * * * * * TOTEM WILL OPEN 11TH STORE BY YEAR'S END Totem Building Supplies will erect a new store with a slightly different format by the end of this year. With 10 stores plus a contract division in Alberta &endash; and sales exceeding $150,000, Totem is one of Tim-BR-Mart's largest members and a dominant player in the province. The new store is about 10 miles north of Calgary in Airdrie, a town of of 20,000 &emdash; about half the size of secondary markets Totem typically targets, such as Red Deer and Medicine Hat. The outlet will be 24,000 sq.ft., about one-third smaller than Medicine Hat. It will also have a 16,000-sq.ft. drive-through lumber warehouse. "It's kind of an experiment for us, because we're going into a community that small," says Colin Robertson, Totem's vice- president, marketing. "If it goes well in a community that size, it opens up a whole range of possibilities throughout the province." Although smaller, the store will carry about the same assortments as its larger counterparts. However, certain lines will be eliminated, such as some housewares and cleaning products that are now carried in the other stores. * * * * * * * TRUSERV LAUNCHES PET PROGRAM A new banner to capitalize on the growing popularity of pets and pet products has been developed by TruServ Canada. Pet Junction is a turnkey program available to existing pet stores. Already, 27 dealers have signed on as members of TruServ and will convert their stores to the Pet Junction banner. Existing TruServ dealers have also expressed interest in enhancing their existing pet departments. "A significant number of True Value stores are considering expanding their pet category," says Gary Hamilton, group merchandising manager at TruServ. To support the program, TruServ has added 3,000 SKUs to its warehouse of food and supplies. All major food brands will be represented. So-called "livestock" is supplied by a network of existing local suppliers. Pet Junction will get its official launch at TruServ's spring market in Winnipeg, April 16-18. There, the number of pet-related booths will jump from four to 24. * * * * * * * CONTRACTORS DOWN ON BIG BOXES, CONFERENCE REVEALS The pursuit of contractors makes for an elusive and often frustrating courtship. Retailers have spent the last half-decade getting smarter about contractor business, especially as it's considered the Achilles heel of the big boxes. But Home Depot has bought a wholesale plumbing business in the U.S. and is preparing to launch its pro mail order business in Canada this spring. So it's time to drill down deeper. That's why we hosted the first-ever Hardlines Contractor Conference: "How to sell to Contractors,"last week. Presented in conjunction with Canadian Contractor magazine, a new Rogers Media publication that intends to mail to 36,000 contractors and builders later in April, and with the sponsorship support of the LBMAO, the event attracted a wide range of dealers and vendors. * * * * * * * SOME CONFERENCE HIGHLIGHTS: The era of the DIYer is over, said Steve Payne, publisher of Canadian Contractor. Citing a Stats Canada survey, he said more than half (53%) of homeowners intending to renovate this year will call a contractor rather than do it themselves. With the belief that one has to "differentiate or die," Brad West, co- owner of Bigford's Castle Building Supplies in Brighton, Ont., developed an installed sales program which ties in his best contractor customers and completes the service loop for consumers looking for installation of the products they buy at his store. It also gives financial security to contractors on the program, as they get paid immediately by Bigford's rather than having to collect from the consumer. While West admitted some trades felt alienated or "left out" by the process, he said overall it's been a good move for the store. Loyalty extends to having contractors even carry the Castle "All-Install" logo on their trucks. Ian Gray, president of Dimensions Retail Systems, demonstrated the necessity of having an online presence to garner loyalty among contractors. More and more contractors won't even consider a supplier who can't be found online. Services a dealer can provide online will include orders and quotes, product catalogues, price look- ups, invoice details and reprints and acounts receivable inquiries. The importance of offering products online and having e-commerce options available to trade customers was borne out by the contractors who participated in a panel discussion at day's end. They also mentioned that pricing is not always their sole consideration. Contractors value their time and need to get in and out fast with knowledgeable service &emdash; something they said they can't always get from big boxes. Cully Koza of Can-Save Distribution gave numerous examples of how he and his brother Larry built the business by going right to contractors onsite to build product awareness and create demand, then pulled in the dealers as the source for those products. Other techniques included coffee breaks in the store with product demonstrations and giveaways.  
COMPANIES IN THE NEWS   Home Depot had sales of US$38.4 billion in fiscal 1999, an increase of 27% from sales of US$30.2 billion in 1998. Same-store sales were up 10% from the previous year. Net earnings totaled US$2.3 billion, up 44%. Sales for the fourth quarter of fiscal 1999 totaled US$9.2 billion, up 26% from US$7.3 billion during the same period a year earlier. While Canadian sales are not broken out separately, Hardlines estimates they were at least US$2.3 billion in fiscal 1999, with all but a couple of stores operating profitably. At the end of fiscal 1999, the company operated a total of 930 stores with an aggregate of approximately 100 million sq.ft. of selling space. The stores include 913 Home Depots: 854 in the U.S., 53 in Canada, four in Chile and two in Puerto Rico; and 15 EXPO Design Centers and two Villager's Hardware test stores in the U.S.   Ainsworth Lumber Co. Ltd. had annual sales of $433.4 million, a 24% increase over $349.1 million in 1998. Net earnings for the year rose to $23.6 million, compared with a net loss of $9.5 million in the previous year. The company reduced its long-term debt by $55 million in 1999, three times as much in the previous year, down to $264 million. Since 1993, the company has invested over $450 million in consolidating, modernizing and expanding its B.C. and Alberta operations, and claims to be the largest supplier of OSB to Japan.   Sears Canada opened a Sears Furniture and Appliances store in Winnipeg on Saturday. The 43,000-sq.ft. store, the first in Manitoba, has a staff of 40, including 18 trained furniture/home decor and major appliance consultants. The company also announced it will relocate its Heritage Mall department store to the former Eaton's location at Edmonton's Southgate Shopping Centre in the fall of 2000.   Home Depot's first environmentally-themed television commercial debuted on February 25 during the ABC broadcast of "20/20." It highlighted Home Depot associates' role in building a habitat for Yang Yang and Lun Lun, two giant pandas on loan from China to Zoo Atlanta. In addition to building the facility, Home Depot President and CEO Arthur Blank donated $500,000 from his Arthur Blank Family Foundation and $500,000 in building materials from The Home Depot, to create the Arthur M. Blank Family Foundation Giant Panda Conservation Centre. The company has a philanthropic budget of more than US$18 million for 2000. The major focuses are affordable housing, at-risk youth, the environment and disaster preparedness.   MAAX Inc. will acquire all of the shares of SaniNova B.V., a Netherlands &endash;based manufacturer of acrylic sanitaryware products with sales of CDN$31 million. As a result of this transaction, MAAX expects to record consolidated sales of approximately $535 million for fiscal 2000-2001  
  CANADIAN STOCK WATCH
COMPANY 52-WEEK HIGH 52-WEEK LOW CLOSE (FRI.)
Canadian Tire 46.00 19.10 22.90
Canfor 19.25 4.25 16.00
Goodfellow 12.25 7.50 10.50
Hudsons Bay 23.85 12.70 13.55
Sears Canada 42.50 18.25 37.50
Taiga Forest 14.75 9.40 10.05
West Fraser 41.00 28.00 37.00
    "Our very business in life is not to get ahead of others, but to get ahead of ourselves." &endash; Thomas L. Monson (1954-)  
PEOPLE ON THE MOVE   Some changes at the head office at Home Depot Canada: Jack Hayes moves from his current position as division merchandising manager to become vice-president of marketing and distribution. He will be responsible for all of Canada's advertising, imports, distribution and installed sales … Eric Peterson is being brought up from the U.S. northwest division, where he was division merchandising manager, to replace Hayes as vice-president of merchandising … Steve Savoie is being promoted from district manager to the position of director of operations, overseeing Tool Rental, contractor sales and installed sales, and involved in new business development. (416-609-0852)   Peter Fealy joins Moen Inc. as director of retail sales, effective March 6 … He's replacing John Hammill, who will assume the position of vice-president, wholesale sales.   CORRECTION: Seems I reversed Ray Falkenberg's career path a bit last week. He was just appointed to at TruServ Corp., but as business development manager. He was director of marketing when he was at the North West Co. … Also as mentioned last week, Michael Nolan lso comes over to TruServ from North West Co. as sporting goods buyer. He was previously in outerwear and footwear at North West. (204-453-9511)   Bob Emmell has been appointed national sales manager for Selkirk Canada. His responsibilities include sales, marketing and manufacturing functions for both Selkirk and Supervent. He was previously vice-president and general manager of Supervent … John Vukanovich has been appointed national marketing manager for the Canadian operations, responsible for overall marketing for both Selkirk Canada and Supervent. (905-662-6600)
Overheard… "If you're selling tools and you don't know what torque is, you shouldn't be in the business … Go do hair!" &emdash; Martin Richards of Martin Richards Design and Contracting, commenting on his dissatisfaction with Home Depot. He was a member of the panel that capped off our latest conference, "Selling the Contractor Market," which was held last Wednesday in Markham, Ont.    
MARKET INDICATORS   Retail trade was up 5.8% in 1999, according to Stats Canada. This follows a 3.6% gain in 1998. While all provinces posted higher sales, increases were strongest in Ontario (+7.8%) and Atlantic Canada(+7%). Wholesale trade in 1999 advanced at more than twice the pace of 1998, says Stats Canada, and one of the reasons for the gains was the lumber and building materials sector. LBM wholesalers saw sales rise 14.4% last year, while December was up 2.7%, the third consecutive monthly increase. Higher prices contributed to the gain. They increased 12.3% in 1999, following an 11.3% drop in 1998 and a 0.8% drop in overall sales in 1998. Metals, plumbing and heating wholesale sales were up 4.6% in 1999. Total sales in the U.S. of existing homes dropped 10.7% in January to a 4.59 million annual rate, the National Association of Realtors reports. December's level was revised up to a 5.14 million annual rate from the 5.06 million level originally reported.  
Hardlines Classifieds   Need to build your sales team? Looking for agents or new lines? Use Hardlines classified ads. They're read by more than 3,000 people every week &emdash; and they get results fast. Only $16 per line for two weeks. Call Beverly Allen at 416-489-3396, ext. 2, for more details. * * * * * * * HARDLINES the electronic newsletter. Michael McLarney, Editor & Publisher. Published weekly (except monthly in December and August) by McLARNEYCOM 283 Belsize Dr., Toronto, ON Canada M4S 1M5. 416-489-3396; fax: 416-489-6154. E-mail: hardline@terraport.net © 2000 by Michael McLarney. Reproduction in whole or in part is strictly forbidden. Subscription: $185+$12.95 GST = $197.95 (or $27.75 HST=$212.75) per year (GST #13987 0398 RT). Please make cheque payable to McLarneyCom