John Caulfield, Contributing Editor
 vol. x, #6 February 9, 2004

IN THIS ISSUE: * Hardware shows find reinvention through new, smaller vendors * Do it Best offers new store expansion program * IRLY dealers reject offer from Rona * Canadian show makes deal with Frankfurt trade show company * Circuit City exec joins Home Depot's Expo team * Forest products procurement policies signal key U.S. trend * G-P surges on strong home improvement market * ILDC signs new member

* * * * * * NOTE: Dollar amounts are stated in the currency of the country from which the story originates. — Michael McLarney, Editor & Publisher * * * * * *
"A woman drove me to drink and I never got around to thanking her." — W.C. Fields
TORONTO — For every vendor at the Canadian Hardware & Building Materials Show last week who said they wouldn't be back, another insisted they had enjoyed a good show. But a good show nowadays is different than it was 10 years ago. For many, that good result meant having a chance to get face to face with a handful of key buyers, who in the past would have found their time being taken up chatting in the booths of the major brand suppliers. In the absence of (most of) the major brands, buyers had a chance to find new, hitherto undiscovered products, which the show has been filling its halls with since last year's show.And these smaller vendors, many exhibiting for the first time, were often the ones to report a favorable response. Faced with falling attendance and fewer exhibitors, this re-invention of the show in Toronto, which ran February 1-3, reflects what's taking place in the U.S., as the National Hardware Show moves this year to Las Vegas in an effort to revive its fortunes — and its flagging attendance. With more than 1,500 vendors already signed up, it too is nonetheless not relying on the big brands the way trade shows have done in years past. The shift in emphasis may not even be all that calculated; it's just the way the market appears to be going. Faced with rampant consolidation both in the U.S. and Canada, the big deals with the big customers are being made in those customers' offices, and any new products are being introduced to those buyers well in advance of any wider launch at a trade show. In addition, both shows face stiff competition from new events: CHS is up against the Winter Buying Show, put on by the Lumber and Building Materials Dealers Association of Ontario. That show ran this past weekend in London, Ont. NHS is being challenged by the AHMA Hardware Show in Chicago. For many attending CHS in Toronto last week, the show elicited a pang of nostalgia. "I've been coming here for thirty years, and this brings a tear to my eye," said one buyer.
TORONTO — Bob Elliott, head of the retail association that runs the Canadian Hardware and Building Materials Show, surprised guests at an industry breakfast on the second day of the show by announcing CHS has formed a partnership with Messe Frankfurt, an international trade show company that produces 102 events around the world, including two other hardware shows, one in Argentina and another in the United Arab Emirates.Elliott, president of the Canadian Retail Hardware Association, which owns CHS, says that, with the backing of Messe Frankfurt, he intends to make the show the focal point for the Canadian industry, adding in a conference to the trade show. He said CHS will again attempt to consolidate the event activities of other organizations in the industry. Many, however, had already been associated with CHS in the past and since departed. Two things that won't change next year, however, are the date and location. It will remain in Toronto, either in late January or early February. In the U.S., Koelnmesse GmbH, the trade show company based in Cologne, Germany, which competes on the worldwide trade show stage with Messe Frankfurt, has forged an alliance with North America's leading hardware show, the National Hardware Show, which will be mounted in Las Vegas this spring.
SURREY, B.C. — A potential acquisition or partnership by Rona in Western Canada has been voted down, as the membership of IRLY Distributors, a privately owned LBM buying group and wholesaler, voted against an alliance. Bruce Davidson, vice-president finance for IRLY, has confirmed that there is no agreement, and that "it's business as usual at IRLY, and we'll continue to grow our sales and grow our membership," he says. "I think the membership is happy — and so are the staff." Rex Millard of Nechako Trading Co., vice-president of the board and an IRLY dealer for 17 years, says the decision was strongly in favor of remaining independent. "I can tell you overwhelmingly that our dealers voted to remain independent," he says. Rona has made clear its intentions to expand aggressively in Western Canada, and the opening this spring of a new, 300,000-sq.ft. distribution center in Edmonton, Alta., is expected to support that expansion, along with a budget of some $80 million to market in the West over the next year, part of a $200-million expenditure the retailer is making in the year ahead.
Fort Wayne, Ind. — In an effort to encourage expansion among its dealers, Do it Best Corp. introduced a new program at its recent dealer market, held in Orlando, Fla. Called RetailSTART!, the new program is designed to help members work through the entire process of assessing, financing and building a new store. It requires dealers to have at least two stores already, and the new store, or stores, must be at least 5,000 sq.ft. in size. "RetailSTART! offers members a comprehensive market and site analysis, and demographic research," says Phil Koenig, national RetailSTART! manager for Do it Best. That includes project financing, inventory assistance and project management. "In addition, retailers who take advantage of RetailSTART! can utilize incentives, such as substantial discounts and dating on new warehouse inventory," he adds. "We'll also provide an allowance for professional merchandising assistance and support for the new location's grand opening."
WINNIPEG, Man. — TruServ Canada has committed to expand its presence across the country, but is especially focusing on the East, says new president and CEO Bill Morrison. "We see our most rapid growth in the Ontario and Eastern markets," he says. The reasons for the Eastern Canada focus are twofold: the True Value hardware banner is well established in the West, and especially the Prairie provinces; and the addition last year of a dedicated distribution center in Kitchener, Ont., gives the co-op wholesaler the infrastructure — and the credibility — to keep growing eastward. Morrison says expansion will continue in Atlantic Canada, while Quebec, despite the French language differences, is also ripe for growth. TruServ has two reps serving Quebec, including one who is permanently stationed there, and the wholesaler offers full bilingual support from its DC. "We're committed to being a Quebec retailer," says Morrison.
MONTREAL — Certified forest areas worldwide grew by 31% in 2003 to reach 173 million hectares (427 million acres), mainly due to a doubling of certified lands in Canada, which reached 56 million hectares (140 million acres). This is one of the key findings included in the newly-released 2003 Year in Review report from the independent research group Forest Certification Watch. NA Certified Forestlands ChartCanada's total certified area is now about double that of the U.S., where certification stagnated in 2003, registering only modest increases in SFI and FSC-certified areas. In the U.S., certification was achieved for 16 million hectares (41 million acres) by the end of the 2003. "The supply of certified products in the U.S. seems increasingly constrained by the large share of forest products originating from non-industrial private forest lands, where certification is much harder to implement." says Jean-Pierre Kiekens, editor of Forest Certification Watch. The report shows the three dominant North American forest certification programs — Forest Stewardship Council, Canadian Standards Association and Sustainable Forestry Initiative — all contributed significantly to the surge in certified areas in Canada, with CSA now the predominant system in Canada. Forest Certification Watch presents its fifth conference April 1-2, 2004 in Vancouver, B.C., which will feature an exhibit area, field tour and a training workshop. For more info, click here.
TORONTO — Sears Canada wants to move into power centers, a departure from its marriage to the traditional shopping mall. Mark Cohen, chairman and CEO of Sears Canada, was speaking last week at the CIBC World Markets Conference. He said 23-25 sites exist throughout Canada that can support full-line "off mall" department stores as anchors for power centers. He noted that the mall market is maturing, and that a younger generation is not as inclined to shop at malls as they are to patronize big boxes or specialty retailers. The new strategy "will give this channel a new lease on life," something, he said, "we can build without the mall 'subsidy'." He expects two to be launched in a test before the end of this year. Cohen also sees an opportunity for more specialty stores, which isolate certain departments in its Sears Home store format. He said a window and flooring store will be launched, as well, that will be smaller than the Home store. He noted that Sears already owns one-third of the window treatment market in Canada.
Canadian Tire 43.32 27.85 41.69
Canfor 12.79 7.60 13.00
Costco 39.02 27.00 38.14
Goodfellow 15.65 9.75 15.45
Home Depot 37.89 20.18 36.33
Hudson's Bay 13.59 7.75 13.26
Lowe's Cos. 60.42 33.37 54.67
Rona Inc. 31.80 11.75 31.70
Sears Canada 21.50 13.60 17.90
Sodisco-Howden 3.35 1.30 3.14
Taiga Forest 8.10 6.30 7.95
Wal-Mart 60.20 46.25 57.58
West Fraser 39.99 29.25 36.60
VERNON HILLS, Ill. — Wickes Inc. says it's made progress in its reorganization, including receiving interim court approval for a $100 million debtor-in-possession (DIP) credit facility to fund its operations. Since filing for bankruptcy protection on January 20, 2004, the Bankruptcy Court has approved a number of the motions intended to support Wickes' staff continuing to receive salary and benefits, while giving the company the operational and financial support needed to keep paying vendors as it reorganizes.AJAX, Ont. — Independent Lumber Dealers Co-operative has added a new member. The select buying group, which has only 24 members but represents more than $2 billion in sales at retail, has added Chouinard Bros./Gibson Building Supply of Markham, Ont. Chouinard was established in 1972 and is a leading residential roofing company in the Greater Toronto Area, and a supplier of other building materials. TOLEDO, Ohio, — Owens Corning has announced it intends to unload its Vytec Vinyl Siding division in London, Ont. A part of OC's Siding Solutions business, it's being dumped so that the company can focus on growing its Homeside and Norandex Reynolds lines of vinyl siding and accessories instead. Vytec's manufacturing operations, which employ 233 employees, was acquired by OC in 1997. MISSISSAUGA, Ont. — Torlys Inc. is moving into a new 86,000-sq.ft. facility that is almost double the size of its current head office and warehouse. The move will occur sometime in April, and is expected to accommodate expansion over the next 10 years. The address is: 1900 Derry Road, Mississauga, Ont. L5S 1Y6. The new property includes a two-storey, 19th-century brick Heritage farmhouse that will be restored and redeveloped by Torlys as a training center and showroom. MONTREAL — Royal International Corp., which supplies hand tools and hardware to major retailers in Canada, the U.S., Europe and South America, has completed the acquisition of M-Laser Inc., based in Drummondville, Que. M-Laser Inc. supplies laser level products under the brand names M-Laser and Maxall Tools. BENTONVILLE, Ark. — Wal-Mart Stores reported net sales for January of $18.40 billion, an increase of 14.3% over the $16.12 billion a year earlier. Sales for the year were $256.026 billion, up 11.5% over $229.679 billion over the prior year. The Wal-Mart division's sales for January were $12.131 billion, up 13.5% over sales of $10.690 billion in the similar period in the prior year. The division's sales for fifty-two weeks of $173.579 billion were up 10.8% over the $156.702 billion in the similar period in the prior year. Sam's Club sales reached $2.48 billion, up 10.4% over January a year earlier, while sales for the year were $34.38 billion, up 8.7% over $31.61 billion in the prior year.
Tom Hurney has joined Home Depot as vice-president store operations for the Expo Design Centers division. Hurney has a strong background with many leading retailers, including Gap and Macy’s. Most recently, he was at Circuit City. He strengthens the Expo team in Atlanta, as Expo’s interim president, Annette Verschuren, continues to divide her time between Atlanta and Toronto, where she also heads up the Home Depot Canada division. In a recent article in the Atlanta Journal Constitution, Verschuren said she might stay on permanently as president, with the vp operations job filled.Richard Marsh formerly a buyer at Dick's Lumber in Burnaby, B.C., has joined Surrey, B.C.-based IRLY Distributors as hardware buyer, working with Richard Tan, hardware manager. Marsh replaces Brad Olsen, who has left the company. (604-596-1551)Following a total reorganization of the company, Janet Oh has joined Globe Union Canada Inc. as director, private label business. She was formerly at News Marketing Canada. (905-907-7220) Colleen Kelly has been appointed national marketing manager, consumer and automotive channels, at OSRAM Sylvania Canada, reporting to Stefan Popescu, vice-president, marketing. A 10-year veteran of the company, she will be responsible for the development of marketing programs for OSRAM's consumer and automotive business in Canada ... Larry Daw, merchandising planner, will now report directly to Kelly. (905-671-5582)
Housing starts are expected to remain strong in 2004, reaching 203,900 units, their third highest level since 1989, according to Canada Mortgage and Housing Corporation's latest report. This is down from a 15-year high of 218,400 units in 2003, but still above the 200,000 mark, considered an important level. Factors contributing to the strong demand include economic growth and continued job creation. Due to an expected gradual rise in mortgage rates, which will temper house resales, house prices are expected to drop, and the pace of new home construction should ease in the second half of the year. The result in 2005 is a forecasted level of starts of 191,800 units.
Okay, my apologies for recent gaffes. We added a member to Reliance, when in fact TruServ Canada, Castle Building Centres and IRLY Distributors all share membership in the hardware buying group, Mutual Hardware ... We moved the town of Newton — and Newton Enterprises, the Rona dealer therein — from Manitoba to Alberta ... Lumber OneAs for Lumber One's affiliation before joining Rona, well, enough said about that ... Finally, we heaped ignominy upon Louis Kotnjek at GE Consumer Products — Lighting by calling him Ed. (Okay, I've rested up after the Hardware Show, I'm laying off the Chinese food, and I'm back on my game! — MM)
"We've got good customers. I don't know what happened here." — Don Harrison, a corporate spokesman for Home Depot, on the shooting of a customer in a Home Depot store near Philadelphia last Thursday. (Well, at least nobody bared their breast! — Michael)
Call Barbara Hills (416-598-3343) now there's only one booth left in the Canada pavilion at International Hardware Fair/Practical World fair, March 14-17 in Cologne. Then come to the 4th annual Canada Night Reception on March 14th. The next day, Hardlines will host a special Networking Lunch for North American vendors to meet Europe’s top buyers on Monday, March 15. For more details, call Bev Allen at 416-489-3396 or

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