RONA made news in recent days with announced layoffs, along with pending closures of two distribution centres. The layoffs will affect about 300 people in total, including 115 staff at RONA’s head office in Boucherville, Que. The DCs slated to close are in Calgary and Terrebonne, Que.

The cuts were followed quickly by news of movement at RONA’s head office. Jean-Sébastien Lamoureux, senior VP for affiliate dealers, wholesale, and public affairs, left the company a day after the wider cuts were announced. In a farewell statement posted to LinkedIn, he paid tribute to “all the dealers across the country who make RONA shine every day.”

As one of the three largest home improvement retailers in Canada, RONA is a big customer for suppliers—and a significant competitor at retail. This latest news puts the spotlight on a company that has had its share of changes, including getting new owners exactly one year ago.

But the consolidation at RONA reflects a wider slowdown across the industry in North America.

As housing starts have slowed and interest rates remain high—the Bank of Canada has held its central interest rate at five percent—changes like the ones at RONA are being felt by hardware and home improvement retailers of all sizes in most parts of the country. Large North American retailers are posting slower results while, anecdotally, smaller dealers across the country are facing challenges of their own.

Whether it’s the building centre manager in a small town who had to lay off six people in the yard and two on the floor last month, or the hardware store owner who had to close shop entirely before Christmas after three years of economic vagaries and evolving competition, stories like these abound. These setbacks are not making news. But they are having an impact.

Other large retailers are bracing for poor results, both here and in the U.S. Facing earnings drops of as much as four percent for fiscal 2023, Lowe's Cos. and The Home Depot have both reported that they have eliminated corporate positions.

Faced with a forecast of a sluggish economy for at least the first half of 2024, dealers will have to rely on the traits that have helped them through tough times so often in the past: patience and determination.

As the retail home improvement industry tightens its belt following a flat year, one business leader offers some considerations for what might get better—and worse—in the coming months.

Bernie Owens, president of TIMBER MART, says he is positive overall about the year ahead, but tempers that outlook with caution. “Looking at the first half of the year, we’ll feel the lull for the first six months,” he said, and doesn’t expect things to get any worse than they are now. “But I don’t anticipate any major [hitting of] the brakes and activity overall is stronger than it was pre-Covid.”

TIMBER MART is a buying group representing some 600-plus stores. About 200 of those locations fly the TIMBER MART banner. Members are in all 10 provinces and the Northwest Territories and represent estimated sales of more than $4 billion.

With supply chain issues largely in the past, product availability has increased, even as demand has softened. “But money is not cheap right now. We’re still seeing long lead times and some categories are still tight, but overall the supply is getting better in many categories.” And as prices are easing, dealers can no longer hold out for the best price on scarce materials, “so they need to sell harder, even as margins are lower because of ample supply.”

Continuing on the positive side, Owens notes that his buying group came off what he calls “a good year.”

Collectively, TIMBER MART dealers managed well through a year that was at best flat for most. He concedes that sales overall were down compared to the heady years of Covid. LBM channel lumber unit volumes grew overall even as sales were down slightly, due mainly to declines in lumber pricing year-over-year. “However, our strong commercial dealer activity more than offset this decline.” And, looking ahead, as interest rates ease, “We’ll see some of the momentum coming back. It has to.”

Owens also cites the federal government’s push to increase Canada’s housing stock over the coming years. “It’s good for our industry as a whole.”

Looking at the negatives, he sees people getting out more, which means they are spending on other areas. “Travel is back.” People are back at restaurants and spending their discretionary income elsewhere now. “So years of spending for us is moving underground—that’s going to dry up somewhat.” But he adds that he expects “crazy housing” activity will bring sales up for dealers.

Home Hardware has launched a credit card for its contractor customers. Developed in partnership with Scotiabank, the Scotia Home Hardware Pro Visa Business Card has been designed to support small businesses, though its focus is squarely on entrepreneurs in the trades and construction industry to help them better manage and grow their businesses.

The new card will tie in with Home Hardware’s existing Scene+ loyalty program, with features including a variable interest rate, no annual fee, a 21-day interest-free grace period on new purchases, and credit limits up to $500,000. Users of the new card will allow flexibility to redeem Scene+ points on a range of products and services, including travel, grocery, dining, entertainment, and home improvement.

Home Hardware introduced its Scene+ loyalty program in September 2023. It allows Home Hardware customers to collect points by using either a Scene+ card or a Scotiabank Scene+ Visa card.

The new pro card is designed to let contractor customers manage their expenses with Visa Spend Clarity for Business, a web-based tool that allows users to track expenses and stay on budget.

It will also replace Home Hardware’s long-standing Top Notch Rewards program, which will be terminated at the end of June. Top Notch Reward members have been notified and they have until 11:59 p.m. EDT on June 30, to redeem their Top Notch Rewards points.

“The Scotia Home Hardware Pro Visa Business Card brings immense value to our pro customers, giving tradespeople, contractors, and builders alike the power to manage and grow their businesses while being rewarded with Scene+ points for purchasing the building materials and supplies needed to complete every job,” said Laura Baker,  Home Hardware’s chief marketing officer.

IKEA Canada has begun a long-term investment throughout 2024 to reduce the prices of products across the entire IKEA range, pouring over $80 million into price reductions on 1,500 products. IKEA has promised to cut prices in a number of countries, including Canada, where it has 16 stores and a growing number of Planning & Design Studios. The idea is fundamental to mass-market retailing: lower the prices, increase volumes.

IKEA says it has lowered costs—and also is seeing decreased raw material prices—enabling the price cuts. It has said that its goal is to lower prices to “inflation-adjusted” pre-pandemic levels by the end of next year. The retailer has already announced lower prices in Germany as well as Sweden and the UK.

The initiative is in step with recent comments by IKEA Canada’s CEO and chief sustainability officer, Selwyn Crittendon (pictured). At a breakfast meeting held in Toronto before Christmas, he addressed the issue of rising prices. Much of Crittendon’s presentation centred around IKEA’s concern for keeping products affordable for Canadian consumers. He talked about the importance of maintaining affordability for Canadians faced with high interest rates and rising product costs.

He noted the rising cost of living for Canadians and emphasized IKEA’s commitment to producing affordable—and sustainable—products to counter those rising costs. “These are the foundations of our company: function, form, quality, sustainability, low price. We will never compromise.”

Bruno Baldessari has a new position as senior vice-president, lumber and building materials, at RONA inc. He was formerly VP forest products, trading, at TIMBER MART, a role he held for just over two years. Prior to that, Baldessari was VP retailing at BMR. He served almost 16 years at that buying group. Baldessari was employed by RONA once before, from 2000 to 2006, as a merchandiser.

At UFA Co-operative Ltd., Steve Kovacs has been appointed to the newly created position of chief sales officer, based out of UFA’s head office in Calgary. He will be involved in UFA’s continued expansion into Saskatchewan. Kovacs is a tenured executive with strong senior leadership experience, most recently as vice-president at Parkland Corp. His experience within the agricultural industry includes almost 15 years with Nutrien (formerly Agrium). No stranger to UFA, he spent several months with the co-op on contract in 2020 as an advisor to the CFO.

Patricia Lachance has joined Acceo Home, Garden and Building Supply Solutions as vice-president of sales. She was formerly VP at estimating software provider Seljax.

DID YOU KNOW...?

… that we’ve marked down the 2023 Hardlines Retail Report by 15 percent? The Retail Report is our annual deep dive into the size of the retail market for hardware and home improvement sales in Canada. Based on 2022 numbers, we break down the industry’s sales by province, banner, and store type, and explore trends ranging from online sales and big box strategies for growth to the importance of private labels. Save even more with a Hardlines Premium Membership by purchasing the Retail Report in a bundle with our 2023 Market Share Report. The 2024 edition won’t be ready until July, so click here for more information and to place your order for our current Report!

RETAILER NEWS

Lee Valley Tools has taken the top spot in Léger’s annual WOW In-Store report. The study evaluates the in-store experience for consumers in 23 areas in order to offer feedback about how consumers feel about their in-store experience. Lee Valley has moved up the rankings from the number-three position last year.

Quincaillerie B.L. in Mont-Louis, Que., has joined the Home Hardware banner. Dealer-owner Bernardin Lemieux and his wife, Louise Côté-Lemieux, founded the business 50 years ago. The co-owners’ sons, David and Louis, work at the store and will take the reins of the business one day.

At supermarket and pharmacy giant Metro, Sales in the first quarter of fiscal 2024 ended Dec. 23 were $4.97 billion, up 6.5 percent from the previous first quarter. Food same-store sales were up 6.1 percent and up 3.4 percent when adjusting for the timing of the Christmas season versus last year. Net earnings of $228.5 million were down 1.1 percent. Pharmacy same-store sales were up 3.9 percent, with a 6.6 percent increase in prescription drugs and a 1.2 percent decrease in front-store sales.

SUPPLIER NEWS

Hillman Solutions Corp., the Cincinnati-based hardware supplier, has acquired Koch Industries Inc., a Minnesota-based manufacturer of rope and twine, chain, wire rope, and related hardware products. This acquisition marks Hillman’s first foray into the rope and chain category. Hillman, whose brands include Dominion, and Paulin, is also celebrating its 60th anniversary this year. Founded in 1964, the company grew from a small distributor of fasteners and hardware serving independent hardware stores in southern Ohio and northern Kentucky to become a North American entity, generating $1.5 billion annually.

West Fraser Timber Co. has announced the permanent closure of its Fraser Lake, B.C., sawmill. The company says it has lost cost-effective access to fibre in the region. The approximately 175 affected employees will be offered opportunities at other locations. The closure cuts West Fraser’s lumber capacity by about 160 million board feet.

In December, the Consumer Price Index rose to 3.4 percent, up from 3.1 percent a month earlier. (StatCan)

The latest instalment of our podcast series What’s In Store is now online! In this episode, we talk to Jest Sidloski, VP of marketing and customer experience at Peavey Industries, about the latest developments with the retailer, which owns Peavey Mart and the licence for the Ace banner in Canada. Sign up now to get updates about the latest free podcasts in your inbox!