A big part of Federated Co-operatives’ business is its retail home improvement stores. Its hardlines division, Home & Building Solutions, provides significant returns to FCL. Cody Smith is director of HABS. He sat down with Hardlines to talk about the value of the co-op retail system to Canadians in general, and local farm communities in particular.

FCL supports 160 local co-op organizations in 600 communities serving 2.2 million members across western Canada with a vision of “building sustainable communities together.” A big part of the co-op model is its patronage dividends, which are paid back to retail associations—something, Smith says, that sets the co-ops apart from other businesses. “A significant portion of our profits go back to the 160 local co-op associations across western Canada in the form of patronage.” Over the past five years, FCL has returned $2.3 billion in patronage to communities in the west.

In 2022, FCL had $12.5 billion in sales, $411 million in net income, and $348 million in patronage allocation. “Those results put us in the top two orgs in Saskatchewan and in the upper echelons of revenue-generating organizations in Canada,” Smith says.

The co-op’s wholesale numbers break out as follows: energy representing $7.8 billion, food with slightly more than $2 billion, ag at almost $2 billion, and HABS accounting for $410 million.

Smith’s HABS division in turn represents $560 million at retail through 104 home centres—88 of them with lumberyards. The balance of the stores are ag centres that are “hybrids” and carry LBM. HABS also feeds some hardlines into the co-op grocery and c-stores.

Growth for the home improvement business has included adding more focus to LBM sales in recent years, as well as increasing the distribution network. That includes a distribution centre that opened near Calgary in late 2022, and the opening of another DC in Fort Saskatchewan toward the end of 2023.

The newest DC “is going to be mainly for LBM and allied products,” says Smith. “What we’re trying to do there is to meet the retailers where they’re doing business today. They’re heavily invested in the LBM side so we thought we’d better provide access to products. Then we can consolidate some inventories across the system.”

The improved distribution network will support the procurement function so dealers can spend more time with their customers, he notes.

In addition, the business has rolled out an electronic shelf label system and new order management system. “It puts us in the upper echelon and reflects the power of the shop local concept,” Smith says

The co-op dealers are doing more business on the LBM side with their DIY customers, “and some of our retailers are doing a great job on that.” But focusing on the B2B side is increasingly important.

Record-low temperatures in many communities in British Columbia and Alberta have reminded all of us that hardware stores—and building supply stores—are the pillars of the towns they serve when extreme weather hits.

This is certainly the case at Hydway Hardware in Fort Vermilion, Alta., which hit a bone-crunching minus 46 degrees Celsius on Jan. 15. “It seemed like everybody in town had come in to buy heat lamps, antifreeze, and extension cords,” said Darwin Toews, brother of Ray Toews, who is co-owner of the store with his wife, Robyn Currie.

It is notoriously cold in the winter in Fort Vermilion, which is 670 kilometres north of Edmonton—and only about 300 kilometres from the border with the Northwest Territories. The town has a population of just under 800, according to the 2021 census. Canada’s record low for anywhere in its 10 provinces was set in Fort Vermilion on Jan. 11, 1911, when the mercury plunged to minus 61.2 Celsius. Wow.

But when it’s life-threateningly cold, this tight-knit community turns to their hardware store for the essentials of life. “A lot of people live in mobile homes around here—as I do,” said Darwin. “They had frozen pipes. We usually have a lot of snow by this time of the year, and we bank the snow up against the mobile home to keep the area underneath insulated. But this year, we didn’t have enough snow. I’m scared to see what my gas bill will be.”

Hydway Hardware was voted Best Hardware Store at our Outstanding Retailer Awards in 2023. It’s a true independent, relying on Orgill Inc. to supply it with hardware. “I just saw the truck pulling into town a few minutes ago,” Darwin said. “It has a bunch of extra heaters that I ordered. Good timing.”

Registration is now open for the National Hardware Show, taking place from March 26 to 28, 2024, at the Las Vegas Convention Center. It is touted as “the most comprehensive event, [and] education and networking platform serving the hardware and home improvement industry.”

And as in years past, a showing of Canadian exhibitors, buyers, and agents will be on the show floor. The show, which felt the effects of the pandemic over the past three years, has returned to a date in late spring that more closely matches its pre-pandemic timing.

The Canadian Home Products Trade Association (CHPTA) will be back offering a forum for its member vendors to access exhibition space and to connect with buyers. It will have a booth on the show floor to promote the programs and benefits of the association to companies selling hardware and home products or services in Canada. CHPTA member companies that are not able to exhibit on their own will also have an opportunity to display some of their product within the CHPTA booth and have a location to meet with customers.

According to CHPTA president Sam Moncada, a number of spots are still available to members wishing to have a presence in Las Vegas.

Another fixture of CHPTA’s presence at the show is its Canada Night reception. “The CHPTA is looking forward to attending the National Hardware Show in Las Vegas this March including hosting the traditional ‘Canada Night’ reception for Canadian vendors and retailers in town for the show,” says Moncada.

This year’s Canada Night will be held on March 27 at Tom’s Watch Bar within the New York New York Hotel from 6:00 pm to 8:00 pm. “Canada Night has always been an opportunity for the CHPTA to bring the Canadian hardware industry together during this trade show in a relaxed atmosphere to enjoy some ‘Canadian bonding’ and networking over drinks and hors d’oeuvres,” Moncada adds.

Finally, the CHPTA will be arranging for some speaker presentations from some of its affiliate partners at the Shop Global Lounge on the show floor. There, presentations will provide helpful information and data on doing business in Canada in the hardware industry, including how to acquire and use important POS data, consumer purchasing insights, market size, and sales trends.

(Early-bird pricing is available now for the National Hardware Show. Click here to register.)

A slowdown in new housing left its mark on the industry last year. According to the latest figures from the Canada Mortgage and Housing Corp., housing starts in 2023 were down seven percent in population centres of 10,000 and more. For the full year, 223,513 units were recorded, compared to 240,590 in 2022.

The decline was attributed primarily to a 25 percent drop in single-detached starts. In fact, some regional disparities offered a more positive outlook. Despite the national decline, actual year-over-year housing starts were five percent higher in Toronto and 28 percent in Vancouver, driven by strength in multi-unit starts. Montreal starts were down 37 percent due to large declines in both single-detached and multi-unit starts in 2023.

However, things started to look up toward the end of the year. In December, the annualized pace of housing starts nationally rose by 18 percent to 249,255 units, from 210,918 units in the previous month. “The recent monthly multi-unit volatility is not surprising as we’re now starting to see 2023’s challenging borrowing conditions and labour shortages in the housing starts numbers, and we expect to see continued downward pressure in the coming months,” said Bob Dugan, CMHC’s chief economist.

Likewise, existing home sales lost steam in 2023 but picked up in December. According to the Canadian Real Estate Association, home sales on an annual basis totalled 443,511 units, a decline of 11.1 percent from 2022. However, they gained momentum as the year drew to a close. Resales rose 8.7 percent between November and December, putting the last month of 2023 on par with some of relatively stronger months recorded over the spring and summer.

The actual (not seasonally adjusted) number of transactions came in 3.7 percent above December 2022, the largest year-over-year gain since August.

Despite the year-end surge, CREA’s outlook remains moderate for the near future. “Was the December bounce in home sales the start of the expected recovery in Canadian housing markets? Probably not just yet,” said Shaun Cathcart, CREA’s senior economist.

“It was more likely just some of the sellers and buyers that were holding onto unrealistic pricing expectations last fall finally coming together to get deals done before the end of the year. We’re still forecasting a recovery in housing demand in 2024, but we’ll have to wait a few more months to get a sense of what that ultimately looks like.”

At Sexton Group, Suzanne Walsh has been promoted to the position of business development director, effective Jan. 1. Walsh joined the company in August 2017 as Ontario business development manager. In her new role, she will spearhead existing member growth and new member expansion, with Sexton’s business development managers reporting to her.

Michael Magennis at Canadian Tire has a new role. He is now SVP, petroleum and special initiatives. A veteran of Canadian Tire for more than 30 years, he was most recently SVP, general merchandising. Micheline Davies is now Canadian Tire’s chief merchant. She was formerly SVP, automotive.

Mario Boivin is now associate national account manager at Rust-Oleum Canada. He comes over from Sherwin-Williams, where he served as national account manager.

At Lowe’s Cos. in Mooresville, N.C., Margi Vagell has been named EVP, supply chain, effective March 1. She joined the retailer in 2009, serving in various senior leadership positions, including SVP and general merchandising manager, a role she’s held since 2019. Vagell is also vice-chair of the Lowe’s Foundation and serves on the boards of trustees of two universities. She succeeds Don Frieson, who has served as EVP, supply chain since 2018. He will retire on April 1.

DID YOU KNOW...?

… that the latest issue of Hardlines HR Advisor hit inboxes last week? In this edition, we look at one industry veteran’s outreach to high school students and a business coach’s focus on the home improvement industry. (If you’re not already receiving HR Advisor, click here to sign up for free!)

RETAILER NEWS

Philip St-James and his wife Stacy Boulet are the latest dealers to join BMR Group. They own two stores in Quebec’s Eastern Townships, Quincaillerie des Rivières in Waterville, and Centre de rénovation Stanstead, which have been in business for 40 and 70 years, respectively. St-James became co-owner of Quincaillerie des Rivières in 2012, which was owned by his parents. He and Boulet acquired the Stanstead store in 2021.

Castle Building Centres Group has added two stores in early 2024. It has signed Landry Brothers Ltd. in Louisdale, N.S. Founder Paul Landry is passing the reins of the business, which is 60 years old, to his son-in-law Christian Sampson and partners Jonathan Stone and Evan Marchand. And Peacock Lumber, Oshawa, Ont., a Castle member for over 55 years, has opened a second location in Colborne, Ont. The owners are Cara and Glen Peacock. The general manager is Mathew McMullin.

Staples Canada has secured a contract from the Ontario provincial government to provide ServiceOntario centres within some of its stores. The move is not without precedent: some IDA Drugs, Canadian Tire, and Home Hardware stores have had ServiceOntario locations for several years, providing access to drivers’ licences, hunting permits, and health cards. ServiceOntario is in the process of opening new centres in select Staples Canada stores, with additional locations expected to open throughout the year. Several stand-alone locations will be closed as a result.

Costco is testing out a new procedure requiring customers to scan their membership cards at store entrances in a bid to curb unauthorized sharing of cards. The pilot project has begun in Costco’s home state of Washington and builds on previous moves to verify membership at self-checkout in the same way as for those in cashier lanes.

Products from Regal ideas Inc. of Delta, B.C., were represented in an unprecedented nine trophies, including three first place finishes, won by contractors at the North American Deck and Railing Association (NADRA) annual awards event held in early January in Clearwater Beach, Fla.

After holding steady at 3.1 percent in October and November, Canada’s annual inflation rate rose to 3.4 percent in December. The price of gasoline, cars and trucks, rent, and airline tickets helped to drive the uptick in inflation. Grocery prices went up 4.7 percent, year over year. The central bank has increased interest rates 10 times in a row, commencing in 2022, to try to wrestle inflation down. (StatCan)

Only 20 percent of Canadians feel better off financially this year than last year, down from the 25 percent who thought so in Q3. Conversely, the number of Canadians who say they are worse off financially today rose to 44 percent in Q4 from 39 percent in Q3. High interest rates and inflation have played a considerable role in this. Canadians are also now more pessimistic about the overall economy in 2024, with 59 percent believing there will be a recession in the next 12 months. (Dye & Durham's Canadian Q4 Pulse Report)