January 23, 2017 Volume xxiii, #4

“That which has been believed by everyone, always and everywhere, has every chance of being false.”
—Paul Valéry (French poet, essayist, and philosopher, 1871-1945)

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Lowe’s introduces 2% deduction off invoices, causing concern among vendors

BOUCHERVILLE, Que. — Lowe’s Canada is looking for ways to save money and invest in the consolidation of its business following the acquisition of RONA last year. But its latest move has sent a chill through the vendor community.

A letter has been sent out to vendors, dated January 13, 2017, addressing the company’s efforts to combine the Lowe’s and RONA businesses, and to enhance its stores to drive sales. It then goes on to ask the vendors themselves to support the costs attached to growing the Canadian business by accepting a 2% discount on all invoices. The discount will be applied to all agreements with both Lowe’s and RONA stores in Canada. Called a “business development rebate,” the new terms will be effective retroactively from January 1.

The letter is signed by Alain Brisebois, EVP operations and central services, and Igor Halencak, VP national procurement and global sourcing. It includes a consent form and a deadline of February 3.

While an exceptional move for this industry, the practice has been used in the grocery sector. And it’s having a wider impact through the industry: other retail groups have noticed this practice and are beginning to question their suppliers on the availability of similar concessions for themselves, putting even further pressure on vendors. (After it took over Safeway in 2013, Sobeys imposed a 1% retroactive “synergy” on its vendors. Competitors lost no time making similar demands.)

In conversation with HARDLINES, Brisebois said he wants to emphasize a partnership approach and believes that vendors will come on board with the strategy when they meet face-to-face with his team to understand the upsides.

“It will bring growth and require partnership with the vendors,” Brisebois notes. He adds that Lowe’s will be “a good investment” for this industry, and the support of the vendors in addition to Lowe’s own investments will translate into growth for both parties. “These top-line initiatives include store upgrades and conversions, better merchandising, and investment in our staff training for the Canadian market.”

A spokesperson for Lowe’s Canada clarified further with this statement emphasizing that the funds will not go to Lowe’s bottom line, but aim to boost top-line sales and benefit both the retailer and its vendors. “Lowe’s Canada intends to make important investments over the next few years, such as an improved IT infrastructure, enhanced omni-channel capabilities, store conversions, store renovations, and most of all investment in our people ... We are looking to our business partners to help support this above-stated transformation and participate with us as we grow and transform the Canadian home improvement landscape.”

As for the impact on vendors that resist the price cut, “We will review the accounts accordingly based on the vendors’ decision,” says the statement.

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Amidst takeover by Peavey, TSC’s focus remains on execution

LONDON, Ont. — Darryl Jenkins is pretty excited about his business. He’s the head of TSC Stores, a chain of 51 farm and hardware outlets stretched out across Ontario, and into Manitoba, which focus on rural, pet, and agrarian markets. In July 2016, Peavey Industries, which owns 36 Peavey Mart stores in Western Canada, announced it had taken a stake in TSC. The investment in TSC includes a transition period that will allow Peavey to acquire complete ownership in TSC over the next couple of years.

After some initial distractions, typical of any takeover, Jenkins is now happy to be able to get back to what he says is the main business: taking care of TSC’s core customers.

On a tour of its flagship store, a few minutes from TSC’s head office in London’s east end, he walks proudly through the aisles, showing off the company’s retail strengths. Right at the front of the store, just to the right of the checkouts, is a workwear section—a very large workwear section given the overall size of the store. “We want to own the workwear business,” Jenkins says, pointing out the array of brands that get strong billing here. They include Carhartt, Dickies, Kodiak, and TSC’s private brand name, Ox Gear. He notes that other companies have pulled back from this category, opening up an opportunity for TSC. In fact, the company has just added a more popular—and less-farm oriented—line, Levi’s.

The workwear ties in well with another strength, hunting and fishing.

Meanwhile, TSC has revamped other areas, including a discount section at the front of the store on the left side of the checkouts. Considered a poor use of prime retail real estate, the area was changed to seasonal, with large outdoor power equipment now featured there, including snow blowers for winter time.

Another strong category for TSC is pet food and pet supplies. Jenkins says the company’s biggest supplier is pet food maker Purina. Pet sales, especially food and care products, are repeat sales that bring customers back every month, he says.

The changes to the floor plan and merchandising have been under way for well over a year, as the company cleaned up its stores and began aligning its practices to prepare for the takeover by Peavey.

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Ace Canada eliminates spring show, offers online alternatives

WINNIPEG — Ace Canada has cancelled its Spring Buying Show in Winnipeg this year. Instead, the hardware wholesaler, which is a division of Lowe’s Canada, will offer dealers the opportunity to make their bookings online, including special promotions, pallet offers, vendor specials, and extended dating for their fall and winter seasonal needs.

The show was originally scheduled for April 22 to 24 at the Winnipeg RBC Convention Centre.

The move is aimed at saving time and travel costs for its independent customers. It also reflects some of the changes moving through all aspects of Lowe’s Canadian business since it took over RONA last year. Ace Canada was part of the RONA deal, and the Winnipeg warehouse supplies independents across the country, though most heavily focused on Western Canada. Formerly TruServ Canada, the business has hosted a fall and spring market for those dealers, who operate mainly under the Ace and V&S banners, as well as a growing number of RONA dealers, for many years.

“Dealers have told us that they would save money by booking their products online. Vendors have expressed interest in attending only one show per year,” said Bill Morrison, divisional vice president of Ace Canada. The online option has been available to them in the past, in addition to the physical shows.

The dates for the Fall National Buying Market are September 30 to October 2 at the Winnipeg RBC Convention Centre.

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Agencies of today: the front lines in the battle for shelf space


SPECIAL REPORT — In the halcyon days of big box retail, agencies did millions of dollars of business each year simply servicing the Home Depots, Lowe’s, RONAs, and Canadian Tires. But when those companies decided one after another to move that role in-house, a number of Canadian agencies went under. And the ones that were left had to work hard to prove their worth.

Agents, and the manufacturers that employ them, say the most important factor in proving their worth is providing an added value. Whether through hosting hands-on product knowledge events and “lunch-and-learns,” or advocating for the brand in-store, there’s much more to the job than merchandising.

Paul Crawford, president of King Marketing, says there are a number of reasons why manufacturers seek out agents: economics, geography, customer intimacy, and the need for “feet on the street.” With a new product, or prospective new retailers, some manufacturers might not have the money, relationships, or employees to cover Canada’s spread-out hardware stores.

But for consumers to be able to understand the products, retail associates have to be able to explain them. And that takes product knowledge. Krista Hamilton, from McDonald Sales, says there’s a direct correlation between knowledge and higher sales. “Product knowledge is critical at the store level,” says Hamilton. “You can sell a product to the warehouse, but if you don’t have anyone actually at the ground level, pushing it through at the store level, the sales will remain very low.”

(This article is excerpted from the latest issue of our sister publication, Hardlines Home Improvement Quarterly magazine, which mailed earlier this month to more than 11,000 dealers across Canada. For your own copy, click here! ―Editor)

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Goodfellow Inc., the lumber and hardwood flooring distributor, has named Patrick Goodfellow to the position of president and CEO. He spent the last 10 years at the company in the role of vice-president, hardwood. Goodfellow replaces Denis Fraser, who is stepping down, effective immediately. Fraser had held the CEO position for two years after taking over from Michael Goodfellow.

Former Canadian Tire CEO and President Michael Medline has been named to the same position at Empire Co., which owns the Sobeys grocery chain. Medline, who left Canadian Tire suddenly in July, will take up his new position immediately, working during the transition with François Vimard, who has been named executive vice-president.

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CLASSIFIED ADS

GENERAL MANAGER - RETAIL BUILDING SUPPLIES

Are you a store manager in a big box retailer? Maybe it is time to move away from the corporate life in a big city? A challenging career at the top of a family environment, may offer the quality of life for your next career move. Stan Dawe Limited, an 80-year-old, five location retail building supply business in western Newfoundland is seeking a General Manager.

The General Manager is the most senior position in our company reporting only to the shareholders. This position is reported to by five store managers, one purchasing manager and the accountant/office manager. Regular briefings with the two key shareholders, provide a history of past performance and establish objectives for the future. The General Manager is responsible to develop and implement a plan to meet these strategic goals.

Daily duties include discussions and problem solving with store managers, cash management, purchasing of commodity inventory, working with the purchasing manager on regular and promotional pricing, coordinating distribution to the branch stores with pickup of incoming freight, assisting with pricing of larger customer quotations, maintaining relationships with key customers, reviewing accounts receivable, approving payables invoices, coordinating with store managers for staff levels and wages. This position also establishes standards for exceptional customer service and employee safety.

General responsibilities include seeking new opportunities for growth in sales and/or profits with new products and/or markets, investigating cost reduction strategies and improving the company’s internet prospects.

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To send your resume or request more information, contact:
Tony Dawe
Stan Dawe Limited
191 Riverside Drive
Corner Brook, NL A2H 4A1
tony@standaweltd.com

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