John Caulfield, Contributing Editor
vol. x, #28, July 12, 2004

IN THIS ISSUE: • Home Depot loses bid for Vancouver "urban" store • Tim-BR-Marts: new strategy, new digs • Lowe's faces opposition to growth • Strober adds key execs • Kingfisher plans Russian expansion

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"Competence, like truth, beauty and contact lenses, is in the eye of the beholder." —Laurence J. Peter (Canadian educator, author of "The Peter Principle")
VANCOUVER — After hearing opposition from neighbourhood retailers and residents, Vancouver City councillors voted to defeat Home Depot's blueprint for a 40,000 sq.ft. store. Opponents complained about increasing traffic, noise and the effect on small businesses in the area.Home DepotHome Depot's blueprint for a 40,000-square-foot store at Broadway and Maple is almost half the size of the original proposed store. At 72,000 sq.ft., that store would have been Home Depot's smallest location yet in Canada, one that reflects the retailer's new "urban" store format. It's the latest attempt by Home Depot to penetrate more urban, downtown areas. Another "urban" store, on the north shore of Vancouver, is set to open September 30 at the toney Park Royal power centre. That one weighs in at 50,000 sq.ft., plus 25,000 sq.ft. on a mezzanine. A similar, though larger, store will open in Toronto's east end at Gerrard Square in December 2004, while an "urban" store in downtown Calgary is scheduled to open December 16. Nick Cowling, PR manager for Home Depot Canada, says the company has gone to great lengths with the "urban" format to ensure that these stores will fit into the neighborhoods they serve. For example, the Park Royal store doesn't look anything like a traditional Home Depot store, he says. The proposed Kitsilano store would have followed similar guidelines. Local residents of the upscale Kitsilano neighborhood could not be assuaged, however. Hearings on the issue had to be carried over two nights, after so many retailers and residents came out to voice their opposition. In the end, councillors voted to limit the size of retail stores in the Kitsilano area to 10,000 sq.ft. — much too small for a Home Depot store. Exceptions to the size rule are grocery stores and pharmacies, which can be up to about 30,000 sq.ft. Cowling points out that both these retail formats carry a lot of hardlines items, too. Traffic was a big concern for many, although Home Depot did at least two traffic impact studies, says Cowling. In each case, traffic was expected to stay the same or even be reduced as shoppers would be able to cut about 15 minutes off their drive to an existing full-size Home Depot on Terminal Rd. Home Depot owns the property in question, having paid $22 million for it. It has two tenants, who are in the midst of two-year leases — an IGA grocery store and a liquor store.
CHARLOTTE, N.C. — The 26-branch Contractor Yards division of Strober Organization has beefed up its management staff with two long-time industry veterans.Frank Chambers, a former Wickes Lumber and Payless Cashways official, recently joined Contractor Yards as its third regional vice-president, overseeing the division's yards in Tennessee (Chambers lives in Nashville), Georgia and Florida. Tom Leete, whose resumé includes stints as a marketing executive with Scotty's and Builders FirstSource, since May has been manager of Contractor Yards' Orlando, Fla., yard. Both Chambers and Leete worked with Contractor Yards' president Ben Phillips when the three worked for Pelican Cos., which merged with Builders FirstSource (then known as Stonegate Resources) in November 1998. Phillips described Leete as his "sounding board" who will also lend his expertise in marketing and advertising to the company. Strober, the Brooklyn, N.Y.-based pro dealer that is the 24th-largest home improvement retailer in the U.S., acquired Contractor Yards from Lowe's Cos. in November 2003, and completed that acquisition on February 2 of this year. That purchase brought Strober's equivalent sales in 2003 to more than $860 million from 71 stores. Strober's CEO, Fred Marino, said the Contractor Yards division would be a springboard for his company's expansion in the Southeast.
VANCOUVER — New management has meant a shift in direction for Tim-BR-Marts Ltd. The Western-based LBM buying group was, for many years, something of an elite organization, representing some of the strongest dealers west of the Lakehead. But consolidation among Canadian buying groups has put Tim-BR-Marts on the offensive more than ever.Tim Urquhart, president and general manager of the 158-member group, took over as president last year, succeeding former president and CEO Barrie Sali, who for almost 35 years had driven the company's growth. One of Urqhuart's main goals has been to re-connect with the membership, which resulted in a lot of time spent on the road. Another one has been to rebuild membership. Under Urquhart's direction, Tim-BR-Mart's ranks have grown by 11 since the beginning of this year, including the latest addition, TimberTown Building Centre Ltd., which alone represents five locations and an estimated $15 million in sales. Tim-BR-Marts is also facing some reorganization of its own. By July 24, it will have relocated its head office from the scenic Granville Island location in the heart of Vancouver to Calgary, in a facility right by that city's airport. Sales and marketing will move there first, while the accounting and IT functions, currently located in Winnipeg, will be brought in later this year.
MOORESVILLE, N.C. — Lowe's Cos.' ambitious national growth plans to open 140 new stores this year have been encountering stiff and relentless opposition in a number of U.S. towns.A Texas judge last week barred the retailer from continuing construction on a store near Austin, and threw out a settlement that would have allowed Lowe's to build a store over an aquifer recharge zone. Lowe's had expected that it could continue construction until a court hearing scheduled for September 7, which could invalidate the city's settlement agreement with Lowe's and force the retailer to either bring the store into compliance with current ordinances or vacate the site altogether. The company has been battling anti-growth forces in Austin for several years. According to the Daily Texan, the City of Sunset Valley and a group called Save Our Springs Alliance sued Lowe's in 2003 to try and block this store. The Austin City Council had voted 4-3 last December to exempt this store from certain ordinances so that the construction could proceed. As Lowe's gets bigger, its exposure to this kind of opposition has become more pronounced. In California, Lowe's is awaiting a court ruling on whether it will be allowed to build a store in Colati, where a citizens group — bankrolled by Lowe's rival Yardbirds — has been trying to block the construction of the 165,000-sq.ft. warehouse home center. In Bethlehem, Pa., a neighborhood group has filed an appeal with Commonwealth Court to stall a $32 million commercial development that would include a Lowe's, a bank, a restaurant and an apartment complex. On June 7, a judge had denied this group's case, which contends the city council had improperly rezoned this site. And in Longview, Wash., residents calling themselves Citizens for Better Planning have hired an attorney to fight Lowe's plan to build a 163,000-sq.ft. store on 12 acres along Ocean Beach Highway. Residents fear the store will cause traffic congestion on the already busy highway, devalue nearby homes and impinge on Lake Sacagawea Park, roughly a quarter mile away. Lowe's representatives insist the impacts on the neighborhood would be minimal and challenge the notion that the development will affect the lake. The city's Planning Commission is not expected to address whether to rezone the land until August. In Framingham, Mass., Lowe's plan to demolish Verizon New England's former headquarters and put a 156,000-sq.ft. store on that site has run into some snags that relate to zoning waivers Lowe's has requested that could impact traffic congestion. Assessed at $12.9 million, the 9.5-acre site currently generates about $382,000 in tax revenue for the town.
LONDON — Kingfisher Plc, Europe's largest home improvement retailer, is gearing up its expansion plans to include Russia. The company, which owns the DIY retailer B&Q, named senior management to lead the expansion.Kingfisher plans to enter Russia with its Castorama home center format, following the success of its Castorama stores in Poland. Kingfisher now has 19 stores in Poland trading under the Castorama banner, which realized a 64% increase in profits to £41 million on sales of £286 million in the most recent fiscal year. Kingfisher opened an office earlier this year in Moscow and now Peter Partma has been appointed as country manager for Castorama in Russia. Partma, who is Swedish, joins Kingfisher from Ikea, where he served as country retail manager for Ikea Russia. There, he spent six years in charge of store operations and development. According to Kingfisher, Russia shares many of the market characteristics which have helped drive success in Poland. The economic fundamentals of the country are positive, with strong GDP growth, even stronger retail market growth, declining inflation and a stable exchange rate. Although Russia has 13 cities with more than 1 million inhabitants, the prosperity and stability needed to drive retail growth are centered mainly in Moscow. The population is also enjoying high disposable income due to low taxes, utility charges and housing costs. There is an enormous demand for home improvement products due to strong housing growth, while the housing stock has suffered from a lack of investment. Kingfisher has 568 stores in nine countries in Europe and Asia, as well as a strategic alliance with Hornbach, Germany's leading DIY warehouse retailer, which operates more than 110 stores in Europe.
NORWALK, Conn. — Just a little over a month after the completion of the 2004 National Hardware Show in Las Vegas, more than 1,000 manufacturers have already committed to over 50% — or more than 289,000 sq.ft. — of the available floor space for the 2005 show. To accommodate the growth, next year the National Hardware Show will span two Las Vegas venues — the Las Vegas Convention Center and the Sands Convention Center. The Sands — site of the 2004 show — will house the Lawn & Garden World and International exhibition areas, while the LVCC will house Hardware & Tools, Paint & Decor, Plumbing, Electrical, and Housewares. The dates for next year's NHS are May 17-May 19, 2005. SAGUENAY, Que. — A local Wal-Mart store will be the focus of an effort to unionize its workers for the second time in one year. The United Food and Commercial Workers Union has applied to the Quebec Labour Relations Board for the right to represent more than 100 workers at the outlet. An earlier accreditation vote was rejected on April 2 by a margin of eight votes, but additional employees have since signed their union cards, leading organizers to believe a majority vote will be in their favor next time. SAINT-LAURENT, Que. — Richelieu Hardware Ltd. had sales of $81.3 million for the second quarter, up from $73.5 million for the corresponding period of the previous year. The increase came both from internal growth and acquisitions. Net earnings were $6.8 million, up 15% from $5.9 million for the same period in 2003. The company made two acquisitions in the United States during the quarter — Allied Hardware in New York and Allied Casework Supply based in Georgia and North Carolina. MEXICO CITY — Three retailers in Mexico have convinced government regulators to approve a plan to institute a joint purchasing company that they hope will strengthen their negotiating power with suppliers. The move is an effort to enable the companies to better compete against Wal-Mart, which entered the country entered Mexico seven years ago. The three other national chains, Controladora Co- mercial Mexicana, Organización Soriana and Grupo Gigante, have formed the joint purchasing company, called Sinergia, to better compete. CHARLOTTE, N.C. — Weyerhaeuser Co. has agreed to sell 304,000 acres of its timberland — including a popular state wildlife management area — to four companies for $404 million. Weyerhaeuser will hold onto an additional 18,000 acres it owns in Georgia, possibly for real estate development. After the deals are completed, Weyerhaeuser will own or manage about 6.5 million acres throughout the United States. HOFFMAN ESTATES, IL — Sears, Roebuck and Co. saw total sales for the five weeks ended July 3 fall 4.4% to $2.55 billion. The retailer experienced a 3.1% decline in same-store sales in June, a casualty of unusually cool weather that affected air conditioner sales. Sears also said it expected third-quarter same-store sales to fall slightly from the year-earlier period.
Lucy-Anne Ward has been appointed director of marketing USA — wholesale and showrooms, for Maax Corp. She is located at the company's U.S. headquarters in Plymouth, Ind. Prior to joining Maax, Ward served as director of marketing for Olympia Industrial. She has also held positions with Jacuzzi Whirlpool Bath and LASCO Bathware.
The manufacturing sector continues to expand, growing for the 13th consecutive month in June, according to a report by The Institute for Supply Management. Growth has slowed, however, rising from 62.8 in May to 61.1 in June, somewhat lower than the 61.5 forecast by analysts. An index reading above 50 indicates expansion, while one below 50 indicates that manufacturing activity is contracting.Wholesale inventories in May were $305.5 billion, up 1.2% from April and up 5.6% from one year ago, says the Commerce Department. Sales were $270.4 billion, up 0.5% from April's revised level and up 16.1% from May 2003.
Housing starts remained virtually unchanged from May to June, says CMHC. Housing hit 239,300 seasonally adjusted in June, with urban starts unchanged from the previous month at 208,500 units seasonally adjusted. Urban single starts decreased 5.7% to 101,900, but urban multiple starts rose 6.2% to 106,600 on a seasonally adjusted annual basis. Starts were up in all regions, except British Columbia and Quebec: up 2.2% in the Atlantic; 0.6% in Ontario and; 17.1% in the Prairies. In British Columbia and Quebec, the seasonally adjusted annual rate of urban starts decreased in June by 7.2% and 9.0% respectively. Rural starts in June were estimated at a seasonally adjusted annual rate of 30,800 units. Year-to-date actual urban starts were 11.2% higher through June than for the same period last year. Single starts were up 5.3% while multiple starts were up 18.1%.The value of building permits retreated 9.5% in May to $4.1 billion as construction intentions declined in both residential and non-residential sectors. The level recorded in May was the lowest in the past nine months. Builders took out permits worth $2.7 billion for housing in May, down 12.7% from April. This decline came on the heels of April's $3.1 billion record high and still left May's total 2.4% above the average monthly level in 2003, a banner year. A marked retreat in the multi-family component largely explained the decline.
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