RONA breaks ground on latest big box

SCARBOROUGH, Ont.—Groundbreaking ceremonies were held here last week to mark the start of construction of a RONA Home & Garden big-box store in Toronto's east end. The big box is one of three scheduled for completion by next spring. Another is in Charlemagne, Que., while the third is a new-format Réno-Dépôt store in Rimouski, Que. But before these open, RONA will open three more this summer, one in Barrie, Ont., an hour north of Toronto, plus Winnipeg South and Langford, B.C. RONA intends to open up to 20 new stores next year, of which an undetermined amount will be big boxes. The Scarborough store, which will be RONA's 73rd big box, will have 125,000 square feet of selling space, including a 27,000 square-foot exterior garden centre, and will carry more than 40,000 SKUs. The store will feature RONA's fledgling "urban" concept, inaugurated in Richmond, B.C. last fall. The concept aims for a more consumer friendly, fashion oriented approach, while accommodating the demands of limited, expensive real estate in the inner city. Using what it calls a "zone concept", the store features separate, fully decorated environments in departments such as paint, lighting, kitchen and bath, flooring and moulding, and windows and door.

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Home Depot ramps up urban concept

TORONTO—Home Depot Canada is developing properties—one new and one it's had for almost a decade—that will become the sites of "urban" neighbourhood stores. The newest is a property is in Pointe-Claire, on Montreal's West Island. This will be modelled after Home Depot's prototypes in New York, Chicago and North Vancouver, which are built on two floors to maximize available real estate. However, says Nick Cowling, spokesperson for Home Depot Canada, the Montreal-area store will be bigger than North Vancouver's, with a full LBM department. The store, which just got necessary approvals from the city, will open sometime in 2007. Meanwhile, Home Depot's port lands property near Toronto's waterfront is being resuscitated after laying fallow since it was purchased nearly 10 years ago.  "We've filed a new plan with the city for the harbourfront lands," says Cowling. "It was turned down. We've taken it to the OMB [Ontario Municipal Board]." The OMB is notorious for allowing plans that exceed density or height restrictions imposed by the city. And this plan, Cowling admits, does that, a necessity based on the high cost of the land itself. Home Depot owns 14 acres, which are part of a larger development plan for Toronto's port lands. Home Depot's plan was submitted in association with a condo developer that owns an adjoining nine acres of land.

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Home Depot adds manufacturing company

SARASOTA, Fla.—Home Depot continues its vertical integration through acquisitions. The Atlanta-based retail giant has purchased Forest Products Supply, a 32-year-old wood manufacturing company based here, with 370 employees. Home Depot bought this company through its Williams Brothers pro dealer subsidiary, and will run it under its Home Depot Supply division, which in recent years has been growing aggressively. The additions of Florida-based distributor Hughes Supply and pro dealer Cox Lumber has positioned Home Depot Supply to reach $12 billion in revenue this year. By 2010, Home Depot Supply expects to be generating sales between $23 billion and $28 billion out of 1,500 locations, which would account for almost 20% of Home Depot's total sales.

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Builder group predicts 'soft landing' for U.S. industry

WASHINGTON—The chief economist for the National Association of Home Builders said last week that the economy and the housing industry are going through "major transitions", but that recent declines in buyer demand and price erosion were not signs of a housing bubble finally bursting. "We're going from unsustainable heat...to sustainable growth," said David Seiders in a teleconference at which he spoke with David Berson, chief economist for Fannie Mae; and Frank Nothaft, chief economist for Freddie Mac. While the three gurus differed in their projections about declines in home starts and sales this year and next, they were in agreement that the U.S. economy would continue to grow at a pace that could support roughly the same amount of annual new-home construction that builders have been producing over the past several years. In an interview with Hardlines, Seiders projected that starts should hit 1.9 million units this year and 1.8 million in 2007 (compared to 2.068 million in 2005). "Our longer-range forecast is that the market will be able to absorb between 1.9 million and 2 million starts per year for the next decade," he said. "We're headed for a soft landing." Berson pointed out, however, that the double-digit price increases that builders across the U.S. had been enjoying in recent years have all but come to an end, as builders have tried to induce sales through generous discounts and incentive programs. But while he and the other economists expect the rate of price appreciation to slow considerably through 2007, they don't expect prices themselves to start falling precipitously. The big concern among the economists is whether the Federal Reserve's policies of increasing interest rates will continue, and what impact that is likely to have on mortgage rates. Nothaft pointed out the Fed has raised the Federal Funds rate 17 times since June 2004, to 5.25% from 1%, which has resulted in the fixed rate for a 30-year mortgage rising to 6.5% (from the mid 3% rage only a few years ago). The economists said that this increase is already serving as an impediment that's keeping some potential homebuyers out of the market.

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British association confirms support for London Show

LONDON—The British Hardware Federation Group has, for the first time, agreed to take part in and fully support the DIY & Garden Show/Totally Tools in 2007. Brintex, organizer of the event, is confident that the show will have something to offer all the BHF Group members whether they are hardware stores, independent builders merchants or DIY retailers. As a result of the partnership, Brintex will be working alongside the BHF to actively encourage them to visit in January. According to estimates from the BHF, in a market worth £5 billion, independent retailers still control between 15 and 25% of sales, making them a vital target for DIY and hardware suppliers. Paul Woolley, commercial director of the BHF Group, said, "We're pleased to confirm our support for the forthcoming DIY & Garden/Totally Tools Show. This will be the first time we have attended, but we felt that, with 2,500 hardware members, it was important to be there, both for our current and potential members." The two shows, which take place Jan. 14-16, 2007 in Earls Court, London, have 67% of exhibition space booked, with sales running ahead of last year. For more information, click www.diyandgardenshow.com or www.totallytools.co.uk.

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