HARDLINES Canada’s electronic information service for the home improvement industry July 3, 2001 Volume vii, #27 Michael McLarney, Editor & Publisher Phone: 416.489.3396 Fax: 416.489.6154 email: mike@hardlines.ca hardlines.ca <https://hardlines.ca/>

* * * * * * IN THIS ISSUE: * Pro Hardware finds growth with disgruntled dealers * U.S. consumer group opposes latest softwood lumber bill * Container Store: employee success story * Wal-Mart starts rolling outlet self-serve checkouts * GDP remains unchanged in April

* * * * * * The Retail Strategies Symposium is a half-day education seminar that will feature industry overviews from authorities on the Canadian and U.S. markets. Learn how the key retail players are positioned for growth, how Canadian distribution channels work, and how the big box retailers are capturing share of the Canadian market. September 12, 2001, at the Four Points Sheraton Hotel, Toronto Airport. Call for details!

* * * * * * THE HARDLINES QUARTERLY REPORT Get the trends. The numbers. The research. The insights. HQR is a quarterly executive summary of the issues and news driving hardware and home improvement retailing. Each issue is jam-packed with thought provoking articles, in-depth analysis and exclusive survey results of industry performance and benchmarks. The latest issue includes: - A store-by-store analysis of big box merchandising strategies - Benchmarking standards of hardware and building centre dealers - The incredible Buying Group Org Chart ™ - analysis of the latest housing and building statistics

GET A SHARPER FOCUS ON THE INDUSTRY. SUBSCRIBE TODAY! Contact: Nancy Wright, Circulation Manager. Phone: 416-489-3396; mailto:nancy@hardlines.ca

* * * * * * KEEP INFORMED. EVERY DAY — Our website has daily updates on retail and industry news that matter to you. Keep informed. Visit hardlines.ca <https://hardlines.ca/> . Every day.

* * * * * * BEAVER MERGER CREATES OPPORTUNITIES FOR PRO HARDWARE

The purchase of Beaver Lumber by Home Hardware has also opened up some opportunities for new dealers, says Glen Duczek, banner manager for Pro Hardware. "The merger left some Home dealers looking around," he notes. Sodisco-Howden, which licenses Pro, has picked up five Home dealers since the beginning of the year. Sodisco-Howden has been in discussions with some former Beaver dealers, as well, "and there are some opportunities out there."

Pro has also attracted 12 new dealers in Atlantic Canada, giving Pro a net gain of 20 dealers since the beginning of 2001.

A big attraction of the Pro banner, says Duczek, is "the growing inability of an independent to go it alone." Alignment with a national network is vital to their prosperity and that national program is something Pro has been working toward since February 2000.

That’s when Sodisco-Howden announced it would winnow out three of its other banners — Novico, Matexpert and Unitotal — in favour of one national "brand." Now the Pro store count stands at 800, up from 375.

Sodisco-Howden continues to service — and grow — its Do-it center banner and counts almost 60 stores in that program. _____________________________________________

SOFTWOOD DISPUTE CONTINUES AS CANADA’S LUMBER EXPORTS DECLINE

A consumer alliance representing 95% of all lumber consumption in the U.S. (which includes Home Depot, the National Association of Home Builders and the National Lumber and Building Material Dealers Association), has appealed to Congress to block support for bill H.R. 2181 — which would impose mandatory trade restraints in the form of quotas and tariffs on all Canadian lumber going to the U.S. The bill is poised to replace the Softwood Lumber Agreement that expired March 31.

Canada sends about $10 billion worth of softwood lumber south of the border — roughly one third of the U.S. softwood market. But the new bill, which Ottawa charges is protectionist, proposes to roll back imports to 1995 levels. "[The new bill] fails to take into consideration the growth in U.S. demand for softwood lumber, the growth in the housing market where most of it is used, and the reduction in availability of such lumber in the U.S.," says a spokesperson for the Association of Consumers for Affordable Housing.

The latest lumber data have been eagerly awaited as an indicator of the impact of the ongoing trade dispute. The U.S. Commerce Department announced that the value of imports of softwood lumber from Canada fell 2.2% in May from April, even though prices were up 9.1%, effectively refuting the U.S. position. Imports totalled US$574.42 million in May, down from US$587.33 million in April. ______________________________________________

THE CONTAINER STORE: HOW IT KEEPS STAFF HAPPY

Hire the best — that’s the advice of the CEO of The Container Store. "One great employee can easily generate the productivity of three great people," said Skip Tindell, who co-founded the U.S. retail chain in 1994 devoted to storage and organization products for the home. With that in mind, his company has strived, in an industry plagued by low wages and high turnover, to attract — and retain — the best people possible. "Most retailers gave up on that concept a long time ago."

Where does he get these employees? Most of them are actually customers. They get paid 50%-100% more than the industry average and even part-timers get full medical and dental benefits. By paying twice the salary, you can get three times the productivity, Tindell said. Ten percent of store sales go to payroll.

Even little things like company discounts have been upgraded for part-time staff. Where once they got a 20% store discount, they now get 40% just like full-time help. And all staff receive 235 hours of training in their first year. The industry average in the U.S., Tindell notes, is around seven. ______________________________________________

COMPANIES IN THE NEWS

The Howden Division of Sodisco-Howden Group has ratified its first contract with unionized workers in its London, ON distribution centre. The Canadian Auto Workers union has signed a three-year agreement. This is the last warehouse in Sodisco-Howden to become unionized.

Alliance Forest Products has announced the 99.7% shareholder vote in favour of selling to Bowater for $1.2 billion. The deal was reached in April. Pierre Monahan, outgoing Alliance CEO, will become a Bowater executive in charge of operations in Québec and New Brunswick. Other Alliance senior managers will stay on with Bowater. The company did not disclose how many of the other 65 employees at head office will remain. Alliance, created seven years ago from four Domtar Inc. mills, had sales of $1.1 billion in 2000.

AWARD is the latest buying group to enter a partnership with LBMX to develop a private electronic trading community for the exchange of electronic documents between AWARD head office, members and trading partners. London, ON-based LBMX specializes in web-based EDI and online customer service technology.

Canadian Tire has broken ground on a new store in Thunder Bay, ON that is slated to open in Spring 2002. The 107,000-sq.ft. Type "A" Next Generation store will be the first in Thunder Bay Centre, a retail plaza designed for big box retail formats. It will replace a 16,000-sq.ft location on the other side of town. Bob Nearing, currently manager of the Thunder Bay Canadian Tire store, will move in as owner/manager of the new location.

Wal-Mart Canada has announced plans to open four new stores in communities across the country. Construction will begin in Cold Lake and Spruce Grove, AB in the Fall of 2001. Langford, BC and Summerside, PE will also see new Wal-Mart Stores by the end of the year.

HomeBase Inc. opened seven new House2Home décor superstores in Fresno, San Diego and California. The openings are part of the company’s strategy to reinvent itself from a home improvement warehouse to a specialty high-end décor retailer. This batch of openings marks the third phase in House2Home’s planned rollout of 37 stores, and brings the total to date to 29.

Canadian Tire has expanded its leisure line-up with two exclusive product lines from camping gear manufacturers. The Coleman Xcursion line extends the retailer’s traditional offers to target more committed outdoor enthusiasts. Woods Canada is introducing its own line designed for family camping.

Wal-Mart’s testing of various self-checkout systems has had favourable results with consumers. The company is now using four different types of the self-checkouts at some of its stores, and anywhere from 21% to 30% of the stores' volume is funnelled through them. ____________________________________________ CANADIAN STOCK WATCH

COMPANY	52-WK HIGH	52-WK LOW	CLOSE (FRI)
Canadian Tire	25.20	15.05	25.99
Canfor	16.95	7.65	9.90
Goodfellow	11.00	8.00	9.25
Home Depot	49.74	47.61	47.24
Hudson's Bay	17.65	12.40	16.32
Lowe's	64.90	34.25	72.55
Sears Canada	37.25	18.55	21.80
Taiga Forest	10.00	6.80	9.10
West Fraser	36.50	21.00	34.50

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"It is easy to understand God as long as you don’t try to explain Him." — Joseph Joubert (1754-1824) _______________________________________________

MARKET INDICATORS

Canada’s gross domestic product was unchanged in April, says Stats Canada, after rising only 0.1% in March. Investment in gas and oil exploration was the biggest cause of the increase, while strikes decreased the public sector. Manufacturing also declined slightly, largely because of 50.7% less demand in the telecom industry. Output in the construction industry fell for the second consecutive month, this time by 0.7%.

Manufacturers’ prices, as measured by the Industrial Product Price Index (IPPI), grew 2.7% from May 2000 to May 2001, compared with a year-over-year gain of 2.9% in April, according to Stats Canada. The IPPI was 131.0 in May, up from a revised level of 130.6 in April. Price increases for motor vehicles, chemicals and lumber also contributed to the annual rise in manufacturers' prices.

Declining mortgage rates and rising household incomes in the first half of 2001 led to the most significant reduction in home ownership costs since 1996, according to Royal Bank’s 2001 Housing Affordability Index. The index, which measures the proportion of pre-tax household income needed to service the costs of owning a home in Canada, declined from an average of 32.9% in the second half of 2000 to 32% in the first quarter and an estimated 29.8% in the second quarter of this year. ______________________________________________

PEOPLE ON THE MOVE

Ace Hardware Canada has named Chris Henwood as new paint/home decor buyer, effective July 16. Henwood is in fact a former buyer for Ace Canada who was most recently with Woods in a marketing position. (905-475-1188)

Wal-Mart Stores in the U.S. has appointed Thomas Hyde to executive vice-president. Hyde was formerly senior vice-president and general counsel for Wal-Mart, overseeing the legal activities of the corporation. He will report to Lee Scott, president and CEO. (905-821-2111)

* * * * * * IN MEMORIAM:

Paul Hill, long time employee of Lansing Buildall, passed away peacefully in his home on June 25 after a long illness. He spent nine years at Lansing, where he served as director of the company’s commercial/retail sales division. While there, he developed a professional estimating department, a commercial sales team and lumber management business, and was instrumental in the development of Lansing’s export business and a newsletter for its contractor customers. Smith was known for his strong leadership and sales management skills, and for his unflagging positive attitude. He is survived by his wife Sharon, and his children Nicole and Andrea. ______________________________________________

NOTED ... Can-Save will hold its 10th annual Summer Booking Expo August 21, 2001. This dealer appreciation day runs from 9 a.m. to 9 p.m. and includes non-stop food, arcade games, and trade show that finishes off with a Beatles tribute band. RSVP by June 30 for a special gift at 1-800-461-5411.

* * * * * * OVERHEARD … "Even the most creative retailer has to be open to change." — Kip Tindall, president and CEO of the Container Store, on the challenges of keeping staff happy, productive and loyal. He spoke at the recent Retail Council of Canada annual Convention.

* * * * * * BIG NAMES, NETWORKING, AT NEXT HARDLINES MARKETING CONFERENCE: Join Canadian Tire, RONA, Ace Hardware, American Tool, Turkstra Lumber and more. Where? The Sixth Annual Hardlines Marketing Conference — September 13, 2001 at the Four Points Sheraton! I am confident this conference will turn out to be the single best day of education, insights and networking you’ll have all year. Period. Only $389.00 per person — includes continental breakfast, lunch, cocktails, prizes and more! Contact bev@hardlines.ca for more info, or call me direct: 416-489-3396. — Michael (Some sponsorships still available for the event — call me for details.) (go to https://hardlines.ca/html/conferences.html)

To get our special hotel rate for the Hardlines Marketing Conference at the Four Points Sheraton, call 1-800-737-3211. ______________________________________________

* * * * HARDLINES MARKETPLACE* * * * Check out Hardlines Classifieds on the web: https://hardlines.ca/html/classifieds_new.asp ______________________________________________

NORAL MARKETING:

Representing leading manufacturers since 1986. We ensure high profile retail presence for a wide range of product lines. Why not make yours one of them?

http://www.noralmarketing.com/ or call 519-439-6800 ext. 201

* * * * * * BUSINESS DEVELOPMENT ASSOCIATE:

The Canadian Retail Hardware Association, producer of the Toronto-based Canadian Hardware and Building Materials Show, seeks to add a Sales overachiever to the Association’s team.

Reporting to the Show Manager, you will analyze, develop and implement sales strategies aimed at securing new Exhibitors. This will involve both in-office duties and face to face Customer presentations with senior industry decision-makers. Travelling to regional shows and to the Chicago NHS show will augment idea development and lead generation. You’ll also act as a team member at the CHS, ensuring Exhibitor satisfaction.

Your background includes a home improvement industry sales role where your team-based activities have gained you success and respect from your colleagues. Developing and securing new business and the resultant benefits attached to overachievement are your personal motivators.

Bilingualism would also be a definite asset.

Please contact, in confidence, Wolf Gugler, quoting file #02-103. Wolf Gugler & Associates Limited, 1370 Don Mills Road, Suite 300, Don Mills, Ontario M3B 3N7. Phone: (416) 386-1719; fax: (416) 386-1721; email: admin@wolfgugler.com

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BUILDING MATERIALS REPRESENTATIVE: Can-Save, a building materials distributor based in Barrie, ON is looking for a building material representative to call on all lumber and building materials retailers in the GTA and Niagara peninsula.

Experience is an asset. Contact Larry Koza or Dan Clements, phone: 800-461-5411; fax: 705-722-1124; email: lkoza@can-save.com ______________________________________________

THE HARDLINES MARKETPLACE: just $16 per line. A classified ad with Hardlines is the most direct way to industry eyes. Over 3,000 executives in the industry come in contact with our email and fax publications … and have you seen our Marketplace in our new website? https://hardlines.ca/html/classifieds_new.asp Publish your ad where it matters. Get industry exposure today. Contact Eugenia Canas at 416-489-3396 or email: buzz@hardlines.ca ______________________________________________

DOING YOUR MARKETING STRATEGY? PLANNING THE BUDGET?

THEN YOU WILL NEED HARDLINES INDUSTRY REPORT: "Home Improvement Retailing in Canada" is a comprehensive overview of the size of the market, how many stores are out there, who the key players are, their market position, the size and growth of the big boxes, the trends in housing and renovations, market trends — and much, much more! 120-plus pages filled with charts, graphs and photos. Regular price: $945, only $750 for subscribers! For more information, contact Nancy Wright at nancy@hardlines.ca; phone: 416-489-3396. (go to https://hardlines.ca/html/industry_report.html) ______________________________________________

Hardlines is published weekly (except monthly in December and August) by McLARNEYCOM 542 Mount Pleasant Rd., Suite 302, Toronto, Ontario, Canada M4S 2M7 © 2001 by Michael McLarney. HARDLINES™ the electronic newsletter hardlines.ca Phone: 416.489.3396; Fax: 416.489.6154 Michael McLarney, Editor & Publisher: mike@hardlines.ca Eugenia Canas, Assistant Editor: buzz@hardlines.ca Beverly Allen, Marketing Manager: bev@hardlines.ca Nancy Wright, Circulation Manager: nancy@hardlines.ca ______________________________________________

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