RONA envisions expansion through new retail formats
TORONTO–RONA's aggressive expansion plans already include acquisitions and new stores in a range of formats. But plans include the possibility of even more specialty retail formats–and more focus on stores that can deliver better customer service than big boxes, says Robert Dutton, president and CEO of RONA inc.
Dutton made a rare appearance in Toronto last week to speak at the annual convention of the Retail Council of Canada. In that presentation, he reiterated his company's plans to grow by acquisition, but he also resisted the notion that one has to be a global player to succeed. "You can compete against size just by using your imagination. That's what Sam Walton did at Wal-Mart."
Besides imagination, though, Dutton says RONA relies on a clear business plan, strong partners up and down the supply chain, and a strong culture within the company that focuses on customer satisfaction. That culture relies on a variety of retail formats, not just the big box (RONA has almost 70 of them now). "The typical warehouse store is to retail what the Model T was to the automobile," he said, "a revolutionary step in history, but just a step nonetheless."
In a personal interview later, Dutton expanded on this theme.
Even as some large format retailers, such as Wal-Mart and Home Depot, are looking for ways to re-invent themselves – and their brand in new formats – RONA already has in its stable a range of retail footprints, from the corner convenience hardware store to the big box. But even that may not be enough, said Dutton. To cater to the X and Y generation of consumers, retailers will have to get ever more specialized in their offerings. He envisions more specialty stores from RONA (right now, the only specialty banner is Botanix for lawn and garden). Citing the HARDLINES "Report on Women in Home Improvement", he pointed out that 94% of home improvement buying decisions involved the female of the family. With that in mind, RONA could develop a store exclusively for women.
Another might feature environmentally friendly and ecologically sound products. He coined the term, "RONA Green". RONA is already serving the ICI (industrial-commercial-institutional) business through a number of its existing stores. "RONA Commercial" may become a stand-alone format sometime in the future. Dutton wants to see these banners debut over the next five years.
"The RONA model relies on adapting the store to the customer's needs," he said.
RONA's Dutton wants U.S. dealers by 2007
TORONTO–RONA wants to own 20% of the Canadian home improvement market by 2007. Then, says the company's president and CEO, Robert Dutton, RONA is likely to look for acquisitions south of the border to continue its expansion efforts. But he has lots to do in Canada, first, he explains.
RONA has a goal of reaching $7 billion in sales by 2007. At that point, the company's share of the retail home improvement market will reach 20%. Then, said Dutton in an interview with HARDLINES, RONA intends to look to the U.S. for continued growth. Having added almost $100 million in retail sales through acquisitions alone already this year, Dutton says his company is on track to achieve its goal next year. Meanwhile, 20 new stores will be built each year for the next two years, adding another $100 million in sales. "Then we can put our ears and eyes south of the border."
RONA won't go unprepared, though. Dutton is keenly aware of differences between Canadian and U.S. customers. He's also aware of the differing retail landscape, one where Home Depot and Lowe's have been battling it out for many years. But the lion's share of the market still resides in the hands of small and medium-sized independents, giving RONA huge opportunities for acquisitive growth, especially in the U.S. Northeast and along the East coast.
"That's my dream," he said. "But we have lots to do in Canada."
(Next week, Dutton talks about Lowe's in Canada–Editor)
IRLY unveils new concept store at AGM
SURREY, B.C.–When dealer members attended IRLY Distributors' annual general meeting earlier this month, they got a preview of a new store concept developed by the privately owned wholesale buying group. The concept store was constructed right in IRLY's warehouse to show the dealers new products and merchandising ideas.
The program includes interior and exterior signage, store layouts, yard layouts, merchandising, feature displays, truck identification, and staff uniforms.¬ÝAccording to Garry Anderson, executive vice-president of IRLY Distributors, the package was created to keep its members competitive. "We're like everyone else. We're trying to sell more programs, not just more products."
The new look, says Anderson, was developed to provide a more unified look at retail for the members. For example, the façade or archway is one way to make each store instantly recognizable as an IRLY dealer.
He also expects the enhanced services from head office to provide more compelling reasons for new dealers to ally themselves with IRLY–and for existing members to increase their purchases. IRLY has another business unit, Western Hardware, which sells to non-members. They got the tour, as well. "They got the chance to see what store programs and planograms are available," Anderson said.
Former Allroc dealers find fit in Sexton Group
WINNIPEG–The relocation late last year of a number of former Allroc members to the Sexton Group has proved to be a good move. Viewed as an unconventional deal–Allroc and Sexton are both competing LBM buying groups–the gentlemen's agreement to shift more than 30 traditional building centre dealers into Sexton has enabled Allroc to focus on its commercial dealers. Sexton, which is better suited to the needs of traditional dealers, has a wider range of retail and private-label programs.
Bob Hancock, vice-president of Allroc Building Products Ltd., says his group can now focus on expanding its commodity business, especially in insulation and drywall. And the huge volumes these products generate will enable the group to make up for the lost members. In fact, he pointed out, purchases by those dealers accounted for only $17 million. "We will more than make that up as a group," he said.
Meanwhile, Sexton has had no trouble absorbing the new members. "It's worked out very, very well," said Bob Mondy, vice-president and general manager of Sexton. "We've received tremendous support from them." The new additions are benefiting, he notes, from Sexton's range of services. "We've offered them more extensive hardware programs, and things like flooring, which Allroc didn't have."
The addition of the former Allroc dealers also opens up some new geographic markets for Sexton, especially in Atlantic Canada and Northern Ontario.
Sexton recently held its first meetings with the new members. "We've got them all in place and they're working with our programs," Mondy said.
At Wal-Mart's annual meeting, officers stress "change"
BENTONVILLE, Ark.–Wal-Mart officials used their company's four-hour-long annual shareholders meeting as a platform to reiterate the retailer's strategy to expand its customer base’Äî130 million people shop its stores weekly’Äîto more affluent shoppers, and to encourage that customer base to shop in more of its stores' departments.
The meeting had all of Wal-Mart's traditional trappings, including cheerleading and a 65-minute Las Vegas-like production with actors and singers who included recent "American Idol" winner Tayler Hicks. MarketWatch reported that those performances were mixed with messages by the retailer's store- and senior-level managers’Äîincluding its vice-chairman John Menzer, CFO Tom Schoewe, and CEO Leo Scott’Äîwho emphasized how "change" is the driving force behind the company's strategy. Scott admitted that gas prices are hurting Wal-Mart's low-income customers' ability to spend. But the world's biggest retailer insists its efforts to sell more upscale clothing and high-end home electronics are paying off.
In his comments, Scott spoke about Wal-Mart's response in the aftermath of Hurricane Katrina, which was much praised locally and nationally, as an example of the retailer's broader "Out in Front" plan, which he said includes improving working conditions in its stores and taking steps to commit to environmental sustainability, two areas where Wal-Mart has been widely criticized in the past. He noted that the retailer's mandate not to allow its 7,000 trucks to idle has saved the company 10 million gallons of fuel, reported MarketWatch. The company is also looking at opportunities globally, including the possibility of opening stores in India.
Shareholders rejected six of the eight shareholder proposals that were up for vote at the meeting, most by wide margins. Those proposals included a shift to a majority vote for electing directors and a request for a report on the equity of Wal-Mart's pay scale based on the race of its employees.
A day after the AGM, Mario Pilozzi, CEO of Wal-Mart Canada, gave some further insights into the company's plans here. These included a reiteration of Wal-Mart's intention to open its first three supercentre stores this fall, which will feature a full line of groceries. Speaking to an audience at the latest convention of the Retail Council of Canada, Pilozzi also said that Wal-Mart is trying to tailor its retail offerings to better suit local conditions.