June 29, 2015 Volume xxi, #26

“Business is more exciting than any game.” —Lord Beaverbrook (Canadian-born business tycoon, politician and newspaper baron, 1879-1964)

IN THIS ISSUE:

• Top Four Retailers look to e-commerce for growth

• Buyers get new roles at Chalifour Canada

• Marks promoted, Gabel takes advisory role at Home Hardware

• Lowe’s Canada continues growth with first Northern Ontario store

• PLUS: Wal-Mart vendors get the squeeze, Ikea plans small-sized store, HBC will open Saks stores, Walmart tries out greeters-again, CanWel seeks shareholder approval, retail sales down—and more!

Top Four Retailers look to e-commerce for growth, says new Report

SPECIAL REPORT — When the big boxes came to Canada in 1994, they brought a lot of change for the home improvement and hardware industry. And over the last 20 years, HARDLINES has been faithfully tracking those changes.

The growth HARDLINES has documented over two decades has been immense. When we first started tracking the size of the industry, it was worth $14 billion. In 2014, that number was approaching $42 billion. And while just four retail groups account for half of that, they haven’t edged out the independents entirely—as many feared they would. In fact, they just pushed everyone else to be better at everything from customer service, marketing, and now social media and e-commerce.

“We know that where the Top Four goes, the industry’s going,” Michael McLarney said at the Retail Conditions Breakfast Seminar last week. He explained how Home Depot Canada, RONA, Home Hardware, and Canadian Tire are making gains both with bricks and mortar and e-commerce. He pointed out, for example, that Home Depot leads the e-commerce game, both here and in the U.S. Its online sales are up almost 50% over last year, and are expected to account for 50% of overall sales in 2015. The Canadian operation lags behind this, but not by much, McLarney added.

This year’s Retail Report, previewed at the Breakfast Seminar, takes an in-depth look at the state of the industry: who are the Top Four, what share of the industry do they account for, what are they doing to stay at the top, and what can other retailers learn from them.

With more than 180 PowerPoint slides, the Hardlines Retail Report also features invaluable information on the other companies that comprise Canada’s Top 20 in the industry, plus rankings of the big box players and buying groups, an analysis of marketplace trends, business conditions, and forecasts. ( Click here to find out more about this incredible Report!)

Buyers get new roles at Chalifour Canada

LONDON, Ont. — Following the departure of Andrew Pantelides, procurement and merchandising manager at Chalifour Canada back in April, some changes have been made to the buying ranks at the hardware wholesaler, which is owned by TIM-BR MART Group.

Catherine Vaugh has moved up to a senior category manager role. Formerly a category manager, she is now directly responsible for paint sundries, hand tools, and household products, and will now also oversee the following departments: plumbing, small appliances, housewares, interior décor, flooring, and camping and sporting goods.

Vince Morency has also moved up: he is now senior category manager for Chalifour Canada. Now directly in charge of the power tools, hardware, and fasteners categories, he also leads the category management team responsible for agriculture, lawn and garden, outdoor living, electrical, HVAC, automotive, and holiday décor. He was previously category manager for power tools, hand tools fasteners, builders’ hardware, and auto.

Marks promoted, Gabel steps back in Home Hardware reorg

ST. JACOBS, Ont. — Home Hardware has created two new senior positions within the company to separate merchandising and marketing roles. The moves are in step with the transition by Ray Gabel, who is currently VP for both merchandise and marketing of hardlines, to a new role as senior merchandise advisor.

A single merchandise organization responsible has been formed to handle all product sourcing. It will be led by Joel Marks, currently director of merchandise, hardlines. He has accepted the title of vice-president, merchandise, effective August 4. Under the newly integrated merchandise department, Bruce White, vice-president, merchandise and marketing for LBM, will report to Marks. Gabel will also report to Marks.

The marketing roles have been spun off from both merchandising roles, and Home will create instead an integrated marketing and sales team led by a vice-president, marketing and sales. The marketing and operations teams will be transitioned to report to the newly created position. Home Hardware is currently recruiting for that role.

Lowe’s Canada continues growth with first Northern Ontario store

SAULT STE. MARIE, Ont. — Lowe’s has opened its first location in Northern Ontario with a store in Sault Ste. Marie. The 91,500-square-foot outlet has a 4,472-square-foot garden centre in-store and an additional 6,300-square-foot “pop up” seasonal garden centre in the parking lot. This is Lowe’s 39th store in Canada.

The store carries about 40,000 SKUs and puts a big focus on seasonal products. An extensive barbecue section features Weber, Broil King, Char Broil, and Master Forge brands, while a patio assortment includes Lowe’s proprietary Allen & Roth collection of outdoor furniture, gazebos, and matching accessories. A large assortment of lawn tractors, mowers, and other outdoor power equipment includes brands such as John Deere, Cub Cadet, Husqavarna, Remington, and Lowe's exclusive Kobalt brand.

The store boasts a number of sustainable features, including: photocell-controlled low-consumption LED lighting fixtures for all exterior lighting; a white “cool roof” roofing membrane to reduce urban heat island effect; low flush fixtures throughout the building; and an estimated 30% reduction in water use. The store uses an automated building energy management system to control lighting and heating and cooling systems. The system can be monitored centrally to track consumption.

FROM THE ARCHIVES: This week in 1995

Home Depot Canada was a regular fixture in our news pages even 20 years ago. Home Depot had acquired the Aikenhead’s big box chain from Molson Cos. in February, 1995, and began opening stores at a rate of nearly one per month. Home Depot Canada president Stephen Bebis was forecasting that sales would more than double that year. On the independent front, Sodisco-Howden was expanding its Novico hardware banner outside of Quebec. By this time in 1995, there were 225 Novico-bannered dealers across the country. Take a minute to read from our HARDLINES archives!

DID YOU KNOW…?

…that summer is a good time to get your entire team on our HARDLINES subscription list? We have great group rates for more than one subscription at your company. Site licenses are available if you want to make sure everyone in your company has access to the latest news on the industry. (Don’t forget: if you regularly forward your own copy of HARDLINES to team members, you are violating our Fair Play Policy™.) Why not let us send HARDLINES to your team! Contact me directly for more information. —Michael

RETAILER NEWS

BENTONVILLE, Ark. — Vendors in the U.S. are getting the squeeze from Wal-Mart Stores with the giant retailer’s latest policy to impose stocking fees across the board. The charges reflect the squeeze Wal-Mart is feeling after raising wages for store staff. While HARDLINES has not yet heard of any Canadian hardlines vendors being affected by the new policy, Reuters reports that Wal-Mart wants to add a 10% fee to food suppliers on the value of inventory shipped to new stores and to new warehouses, both one-time charges, and 1% to hold inventory in existing warehouses. This new fee system is seen by some observers as a departure for Wal-Mart; they say the company has historically eschewed additional fees in favour of the best price up front.

NORWICH, UK — Furniture retailer Ikea is planning a small-sized store in this community in England, as a way to provide more convenience to shoppers who must travel long distances to get to an Ikea big box. Ikea has 18 stores in the UK, compared with 13 in Canada. The new smaller stores could offer a pickup point for online orders and to test new products. Similar small stores are being tested in Spain, Norway, and Finland.

TORONTO — Hudson’s Bay Company will open seven Saks stores in this country. The first two will open next year in Toronto, on Queen Street, embedded in the existing Bay store there, and in Sherway Gardens. According to Jerry Storch, CEO of HBC, “Canada has an appetite for luxury market and the time is ripe” for this kind of store. The company will also bring its discount concept Saks Off 5th stores, with 27 planned.

BENTONVILLE, Ark. — Walmart is trying out the use of greeters at the entrance to some of its stores, after discontinuing the practice three years ago. According to the Wall Street Journal, those greeters were moved into the store to help direct customers and answer questions. Now, in an effort to reduce shoplifting, they are being returned to their original posts on a test basis.

SUPPLIER NEWS

VANCOUVER — CanWel Building Materials Group Ltd. is seeking shareholder approval to issue common shares in connection with the acquisition by CanWel of assets of two privately-owned California-based building products distribution and treating companies. The deal is worth about US$45 million and includes the assumption of about US$9 million debt. The deal is expected to close by July 2.

PEOPLE ON THE MOVE

Kathee Tesija , executive vice president, chief merchandising and supply chain officer at Target Corp., will move into an advisory role effective July 6, according to Target Chairman and CEO Brian Cornell. She has been with the company for nearly 30 years. In her new advisory role, “she will spend the next several months contributing to key enterprise initiatives and ensuring a smooth transition of her responsibilities,” says the company.

ECONOMIC INDICATORS

The rental apartment vacancy rate in Ontario urban centres was 2.5% in April, down from 2.8% in April 2014. Improved employment conditions for younger households who typically rent helped push demand, while a drop in migrants entering Ontario and more condominium rental projects coming on the market, also contributed to the drop in rental availability. The sharpest declines in vacancy rates occurred in Brantford (1.8%), Hamilton (1.8%) and Guelph (0.6%). (CMHC)

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