| CANADA'S KEY RETAIL BUYERS TALK SHOP |
| Mississauga, ON — An exciting new product isn't enough to catch the attention of Canada's key retail buyers. Nor is it enough to come up with a knock off price for an existing line. Buyers today are looking for long-term commitments with their vendors - and long-term visions for building sales together.
These were just a couple of the tips provided recently by some of the key buyers from Canada's leading home improvement retailers. They shared their experience and insights with almost 100 vendors who gathered for the third Hardlines Meet the Buyers Seminar at the Delta Toronto Airport West Hotel.
Pam Pike from Canadian Tire, Steve Lunny from Home Depot Canada and Bob Masich of Sears Canada talked frankly about the challenges they face sifting through proposals from new and existing vendors who want their products listed. Marc Dufresne, executive vice-president, purchasing and logistics for Rona Inc., gave additional insights, with an outline of what to expect as his company awaits the closing of its acquisition of Réno-Dépôt.
Even though they all compete against each other, these buyers came together to give their input and their time - something they all, in fact, have very little of to spare. "It's a harsh reality," said Steve Lunny of Home Depot Canada. "But we don't want to have three meetings when we could have had two." Get it right the first time, they exhorted. You may not get a second chance. Show you value the buyers time - and be prepared. As Bob Masich at Sears Canada pointed out, "We can make a fast decision, but we need the information to do this."
Masich also stressed the concept of long-term planning. "Your role in this is to be my partner and help develop programs we can sell my customer," he said of potential new vendors.
At Canadian Tire, development of the new 20/20 retail program, which will be rolled out this fall, will open up more space on the retail floor for new products, especially home décor. Pam Pike encouraged vendors of these products to take advantage of this opportunity. "It's going to be very exciting," she added.
The day closed with comments from Marc Dufresne of Rona. As senior buying executive for the company, he was in an excellent position to outline the course of the company, and its requirements to vendors. Over the next several months, Rona intends to finalize the acquisition of competing big box retailer Réno-Dépôt. Until then, said Dufresne, both companies - and both buying teams - are to be treated separately.
Dufresne parted company from his fellow buyers when it came to supplying national programs. Masich from Sears and Lunny from Home Depot both expressed their concern that potential vendors have the capacity and distribution network to supply their stores nationally. Rona, on the other hand, with a variety of store formats throughout the country, is willing to test new products in regional markets within various store formats. This way, said Dufresne, Rona can help a vendor develop their production and merchandising for more widespread rollout over time.
All buyers stressed many common themes: the need to understand the retailer they're pitching, to be aware of the market and its competitors, and the importance of long-term partnerships based on mutual respect. |
| SARS SCARE MEANS BIG SALES FOR DUST MASK MAKER |
| Montreal, QC — While the fear of SARS has taken a toll on tourism and hospitality businesses in Toronto, some companies are profiting - and sales of dust masks have gone through the roof. In fact, when the outbreak first loomed in mid-April, one company, North Safety Products, had to add extra shifts and double production to meet demand for N95 dust masks, not just from hospitals but from consumers.
The crunch has been also given an unexpected boost to a new product from North Safety - a rubber half mask that uses replacement filters.
During the height of the epidemic, North Safety was shipping millions of masks a week. "We had the biggest three-day period in our history," recalls Mark Baker, who is in charge of advertising and public relations for North Safety. Its biggest customer, Acklands Grainger, made a single $500,000 order one day, and went through 10,000 N95 masks in one week alone.
Through it all, demand has increased sales - but not margins. "We haven't jacked up the price. They still sell for peanuts," says Baker wryly. |
| ACE ADDS SKUS FOR CONTRACTOR-ORIENTED MEMBERS |
|
Oak Brook, IL — Ace Hardware Corp. is developing broader hardlines assortments for dealer-members who cater primarily to professional customers.
About 950 of the buying group's 4,900 dealer-members carry lumber and building materials in significant quantities. However, many of those dealers have been buying different kinds of hardware and in far greater quantities than consumer-oriented Ace hardware stores and building centres. Much of this sourcing comes from outside Ace's own distribution, so the co-op wholesaler is beefing up its distribution centres with more contractor-oriented products.
"We see a lot of potential for identifying pro assortments of hardlines and finding a way to serve these dealers better," says Amy Pellerito, Ace's newly appointed LBM manager. However, she adds, Ace does not yet have enough sales data to construct a planogrammed hardlines program for these dealers. Such programs exist for DIY focused lines, such as the "Discovery" merchandise sets Ace has put together for its retail members in recent years. (About 215 of Ace's LBM dealers currently participate in the co-op's Data Warehouse program, which measures retail sales.)
Explaining the differences between the needs of retail-driven members and the pro-oriented dealers, Pellerito notes that the top 10 hardware SKUs purchased through Ace by both types of members are virtually the same, "but the next 10 are completely different."
Ace initiated this effort only weeks after it terminated a supply agreement with Builder Marts of America, the South Carolina-based dealer services group. On Aug. 2, 1999, Ace merged its LBM division with BMA, and took an equity position in that company, which Ace has since sold back to BMA. The termination of its agreement with BMA occurred in late April, around the same time that rival TruServ Corp. terminated its noncompete agreement with BMA.
She adds that Ace is not looking to start warehousing or trading in commodities, and that dealer-members are free to buy lumber and building materials from any source. She even speculates that some dealers may decide to buy through BMA. However, Ace has struck preferred supplier agreements with at least two building products manufacturers - USG Corp. and PrimeSource - and some less-than-truckload shipping agreements with other suppliers that were not named. |
| INDUSTRY STOCK WATCH |
|
COMPANY |
52-WEEK HIGH |
52-WEEK LOW |
CLOSE FRIDAY |
| Canadian Tire |
37.29 |
26.80 |
35.10 |
| Canfor |
11.50 |
6.83 |
8.55 |
| Costco |
41.35 |
27.00 |
36.09 |
| Goodfellow |
13.99 |
9.75 |
10.50 |
| Home Depot |
38.79 |
20.10 |
32.49 |
| Hudson's Bay |
13.90 |
5.87 |
9.66 |
| Lowe's Cos. |
46.48 |
32.50 |
44.20 |
| Rona Inc. |
19.40 |
11.75 |
18.85 |
| Sears Canada |
24.25 |
13.60 |
16.53 |
| Sodisco-Howden |
1.90 |
1.06 |
1.80 |
| Taiga Forest |
7.30 |
5.85 |
7.25 |
| Wal-Mart |
58.75 |
43.72 |
54.26 |
| West Fraser |
39.46 |
26.27 |
36.50 |
|
| MARKET INDICATORS |
| The Consumer Price Index increased in May by 0.1% from April. A 10.9% rise in the electricity index was the main factor behind this monthly increase, with Canadians paying more for their goods and services for the third month in a row, says Stats Canada. Year over year, the CPI rose 2.9%, Excluding energy prices, the 12-month increase in the CPI was 2.7%, after a 3.2% year-over-year increase in March.
Wholesale sales fell sharply in April (-1.1%), with $35.9 billion in goods and services sold during the month, according to Stats Canada. This was the third consecutive monthly decline and the sharpest recorded since September 2001 (-1.1%). Five of the 11 wholesale trade groups reported a drop in sales. The decline, like those in the previous two months, can be attributed chiefly to the drop in sales of motor vehicles, parts and accessories (-4.2%), but other groups fell, as well, including metals and hardware (-5.5 %).
U.S. construction put in place during April was estimated at seasonally adjusted annual rate of US$862.6 billion, down 0.3% from March's estimated level of US$864.8 billion, according to the U.S. Commerce Department's Census Bureau. However, April was slightly higher - 0.7% - than April 2002. Spending on new residential housing units was at a seasonally adjusted annual rate of US$325.6 billion in April, down 0.5% from March. |
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| COMPANIES IN THE NEWS |
| Montreal, QC — Domtar Inc. and Tembec Inc. have reached an agreement-in-principle to create a joint venture that will merge their timber and softwood operations in Québec and Ontario. The new company will be equally owned by both Domtar and Tembec and represent assets of about $850 million, with pro forma net sales for 2002 of $900 million. Based on its sales capacity, it claims to be the second largest solid wood products company in Canada and the fourth largest in North America. It will have a manufacturing capacity of 2.1 billion board feet and a sales capacity of 2.6 billion board feet.
Vaughan, ON — Canadian Tire Corp. opened a new 224,000-sq.ft. retail support centre last week to supply automotive products to its dealer stores in Ontario. The site, in this community just north of Toronto, employs about 160 people and has the material handling equipment necessary to support daily shipments of automotive hard parts and accessories to most Canadian Tire stores in the province. The facility will also support further expansion of Canadian Tire's retail automotive business, both through its network of 449 associate dealers and through PartSource, an automotive parts specialty chain with 33 stores.
Atlanta, GA — Home Depot, which once balked at all the paperwork involved in becoming a supplier to the U.S. government, has been awarded a contract to supply building, repair and maintenance products to all federal agencies. That contract, which goes into effect July 1, makes Home Depot the largest retailer to have received a Hardware SuperStore Multiple Schedule contract from the General Services Administration. To meet the needs of the federal government on all levels, Home Depot is launching "The Home Depot Government Solutions Group."
Mississauga, ON — Wal-Mart Canada has announced the next Sam's Club opening in Canada. This one will open in the East Mall in Toronto's west end community of Etobicoke in the fall of 2003. The 129,000-sq.ft. warehouse club will cost almost $20 million and create about 170 permanent jobs in the store. Wal-Mart Canada has already announced Sam's Club openings this fall in Vaughan, Pickering, and Richmond Hill, ON. Another store will open in London, ON sometime in 2004.
Wilkesboro, NC — Lowe's will follow Home Depot's lead and begin developing smaller stores that will fit into smaller markets of 15,000 to 35,000 households. Of the 130 stores planned for 2003, 20-25 will be these 94,000-sq.ft. prototypes. Two have already opened, one in Elkin, NC back in March and the other last month in Dickson, TN. Lowe's big boxes typically measure 116,000-sq.ft. and cost close to US$17 million to build and US$5 million to stock, and generate on average about US$33 million in sales per year. The new stores, on the other hand, ring in at about US$12 million in construction costs and stock about US$3.5 million in inventory. Lowe's expects the prototypes to generate US$20 million to US$25 million in sales annually.
London, UK — Kingfisher plc is continuing its efforts to pare down the company with the proposed demerger of Kesa Electricals and its separate presence on the stock exchange. With 790 stores, Kesa is Europe's third largest electricals retailer. Pending shareholder approval of the demerger, the division is expected to start trading as a separate company on July 7. Kingfisher shareholders will continue to hold their shares in Kingfisher and will receive a direct pro rata interest in Kesa Electricals.
Jacksonville, TX — When employees of a Wal-Mart meat department tried to organize a union in 2000, Wal-Mart simply closed the butcher department in that store and switched to packaged meat. Now an administrative law judge has ordered the retailer to reopen the butcher shop - and bargain with unionized butchers whose jobs disappeared when the chain made the switch. Wal-Mart downplayed the judge's decision, calling it "limited."
Klamath Falls, OR — Jeld-Wen, a privately owned door and window maker with Canadian headquarters in Winnipeg, MB, has developed a campaign to unite its many brand names under a single banner. The company, which has been on the acquisition trail for years, currently has 27 brand names, says a report in the New York Times. But in an ad campaign on television, in print and through the Internet, which began last week, the company is spending more than $10 million to reintroduce itself under the Jeld-Wen name, retiring brands such as Aurora, Contours, Corinthian, Donat Flamand, DoorCraft, Elite, Energy Saver, Norco, Prestofix, ProBilt and Willmar. |
| PEOPLE ON THE MOVE |
 Pat Bennett has joined Rona Inc. as senior operations director for traditional stores in Ontario. Bennett was formerly vice-president of sales at Ace Hardware Canada until that company was taken over by competitor Sodisco-Howden Group. Before that, he served as vice-president operations at Home Depot Canada. (514-599-5100)
Thomas Glenn has been elected chairman of the board of Ace Hardware Corp. Glenn is president of Ace Hardware of Chattanooga, a 13-store chain in Tennessee and Georgia … Veteran board members Eric R. "Rick" Bibens II, president of Bibens Home Center in North Springfield, VT; D. William Hagan, president and part owner of five Ace stores in northern Florida; and Richard A. "Rick" Karp, owner of Cole Ace Hardware, a three-store chain in San Francisco, were re-elected to the board … Lori J. Terpstra was elected to serve her first term. She and her husband own Rylee's Ace Hardware, which operates three stores in the Grand Rapids, MI area. Each will serve three-year terms on the 10-member board, which helps set strategic policy and direction for Ace management. |
| NOTED… |
| A great job board for hiring store staff is canadaretail.com. The company is holding a promotion this month called the "Annual Christmas in June promotion." Purchase a three-month registration and enjoy an additional month free to take you through the busy back-to-school season and seasonal hiring period. That way, you're covered until November 1, 2003. For large national retailers, canadaretail.com has an affordable package that provides unlimited job postings. The site is getting more than 112,000 visits per month. If you've been contemplating Internet recruiting, I recommend this service. It's a great complement to the management and executive recruitment you can do through our own Hardlines Classified Ads. — Michael |
|
John Caulfield, Contributing Editor
vol. ix, #25 June 23, 2003
ANNOUNCING THE DRICORE SALES & MARKETING TEAM
Sam Mowat, General Manager, Sales & Marketing, Longlac Wood Industries is pleased to announce the reorganization of the sales and marketing team at the DRIcore Division to better service its customers.
Dave Murray, Director of Marketing, brings to Dricore his versatile marketing experience with Canadian manufacturers of home improvement products, most notably, Premdor Inc. (now Masonite International).
Grant Cowx, Sales Manager - North America joins DRIcore after sales and marketing assignments at Scott Paper Ltd and Duracell Canada Inc.
Kim Laurienzo, Trade Services Marketing Manager, provides DRIcore with her proven skills in trade marketing in the retail box store environment after her tenure at Bailey Metal Products Limited.
Gilles Quirion, Sales Representative, brings his enthusiastic energy to DRIcore as one of the original sales team when Longlac Wood Industries established the DRIcore Division in Mississauga in 1999.
For more information call Sam Mowat at 888-566-4522, ext 224
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Please contact us at (416) 712 - 2218 or by e-mail at superiorbrass@adamapt.com. You can view our 4000+ product line at www.superiorbrass.com
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Contact Al Vanderveen at 519-439-6800, ext. 201, to find out how Noral can boost your sales in Canada. http://www.noralmarketing.com
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