Lowe's plans methodical approach to Canadian market

TORONTO — The world's second-largest home improvement retailer is poised to open its first stores in Canada in the coming months, using a process-driven strategy to compete against existing retailers. Lowe's strategy is working, says Geoff Wissman, vice-president of TNS Retail Forward, the retail research and consulting firm. That company's "Lowe's expert," Wissman spoke at a breakfast seminar organized by HARDLINES last week to a room full of vendors and retailers, all of whom were keen to gain insight into this latest retail contender. "Lowe's is in the ‘sweet spot' right now in the U.S.," Wissman said. The company is a savvy merchandiser that understands customer needs. It focuses on DIY, DIFM (do it for me) and, to a lesser extent, contractors and trades, which make up 25% of its business. The company is recognized south of the border for providing a superior store experience. Key growth categories include appliances, kitchen cabinets, and garden products. With US$46.9 billion in sales in 2006, Lowe's has more than 1,400 stores and represents 12% of the U.S. home improvement market. There are, however, some things that Lowe's is not good at, said Wissman. "It's not the most productive, and it's not the most innovative." Instead, he suggested, Lowe's prefers to be a "deliberate follower," watching other retailers try new ideas and learning from their mistakes and successes. Coming into Canada, Lowe's will face a number of strong competitors, unlike in the U.S., where it has been able to gain market share from a steady stream of secondary players in regional markets. In Canada, consolidation is much greater, with four retail groups accounting for more than half the industry's sales at retail. "These are four very strong players," Wissman pointed out. Lowe's arrival, then, will be a good for consumers, as the company will strive to steal customers — and market share — from existing retailers. Expect aggressive pricing and promotions to capture customers, he said, as well as pressure on vendors to offer special pricing.

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Can-Save debuts new kitchen line on 25th anniversary

BARRIE, Ont. — A new kitchen line that will allow building supply retailers to sell to multi-unit builders had its debut at the Can-Save Expo, held here recently. Called Cabinetsmith, the line will allow Can-Save customers to break into the lucrative category of kitchen cabinetry suites in the multi-unit market. "It's been heartbreaking that our dealers are getting the drywall, lumber, etc. for these bigger jobs, but have not been able to capture the cabinet part of the job. Now they can," said Stephanie Brown, who oversees business development for the kitchen and bath division, Can-Save. Brown added that because Can-Save will maintain an inventory of the product line, builders can offer their customers firm delivery dates, which will save them both time and money. A new line of custom wooden interior doors from Jeld-Wen also got attention from visitors to the show, reflecting growing consumer interest in premium products that add a distinctive touch to the home. Another stand-out was a product called Stone Fusion, which uses stainless steel clips, rather than mortar, to anchor stone to an exterior wall. The Expo, held annually, this year celebrated Can-Save's 25th year serving independent dealers in Ontario.

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Home Depot Canada launches solar energy products

TORONTO — Home Depot Canada has added a new plank to its offering of eco-friendly consumer products. With the launch this week of a national program called Catch the Sun, consumers can now access a range of products that incorporate active or passive solar power. On the housewares end, lighting and low-E glass doors will be available. But the giant retailer will also sell solar energy packages for the home and cottage, both in grid-tied and off-grid formats. Homeowners have the added option of installation by a Home Depot serviceperson. The news comes the same week the Ontario government announced a program that rebates homeowners up to $5,000 for retrofits for Energy Star appliances and solar domestic water systems, extends the retail sales tax rebate on qualifying solar, wind, micro hydro-electric and geothermal equipment to 2010, and sets a target of the installation of 100,000 solar systems across Ontario.

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Wal-Mart adds sustainable packaging to its vendor requirements

MISSISSAUGA, Ont. — Wal-Mart Canada hosted a sustainable packaging exposition last Thursday, calling it the first of its kind in Canada. The event, held at the Toronto Congress Centre, was mounted to support the retailer's goal to reduce product packaging by 5% by 2013. Presented in partnership with the Packaging Association of Canada, the event played host to more than 100 Wal-Mart suppliers. Wal-Mart Canada's product buyers were also on hand, where they introduced a new "Packaging Scorecard" that assesses the sustainability of suppliers' packaging. The move to sustainable packaging will focus on reducing the overall eco-footprint required to make, transport and dispose of product packages. Those effects can be dramatic. For example, in the case of a line of toys sold in Wal-Mart stores across North America, the cardboard carton was reduced by just one square inch. In one year, cardboard use with that product line was cut by 3,450 tons and PVC plastic by 600 tons, reducing fuel consumption for transport by 300,000 litres. Related cost savings for Wal-Mart amounted to $3 million.

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Home Depot sells HD Supply, plans stock repurchase

ATLANTA — Home Depot Supply will be sold for $10.3 billion to an investment group that includes Bain Capital Partners, The Carlyle Group and Clayton, Dubilier & Rice. Intense shareholder pressure forced Home Depot to sell HD Supply, which provided goods and services to contractors and commercial accounts, and accounted for 13% of the company's revenue in 2006. Home Depot intends to use the capital from that sale — along with existing cash on hand and net proceeds from an anticipated $12 billion issuance of senior unsecured notes — to buy back $22.5 billion of its common stock. The sale of this business unit punctuates the company's clean break from the business strategy developed by its former chairman and CEO, Robert Nardelli. He spent nearly $8 billion in acquisitions to expand HD Supply and move Home Depot closer to the professional customer, whom Nardelli expected to contribute half of annual sales eventually. What remains uncertain is how Home Depot intends to capture more business from pro customers, who last year accounted for about 2% of its stores' foot traffic but 30% of their sales. At one point, Home Depot had estimated that HD Supply, its pipeline to those customers, would expand to between $22 billion and $25 billion in revenue by 2012. Home Depot now needs to make up HD Supply's revenue as well as the $800 million in operating income that the division produced last year. Pending regulatory review, the deal is expected to close in the third quarter of this year.

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Home Hardware promotes employee health

ST. JACOB'S, Ont. — Home Hardware Stores Ltd. has launched a new program to promote healthy living among its 1,200 current and retired staff and their families. The first ‘Health is Close to Home' fair was held here last week. Among the 20 exhibitors at the day-long event were the Heart and Stroke Foundation, Asthma Society/Lung Association, Canadian Cancer Society, Arthritis Society, GoodLife Fitness, and Home Hardware's own "Cooking Ladies", who were on hand to discuss healthy eating habits. Fair attendees could also sign up for osteoporosis, cardio and diabetes screening.

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