John Caulfield, Contributing Editor
 vol. x, #11 March 15, 2004

IN THIS ISSUE: * Home Depot wants suppliers in sync with data sync * Las Vegas Show strong in lawn and garden * Rona launches Benjamin Moore boutiques * Lowe's to debut in Maine * Zellers overhauls hardware department * Weyerhaeuser faces lawsuit * Sears beefs up power tool offerings

* * * * * * NOTE: Dollar amounts are stated in the currency of the country from which the story originates. — Michael McLarney, Editor & Publisher * * * * * *
"Half of the failures in life arise from pulling in one's horse as he is leaping." — Julius and Augustus Hare
ATLANTA — Georgia-Pacific Corp. announced on Friday that it's made a deal to sell its building products distribution business to a new company owned by Cerberus Capital Management L.P., a private, New York-based investment firm. Members of the GP distribution business's management team are also involved in the purchase.GP has had the division on the block for at least a year. The deal is valued at about $810 million, which includes the assumption of $630 million of working capital at closing and includes the separate sale of the business unit's real estate assets, valued at $100 million. Georgia-Pacific expects the transaction to result in net after-tax proceeds of approximately $780 million, which will be used to reduce debt. In addition, Georgia-Pacific will enter into a five-year agreement to keep selling its manufactured structural panels, lumber and other building products to the spun-off distribution business. The distribution division had net sales last year of $4.3 billion through 63 warehouses in the U.S. and one location in Canada. It sells some 10,000 products across 14 categories, including structural panels, hardwood plywood, roofing, insulation, metal products, lumber, paneling, vinyl siding and particleboard. All current employees of the distribution business, including the current management team led by Charles McElrea, president — building products distribution, are expected to join the new company. Closing, which is expected to occur during the second quarter, is subject to customary conditions. "This agreement is yet another major step forward in reducing debt and sharpening the focus of Georgia-Pacific," said Pete Correll, Georgia-Pacific's chairman and CEO in a prepared statement.
MISSISSAUGA, Ont. — The hardware department at Zellers has been renovated, with more emphasis on convenience, and less on project orientation."We saw an opportunity to really sharpen our focus," says Tom Stafford, vice-president hardlines and pharmacy at Zellers. By going after the impulse buy, he says, Zellers can better complement the project that would be initiated at a more traditional hardware or home improvement outlet. "For example, we can't sell the cabinetry, so we sell the cabinet hardware." But knobs and pulls represent just one area of focus for the 298-store mass merchant, which is owned by Hudson's Bay Co. It de-listed about 10% of its hardware assortments, adding back in another 1,000 or so SKUs, increasing the total hardlines department to about 5,000 items. By re-aligning assortments, says Stafford, the retailer has maintained the same footprint in its stores for the department, relying on techniques such as sliders and shorter pegs to maintain facings. Stafford says that Zellers learned from other divisions within HBC, picking up tips especially from Home Outfitters, the fast-growing chain of housewares, bedding and seasonal stores. "If you want a picture hanger, we've got it. If you want a screw — they're all there," Stafford notes. But you'll no longer find a full array of items such as hammers. Instead, a few all-purpose hammers are now available. Brand names include Stanley hand tools and measuring tapes, and Black & Decker power tools. A similar metamorphosis has occurred in the automotive department. Where once a full array of tune-up and repair items such as oil filters was available, the emphasis is now on car décor and accessories, with steering wheel covers and conversion kits for TVs exemplifying the department. "Now," says Stafford, "you'll find things to make life inside the care more convenient." The automotive department also reflects more emphasis on seasonal needs, with wiper blades and a full line of ice scrapers, while summer assortments include a new line of Coleman power washers. Although Zellers reported a decline in its hardlines sales in the fourth quarter of 2003, home décor made gains during the period. The hardlines side, overall, says Stafford, is on the rise, unlike the softlines.
ATLANTA — By mid year, Home Depot plans to stop exchanging product information manually with its suppliers, and has insisted that they adopt UCCnet product registry standards for data synchronization and electronic data interchange.Information Week quotes Mark Healy, Home Depot's merchandise operations senior director, as stating, in so many words, that the retailer would stop buying from vendors that don't comply with its edict. "If the supplier doesn't have an electronic solution, it's going to be difficult for them to get information to us." The trade magazine reports that Home Depot will provide vendors with a schedule in the third quarter of this year about when it expects suppliers in specific categories to be using UCCnet. Healy says, and about 1,000 of Home Depot's 5,000-plus suppliers are among them. Home Depot Canada, in line with the U.S. head office, issued a letter to suppliers last fall, demanding that its suppliers register with UCCnet's Canadian counterpart, ECCnet, before October 15, 2003. However, so much confusion surrounded the process, and ECCnet's role in the process, that the deadline was extended into 2004. A major component in Home Depot's store productivity strategy this year has been to improve the fluidity of its back-end receiving. This summer, the retailer plans to begin using wireless devices that can capture information about products as they are received at its stores. Information about returns and product movement will also be accessible to suppliers, with the goal being improved synchronization and transparency between vendors and the stores. Product listing through a data sync registry such as UCCnet and ECCnet is much more standard for other industries, especially grocery. But suppliers are wary of benefits, and many consider the program just one more way in which streamlining of a retailer's logistics falls on the backs — and pocketbooks — of the vendors themselves. However, Wal-Mart has determined that adoption of data sync will provide savings that reach into the billions of dollars.
LAS VEGAS — The National Hardware Show is already surpassing last year's event in size and exhibitors. Through March 9, 2,165 exhibitors had leased 463,880 sq.ft. of net exhibition space inside the Sands Expo & Convention Center here, where the show is scheduled for May 10-12. According to the show's Web site, more than 12,000 attendees from 72 countries have registered for the event."This is the first year-on-year growth for the show since 1999," says Rob Cappiello, President of NHS. Cappiello attributes some of that increase to lawn and garden exhibitors, which account for 200,000 sq.ft. of show space. Cappiello says the convention will include a 6,400-sq.ft. area for new products that can accommodate two demonstration areas. He also plays up the show's educational program, which will include 15 "tracks" and 60 sessions. (Hardlines will participate with two sessions on key retailing perspectives internationally.) NHS has commissioned research that's being conducted by the Home Improvement Research Institute and will be presented at the show, which examines the extent that the sales of existing homes affect purchases of home improvement products in different categories.
TORONTO — A new paint program appeared last week in select Rona Lansing stores around the Greater Toronto Area. In partnership with Benjamin Moore paints, the eight Rona Lansing stores around the GTA will feature the Benjamin Moore Signature Boutique, a program that's been used with traditional paint dealers since its inception in 1998, but the installation in these Rona Lansing stores marks the first venture for the retailer with this program, which has been mounted as a "store within a store."While Sico is the dominant brand in Quebec — and in Rona stores in that province — and both Sico and CIL are the brands being offered nationally, Lansing, a familiar chain in the Toronto area since its inception in the early 1950s, has offered Benjamin Moore throughout that time. "This program reflects regional needs," says Normand Dumont, senior vice-president merchandising at Rona Inc. "Rona has the ability to give what the customer expects in each market, and paint is one area that has high brand recognition." Dumont, along with Pat Bennett of Rona and David Haigh, general manager — central region for Benjamin Moore, and Doug Funston, regional and marketing manager — central region, were on hand last Thursday for an official "opening" of the Signature Boutique at Rona Lansing's Lambton store in Toronto's west end. Situated at the back of the store, laminate hardwood has been installed on the floor, while lifestyle murals hang atop smartly faced up, consumer-friendly paint lines that represent a newly expanded palette of colors.
AUBURN, Maine — Lowe's Home Improvement Warehouse plans to open 140 stores nationwide this year, including its first store in the state of Maine. And like its major competitor, Home Depot, it's discovering some opposition in the Northeast.The Associated Press reports Lowe's has budgeted $16.5 million for a 150,000-sq.ft. store in Maine, which will be located next to an existing Wal-Mart. The store will open with 175 employees sometime in the fourth quarter of 2004. Farther south, however, Lowe's has encountered some opposition to the construction of an $80-million distribution center in Plainfield, Conn. Union contractors have been staging protests outside nearby Lowe's stores because Lowe's general contractor is using non-union labor from out of state on that job. Meanwhile, Home Depot opened a store on January 22 in Brattleboro, Vermont. At 65,000 sq.ft., it's among the smallest in the chain. However, the store, the third in the state, is close to existing stores, and raising the ire of locals who are resisting the big box incursion. A fourth store in Vermont is scheduled to open in Bennington sometime in the future.
MISSISSAUGA, Ont. — The Lumber and Building Materials Association of Ontario has confirmed it will go ahead with its Winter Buying Show next year, following the inaugural event last month. It will take place once again in London, Ont., February 5-6, 2005. The show will target more than 2000 retailers and 150 vendors.However, the dates overlap directly with next year's Canadian Hardware and Building Materials Show, being held in Toronto February 6-8, 2005. "I'm very disappointed that this has been done," says Bob Elliott, head of the Canadian Retail Hardware Association, which owns CHS. "We all try and stay away from each other's dates, to make a schedule that makes sense for everybody in the industry. [This overlap] makes it tougher for retailers and exhibitors who might want to go to both." Kimberley Clarke, the new show manager of the LBMAO's Winter Buying Show, admits there's a conflict, but only in the dates. CHS, she points out, is attempting more of a conference approach to its event. The dates chosen, she adds, were based largely on availability of the venue, London's Western Fairgrounds. "We don't see a huge crossover in traffic. We're targeting lumber dealers — it's a buying show. And where there's a crossover, retailers will come to both shows." Clarke replaces Peter McLean of the show management company McLean Hart as show manager. She was hired — on a contract basis — because of her industry experience, which includes sales and marketing roles at both Dimensions Retail Systems and LBMX, and her location, Clarke says. She lives in London, and has lots of contacts within that city to help her with the show from a planning perspective.
TORONTO — Sears Canada has added three leading national brands to its assortment of power tools. DeWalt, Makita and Milwaukee will now sit aside Sears's own Craftsman brand.In the U.S., a mix of national brands within a Sears department store's hardware has been in place, in its "Tool Territory," for some years, but in Canada, Sears has traditionally relied on its own Craftsman brand, which is produced by Ryobi. In an effort to broaden the appeal of its hardware department, Sears has added the well-known names to cater, not just to DIYers, but to professional builders and renovators. It's also expanded the assortments in a number of categories, including drills, saws, sanders, routers and grinders. "We have customers who are regular home owners, but we also have the Craftsman Professional series, so Craftsman spans the homeowner and the professional," says Vincent Power, a spokesperson for Sears Canada. He adds that the appeal of Craftsman celebrity spokesperson Bob Vila increases the appeal of the Craftsman line.
Canadian Tire 45.24 28.70 44.75
Canfor 14.70 7.60 13.84
Costco 40.42 27.92 38.30
Goodfellow 16.00 9.75 15.50
Home Depot 37.89 21.66 36.09
Hudson's Bay 14.15 7.75 13.80
Lowe's Cos. 60.42 35.45 53.09
Rona Inc. 35.00 13.70 31.99
Sears Canada 21.50 13.60 16.89
Sodisco-Howden 3.35 1.30 3.12
Taiga Forest 8.76 6.31 8.30
Wal-Mart 61.31 46.50 58.48
West Fraser 43.25 29.25 41.25
MONTREAL — Maax Inc., North America's third-largest bathroom fixture and kitchen cabinet maker, is being purchased by a consortium that includes a U.S. investment firm, the private equity arm of the Ontario Municipal Employees Retirement Board, and some of Maax's own managers. The deal is worth about $555 million, in which the shares of Maax will be sold to the group at $22.50 a share, representing a premium of 22% over the closing price on the day before the sale process was announced last September. The sale includes the assumption of about $85 million of Maax's debt.TORONTO — Department store giant Hudson's Bay Co. saw sales and revenue for the fourth quarter ended January 31, 2004 increase by $17 million to $2.46 billion. Same-store sales in the quarter fell 4%, while operating income (earnings before interest and income taxes — EBIT) in the fourth quarter increased 9% to $156.2 million. Prior to normalizing for non-comparable items, however, net earnings in the quarter declined to $89.6 million, reflecting a generally weaker holiday season, primarily in apparel categories, and the company's commitment to everyday low pricing over excessive discounting and promotional activity. For the year, sales and revenue reached $7.40 billion, an increase of $16 million, or 0.2%, above $7.38 billion over the previous fiscal year. EBIT increased 10% to $158.3 million and net earnings were basically unchanged from last year. Zellers, HBC's discount department store chain, posted its highest operating profit in seven years, although same-store sales in 2003 decreased 2.6% at Zellers and 2.3% at the Bay. COLOGNE, Germany — With the Cologne International Hardware Fair/Practical World moving to a biennial event, the owner of the show, Koelnmesse, had originally planned a specialty tools show in alternating years. Now that event, called Tools Cologne, has been cancelled, in favor of devoting more energy to the Practical World Show, which actually starts today and runs until March 17. The next instalment of the show will be in 2006. PALM DESERT, Calif. — Although data warehousing is still considered by many as a discretionary program that's hard to measure, Ace Hardware Corp. has managed to boost the size of retail purchases through one of its loyalty programs by $1.03 per transaction, and increased the customer response to marketing campaigns through data reuse. The company shared its successes at an IT conference by ComputerWorld that was held here recently. ST. JACOBS, Ont. — Canada Post will issue a new 49-cent stamp on April 19 honouring the 40th anniversary of the founding of Home Hardware Stores Ltd. In 1964, 128 independent Ontario hardware retailers purchased Hollinger Hardware of St. Jacobs, Ont. This resulted in the formation of a dealer-owned hardware co-operative that has since grown today to more than 1,000 dealers and almost $4 billion in retail sales. CALGARY & TORONTO — Shell Canada Products have made a deal to sell 10 Shell retail locations to Canadian Tire Petroleum. The gas stations will be re-branded and operated by Canadian Tire. The sites, which are located in Ontario and western Canada, are slated for physical conversion beginning in May. The purchase is part of Canadian Tire's efforts to grow its network of gas stations through both acquisition and increased sales from existing sites.
At Home Hardware Stores Ltd., Patty Uhrig has moved over from Bill Ferguson's office to join the Home Furniture team as a facilitator on the dealer development team. She reports to Georgette Carriere, who is now dealer development manager for all of Canada. (519-664-2252)
Retail sales were up a bit in the U.S. in February, but mainly due to auto sales and performance by department stores, says the Commerce Department. Retail sales rose 0.6% to a seasonally adjusted $327.17 billion in February, but sales other than vehicles were flat compared with January.Concerns about offshore manufacturing taking over domestic production will no doubt increase, given the latest news that the trade deficit widened to a record $43.1 billion in January. The gap was blamed on rising oil prices, which helped keep imports near historic highs, reports the Commerce Department.
Housing prices rose only 0.3% in January, relatively unchanged from December's monthly increase, seasonally adjusted. Year over year, this index of contractor's selling prices rose 5.1%, up slightly from December's annual increase of 5.0%Housing starts were up in February, as the seasonally adjusted annual rate increased to 214,100 from 195,500 in January, according to CMHC. The seasonally adjusted annual rate of urban starts rose 10.9% to 188,500 units, with most of the increase coming from multiples. Multiple starts increased 18.6% in February to 88,500, while single starts rose 4.9% to 100,000. Year-to-date actual urban starts were 7.1% lower in February than in February 2003. Single starts declined 3.5% and multiple starts were off 10.3%.
Home Depot, Canadian Tire, Home Hardware and more! Hardlines will host its third annual Meet the Buyers Breakfast Seminar, April 28, 2004. For more details, call Bev Allen at 416-489-3396 or
B&Q, the U.K.'s largest DIY retailer, plans to hire 3,500 people this year to staff the 20 stores it intends to open in 2004. This will bring its total number of B&Q outlets to 337, with 39,500 staff.Both B&Q and French DIY retailer Castorama are part of Kingfisher plc. Kingfisher has been aggressively repositioning itself in recent months, determining only to remain in markets in which it can be the number one player. That meant pulling out of countries such as Poland, and also Canada, where the Castorama unit owned 20 Réno-Dépôt big boxes. Those were subsequently sold to Rona Inc. Kingfisher also demerged its electrical retail business last year so it could concentrate on the retail home improvement market. Since the demerger, Kingfisher has continually been plagued by rumours that it could be a target for a takeover by Home Depot, however, even Home Depot's chief officer, Bob Nardelli, has admitted the weak dollar in relation to the pound sterling would make any such takeover highly unattractive at this time.
PORTLAND, Ore. — Weyerhaeuser has agreed to pay $34.5 million to settle a lawsuit filed by four hardwood mills in Oregon. The suit alleges that the forestry company attempted to gain monopoly power by altered prices on alder wood to drive competitors out of business.Weyerhaeuser admitted no liability in its settlement agreement. The plaintiffs were seeking $117 million in damages, and the same attorneys representing the mills won a $78.9 million verdict against the lumber giant last year over accusations of anti-competitive tactics, which led to the demise of Longview's Ross-Simmons Hardwood Lumber. Weyerhaeuser's legal woes are not over yet, though. In its statement, the company said it's a defendant in two similar antitrust cases scheduled to go to trial on May 11 and June 1, respectively. In addition, the supplier has filed an appeal with the U.S. Court of Appeals for the Ninth Circuit in an attempt to overturn a verdict against it in another alder-related case. It took a first-quarter charge last year of $52 million for that case, according to Reuters.

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