John Caulfield, Contributing Editor
 vol. x, #12 March 22, 2004

IN THIS ISSUE: * Cologne remains key show for European, Asian connections * AHMA Show affirms commitment to Chicago venue * Lanoga launches installed program for builders * Rona unveils new-concept store * Lowe's assuages locals with extra hires * Sears Grand gets going * Quebec co-op expands hardware warehousing * Home Depot gets sued over slogan

* * * * * * NOTE: Dollar amounts are stated in the currency of the country from which the story originates. — Michael McLarney, Editor & Publisher * * * * * *
"I never think of the future. It comes soon enough." Albert Einstein
COLOGNE, Germany — You know, it was actually a very good show. Many attendees talked about the changes to Practical World, the International Hardware Fair. About how it's gone from an annual event to every two years. How there are so many Asian companies exhibiting now. Or how that specialty tools show, proposed for Practical World's off-years, was cancelled. But the changes are good, whether they all stick or not. The main thing is that the show is making changes. Pro-active ones. By going biennial, it ensures its vitality and importance - before it declines. And sure, there were lots of Asians there, but they were also writing business, plenty of it, with Western buyers. But suppliers from France, Spain, Egypt and the U.S. saw lots of action too. And was the traffic down? When you're talking about upwards of 74,000 people — a 10% increase over last year — it's hard to tell. One North American vendor said he'd seen Canadian Tire and OBI (Germany's largest DIY retailer) already the first day. "The challenge for us was and is to position the fair in such a way that it fulfils the requirements of the sectors involved and the changing market conditions," said Oliver Kuhrt, executive director of Koelnmesse. "The clear increase in visitor figures … confirms that we are now on the right track." With the prospect of a two-year wait for the next show, 3,677 companies from 59 countries came to show off their wares at Practical World 2004.
CHICAGO, Ill. — The AHMA Hardware Show is banking on the big brand name companies it says are supporting its show, and the centralized location here in the Windy City. "The real strong point our show is the strength of our exhibitors," says Tim Farrell, CEO of the American Hardware Manufacturers Association, which owns and operates the brand new event.Farrell's organization made headlines just over a year ago when it announced it would sever its partnership with Reed Exhibitions under which they jointly organized and mounted the National Hardware Show. This year, as Reed moves NHS to a new venue in Las Vegas, AHMA will put on its own show right here. Farrell adds that, along with the leading brands, his show has attracted the support of the buying organizations in the U.S. to attend the AHMA Hardware Show, which now has more than 500 exhibitors. "Anybody in the trade show business knows those are the two factors needed for the success of a show." One of the criticisms of the show, when in Chicago, was the high cost of support services. The AHMA is not the only group that has identified that services provided by union labor remain high. Mayor Richard Daley has attempted to initiate changes, even though labor relations is a state-level jurisdiction. Nonetheless, Farrell is optimistic that changes can be made. "We are working with the city and [McCormick Place] and all organizations to address any negative factors that may exist," he adds, noting the AHMA has already taken huge costs out of the show. Drayage, the cost of getting a company's booth and products to its exhibit space on the show floor, was considered outrageously high by many exhibitors, due to union labor. That cost has been absorbed outright by the association, says Farrell. "We really believe Chicago is the premier trade show venue in the country."
BOUCHERVILLE, Que. — Rona Inc. has finally taken the lid off a new retail concept it has been working on in its home province of Quebec. Calling the program "upgraded traditional hardware store," the new stores will carry the Rona Le Rénovateur banner here and operate under Rona Home Centre in Ontario and Western Canada. The first Rénovateur store opened last week here in Boucherville. In each case, the stores are upgraded from a traditional hardware store. Two more outlets being built or scheduled for construction in Prince Albert, Sask., and Fort McMurray, Alta. These stores will be slightly smaller, averaging 35,000 sq.ft. with the lumberyards adding another 40,000-80,000 sq.ft. The stores will take many of the merchandising techniques found in a Rona Regional, a smaller (65,000-85,000 sq.ft.) version of a big box, but with elements found in a more traditional store. The new concept, while still carrying aspects of a big box layout, draws even more strongly from a traditional one. The stores aim to attract both male and female DIYers, as well as a strong base of contractor business. Dedicated environments within the store are designed to suit different consumer needs. Interior decoration and renovation projects are boutiqued in dedicated sections featuring paint, moldings, lighting, decorative items and related products. Lumber and tools are among the products and services featured at the contractor counter. "Within the next year, Rona plans to invest about $30 million in building new retail locations," said Robert Dutton, president and CEO of Rona, in a prepared statement. Rona will invest more than $125 million over the next few months in the construction or renovation of stores. In addition to implementing the new Rona Rénovateur program, the company will build five Rona Home and Garden big-box stores this year. They will be : in Kitchener-Waterloo and Barrie, Ont.; Regina, Sask.; Richmond, B.C., and in Calgary North. As well, two Rona Building Centres, which cater more to trades and contractors, will be constructed in Peterborough, Ont.; and Calgary, Alta.
NEW YORK — After nearly two decades of modest physical growth, Sears Roebuck & Co. is once again revving up its expansion engine. Speaking here at Reuters' Consumer Products and Retail Summit, Sears' chairman and CEO Alan Lacy revealed that his company is planning to increase the number of its Sears Grand off-the-mall outlets over the next three years. That concept, which Sears launched last fall in Salt Lake City, has an expanded format, of 200,000 sq.ft., aimed at squaring off against the likes of Target and Wal-Mart. A typical Sears Grand store carries hardlines, appliances, consumer electronics and food. A second store will open this Wednesday in Chicago, at the north suburban Gurnee Mills Mall. Three more will open in 2005, and "a more significant number" in 2006 and 2007. Lacy also disclosed that the company is considering stand-alone Lands End outlets in upscale shopping malls, although he wasn't specific about Sears' plans. In existing stores, Sears is dropping computers from its inventory to make more room for larger, pricier televisions and a new line of DVD movies. Lacy projected that Sears same-store sales in 2004 would be flat to mid single digits. One of the reasons why Sears wants to start adding more stores again is to maintain its market share in appliances. Alan Lacy, its chairman, conceded that the company was in danger of sacrificing share to Depot and Lowe's "until we're in a position to grow our store base more rapidly."
ST. JACOBS, Ont. — With beefed up programs and expanded assortments, Home Hardware Furniture is attracting more dealers than ever. Although Home Furniture's 60 stores account for only about $50 million of Home Hardware's almost $4 billion in sales by its 1,000 dealers across Canada, the member-owned wholesaler anticipates big growth from the division. Home added only two Furniture stores in 2002, but last year, a dozen signed on, with another six lined up to join the banner before year's end. Some are new dealers, others are existing Home Hardware dealers who have chosen to expand their business. Don Gautreau in Moncton, N.B. will open two Furniture outlets next month. Others, such as Southpark, P.E.I., have expanded with a "store within a store" in his existing Home Hardware Building Centre. "Dealers have the ability to do more merchandising with Home Furniture because it has more margins," says Morgan McCabe, merchandise manager for Home Furniture. In fact, he adds, "Our dealers aren't feeling the impact of Home Depot at all." The move into furniture has been a natural one for many dealers, especially those who are already in LBM. The new banner focuses on furniture, both finished and unfinished, as well as heavy appliances, which tie in with building centres that already carry kitchen cabinets.
NAPLES, Fla. — In what its attorney characterized as "the most significant trademark infringement case in U.S. history," a local retailer, Sunshine Ace Hardware, is suing Home Depot and asking for $1 billion in compensatory damages. The suit claims Home Depot illegally used Sunshine Ace's advertising slogan "You Can Do It, We Can Help," which Sunshine claims to have been using for two years before the warehouse giant introduced it. The disagreement between Depot and Sunshine Ace, which operates four stores in Florida, has been going on since June 2003, when Sunshine Ace sued Home Depot in a federal court in Fort Myers, Fla., claiming that the competitor infringed on its trademarked slogan. A deal couldn't be settled out of court, however, as negotiations collapsed last week. The Naples Daily News, citing court documents, reported that Home Depot has spent between $1 billion and $2 billion on its nationwide "You Can Do It" ad campaign. Sunshine wants Home Depot to stop using that slogan in all markets, not just Florida, where the Atlanta-based dealer operates more than 120 stores.
NORTHAMPTON COUNTY, N.C. — When big box retailers enter a market, they almost always claim they will bring more jobs and higher tax revenues to the community. Opponents typically contend those claims are overblown, especially when the retailer receives tax incentives just for coming into the market. They insist big box dealers should be made to pay more for such things as road, sewage and land development improvements. For example, Home Depot initially was to receive $1 million in tax abatements from the village of Carpenterville, in southern Illinois, to open a 130,000-sq.ft. store there. But after several months of negotiations, it now appears that the village's board is considering a $900,000 tax break, 60% of which would go to Home Depot on the condition that it comes up with a better plan to manage storm water runoff. In Northampton County, infrastructure improvements that support a Lowe's regional distribution center there were partly funded by a $1 million block grant that county received. Apparently, the investment is paying off, as the country recently disclosed that the Lowe's DC has hired 310 people, 198 of whom had previously held low-to-moderate income jobs.
QUEBEC CITY — Regional co-op wholesaler Co-opérative Fédérée is expanding its distribution center, adding 35,000 sq.ft. to the existing facility, bringing the overall size of the warehouse up to about 165,000 sq.ft. According to Claude Gingras of Co-op Fédérée, the work is under way now and he expects it to be completed by August. Expansion is being undertaken mainly to accommodate increased inventory in hardware, as the company beefs up assortments to service both existing hardware and LBM members, and a small but growing group of independents being served by Co-op Fédérée under a banner it launched late in 2002, Unimat. Last year, it added five new members under the fledgling Unimat banner. The program, an alternative format for non-member retailers, has appeal to both hardware and building centers. Co-opérative Fédérée also has a 30,000-sq.ft. warehouse, plus another 100,000 sq.ft. of yard, to store lumber and building materials.
GOLDEN. Colo. — MSN, the internet service provider whose web venues attract more than 350 million visitors each month, is expanding its reach to home improvement. Now customers can access ServiceMagic's online network of more than 45,000 pre-screened contractors through MSN's House and Home web site. Rodney Rice, ServiceMagic's co-founder, said in a prepared statement that he expected this strategic alliance to add significantly to his company's customer base. Christine Andrews, MSN's product manager, predicted that this deal will make the site "a top destination for anyone looking for home improvement resources." The six-year-old ServiceMagic also provides access to real estate professionals, and last October branched out providing connections to pre-screened lenders through a joint venture with Cornerstone Mortgage. ServiceMagic generated $20 million in sales last year.
REDMOND, Wash. — Lanoga Corp. has launched an installed sales program of its own, but unlike many - including Home Depot - the program is aimed at pros. Lanoga dealers, which operate under the United, Spenard, Lumbermens, Home and Dixieline banners, will do more than just sell builders the windows for a home, it will have them installed, as well.WASHINGTON — Ace Hardware Corp., with some 3,700 members who collectively represent 4,800 stores, plans to open another 150-200 outlets this year. At its dealer market being held here recently, the Oak Brook, Ill.-based company reported net income of $100.7 million in 2003, up 22.7% from the previous year, while sales through the warehouse were up 4.3% to $3.16 billion. Retail sales are projected to hit $13 billion, as the company focuses more and more on upscale products, especially in the hardware and lawn and garden departments. LONDON, U.K. — Although sales fell 18% to 8.8 billion pounds, Kingfisher Plc, Europe's largest home-improvement retailer, and third-largest in the world, reported a 35% increase in profits, helped by its B&Q DIY chain in the U.K., following the demerger of its consumer electronics division, Kesa Electricals. Net income rose to 229.6 million pounds ($417 million) in the fiscal year ended January 31, from 170.6 million pounds a year earlier. Kingfisher intends to focus on Europe's $232 billion home improvement market, which is expected to grow by 20% by 2007. Growth in France is being led by almost doubling the size of its 59-store Brico Depot chain. MONTREAL — Hardware distributor Sodisco-Howden Group reported a fourth-quarter increase in net earnings of 20%, and an increase year-over-year of 225% over the previous year. During the fourth quarter, revenues totalled $128.7 million, up 2.1% from the same quarter in 2002. The increase was driven by Ace dealers, whose revenues primarily comprise warehouse hardware sales - Sodisco-Howden's most profitable segment. The Ace dealers also helped drive full-year revenues to a record $485.4 million, while net earnings totalled $7.7 million. BOISE, Idaho — Boise Cascade Corp. will sell approximately 79,000 acres of timberland in western Louisiana for approximately $84 million. The timberlands are being bought up by the Hancock Timber Resource Group, based in Boston, Mass. The deal is expected to close by March 31, 2004. Boise continues to own or control more than two million acres in the United States, including about 610,000 acres of timberland in Louisiana. TORONTO — Canadian Tire is unveiling today a new in-store gift registry service. The registry, already a feature on CTC's home page, will launch next Saturday, March 27.
At the Building Supply Dealers Association of BC (BSDA) Annual Gala, held March 6, the association presented its ORION Awards. In the category of most outstanding supplier - individual service, the award went to Garry Anderson of Irly Distributors Ltd., Surrey, B.C. (604-596-1551)Kim Gonzalez has joined Do it Best Corp. as education services specialist in the company's communications department. She's responsible for facilitating year-round training programs, and organizing special events at the co-op wholesaler's buying markets. Gonzalez was most recently executive assistant for The Lutheran Foundation. (260-748-5300) Garry Fairbrother will retire from Federated Cooperatives on April 30, 2004. He worked for Fedco for 35 years, including as manager - general merchandise for the past 20. (A dinner and roast in his honor will take place April 3, during the Federated Coop's spring dealer show in Saskatoon. For more info, contact: Vaughn Crofford at the Canadian Hardware Housewares Manufacturers Association at (416-282-0022, ext. 30; or 1-800-488-4792). TruServ Canada has promoted Ralph Dunham, formerly district manager for Northern Alberta, and a 21-year veteran of the company, to the position of regional manager, sales, operations & member relations (East). He reports to Ray Falkenberg and will relocate to TruServ's Kitchener office. (519-893-8383)
The U.S. Commerce Department reports that housing starts in February were 1,855,000, down 4% from January but up 13% from one year ago. Despite a disconcerting rise in the jobless rate, low interest rates have managed to keep the new housing market strong, as the level stayed the same from February to March, according to the National Association of Home Builders. The index, a measure of builder sentiment on sales and buyer traffic, was at 64, unchanged from February's downwardly revised reading.
Existing home sales in February in major markets totalled 24,368 units on a seasonally adjusted basis, according to the latest report from the Canadian Real Estate Association. That's up 1.4% from the previous month. New listings amounted to 38,885 units, up 4.0% over January. Tight market conditions, combined with solid demand for higher priced homes, caused the residential average price to rise 10.5% year-over-year to $233,921.
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
Maple Leaf Night, a Canuck tradition during the National Hardware Show, is following the show to Las Vegas. The event is held by the Canadian Hardware and Housewares Manufacturers Association, which surveyed its retail customers to find the majority have chosen to attend NHS in Las Vegas over the AHMA Hardware Show in Chicago. Maple Leaf Night will be held Monday evening, May 10, 2004 at the Mirage Hotel. Contact: CHHMA at 416-282-0027 for more info.
"I haven't felt this kind of excitement at a show since Chicago eight years ago" — Jason Mayer, who was at Practical World in Cologne searching for new lines for his London, Ont.-based rep agency, Northern Marketing.

****HARDLINES MARKETPLACE**** Don't miss the products and services on the Hardlines web Marketplace: And check out Hardlines Classifieds on the web: HELP WANTED

DISTRIBUTOR WANTED: A distributor is sought for a patented Australian product, Kableflags. Kableflags is a power-plug identifier system designed to ensure that you never unplug the wrong power plug again. There are six versions, each with ten pre-labelled identifiers for cables used in Home Entertainment, Kitchen, Home Threatre, Home tools, Computers and Office cables. A blank version is available to personally customize the flags. Attaching Kableflags takes seconds and will save you money as many appliances, although switched off, still draw power and worse still, can be susceptible to damaging power surges or brown outs. For more details, contact Fareeda Chand, Austrade tel: 416-323-1418 or email: ********************************************************************************** PRODUCTS OFFERED      
ERAPRO ERAPRO Winter Tools     877-372-9273
**********************************************************************************   SERVICES OFFERED RETAIL IS DETAIL. Let Noral Instore, a national service company, handle your service requirements in Canada. Noral serves some of America's leading manufacturers, managing their lines for Canada's top hardware retailers, big boxes and mass merchandisers. Contact Dave Leslie at 905-702-9443, to find out how Noral can boost your sales in Canada.


Hardlines is published weekly (except monthly in December and August) by McLARNEYCOM 542 Mount Pleasant Rd., Suite 302, Toronto, Ontario, Canada M4S 2M7 © 2004 by Michael McLarney. HARDLINES™ the electronic newsletter Phone: 416.489.3396; Fax: 416.489.6154 Michael McLarney, Editor & Publisher: Beverly Allen, Director of Sales & Marketing: Nancy Wright, Circulation Manager: Phyllis Nowell, Sales Manager: ______________________________________________ THE HARDLINES "FAIR PLAY" POLICY: Reproduction in whole or in part is very uncool and strictly forbidden and really and truly against the law. So please, play fair! Call for information on multiple subscriptions or a site license for your company. We do want as many people as possible to read Hardlines each week - but let us handle your internal routing from this end! ______________________________________________ Subscription: $229 (Canadian subscribers add $16.03 GST = $245.03 per year/ GST #13987 0398 RT). Secondary subscriptions at the same office are only $36 (Canadian subscribers add $2.52 GST = $38.52). Ask about our reduced rate for branch offices. You can pay online by VISA at our secure website or send us money. Please make cheque payable to Hardlines/McLarneyCom.