The Home Depot is opening four new distribution centres in North America, to serve its contractor customers better. That rollout includes one in the Greater Toronto Area that opened late last year (see our Jan. 15, 2024 edition—Editor). The new facilities are an instrumental part of the retailer’s strategy to better serve pro customers, including those working on larger, more complex projects than typically served by Home Depot stores.

The warehouses are called flatbed distribution centres (FDC); the one in Canada is located in Mississauga, Ont., west of Toronto. The 300,000 square-foot FDC is part of a 600,000-square-foot facility receiving and fulfilling orders to pros that will delivered daily out of that facility, instead of from individual stores.

The other locations are in Detroit, southern Los Angeles, and San Antonio, Texas.

The new distribution centres stock large, bulky merchandise like lumber, insulation, and roofing shingles. With a network of distribution centres stocking a variety of product types, pros can order job lot quantities of the products they need to complete their entire projects, delivered directly to their job sites. The new distribution centres are expected to open in the first half of the year.

Along with its supplier partners, The Home Depot is working to build depth of inventory in each of its top pro markets, with job lot quantities that are meaningfully larger than what it has historically offered through its stores alone. In addition, when jobsite deliveries are fulfilled directly from a distribution centre, there is less congestion in local Home Depot stores from staged products in aisles and more inventory on hand to satisfy the needs of in-store pro customers.

The company has already opened similar pro-focused hubs across the U.S., and expects by the end of 2024 to have 17 of its top pro markets equipped with the new DCs. In addition, Home Depot is building out more offerings for its contractor customers, including:

• localized product assortments specially tailored for each priority market
• dedicated sales forces in each of its priority markets
• digital tools and personalized experiences, including new order management capabilities to better manage complex pro orders
• trade credit, which is currently being piloted with a small number of pro customers
• tiered pro pricing

Amidst a number of changes at RONA’s head office earlier this year, one that stands out for the company’s independent, or affiliated, dealers was the hiring of a new senior executive to manage the affiliate dealer portfolio.

Alain Ménard joined RONA in January as senior vice-president, RONA affiliated dealers. He was recruited from Sobeys and brought with him a range of experience dealing with entrepreneurs—including having been one himself earlier in his career.

Ménard replaced Jean-Sébastien Lamoureux, who had been in charge of the affiliate business at RONA. Lamoureux joined the company in 2017, coming over from the Montreal office of National Public Relations. He started at RONA as VP of communications and PR, and in 2022 was handed the affiliate dealer portfolio. He was instrumental in maintaining the confidence of the independent RONA dealers during the company’s sale by Lowe’s to private-equity firm Sycamore Partners in a deal that closed last February.

With his grocery background, Ménard brings experience that aligns with the RONA model. There is a paucity of national retail companies to draw from in Canada, let alone ones that have a mixed ownership model of corporate and independently owned stores like RONA’s.

Earlier in his career, Ménard held various executive and senior management positions in several major food chains. Before joining RONA, he spent nearly 20 years at Sobeys, most recently as vice-president, development and commercial relations, affiliated merchants. That business consists of the IGA, Tradition, Bonichoix, and Rachelle-Béry banners. During his time there, his responsibilities included innovation, department strategy, optimization of online grocery execution, in-store fixtures and fittings, and operational support.

His earliest involvement with grocery retail was at his local Steinberg’s grocery store, where he went from cleaning floors and bagging groceries to becoming a manager of different corporate stores.

When Steinberg’s went bankrupt in 1992, he joined Provigo and later Metro, where at the age of 28 he bought a series of franchise stores before moving to head office as general manager of Metro’s 162 affiliated stores.

Having spent so much of his career working with real entrepreneurs, typically in family businesses, Ménard developed a strong sense of respect and understanding of the affiliated model. “All of my life I have supported an affiliated dealers’ business model.”

(Alain Ménard will be a keynote speaker at the 28th annual Hardlines Conference. It will be held at the Fairmont Le Manoir Richelieu, in La Malbaie, Que., Oct. 22 to 23. As a Hardlines Premium Member, you have front-of-the-line access to this year’s conference and registration that’s 20 percent off the regular price. For more information about the 2024 Hardlines Conference, click here. Got questions about your Premium Membership? Contact Jillian MacLeod at the Hardlines Virtual World Headquarters!)

Loyalty programs are playing an increasingly important role in the offerings of many home improvement retailers. And the movement last September as Home Hardware joined Scotiabank’s Scene+ program, which includes partners like Sobeys, IGA, Foodland, and FreshCo , bears out how much effort is going into fine-tuning these programs.

One customer points program that took a hit was Air Miles Canada. It was once a national leader and Canada’s “most recognized” loyalty card program. It had steadily built up its retail partners in this country since 1992.

However, in February 2021, Air Miles Canada began to decline sharply. Lowe’s Canada left the program, along with its brands RONA and Réno-Dépôt. Two months later the program suffered a further setback when the Liquor Control Board of Ontario left the program. In 2022, Staples Canada abandoned Air Miles. The biggest blow of all might have been the defection the same year of Empire Co., the parent of Sobeys, Safeway, Farm Boy, Foodland, IGA, and other grocery stores (which are now members of rival program, Scene+).

Air Miles Canada did sign Dollarama as a partner last year but the owner of the program, LoyaltyOne, filed for bankruptcy on both sides of the border in March 2023. The Bank of Montreal purchased Air Miles Canada on June 1, 2023.

Now, in the retail home improvement industry, two major brands, Kent Building Supplies in Atlantic Canada, and TIMBER MART nationally, continue to use Air Miles.

“I do believe there’s value for the dealers that Air Miles can deliver,” TIMBER MART president and CEO Bernie Owens told Hardlines. He expects that the new ownership by BMO will add more “anchor” users that will rebuild the program’s profile. In fact, Owens shares that the issuance of Air Miles points by TIMBER MART dealers increased in 2023. “That shows there’s still value in it.” The program, he adds, is available at the discretion of each dealer, who can evaluate its merits for their own markets.

“I look at Air Miles and say, ‘what are the options out there?’ It’s to build loyalty for dealers at an affordable cost.” He believes BMO has an opportunity to provides better analytics that can help dealers understand their customers.” “If these points systems don’t add value to our dealers, we’ll have to look somewhere else.”

Air Miles Canada still counts on a significant roster of retail partners, including Metro (a grocery chain in Ontario and Quebec), Shell, Global Pet Foods, Jiffy Lube, and a high-profile group of online-only partners through airmileshops.ca.

The International Council of Shopping Centers (ICSC) has published its Consumer Returns Survey, which indicates that online shopping has roughly three times more returns as bricks-and-mortar shopping.

The New York City-based organization polled more than a thousand U.S. consumers last month. The poll showed that for every $100 spent online, about $15 of product is returned. For every $100 spent in physical stores, about $5 of product is returned. The main reasons cited by respondents to the survey who explained why they had recently returned an item purchased online were: “damaged goods” (52 percent), “item did not fit” (50 percent), “item was not as expected” (42 percent), and “the wrong item(s) was sent” (37 percent).

The online return rate was higher than in-store across all categories of retailers studied, though the gap was biggest for discount department stores, where consumers returned just 6.2 percent of items bought in stores compared to 33.2 percent of items bought online.

With 82 percent of respondents reporting that return policies influence whether they decide to purchase from a retailer, those return policies are important. But retailers are fighting back against the growing challenge—and costs—of returns. They are reviewing and updating their online return policies, even as they must keep in mind how customers may respond.

According to the survey results, if retailers were to charge a fee to ship back purchases made online, nearly three-quarters of respondents said they’d likely stop shopping online from that company altogether. Sixty percent said they’d likely stop shopping online with retailers that shortened the free return window.

“We have known for some time the value of brick and mortar to a retailer’s strategy,” said Tom McGee, president and CEO of ICSC, in a release. “Our latest findings further prove this by showing that the return rate for in-store purchases is three times less than the return rate for online purchases. Additionally, consumers are becoming more mindful of changing return policies that result in fees and shortened return windows.”

Wolseley Canada has appointed Jeffrey Gallanty as VP, supply chain. Gallanty joins the company from Ferguson Enterprises, where he managed the distribution and logistics network in the U.S. Northeast for the past five years. Over more than 25 years in supply chain logistics, he has held roles at Brooks Brothers, Bloomingdale’s, and Restoration Hardware.

DID YOU KNOW...?

... that Hardlines is now receiving entries for the 2024 Outstanding Retailer Awards? All Canadian hardware and home improvement retailers and managers who have operated under their current ownership for at least two years are eligible. To enter, please visit www.oras.ca; or contact our Editor-in-Chief, Steve Payne, for further information. (Le formulaire est également disponible en français.)

RETAILER NEWS

Canac will begin construction early next month on its store in Rivière-du-Loup, Que. The site for the chain’s long-awaited 33rd store was purchased back in 2017. It and the upcoming 34th store in Sorel-Tracy, Que., each represent an investment of about $20 million.

About a dozen detectives from the California Highway Patrol recently staked out a Home Depot store in the Los Angeles area for a night-long “blitz” in which they attempted to catch “boosters” in the act of shoplifting. A “booster” is a professional thief who typical sells to a “fence”—someone who resells the items (often power tools). According to a recent article in the New Yorker magazine, anyone caught stealing was handcuffed, taken to a back room, and questioned.

Lowe’s Cos. has announced it will give staff a day off on Easter Sunday, March 31, by closing all its stores and contact centres for the day. It joins other U.S. retailers like Target, Costco, and Sam’s Club, while Wal-Mart and Petco will be among the retailers that intend to stay open. This will be the fifth year in a row that the company closes on Easter. Lowe’s has more than 1,700 stores and 300,000 workers in the U.S.

Loblaw Cos. is testing self-checkout receipt scanners at four of its grocery stores in southern Ontario. The stores are in Oakville, Georgetown, Windsor, and Woodstock. Metal barricades refuse to open if a customer does not scan their receipt after going through self-checkout. If the customer tries to force the barricade, an alarm goes off. An attempt to reduce “organized retail crime” was the reason for the experiment, a company spokesperson said.

Chesapeake, Va.-based Dollar Tree will close a thousand of its stores south of the border in the next few years, says the company. It will close 600 stores under the Family Dollar banner, which it acquired in 2015, in the first half of this year, plus 370 of that brand’s stores over the next few years. In its latest quarter, Dollar Tree lost $1.71 billion. Retail analysts have blamed the botched acquisition of Family Dollar for the losses. There are 227 Dollar Tree stores in Canada, not one of which the company says is being closed at this time. Dollar Tree operates more than 15,000 stores in North America.

Ford Motor Co. and a Hong Kong tool maker have settled their dispute about Ford allegedly restricting the use of its iconic blue oval brand on power and hand tools. A Michigan federal judge dismissed Hong Kong-based Nine HKG’s suit, filed in 2022, and the parties came to a financial agreement. Hardlines had reported on the North American launch of the Ford tools in 2014, where they were debuted at the National Hardware Show in May of that year.

Sales of existing homes fell 3.1 percent in February from the previous month. That followed a cumulative 12.7 percent increase in sales activity in December and January. The actual (not seasonally adjusted) number of transactions came in 19.7 percent above those for February 2023. (Canadian Real Estate Association)

The annualized pace of housing starts rose by 14 percent in February to 253,468 units, from 223,176 units in January. The actual number of urban housing starts was up 11 percent to 17,495 units, from 15,822 a year earlier. Single-detached starts decreased 14 percent in February. (CMHC)

Investment in building construction declined 0.9 percent to $19.7 billion in January. In the residential sector, spending fell by $194 million or 1.4 percent to $13.6 billion. The decline was led by a 4.1 percent drop in Ontario, to $5.4 billion. It was partially offset by increases in five provinces, in particular a $53 million spike in Quebec, where spending reached $2.5 billion. (StatCan)