John Caulfield, Contributing Editor
 vol. x, #18 May 3, 2004

IN THIS ISSUE: • Lowe's sets up shop in Brooklyn • TruServ Corp. makes paint selection easy • Buyers share tips for getting listed • Westlake increases warehouse capacity • Homebuilding boosts BMHC results • New group targets gypsum dealers for growth • Rona will standardize formats with Building Box conversions • Allroc adds Quebec dealer to membership

* * * * * * HARDLINES IN LAS VEGAS: Yes, now that Hardlines has gone truly international in scope, we'll have a booth at the National Hardware Show. Come visit us at Booth L224! — Michael * * * * * * NOTE: Dollar amounts are stated in the currency of the country from which the story originates. — Michael McLarney, Editor & Publisher * * * * * *
"No one ever listens to anyone else, and if you try it for a while you'll see why." —Mignon McLaughlin (American writer)
BROOKLYN, N.Y. — Lowe's Cos. took its first real bite of the Big Apple when it opened a 136,000-sq.ft. store in the Gowanus section of this New York City borough on April 30.Lowe's has 23 stores in the New York metropolitan area, including one each in North Bergen, N.J., Staten Island and Garden City, N.Y. But its Brooklyn outlet — located at an old postal depot site, according to the New York Times — represents its deepest penetration yet into one of the largest home improvement markets in the U.S. In fact, Lowe's opened this store with 320 employees, compared with the 175 it usually starts out with, to handle the anticipated customer traffic and sales volume.The North Carolina-based company views the success of this store as crucial to its ability to achieve critical mass in a market where its rival, Home Depot, already has a strong foothold. To that end, Lowe's has made unusual overtures to the community to establish good will. The Brooklyn store includes a tree-lined esplanade along the Gowanus Canal, and will conduct DIY clinics on Sunday instead of Saturday out of respect for the area's large Jewish community. More interestingly, Lowe's is conducting a contest, with a $10,000 prize, for local artists to submit murals that will decorate two sides of the store. The theme of the murals, according to a statement by the retailer, will be "Brooklyn: My Neighborhood, My Home," and will depict what the artists believe makes Brooklyn a unique place to live.
TORONTO — A roomful of vendors got some tips, insights — and blunt truths — last week at the Third Annual Hardlines Meet the Buyers Seminar, held at a hotel near the Toronto International Airport last week.These senior buyers represented the senior buying influences from four of Canada's leading retail giants. The day started with Joel Marks, director, merchandising — hardlines at Home Hardware Stores Ltd. After giving a brief background on his company, he asked the rhetorical question, "What does a product manager really want? We want a beneficial relationship, one that's a true win-win."Marks stressed the importance that Home Hardware, a dealer owned co-op retail distributor with 1,000-plus stores across Canada, places on relationships, pointing out that, unlike some of his competitors, buyers do not move around from department to department every couple of years. Rather, they are groomed to become true experts in their buying category. Dean Andrey - CTCDean Andrey, category manager for tool accessories and tool storage at Canadian Tire Corp., stressed the importance of innovative products, items that will help Canadian Tire differentiate itself in the marketplace. "We want to be first to market with innovative new products," he said. To satisfy that hunger for the new and different, Canadian Tire stays open to new vendors of all stripes. "We have a vendor base of perhaps 2,000 or more vendors, including some of the largest and most well-established companies in the hardware and home improvement industry. But we also deal with some of the smallest, least established companies." With the development of Canadian Tire's Concept 20/20, which expands certain departments on the retail floor of its stores, Canadian Tire offers more opportunities for vendors of décor products to get shelf space, he added. Karol Hurrell, merchant at Home Depot Canada for department 29, kitchens, said that getting established with the Canadian division can become an effective stepping stone for doing business in Atlanta. If a vendor can learn to manage working with 102 stores in Canada, they are in a good position to present their programs successfully in Atlanta. (Next week: tips for getting listed with Wal-Mart Canada)
LENAXA, Kan. — Westlake Ace Hardware has combined two distribution warehouses into one, slightly larger operation, also in the Kansas City suburb of Lenexa. It's a facility that the privately held hardware chain purchased in December, and replaces an existing DC that was built in 1986.So far, Westlake has moved its warehouse/distribution operations into the larger facility, and plans to moved its corporate headquarters into it, too, although the timetable for that is still pending.The century-old company is Ace Hardware Corp.'s largest member, with some 80 stores in eight states, including Missouri, Kansas and Nebraska.
SAN FRANCISCO — Building Material Holding Corp., one of the largest pro-oriented home improvement dealers in the U.S., reported a 50.8% increase in revenue, to $416.8 million, for the three months ended March 31. The company's net income for the quarter was $4.2 million, versus $586,000 for the same period in 2003.Robert Mellor, BMHC's chairman, president and CEO, attributed the gains primarily to strong homebuilding activity and the skyrocketing price increases for wood products.The company was particularly pleased with the results from BMC West, its retail division, which reported a 32.5% jump in sales, to $248.7 million, and 86.7% increase in operating income, to $14.2 million.
CONCORD, Ont. — The emergence of a new buying group focused strictly on gypsum dealers underlines the growing importance of these dealers. Unlike other groups, that often mix commercial dealers with traditional yards, membership at The Signature Group is comprised exclusively of gypsum supply dealers, says Doug Skrepnek, president of TSG.Skrepnek appears to be on to something: other groups have identified the sector as a powerful one in terms of commodity volumes. Groups like TORBSA in central Ontario have a heavy commercial base of dealers; while CID is the commercial arm — and a fast-growing one — for TIM-BR Mart Ontario.The addition of a specialty installer/dealer to the ranks of Independent Lumber Dealers Co-operative marks something of a departure for that group. Chouinard Brothers/Gibson Building Supplies represents two businesses, a roofing company and a specialty building supply dealer with two outlets specializing in roofing. Following the retirement of Barrie Sali at the end of 2003 as president and CEO of Tim-BR-Marts Ltd., the Vancouver-based buying group, there were murmurs that he would start a group for GSDs himself. Through five members alone, Tim-BR-Marts is the largest buyer of gypsum in Canada. But Sali tells Hardlines that he's set up a home office and will devote his time to real estate development. "Am I going to go back into [the buying group business]? I don't think so at this time," he says. "I love what I'm doing now." At TSG, recruitment has not been aimed at existing members of other groups, which is why membership has been concentrated in Central Canada. "All the big GSDs in the West are affiliated," notes Skrepnek, " and I've tried to stay away from their loyal members. I didn't want to disrupt things." At least, not yet. Skrepnek wants TSG to become the largest buyer of gypsum in the country and expects the group to top out at 15-20 members by 2006.
Chicago, Ill. — TruServ Corp. has developed a program to simplify the color selection process in its stores — and the heart of the strategy is itself a simple one. The new "Color Made Simple" program just cuts the number of colors by half.Color Made SimpleAccording to TruServ, a huge stumbling block to getting the job done is finding the right color. Color Made Simple is a consumer-focused paint strategy that streamlines the color palette and builds on the strengths of the independent dealer to offer service and product knowledge. The new palette consists of 1,107 colors of paint in an eight-foot display. A four-foot display, with a smaller selection of colors, is also available for smaller stores."We found from extensive consumer research that color is the driving force in purchasing paint, but most consumers are confused by too many color choices," said Carol Wentworth, vice-president of marketing, in a prepared statement. "So, we're offering a very comprehensive collection with fewer colors." The Color Made Simple program includes removable "peel 'n place" paint chips, which consumers can take home and test on their walls. It also includes an idea center that provides cards with color combination recommendations for various rooms, including a photo of a room and three coordinating color swatches.
SCARBOROUGH, Ont. — Rona Inc. recently completed the conversion of six Building Box stores in Ontario. That brings the number of Rona big boxes in Ontario to 15. While the ones outside the Greater Toronto Area, such as Cambridge and Windsor, are considered to be money-makers, the re-branding is expected to help all the big box stores benefit from the growing awareness of the Rona name in English Canada, and bring GTA stores up in profitability within the coming years.The Building Box switch will be a thorough one. The conversions will adopt the full Rona Home & Garden format, putting an end to the extensive assortments that were the signature of the Building Box stores. SKU counts will be reduced and streamlined to match supply coming out of Rona's own warehouse, and to maximize on potential price breaks. Product switches will include more emphasis on Rona's own private label, for everything from locksets to plumbing. A typical Rona Home & Garden carries about 40,000 SKUs.Meanwhile, the 14 Réno-Dépôt stores in the province of Quebec will remain unchanged. They were the first big box home improvement stores in that province, and retain a very high acceptance in that market. "It's in the best interests of our customers and our stores to leave them the way they are," says Sylvain Morissette, director of communications for Rona. One newly converted store may find some tough competition — from another Rona Home & Garden. The two stores, in Toronto's east end, are practically right around the corner from each other, but that doesn't faze Rona's vice-president, store operations for Ontario, James Jones. "Right now, there's no need to close any of these stores," he says. "Both stores will thrive and grow their market share." He points out that the existing Rona store has enjoyed high double-digit same-store sales in the past two years, putting its volumes just about on par with its neighbour. Both stores will continue to co-exist as a hedge against five Home Depot stores that are located in the area. The process of harmonizing assortments in the newly converted stores should be completed by December 2005, says Jones.
ATLANTA — Building products manufacturing and distribution continued to deliver good news to Georgia Pacific in the three months ended March 31.G-P's manufacturing and distribution segments reported operating income gains of $263 million and $58 million, respectively, versus an operating loss of $17 million on the manufacturing side during the same period in 2003, and only a $3 million gain from distribution last year."Demand for building products remained very strong," said Pete Correll, G-P's chairman and CEO. His company has also benefited from skyrocketing wood products prices: plywood was up 52% in the first quarter compared to last year, oriented strand board rose 115% and softwood lumber was up 12%. Correll said that G-P also enjoyed a 40% increase in the sale of its Dens brand gypsum panels. In the quarter, G-P negotiated a deal to sell its distribution division to Cerberus Capital Management L.P. and some of that division's senior-level managers. Georgia-Pacific expects the transaction to result in net after-tax proceeds of approximately $780 million, which will be used to reduce debt. In the quarter, sales from the building products distribution division rose 44.4% to $1.264 billion. Manufacturing sales increased 34.9% to $1.652 billion. As a corporation, G-P reported consolidated sales of $5.222 billion, a 17.7% gain over first quarter 2003 totals. The company's net income was $147 million, versus a loss of $30 million. These totals included results from G-P's consumer products, packaging, and paper and pulp divisions.
HONG KONG — You read about it first in Hardlines, of course, but Ace Hardware Corp. held an official opening of its first international buying office here last week. The new operation, called AGD Asia Ltd., reflects the growing importance of offshore sourcing by retail companies, and is intended to be Ace's base in Asia to source products for the co-op's international retail members.ATLANTA — Last week, Home Depot CFO Carol Tomé reiterated the company's forecast that sales will grow 10%-14% in fiscal 2004, while earnings will rise 7%-11%, excluding the impact of an accounting change. Including the impact of the change, per-share earnings will rise 7% to 11% on sales growth of 9% to 12%, Tome said during a presentation at a Lehman Brothers conference. New stores are expected to generate 6% sales growth, while same-store sales are forecast to be up 3%-6%, she said. VANCOUVER — Forestry giant West Fraser Timber Co. posted earnings of $27 million on sales of $541 million for the first quarter of 2004, compared with earnings of $11 million on sales of $487 million in the first quarter of 2003. Earnings and EBITDA increased, despite a much stronger Canadian dollar versus the comparative period in 2003. First quarter earnings also include a $10 million pre-tax, non-cash charge related to the expensing of share options. CALGARY, Alta. — Allroc Building Products Ltd. has added a new dealer to its ranks. Carrière Lefebvre is a Montreal-based GSD, and the latest Allroc member in the province of Quebec. Already strong in the West (it has 47 dealers west of Ontario), Allroc has its eye on the East for expansion. "We need a stronger presence in Atlantic Canada," says Bob Hancock, vice-president of Allroc. PRINCE RUPERT, B.C. — Tyee Building Supplies, a building center in this northern community of British Columbia, has become the latest independent in Western Canada to sign with Rona Inc. The former member of Irly Distributors becomes the 24th Rona-bannered store in the province, and the western-most Rona dealer in the country. TORONTO — At its AGM last week, Sears Canada gave more clues to its previously announced desire to populate power centers (see Hardlines passim — Editor). Called Sears Village, clusters of smaller Sears specialty shops, they'll be part of a strategy to reclaim market share in high-growth areas of the country that may not support a traditional mall. The retailer plans up to eight such Village stores by year's end, and anticipates that there's room for hundreds more in the future. Sears is owned 54% by Sears Roebuck & Co. in the U.S. MISSISSAUGA, Ont. — Remington Products has relocated to the headquarters of its new owner, Rayovac. The company will now be known as Rayovac Canada Inc. The new address is 5448 Timberlea Boulevard, Mississauga, Ont. L4W 2T7. (905-624-4448 or 1-800-268-0425) STE-MARIE, Que. — Maax Inc., one of North America's largest makers of bathroom fixtures and accessories, reported sharply lower profits and revenues for its fourth quarter. Earnings fell to nearly $3.4 million, compared with a profit of $6 million a year earlier. Net sales in the period fell almost 8% to $142.8 million from $154.7 million, due mainly to the impact of the stronger Canadian dollar compared with the U.S. dollar. For the entire fiscal year, Maax profits fell to $34.4 million from $36.6 million, while annual sales rose to $642.2 million from $616.9 million. MISSISSAUGA, Ont. — The Canadian Retail Hardware Association has moved offices. They're still in the same building, but with a new suite number: CRHA, 2121 Argentia Road, suite 404, Mississauga, Ont. L5N 2X4. (905-821-3470) MONTREAL — Tembec's second-quarter consolidated gross sales were $887.2 million, up from $857.8 million in same period last year. Tembec generated a net loss of $93.1 million, a swing from net earnings of $34.2 million a year earlier.
Michel Merineau, formerly real estate director at Rona Inc., died suddenly in his home in Ste-Julie, Que. on April 24. Merineau was a veteran of the company since 1981. Before his position as real estate director, he was development director, and was personally responsible for the initial expansion of Rona beyond its home province of Quebec. He is survived by his wife Diane St-Pierre and his daughter Gabrielle.
Germain VoyerAt Roland Boulanger & Cie ltée, Germain Voyer has been appointed general manager. Reporting to company president Guy Boulanger, Voyer will look after the implementation of the strategic plan, support the realization of business opportunities and participate in the development of the next generation of managers. Voyer brings to Boulanger his expertise in both manufacturing and distribution in the building materials trade. (819-358-7210)Kim Whitehouse has joined Ajax, Ont.-based Ideal Industries Canada. At this manufacturer and supplier of electrical and datacom connectors, tools and test equipment headquartered in, he'll serve as national retail manager. (800-527-9105, ext. 580)
Sales of new homes in the U.S. reached record levels in March, with 1.228 million units at an annual rate being sold, says the Commerce Department. The surge reflects low mortgage interest rates and an improving job market. Single-family home sales rose 8.9%.Durable goods sales increased by 3.4% in March, says the Department of Commerce. February's order levels were also revised up, with the gain for that month now standing at 3.8% instead of the original estimate of 2.5%.
Consumer demand for big-ticket furniture and home electronics gave a shot in the arm to large retailers in February, according to Statistics Canada. However, overall sales for large retailers actually fell 0.6% to just over $7.5 billion, following a 3.3% surge in January.Retail sales were stronger in February, says Statistics Canada, rising 2.3% over the previous month, and advancing at their fastest monthly rate in more than six years. Surging auto sales, combined with strong gains in the clothing, furniture, general merchandise and food sectors, led total retail sales to new heights.In February, wholesale sales edged down 0.3% to $36.8 billion in goods and services, says Statistics Canada. This is the third decrease for wholesalers in the past four months. As in the previous month, February's decline was largely attributable to the motor vehicles, parts and accessories sector. Excluding that sector, sales rose 0.4%.
Two delegates at our Third Annual Meet the Buyers Breakfast Seminar won tickets to sessions at our upcoming Hardlines Conference Series. Andy Moncrieff, regional sales manager for Exchange-A-Blade, and Rick Houghton, regional sales manager for Fiberbuilt, won passes to our opening session, "Lessons in Leadership," with retail trainer customer relations expert Donald Cooper (a $149 value!!!). Congratulations, and thanks to everyone who came out to join us! — Michael
Hardlines has partnered with to offer the industry an easy and affordable way to place job openings on the Internet. The program for visitors is easy - and specially priced! To post a single job on at the special price of $150.00 plus GST for 60 days, just click here to Register and Post a Job. Click here to read More about the program.

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


Exclusive distributorship: EXCHANGE-A-BLADE, an established manufacturer and distributor of power accessories is seeking a dynamic sales oriented individual to take over an existing Ontario franchise with existing accounts with solid growth potential. The canidate must have an entrepreneurial spirit and be comfortable with "hands on" sales and service. Investment required. Training and support provided. Call (519)679-6760, ask for Andy Moncrieff.   ********************************************************************************** HELP WANTED TIM-BR-MART OntarioMARKETING MANAGER You are a senior marketing professional with many years of retail and contractor experience. As a team player, you possess strong communication, managerial and interpersonal skills. Strong organizational skills are required for overseeing the budget and critical execution paths. You are a very motivated, 'hands-on' individual who will be responsible for developing and executing various marketing programs, including print, radio, television and web media. You will also work with a team of on-site Merchandisers to ensure our stores are properly branded and merchandised. Experience in setting up trade and consumer shows and special events would be an asset.

TIM-BR Mart is the national retail brand for hundreds of building centres across Canada. This management position is dedicated to ensuring that our stores in Ontario project a strong retail image at store level. Your goal is to strengthen the TIM-BR Mart brand in the marketplace. We offer a competitive compensation package and a pleasant working environment near the airport. We thank all applicants for their interest; however, only those selected for an interview will be contacted. Please submit your resume, in strictest confidence, to the Executive Assistant at or by mail to 6470 Viscount Road, Mississauga, Ontario, L4V 1H3.  

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Attractive base salary, commission and over quota achievement bonus, expense account and comprehensive company benefits package. This position is located in Calgary; hiring will be conducted through the Montreal head office. Send resume, relevant accomplishments and salary history by fax to 514.331.2112 to the attention of Yvon C. Beaudet or email ********************************************************************************** PRODUCTS OFFERED

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