"In calm water every ship has a good captain." - Swedish proverb
vol. viii, #21 May 27, 2002  
* Rona Lansing adds big box elements, more contractor perks * What buyers want: vendor buy-backs, new products * Taiga finishes best year ever * Ace stakes growth on alliances with independents * Home Depot loses ground to Lowe's 1Q performance* Rona Lansing adds big box elements, more contractor perks


Join the Women's Consumer Products Network on May 28th for an evening social and dinner. Presentation by Ron B. Hesketh, founder of "Maximizing Your Peaks, Minimizing Your Valleys," and a senior partner with Peak Performance Systems, a training organization that is dedicated to consulting, professional development and training. For more info, call 416-208-0688; e-mail: wcpn99@yahoo.com
Markham, ON - After two startup hardware stores closed recently in Calgary, Ace Hardware Canada admits its best shot at growth is supplying hardlines to its building supply customers. "That's our future, going forward, with the lumber and building materials guys," says Pat Bennett, Ace Canada's vice-president sales. He insists the independent dealer has the clout needed to compete against the big boxes, saying the big guys today are focusing more on margins than on sales. As a result, he adds, the price wars of a few years ago are just not happening today." Independents today can compete with fair pricing, but also with knowledgeable customer service." While the Calgary stores, and another in Maple, ON have not panned out for Ace, deals like the one it recently struck with United Farmers of Alberta are giving the company much-needed sales volume. There, the new programs for 34 UFA stores have almost been completed. Ace has duel-bannered 14 independent building centres so far this year and a new ground-up hardware store is planned for Richmond, BC in June. Also, Ace's supply arrangement with Castle Building Centres is bearing fruit, with ten projects currently on the go. Acceptance is especially strong in Atlantic Canada, where eight of those 10 new banners are going in. Ace has a total of 29 projects, ranging from ground up stores to remerchandising and expansions, that will all be completed within the next three months. Ace also has agreements with Growmark, Tim-BR-Marts, Sexton and Torbsa.
Markham, ON - Rona's commitment to its traditional stores was reflected in the recent expansion of this Rona Lansing store just north of Toronto. The store has almost doubled in size to 37,000 sq.ft. and switched to 12-ft. warehouse-style racking through most of the store. More space has been devoted to retail in an effort to get as much product on the floor as possible. With inventory increased from 19,000 to 26,000 SKUs, much of the new retail space has been turned over to expanded assortments, especially a more complete line of Rona private label products and more attention to seasonal. Most products are now being shipped out of Rona's Boucherville, QC distribution centre or being direct shipped. Another department that has been expanded is the contractor area. Designated parking outside, along with wider aisles, make it easier to get product out of the store. It also has its own entrance, complete with its own cashier.
Toronto, ON - When performance is measured on gross margin, buyers must walk a fine balance between full-line programs and new product development. More than one of the six buyers who participated in our recent Hardlines Meet the Buyers Seminar made this point. Joel Marks, merchandise director for hardlines at Home Hardware, invited innovators and inventors with new products to approach his company. Despite an overall trend toward partnerships with vendors that can provide full programs, Marks was not alone in his stance on new products. Suzanne Morgan, lead category manager for décor at Canadian Tire, said her company has to be open to new products, which are vital for differentiating CTC and sale opportunities. She cited the company's website as an especially viable forum for innovation - including products that would not necessarily fit on the shelves of a Canadian Tire store. Peter Vernon, Home Depot Canada's hardware merchant, used Stanley Works as an example of long term relationship with a full line supplier. The deal, which raised eyebrows throughout the industry, puts a lot of Stanley's sales eggs in the Home Depot basket. Yet the long-term development of this relationship is one Home Depot is eager to invest in, said Vernon. Some things won't change, however, such as the need for vendors to work with retailers to buy back old stock, or at least help sell it off. "You hate it, we love it, but it helps us manage our inventory," admitted Bernie Snider, group merchandise manager for hardlines at Ace Hardware Canada.  
Canadian Tire 33.08 18.50 31.86
Canfor 12.00 8.08 9.80
Emco 12.27 3.71 12.20
Goodfellow 11.90 8.00 11.60
Home Depot 53.45 30.30 43.20
Hudson's Bay 20.10 12.50 13.85
Lowe's Cos. 48.88 24.99 48.10
Sears Canada 25.00 12.50 24.15
Sodisco-Howden 2.50 0.75 1.80
Taiga Forest 12.75 7.40 12.50
West Fraser 44.42 26.13 40.02
Taiga Forest Products ended its fiscal year with its best performance in its history. Sales reached $854.3 million, up from $790.2 million in 2001. Earnings for the year were $6.2 million, up from $841,000 a year earlier. Sales for the three months ended March 31, 2002 were $206.5 million, up 20% from $171.5 million for the same period last year. Earnings for the quarter were $719,000, up from $287,000. Rona will open a 125,000-sq.ft. Rona Home & Garden in Gloucester, ON this Wednesday, making it the second Rona big box in the Ottawa area. Selkirk Industries has been sold to Tinicum Capital Partners, an investment group out of New York, for US$40 million in cash. The deal, struck with Selkirk's parent, U.S. Industries, will close by the end of July. The purchase is expected to have no affect on Selkirk's Canadian operations, where it's "business as usual." U.S. Industries' other companies include Jacuzzi, Eljer and Sundance Spas. For its fiscal first quarter, Home Depot's profits were up 35% to US$856 million, from US$632 million during the same period a year earlier. Sales were up 17% to US$14.3 billion. Growth was driven largely by new stores. During the quarter, Home Depot opened 57 new stores, the highest number of quarterly store openings in company history. By the end of the quarter, the company operated 1,386 stores. However, at Lowe's Cos., sales rose 22.6% to US$6.47 billion, up from $5.28 billion in the first quarter of 2001. and profits were up 51.7%. Lowe's same-store sales exceeded Home Depot's, as well - 7.5% versus 5.0%. Rona's award-winning website, www.rona.ca, has been redesigned, with the project planning needs of its customers in mind. In 2001 the Rona site averaged 150,000 visitors a month, an increase of 125% over the previous year. According to its most recent statistics, 246,000 Canadian visitors went to rona.ca in March 2002. Though the visits do not result in substantially more on-line sales, the site is being used for comparison shopping. Wal-Mart Canada will open a new 81,000 sq.ft. free-standing store in Atholville, NB this Fall. Another store, at 108,000 sq.ft., is scheduled for New Minas, NS in the Spring of 2003. Sears Canada will convert the Eatons Polo Park store in Winnipeg to a Sears store. It will remain open during the conversion. This store, along with the other five former Eatons locations and approximately 13 other larger Sears stores, will form the basis of a Sears "select" strategy, offering customers a broader assortment of better fashion merchandise.
Home Hardware Stores has named Ron Goldade of Neepawa Home Hardware in Neepawa, MB as chairman of the board of directors. Goldade has owned and operated Neepawa Home Hardware since 1985, and has served on Home Hardware's board of directors since 1990. He is also past president of the Canadian Retail Hardware Association. He replaces Charlie Reid of Saskatoon, who retired after 11 years as Home's chairman. (519-664-2252) At Do it Best Corp., Dave Heine has been appointed vice-president of retail development. He will oversee growth of the co-op retailer and manage its field staff. He was most recently vice-president of lumber and building materials … Quent Ondricek has been appointed vice-president of lumber and building materials, replacing Heine. He will oversee all LBM purchases. He was promoted from the position of national sales manager. (260-748-5300).
Consumer spending in retail stores remained essentially flat for a second consecutive month in March. Retail sales stood at $25.2 billion in March, down 0.2% from February, when retailers also posted flat sales (-0.1%). This follows strong sales gains of at least 1.2% in January and in each of the last three months of 2001. Despite the lack of sales growth in March and February, retailers managed to post a healthy 2.6% gain in the first quarter of 2002 compared with the fourth quarter of 2001. Retail sales in the first quarter were 6.6% above those of the first quarter of 2001. The composite index increased 1.2% in April after a 1.3% increase in March, the best consecutive advances in nearly 20 years, says Stats Canada. The housing index continued to grow in April (+0.8%). Sales of existing homes rebounded after having fallen in the previous two months. Housing starts posted their lowest level of the year, as recent gains made due to warm weather may have been borrowed against building in the spring. Wholesale sales in March were down 0.2%, but the first quarter of the year remains strong overall, up 2.4%. Lumber and building materials were up 1.7% in March, from February.
The Spring issue of Hardlines Quarterly Report features: The Three Billion Dollar Club - find out which home improvement retailers dominate the Canadian scene...Who's winning the big box war? Big box expansion in Canada..... CLICK HERE to find out more!
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