Lowe's Canadian operations are up and running

TORONTO – The new team that represents the first international expansion effort by Lowe's Cos. has set up offices in the north end of Toronto. Move-in date was May 1, but the division went operational three days later with headquarters at 5160 Yonge St., just north of Sheppard Ave. The president of Lowe's Cos. Canada is Doug Robinson, and vice-president of merchandising is Ben Mauceri. The world's second-largest home improvement retailer will enter Canada with up to 10 stores in 2007, beginning in the Greater Toronto Area. The new merchandising team, built up over recent months, comprises a who's who of top Canadian buyers. They have been drawn from the ranks of companies such as Wal-Mart and Canadian Tire, while some have worked in the past for Home Depot Canada. (For a more complete list of Lowe's merchants, see our April 3, 2006 edition’ÄìEditor).

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RONA targets pros with new-concept Réno-Dépôt

BOUCHERVILLE, Que. – RONA has developed a new way to beef up its retail appeal to contractors and pros. Lately it has been aggressively buying up existing retailers that cater to contractors (most recently Matériaux Coupal in the Montreal area and Curtis Lumber in Burnaby, B.C.). But one such chain is already in the RONA fold. Réno-Dépôt, acquired by RONA in April 2003, has 14 big boxes in the Montreal and Quebec City areas that cater better to pros than probably any big boxes in the world. Now RONA has turned its sights on Réno-Dépôt – a banner that is so profitable and well respected that it became the first RONA acquisition to keep its own name–to create a smaller-format big box that is aimed at heavy DIYers and contractors. The first of these 78,000-square-foot stores broke ground in Rimouski, east of Montreal, last week. Because of their smaller size, RONA expects to increase the Réno-Dépôt franchise in medium-sized markets throughout the province, with up to six of them in total over the next three to five years. "We're delighted to re-energize the Réno-Dépôt banner by launching a new phase in its development," said Robert Dutton, president and CEO of RONA. "Réno-Dépôt is a very high-value brand in Quebec, particularly among construction and home renovation professionals and do-it-yourselfers." Besides shrinking the retail footprint, RONA will make the new Réno-Dépôts faster and more practical to shop, thanks to a larger number of open areas, more user-friendly placement of products, a re-engineered lighting design, and a new signage system that incorporates pictograms to enhance readability. In addition, a number of displays will be overhauled, particularly in the kitchen, paint, flooring, and lighting departments, all of which will be grouped together in a new area of the store. The investment in new stores will not be at the expense of the existing Réno-Dépôt outlets. These will benefit from another $10 million investment over the next five years to refurbish them with the features of the new Réno-Dépôt store concept.

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Why Lowe's Canada doesn't have any Home Depot buyers

TORONTO – The arrival of Lowe's Cos. to Canada involved creating an entirely new management and merchandising team here. That team represents some of the most seasoned buyers in the country, including people that were lured away from Wal-Mart and Canadian Tire Corp. However, no buyers or executives from Home Depot Canada found their way to the new Lowe's offices. According to Gino Digioacchino, newly appointed vice-president, merchandising for Home Depot Canada, the answer for that is easy: the two companies represent "two different cultures." Home Depot, he says, is more entrepreneurial, while "Lowe's is more process oriented." The entrepreneurial bent reflects a move by Home Depot to get its stores more locally focused, both in terms of services and the products on the shelves. "Each merchant runs their business," says Digioacchino. However, he says, the Lowe's way, although more "top-down" in his eyes, has to be admired. He should know; he studied Lowe's carefully during a two-year stint as director of strategic implementation for stores, before coming back here to run Home Depot's Canadian merchandising team. Lowe's researches its markets carefully, and can deliver "lightning speed execution–they're the best," says Digioacchino. However, besides different cultures, it is safe to say that Home Depot spent months preparing for Lowe's arrival in Canada, including making sure their people were well taken care of and insulated against the attractions of working for a newcomer. (For more on the latest direction of Home Depot Canada's merchandising team, check out our exclusive interview with Gino Digioacchino in the next issue of our sister publication, Hardlines Quarterly Report, due out in a matter of weeks. – Michael)

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Home Hardware starts tracking direct purchases

ST. JACOBS, Ont. – After more than two years of development, Home Hardware Stores Ltd. has implemented a process that enables it to track purchases by its members that don't go through the Home Hardware warehouse. The program, called HomeBase, lets Home Hardware track item unit sales. Before this, the only record head office would receive of a direct purchase by one of its building supply dealers was in the form of the total value of the purchase. "Now we have the ability to track all our vendors' direct programs at the unit level," says Terry Davis, Home Hardware's vice-president information technology and strategic planning. It's part, he says, of a "master plan for category management. Whether product is sourced directly or through our distribution centre, it's all the same to us now." The new program gives every product that arrives on a direct ship basis into its member dealers' stores a SKU number of its own, which will allow the company to begin tracking sales history for those products in a more exacting manner. "It lets us begin category management in earnest," says Davis. For the dealers, implementation is rather simple. A store version of the HomeBase software has been developed, which must be added as an upgrade to dealers' existing POS systems. Home has created versions that are compatible with its own Prism system, and with its two leading retail systems suppliers, Silk Dimensions and Profitmaster. "The stores just have to take their own product numbers and match them to the new Home Hardware number," Davis says.

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Home Depot buys another pro dealer

TAMPA BAY, Fla. – In its efforts to increase its pro contractor business, Home Depot has purchased yet another independent home improvement company. Cox Lumber Co. is a chain of 28 stores throughout Florida with sales of $396 million last year. Under the new deal, it will become a wholly owned subsidiary of Suwanee, Ga.,-based Williams Brothers Lumber, which Home Depot bought earlier this year. These acquisitions are part of Home Depot's effort to increase its sales–and credibility–among the pro and contractor market. The company has historically built its store network on a "greenfields" basis, building its big box stores from the ground up. It's growth by acquisition has been, until recently, confined to its wholesale business, such as the purchase of Hughes Supply last month. And only a two weeks ago, it announced the purchase of a major online and catalogue company, Home Collections. But North America's pro market is highly fragmented, with a large number of medium-sized companies open to consolidation–a fact that has not gone unnoticed by larger companies on both sides of the border. In the U.S., Stock and Strober/Lanoga have been aggressively buying up companies, while RONA inc. in Canada has already added CD$100 million in retail sales this year through acquisitions alone–most of them contractor-oriented yards. Cox Lumber has, in addition to its 28 stores, 11 truss plants and 15 door plants in Florida. Like Williams Brothers Lumber, Cox will become part of the Home Depot Supply business, and retain its own name to better identify with the local markets the stores serve..

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Supply chain woes dog Loblaw in 1Q

TORONTO – While its sales were up slightly, profits for Loblaw Cos. dipped in its first quarter by 1.9%. However, after adjustments, that profit actually declined by 19.4%. The company is still recovering from challenges that began in 2005 as it attempted to revamp its systems, supply chain and general merchandise and drugstore areas. Loblaw is focusing on improving the in-stock position of general merchandise at the store level. Sales for the first quarter of 2006 increased by 1.4%, or $87 million, to $6.1 billion. Same-store sales during the quarter declined by 2.5%, adversely affected by the timing of Easter, which occurred three weeks later in 2006, resulting in a shift in holiday sales into the second quarter. The giant supermarket retailer's energies and resources were so consumed last year with the challenges of relocating buying offices and consolidating its distribution channels that service to the food business was adversely affected. But, says the company, service levels have returned to normal as improvements continue to be made in the performance of the general merchandise supply chain. Loblaw has made some important hires to manage the general merchandise division, most notably Mark Foote, who was lured away from Canadian Tire Corp. to become evp of merchandising for the general merchandise division. Working with people like Louise Drouin, vice-president of hardlines and softlines, he has inherited a distribution system that was moving to a national platform, even as a new third-party owned and operated warehouse and distribution centre was created for Eastern Canada. That DC handles general merchandise and certain drugstore products.

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True Value announces 1Q earnings growth as revenue dips

CHICAGO – True Value Company had a profitable first quarter, reporting net margin for the period of $12.8 million, an increase of $10.2 million over $2.6 million a year earlier. (Net margin included $5.6 million left over from a reserve previously established for an arbitration award that was settled with its former accountants last year.) Excluding the gain, True Value's profit was still a healthy $7.2 million. However, the dealer-owned co-op hardware wholesaler posted revenue of $496.6 million for the quarter, a decrease of 1.4% or $7.0 million from $503.6 million for the same period a year ago. True Value dealers felt the impact of the unseasonably warm winter, especially in the Northern parts of the U.S., on their seasonal sales. "Mild weather in January was the primary driver of the revenue decline in the quarter," said Lyle Heidemann, president and CEO of True Value Company. The impact included a decline in same-store sales of 2.8%. The member-owned wholesale hardware co-operative, with approximately 5,800 independent retailer locations worldwide, posted sales of $2.0 billion in 2005.

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