| SODISCO CEO TAKES TOUGH STAND VS. NEW COMPETITOR |
MONTREAL — Jos Wintermans is "not afraid" of the new competitor that's emerged in Quebec, he says. In fact, he challenged dealers to question who will pay for a new distribution deal by Groupe BMR, AWARD and TIM-BR Mart Ontario.
 He spoke at the recent Sodisco-Howden Fall Market, which attracted 2,000 people representing 900 stores, 35% of them from outside Quebec.
Both in front of his dealers and in private conversations, Wintermans hammered home a message about the importance of running an organization that discloses where its profits go, such as Sodisco-Howden, which is publicly traded. "We are not going to take this lying down. We are going to fight for our dealers. When they see the facts, they are going to stay with [a distributor] that is going to be transparent with their customers."
Quincaillerie Matreco Hardware, the new kid on the block, is the culmination of the growth of BMR's own ambitions to establish its own hardware distribution facility. Already an important wholesaler of building materials to its own dealer members, in 1997 BMR added hardlines to its warehouse in Longueuil, QC in an effort to oversee its own destiny on that side of the business. About two years ago, Yves Gagnon, president of BMR, began efforts to expand the hardlines distribution side, and soon after, Sodisco-Howden stopped shipping to BMR, recognizing the growing threat to its own business.
This year, the BMR warehouse is expected to ship about $85 million in purchases to its 125 dealers throughout Quebec, New Brunswick and Northern and Eastern Ontario.
AWARD, BMR and TIM-BR Mart Ontario (along with Tim-BR-Marts Ltd. based in Vancouver, which is not part of the deal), are affiliated within a collective buying group called Matreco. Now AWARD wants to model its group after its French-Canadian sister. With a $35,000 investment from each of 51 of its 96 members, AWARD will open a 42,000-sq.ft. distribution centre of its own in Bedford, NS, near Halifax. The facility will carry about 5,500 of BMR's fastest-moving items, and has reportedly committed to buy $5 million worth of products from BMR in its first year of operation. The new distribution entity, called AWARD Distribution Ltd., is also expected to buy $4 million worth of products from other sources and funnel an additional $9 million in direct shipments to dealers.
TIM-BR Mart Ontario, meanwhile, will offer BMR as a supplier of choice to its own members, but will rely on BMR's trucks, which will be co-branded with the TIM-BR Mart and AWARD logos, to supply product.
However, it doesn't add up for Sodisco-Howden's Wintermans. "In the last 10 years, since Home Depot started shipping direct, all the people that don't have enough volume in distribution have gone by the wayside. Now, [Quincaillerie Matreco Hardware] is going the other way and adding costs. It just doesn't make sense," he insists.
Although dogged by problems of its own as it attempts to consolidate its banners (it bought the Ace business in Canada at the beginning of 2003 and the hardware business of Marchands Unis a year earlier), Sodisco-Howden showed strengthened results in its latest quarterly results (see "Companies in the News" in this issue). |
| CANADIAN TIRE'S LATEST CONCEPT IS FEMALE-FRIENDLY |
MARKHAM, ON — Four new-concept Canadian Tire stores were opened officially across the country last week, complete with a big seasonal department right up front, scent machines adding to the ambiance of different departments and lots, I mean lots, of cleaning products.
Called 20/20, the new-concept stores are designed to "take back" up to 20% of available space from the warehouse of each store, and, in turn, increase sales for these stores by 20% in the first year. 20/20 stores are already open in Kitchener, Markham and Pembroke, ON, as well as in Prince George, BC.
 The broad assortments typical of a Canadian Tire store have been reorganized under four themes: Driving (automotive), Fixing (home improvement), Living (leisure products), and Playing (sporting goods). The additional space has been turned over to a number of areas, including expanded housewares and kitchen gadgets, new work wear department that looks like a clothing retailer, complete with change room, and more attention to household cleaning products, seen as a way to increase return traffic for customers, especially women.
 "We've done a good job for dad. We're not sure we've done as good a job for mom and the kids," said Mark Foote, president of Canadian Tire Retail, as he outlined the strategy behind the new concept.
Besides expanding existing product lines, some new categories have been introduced under the new design. These include greeting cards and gift wrap, cut flowers and indoor plants, and home office supplies – everything from knock-down furniture to writing instruments, paper and binders.
Not all the new available space has gone to merchandise, however. The stores have been opened up, as well, to allow for wider aisles and more breathing room at checkout. The front of the store is dominated by the "Marketplace," a power display area devoted to bi-weekly promotions. |
| NHS AND COLOGNE SHOW ANNOUNCE STRATEGIC ALLIANCE |
| Cologne, Germany — A new deal between the National Hardware Show in Las Vegas and the world's largest hardware show, The Cologne International Hardware Fair/Practical World, was unveiled last week.
The two shows will align in a sales and marketing agreement whereby both parties will seek delegates and exhibitors that can participate in both events.
"The collaboration with the National Hardware Show creates benefits for everyone involved," says Mette Petersen, the North American president and managing director of Koelnmesse Inc., which owns the Cologne show. "The extensive sharing of services and transfer of knowledge between Koelnmesse and Reed Exhibitions [which owns NHS] will enable our customers to focus all of their attention on the trade visitors and attendant business activities."
The Cologne show already has partnerships in other countries, Practical World Asia in Shanghai, and the Taipei International Hardware & DIY Show in Taiwan.
The move to join with NHS in the U.S. is an important step in re-establishing Cologne's dominance worldwide, and is a coup for the legitimacy of the Las Vegas show, which is in a well-publicized battle for attendees – and credibility – with the rival AHMA Hardware Show, being held in Chicago by the American Hardware Manufacturers Association. Both shows will be held only weeks apart, with the AHMA's Chicago event taking place April 18-20, and the Las Vegas show May 10-12, 2004. |
| RONA OPENS LATEST BIG BOX |
 KINGSTON, ON — A $20-million investment in this community about three hours east of Toronto has culminated in the opening of Rona's 62nd big box store, and the 19th under the Rona Home & Garden banner. The 120,000 sq.ft. store will carry some 45,000 SKUs and feature a 3,400-sq.ft. greenhouse, 26,000-sq.ft. garden centre and a large seasonal department, offering everything from Christmas decorations to lawn fertilizer.
Rona's president and CEO, Robert Dutton, was on hand for the opening, which attracted a line-up of hundreds of customers, who waited for the doors to open last Wednesday morning. He called this newest store "the latest and most developed version of our successful big-box concept."
 The store has an added aesthetic touch: a group of hardwood trees, more than a century old, were preserved in the construction of the new store, preserving the venerable atmosphere of the neighbourhood.
In addition, an existing Rona Cashway store in Kingston will continue operating, serving as a platform for the big box store's LBM orders and deliveries to construction sites. |
| CASTLE GETS PRO-ACTIVE IN ONTARIO |
| MISSISSAUGA, ON — Castle Building Centres is getting back to its roots in Ontario. The national buying group, based here, recently hired industry veteran Mike Frame to help it put renewed focus on Canada's largest province, and the source of fully one-third of all retail home improvement sales in the country — according to a new study by Hardlines (enough cheap plugs already! — Editor).
For the past few years, Castle has in fact been trying to strengthen its membership across the country. Most recently, since the hiring of Alan Schoemperlen, who joined from Winnipeg-based TruServ Canada just over two years ago as western business development manager, Western Canada has been a special focus of the buying group, even as Ron Douglas has been consolidating membership in Atlantic Canada in his role as business development manager there.
"It's time for us to revisit where the company was born, in Ontario," says Pro Wylie, president of the 256-store group. "It's a maintenance thing here in Ontario. We want to remain strong."
Frame will handle recruitment and dealer service in Eastern Ontario, while Ron Marchetti, national business development manager, will narrow his coverage, which formerly extended to the whole province, to Western Ontario. According to Wylie, another person may still be recruited, someone who is bilingual and can talk to dealers in Northern and Eastern Ontario. "We're taking the Ontario market very seriously," he says. |
| HOME DEPOT FOCUSES ON SPORTS SPONSORSHIPS |
| ATLANTA & TORONTO — Home Depot is spending big bucks on sports. Advertising dollars are going into everything from the Olympics to college football on ESPN, in addition to ongoing sponsorships of regional and local events and teams.
In fact, the company's Canadian division has just signed a multi-year agreement with the National Hockey League, with the retailer as corporate partner of the League in Canada in the home improvement category. Home Depot Canada will continue its NHL advertising on TSN and CBC's Hockey Night in Canada. But it's also going to develop a national contest, in which fans are invited to build their own backyard hockey rink. The segment will be produced by CBC to air during Hockey Night in Canada. |
| LBMAO'S INAUGURAL SHOW APPROACHES SELL OUT |
| MISSISSAUGA, ON — Canada's newest trade show, the LBMAO Winter Buying Show, has reported it's filled 90% of its exhibit space. The show, which will be held in London, ON at the Western Fair Grounds from February 7-8, 2004, will have a modest start, with about 25,000 net sq.ft. of exhibit space and an estimated 125 exhibitors.
The show's owner, the Lumber and Building Material Association of Ontario, pulled its support from the Canadian Hardware and Building Materials Show, which will be held a week earlier, February 1-3, 2004. CHS is owned and operated by the Canadian Retail Hardware Association.
A deal between the two organizations had left the LBMAO dissatisfied with both the apparent lack of buying at CHS, and its own share of the revenue from the event, driving it to split off. In so doing, the LBMAO is following the lead of its sister LBM associations in Western and Atlantic Canada, both of which have successful buying shows of their own.
To date, more than 110 exhibitors have signed up for the new show, including AFA Forest Products, Alexandria Moulding, All Weather Windows, Atlas Polar Co., Brite Manufacturing, Can-Save, Dimensions Retail Systems, Sico and Stanley Canada. For more information on the show, click here. |
| COLOGNE SHOW WILL MOVE TO EVERY OTHER YEAR |
| COLOGNE, GERMANY — The International Hardware Fair/Practical World, held each year in March in this historic city on the Rhine, will move to alternating years following the 2004 edition of the show. In 2005, the show will be replaced in odd-numbered years by a specialist tools fair called "Tools Cologne."
The news, which comes on the heels the Hardware Fair's alliance with the National Hardware Show in the U.S., is seen as a pro-active move on the part of the show's owner, Koelnmesse Inc., as it faces dwindling exhibitor participation, especially from key power tool manufacturers such as Bosch and Black & Decker, which have been participating in alternating years for some time.
The decision to change the show's frequency has been met favourably. John Herbert, head of the BHB, the European retail hardware association that represents dealers in Germany, Austria and Switzerland, calls it "a bold decision" that is being taken before the show starts slipping. "We welcome it. We think it's going to be a first-class fair – and the whole world will be there."
The International Hardware Fair/Practical World will be held March 14-17, 2004 and is expected to feature more than 3,500 exhibitors. |
| INDUSTRY STOCK WATCH |
|
COMPANY |
52-WEEK HIGH |
52-WEEK LOW |
CLOSE FRIDAY |
| Canadian Tire |
42.60 |
27.85 |
40.75 |
| Canfor |
10.95 |
7.20 |
8.97 |
| Costco |
39.02 |
27.00 |
34.49 |
| Goodfellow |
12.40 |
9.75 |
12.35 |
| Home Depot |
37.89 |
20.10 |
37.37 |
| Hudson's Bay |
12.97 |
6.41 |
11.14 |
| Lowe's Cos. |
60.42 |
33.37 |
59.00 |
| Rona Inc. |
25.00 |
11.75 |
24.70 |
| Sears Canada |
21.16 |
13.60 |
21.35 |
| Sodisco-Howden |
3.35 |
1.15 |
3.00 |
| Taiga Forest |
8.10 |
6.00 |
7.45 |
| Wal-Mart |
60.20 |
46.25 |
58.42 |
| West Fraser |
39.05 |
29.25 |
32.55 |
|
|
| COMPANIES IN THE NEWS |
| MONTREAL — While 3Q revenues for Sodisco-Howden Group were down slightly at $125.3 million, year-to-date revenues were up $651,000 to $357 million. Changes in billing for direct shipments to key buying group customers affected sales in the third quarter, which were down 1.9%. The drop reflected lower lumber prices in the first half of the year and some softness in the marketplace, which overcame gains made by additional sales to Ace bannered dealers. EBITDA for the third quarter was up 54% to $5 million, due to a shift in sales mix to hardware warehouse sales, thanks to the newly acquired Ace business, and to increased rebate income due to recognition of year-end plateaus throughout the year. For the nine-month period, EBITDA was up 100% to $12.7 million.
OTTAWA — Thirty-five Home Hardware dealers in Eastern Ontario have announced their sponsorship of Roger's House, a program spearheaded by the Ottawa Senators and Ottawa Senators Foundation in tribute to hockey hall of famer, Roger Neilson, the former Senators assistant coach who passed away in June after a lengthy battle with cancer. As first founding sponsor, Home Hardware will provide an initial donation of $100,000. As part of the partnership, Home Hardware purchased a suite at the Corel Centre, which will be sold to dealers and auctioned off for special events to raise money for Roger's House.
GRANDE CACHE, AB — Weyerhaeuser Co. has announced it will close its lumber mill here on February 8, 2004, affecting about 156 jobs. The closure comes following failed attempts by the company to find a buyer, and will result in a fourth-quarter after-tax charge of US$8 million.
BRANTFORD, ON — The Nu-Gro Corp. recently finalized its purchase of the assets and business of Greenleaf, including its brands, Greenleaf Products Inc., Later Chemicals Ltd. and Midpoint Product Inc. The acquisition is valued at approximately $8.7 million, and will add an expected $27 million in sales to Nu-Gro's business.
BENTONVILLE, AK — Wal-Mart Stores reported net sales for October of US$19.07 billion, up 11.8% from US$17.05 billion in October 2002. year to date, sales were up 11.3%. Sales for the thirty-nine week period were US$182.312 billion, up 11.3% over US$163.81 billion a year earlier. Sales by the Wal-Mart division for October were US$12.720 billion, up 10.7%. Sales from the Sam's Club division were US$2.64 billion in October, up 9.7%. The International division's sales for the month were US$3.71 billion, up 17.6%.
ISSAQUAH, WA — Costco Wholesale Corp. had net sales in October of US$3.42 billion, an increase of 14% from US$3.01 billion. For the first nine weeks of its fiscal year, the warehouse club retailer reported a 13% increase in sales, which climbed to US$7.49 billion from US$6.60 billion.
BENTONVILLE, AK — Wal-Mart Stores is working with 100 of its largest vendors to ramp up the implementation of radio-frequency identification, a new high-tech inventory-tracking system, that is causing quite a stir throughout the retail industry. Wal-Mart wants these suppliers to start attaching RFID tracking tags to products by January 1, 2005. RFID tags, which contain special microchips and antennae, are designed to relay to computers precise information about the contents of product packages and containers. |
| PEOPLE ON THE MOVE |
|
Steve Metcalfe has joined Maxtech Consumer Products Group as sales and marketing manager. He was formerly at Emerson Electric. (519-885-5336)
Ed Lanctot, longtime general merchandise manager of Cotter & Co. (now TruServ) has died. Lanctot was Cotter founder John Cotter's first employee. They had worked together at Kelley How Thompson in Duluth, MN, before John Cotter started Cotter & Co. As general merchandise manager, Lanctot was also in charge of advertising, and for many years considered the best known merchandiser in the hardware industry. He was 84. |
| MARKET INDICATORS |
| The value of residential building permits rose a whopping 10% in September to $2.90 billion, says Stats Canada. This record level surpasses the previous record of $2.86 billion set in July. The value of building permits, an early indicator of construction activity, points to a busy winter for residential builders. The value of non-residential permits also advanced in September, rising 4.5% to $1.5 billion, with gains in commercial and institutional permits. In total, municipalities issued $4.4 billion worth of building permits in September, up 8.0% from August.
In the biggest monthly employment increase in 19 months, Canada's unemployment rate fell to 7.6% in October, down from 8.0% a month earlier. During this period, the Canadian economy created 65,400 jobs, with gains being spread across most segments of the work force. |
| OVERHEARD... |
| "What I don't understand is how everyone else is taking costs out of their systems so that they can compete. And here we have a move to add costs. Who's going to pay for those costs? Somewhere along the line, the members of these groups will haveto pay…" — Jos Wintermans, president and CEO of Sodisco-Howden Group, speaking at the recent Sodisco-Howden fall market in Montreal, on the emergence of a new competitor, Quincaillerie Matreco Hardware. |
| WEYERHAEUSER SIGNS RESEARCH PACT WITH CHINA |
| OLYMPIA, WA — Weyerhaeuser, the forest products giant, has signed an agreement with the Republic of China to cooperate on forestry research and environmental restoration projects in that country.The deal, signed here on November 1, was initiated by Washington State's Governor Gary Locke, who is the son of Chinese immigrants. Locke visited Beijing and Shanghai last month. Associated Press reported that China is Washington State's second-largest export market.
Steve Rogel, Weyerhaeuser's chairman and CEO, signed this pact with Jiang Zehui, president of the Chinese Academy of Forest. The agreement calls for the two organizations to cooperate on forest management, wood technology and silviculture. Specifically, they will research opportunities for eucalyptus forests in southern China, including possible uses for the wood, cooperate on product development and market assessment, and develop ways to reduce sedimentation and improve water quality in China's forests. |
| FORTUNE BRANDS ADDS THERMA-TRU TO ITS STABLE |
| LINCOLNSHIRE, IL — Fortune Brands, whose businesses include several leading kitchen cabinet suppliers and Master Lock, will pay US$925 million to acquire Therma-Tru, the leading supplier of residential entry doors in North America.Maumee, OH-based Therma-Tru, with US$400 million in annual sales, 2,400 employees and four manufacturing plants, commands a 25% share of the residential entry door market, and a higher portion of the fiberglass entry door segment. It will be folded into Fortune's US$3 billion home and hardlines division, which includes Moen faucets; cabinets sold under the Aristokraft, Schrock, Diamond and Omega brands; Master Lock padlocks and Waterloo tool boxes.
For the past three years, Therma-Tru has been owned by the New York-based investment firm Kenner & Co. The day before the Fortune Brands deal was announced, Kenner revealed that it would acquire Dallas-based Atrium Cos., one of the largest window manufacturers in the U.S., in a deal valued at US$610 million. |
|
John Caulfield, Contributing Editor
vol. ix, #43 November 10, 2003
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(Nov. 17/03)
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