vol. viii, #43 November 11, 2002 Remembrance Day

* Rona's Next Generation gets preview at new store * TSC steps up TV advertising * Tim-BR Marts keeps converting dealers to brand package * Canadian Tire profits dip in 3Q * House prices will keep climbing

"What history teaches us is that men have never learned anything from it." - Georg Wilhelm Hegel (1770-1831)
The key retail executives in Québec will meet in Longueuil, QC on November 19, 2002 for "Home Improvement Retailing: where will it be in 10 years?" This event, presented by ADMACQ, will feature Roger Plamondon of Home Depot Canada, Yves Gagnon of Le Groupe BMR, Claude Bernier of RONA, Claude Gingras of Co-op Fédérée, Jos Wintermans of Sodisco-Howden Group and many others. Moderated by Jacques Nantel, department head for electronic retailing at Montréal University. This will be an incredible day of insight and networking. Call ADMACQ for more info: 1-877-723-6220; info@admacq.qc.ca.
Women and Home Improvement: Understanding Female Shopping Habits. A special report from Hardlines, Canada's information service for the home improvement industry. Are you capturing this market effectively? Learn about the shopping habits of women home improvement shoppers. Price: $99! Contact nancy@hardlines.ca for more info!!! ***** >Home Depot's sales grew by more than 20% last year in Canada. But do you know the other company that's building stores at a brisk rate? >Four companies account for almost half the home improvement market in Canada. Who are they? >Big boxes make up almost a fifth of the market today. Where will they be in three years? These are the kinds of questions that get answered in every issue of HARDLINES QUARTERLY REPORT. A one-year subscription is only $379! Contact nancy@hardlines.ca for more info or click here to order from our website!!! (Alright already, the ads are bad enough, but what's with all the exclamation points? - Editor)

Mississauga, ON - The newest Rona Home and Garden store, just west of Toronto, encorporates many features that will represent the company's "Next Generation" of stores.

According to Pierre Dandoy, executive vice-president of Rona's big box stores, the newest outlet carries about 40,000 SKUs, a product mix that will set a standard for the country, with variations to account for regional differences between the GTA, Québec and the West. The store stands on three pillars, says Dandoy: instore expertise, everyday low pricing and a "proudly Canadian" brand position. A number of departments have been buffed up, showcasing features not typical in a Revy store - but common enough in Rona's big boxes in Québec - including a greater emphasis on boutiquing. "We try as much as possible to show the product as it would appear in the home," says Dandoy. "You have the ambience of the home right in the store." Kitchen and bath has been made more upscale looking. Tubs and sinks are displayed in racking that's faced with a veneered finish, rather than sitting in metal racking, another touch from Rona's big boxes in Québec. The seasonal department has been expanded, too. "We want to be the most important company in retail for seasonal," says Dandoy as he surveys the huge assortment of Christmas accessories and decorations that greet one upon entering the store. The seasonal theme continues down the power aisle, which features snow throwers. New categories include cleaning and home maintenance, while knockdown furniture has gotten a facelift with an assortment that will eventually be adopted in Québec. Flooring and lighting are examples of other departments that have been freshened up. In flooring, all related products, including tiles and hardwood, are put together. The lighting department has been similarly grouped in a 10,000-sq.ft. boutique. The tool corral has been opened up at both the front and back to encourage more traffic, while the checkout within the corral has been eliminated altogether. Dandoy says this store was already erected when he started introducing Rona's Next Generation concepts. Therefore, it's about halfway to where he'd like to see the concept. Ensuing stores will build on the changes at this store, with enhancements, he says, that will focus on making the stores easier to shop.
Vancouver, BC - Independent dealers in Western Canada are finding the value in aligning themselves with the Tim-BR Mart national banner program. According to David Beck, who oversees store planning for Tim-BR-Marts Ltd., many are even putting the brand ahead of their own identity, something that independents have often been reluctant to do. Tim-BR-Marts is part of the Matreco group, which includes AWARD, BMR and Homecare (Tim-BR Mart Ontario). Except for BMR, Matreco's Québec-based member, the groups have been converting their members to one national brand, a subtle reworking of the Tim-BR-Marts name. The program consists of both interior and exterior details. Flourishes include brighter signage, new end cap signage and the brand's slogan: "Good neighbours, good advice." The outside of the store updates the peaked big box-style entrance with an arch to mark the entrance clearly. "We wanted something progressive, a young fresh look," says Beck. "The arch was, to us, very clean." Of the 185 Tim-BR-Marts stores in Western Canada, Beck says 59 have been converted or are in the works, 15 of them in this year alone. Recent conversions include Salmon Arm and Powell River, BC. The next to open will be a new store for Bill Lutes in High River, AB. Lutes Building Supplies will open its doors sometime early in 2003 with the full Tim-BR Mart package.
London, ON - TSC Stores are appearing more and more on television and in association with special events. "We've become more aggressive in the last two years with advertising and promotion," says Roy Carter, president of the chain of farm and hardware stores through Southwestern and Central Ontario. TSC is also attaching its name to special events, including the Western Fair in London, the Woodstock Farm Show and the Royal Winter Fair, running this week in Toronto. "We're trying to communicate to people beyond our normal listening audience that we're a good spot to shop for our core categories of hardware and farm supplies," Carter continues.
Toronto, ON - Canadian Tire Corp. has reported third-quarter consolidated net earnings of $49.6 million, down 7.2% from $53.5 million in 2001. However, net earnings were up 13.8% to $49.6 million, compared with $43.7 million in 2001. Consolidated retail sales for the quarter were up 13.4% to $1.8 billion, while consolidated gross operating revenue rose 11.7% to $1.45 billion. For the first nine months of the year, Canadian Tire net earnings rose 2.2% to $138.5 million. Consolidated retail sales were $5.13 billion for the first nine months, up 11.2% compared to the same period in 2001. Consolidated gross operating revenue for the first nine months was up 8.4% to $4.30 billion. Total retail sales for the quarter were $1.50 billion, a 7.6% increase from 2001. Same-store sales were up 4.4% for the quarter. Year to date, Canadian Tire Retail total retail sales were $4.19 billion, up 6.8%. Same-store sales were up by 3.2%.
Don't miss Practical World 2003, the Cologne International Hardware Fair/DIY'Tec. The 2003 show is March 9-12. For show information, contact Barbara Hills at 416-598-3343 or email colognet@idirect.com. To book your flight and hotel, call Carol-Ann Itel at Trade Show Travel, 1-877-873-7469 or email tradeshowtravel@shaw.ca .
Canadian Tire 33.15 23.15 29.90
Canfor 11.70 6.83 7.58
Emco 12.77 5.60 11.00
Goodfellow 13.99 8.49 12.20
Home Depot 52.60 23.18 26.65
Hudson's Bay 15.55 5.87 6.70
Lowe's Cos. 49.99 32.50 39.47
Sears Canada 25.10 15.05 17.65
Sodisco-Howden 2.20 1.06 1.47
Taiga Forest 7.00 4.55 6.25
West Fraser 44.42 28.90 33.00
Rona Inc. successfully closed its public share offering last week, raising more than $150 million on the Toronto Stock Exchange. The underwriters have an option to purchase up to 1,668,000 more common shares until December 5, 2002. The additional shares may be sold by certain existing Rona shareholders or be issued by Rona. If the over-allotment option is exercised in full, total gross proceeds to Rona could reach $172,638,000. The money will be used to pay down debt in the form of outstanding debentures, and to strengthen the company's infrastructure following a number of acquisitions. Doman Industries will get relief from creditors for up to 90 days under the Companies' Creditors Arrangement Act. Doman has reached a deal with some lenders to help the company reduce its long-term debt from $1 billion to $400 million and provide up to $100 million of new capital. Canadian Tire has forged a five-year supply and technology agreement with NAPA Canada, whereby NAPA will supply Canadian Tire stores with emergency parts and automotive products not normally kept in stock. The deal is part of CTC's strategy to grow its automotive business. Canadian Tire has introduced a Christmas gift-giving program featuring more than 300 products. The program features products that are completely new to Canadian Tire's assortment. Sections organized by themes offer home entertaining gifts, barware, candles, picture frames, office accessories, travel items, gardening gifts, gifts for golfers and hockey fans, luggage, calendars, framed art and pre-wrapped gifts. Sears Canada has opened a Furniture and Appliances store in Calgary that reflects the retailer's latest design concepts for its furniture and major appliances business. The 43,000-sq.ft. store is the prototype that showcases groupings of both contemporary and traditional home furnishings, wider aisles, new lighting and a softer colour palette for in-store signage. Planters' Pride has appointed the following distributors: Greendale Garden Products for Ontario, Halifax Seed Co. for the Maritimes and Labon Inc. for Québec. On November 5, the Canadian Retail Hardware Association and Lumber and Building Materials Association of Ontario met with the House of Commons Standing Committee on Finance to discuss how to increase economic prosperity. The submission was supported by a coalition of three key industry groups, the Canadian Retail Building Supply Council, the CRHA and the Canadian Hardware and Housewares Manufacturers Association. The submission outlined industry support for reduction of both the national debt and taxes. Wal-Mart Stores reported net sales for October of US$18.5 billion, up11.3% over last year. Sales for the year to date were US$174.6 billion, up 12.1%. The Wal-Mart division's sales for the four-week period were up 12.7%.
Jon Louch has joined Bon L Canada Inc. as national sales manager. He was formerly with Balmer Studios. (905-508-3247) Mitchell Mailvaganam has joined Planters' Pride, a division of ITML Horticultural Products, as product co-ordinator. A graduate of the University of Waterloo, ON, he reports to Don Gayford, director, retail operations. (905-791-2600) At the Canadian Retail Hardware Association, Maura Bella has been named director of the Canadian Hardware & Building Materials Show. She continues to hold her position as director of administration. Joe Edwards, show manager, is currently on indefinite medical leave. (905-821-3470)
The seasonally adjusted annual rate of housing starts in Canada increased 10.4% in October to 220,400 units, according to CMHC. Urban multiple starts rose 21.4%, while urban singles rose 6.9%. Estimated actual urban housing starts for January to October are 27.6% higher than for the same period last year (149,563 units compared with 117,207 units). The single-detached market increased 34.5%, while multiples increased 19.1%. Builders took out $3.7 billion worth of building permits in September, down 6.9% from August, says Statistics Canada, the second consecutive monthly decline. Residential permits fell by 4.4% to $2.4 billion, the result of a sharp drop in construction intentions for multi-family dwellings. Non-residential construction intentions fell by 11.3%. A report by ReMax says housing prices in Toronto will go up 7% next year, but still fall short of the national average. Prices across Canada are expected to rise by about 10%. Strong migration into the Greater Toronto Area, job growth and low mortgage rates are fuelling the housing boom in Toronto, where sales were up 19% in October from the same time last year. Consumer spending in department stores fell in September by 3.2% from August, bringing department store sales to $1.70 billion seasonally adjusted for the month. This is the lowest level so far this year. Despite recent declines, department store sales in the third quarter were up 5.6% from the third quarter of 2001. Compared with the second quarter, however, department store sales were down a slight 1.1%. This was the first quarter-to-quarter decline since the fourth quarter of 1999.
"Consolidation of the distribution channels in Canada may not be a good thing long term, as it narrows the competition, and we all know competition is a good thing. On the positive side, the additional buying power that Sodisco now gains will be a positive aspect for all involved, as it should ensure that the independents continue to be in a position to compete with any of the major players in the industry." - Randy Martin, director, merchandising for Tim-BR-Marts Ltd., on the recent takeover of Ace Hardware Canada by Sodisco-Howden Group.
Albert Plant, national market manager of consumer products and retailing for RBC Royal Bank, was a hit at our recent Hardlines Marketing Conference. Now RBC Royal Bank has updated his thought-provoking and informative presentation and bound it into a special report for Hardlines subscribers: "Consumer Fulfillment - The rules of the game don't change." Albert invites anyone who wishes to receive a free copy of this report to contact Nancy Wright here at Hardlines: 416-489-3396, or nancy@hardlines.ca.
If you are doing budget planning, developing next year's marketing plan, pitching a new client who needs hard data, a foreign head office that needs the definitive Canadian snapshot, in need of competitive intelligence, call Nancy Wright, 416-489-3396, to find out more!

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