RONA unveils growth plans at latest market

MONTREAL—RONA inc. has a plan. It even has a name for the plan: 7-07. What it means, as outlined by company executives at the RONA dealer market held here last week, is that Canada's number-two home improvement retailer continues to vie seriously for the number-one spot held for years by Home Depot Canada. But in order to become a $7 billion company by the end of 2007, RONA has to pursue growth on four main fronts. It is pursuing organic growth, to the tune of $200 million, while new stores will account for an additional $700 million. Recruitment will ring up another $400 million in annual sales. But the other big growth area remains acquisitions. RONA expects to add $700 million in sales by the end of 2007 by buying up other retailers. All those acquisitions are expected to occur within Canada. The company is not restricting its growth to retail channels. According to Claude Guévin, executive vice-president and CFO of RONA, the ICI (institutional-commercial-industrial) market is worth upwards of $100 billion. Not only that, but it offers better margins and resists the cyclical nature of retail. RONA's aging customer, meanwhile, means more opportunity for installed sales. Guévin referred to a study showing that the percentage of Canadians who view themselves to be DIYers has actually increased since 2002, from 63% to 69% in 2006. However, growing home categories include gardening and decorating, leaving room for professional help on more hardcore renovation projects. "Installation is an important service and we have to work on it to continue to grow organically," he said. (More on the RONA show in the next incredible issue! —Editor)

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New look Home Depot enhances décor departments

MISSISSAUGA, Ont.—Lowe's may be coming to town, but Home Depot Canada is not sitting idly by. A new store, only the second relocation of an existing outlet in this country, is 10,000 square feet larger than Home Depot's traditional 135,000-square-foot size, and a departure from the retailer's most recent efforts to build stores of 94,000 and 60,000 square feet. The most dramatic enhancements of Home Depot's existing merchandising are in soft DIY. All its décor categories have been moved into the centre of the store, which now features lowered sightlines that offer a clear view to the bath department toward the back of the store. One of Home Depot's catalogue acquisitions has materialized as a department in this new store. Home Decorators, an online catalogue business acquired last year, has four stores of its own. Home Depot Canada merchants visited those stores and studied the company's product lines. The result is a store-within-a-store bearing the name "Home Decorators Collection". It features everything from furniture and rugs to lights and accessories. (More on this new Home Depot store in our next blazing issue! —Michael)

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Lowe's reports 3Q profit rise

MOORESVILLE, N.C.—Lowe's Cos. has reported net earnings of $716 million for the quarter ended Nov. 3, 2006, a 10.8% increase over the same period a year ago. For the nine-month period, net earnings grew by 20.3% to $2.49 billion. Sales for the quarter increased 5.8% to $11.2 billion, up from $10.6 billion in the third quarter of 2005. For the nine months ended November 3, 2006, sales increased 12.6% to $36.5 billion. Same-store sales, however, declined 4.0%. Year to date, same-store sales increased 1.7%. According to Robert Niblock, chairman, president and CEO of Lowe's, the retailer is starting to feel the effects of the slowdown in the housing market in parts of the U.S. In addition, price deflation in some key commodities and a lack of hurricanes all affected year-over-year performance. "Despite these challenges, we continue to gain market share in key product categories," Niblock said in a release.

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Cologne Hardware Fair will open doors to pros, DIYers in '08

COLOGNE, GERMANY—Starting in 2008, the giant International Hardware Fair/Practical World will open its doors to skilled trades and do-it-yourselfers. However, admittance will be restricted to halls six and nine — the Builders' and Home Improvement/DIY Supplies section. The rest of the exhibition centre — 14 halls in total — will, as in the past, be open exclusively to trade visitors and buyers from the industry. The next International Hardware Fair/Practical World will be held here March 9-12, 2008. Oliver P. Kuhrt, Executive vice-president of Koelnmesse, outlined this new approach at the German retail trade organization BHB's DIY Centre Conference in Berlin. "We are pointing the way to the future with this new strategy," he said. "The DIY industry will get direct feedback from the private do-it-yourselfers regarding new products, and the trade can make good use of the various trends in selecting its product line-up. Nevertheless, the focus on specialists and trade visitors that characterizes the largest part of the fair will be unaffected." The show, which is now held every other year, will be replaced again next year by Asia Pacific Sourcing, which features Asian exhibitors offering a wide range of hardlines products.

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U.S. housing slump takes toll on pro dealers

NATIONAL REPORT—Pro dealers that supply builders and contractors with materials and labor are feeling the weight of a housing slump that shows little signs of abating. Last week, the U.S. Commerce Department reported that housing starts in October fell to their lowest annualized level in six years. The only region of the country that did not see a drop-off was the Northeast, which is being sustained by condominium construction. In response to this market softness, some of America's largest dealers have been closing stores and laying off employees. The biggest shocker came from Stock Building Supply, which revealed last week that it has laid off about one-eighth of its workforce, or around 2,000 people, since June. The housing slump is affecting companies large and small. Builders FirstSource reduced its staff by 8%, or around 500 people, in its most recent financial quarter. And Boise, Idaho-based Franklin Building Supply told the Idaho Business Review that it had 100 fewer workers since September through layoffs and attrition, which represented nearly 30% of its workforce.

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Lowe's introduces furnishings in catalogue

MOOREVILLE, N.C.—Lowe's Cos. recently mailed its first product catalogue, which features a new line of furnishings called Home Accents. As yet, the line is not carried in its stores year-round. Multichannel Merchant magazine reports that the current 48-page catalogue offers holiday buying tips. The magazine adds that Home Accents includes six product styles: country living, traditional, contemporary, eclectic, casual, and cozy. Its selection includes a $1,000 crystal chandelier, $198 accent rugs, and $58 footstools. Lowe's own catalogue launch comes just weeks after rival Home Depot announced that it was discontinuing two of its high-end catalogues, 10 Crescent Land and Paces Trading Co. Another catalogue business, Home Decorators, has become the inspiration for a new department by that name in a test store near Toronto (see Home Depot story above—Editor).

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