John Caulfield, Contributing Editor
vol. x, #48, November 29, 2004

IN THIS ISSUE: • TruServ has big plans for Country Depot • Rona steps up expansion plans • U.S. housing market stays hot • We talk with Sodisco's new head merchant • U.S. vendors increase participation in London show • Green products take off

* * * * * * NOTE: Dollar amounts are stated in the currency of the country from which the story originates. — Michael McLarney, Editor & Publisher * * * * * *
"We blame in others only the faults by which we do not profit!" — Alexander Dumas
Country DepotWINNIPEG — When TruServ Canada bought up the retail business of Growmark Canada in January 2003, it inherited a unique retail format designed a decade earlier called Country Depot. This concept took the basic farm co-op product mix, fine-tuned it under the categories of hardware, work wear, lawn and garden, and pet supplies. Now that concept is being exported outside of Ontario.Not simply aimed at the traditional rural marketplace, Country Depot is designed to offer a sophisticated retail package that will appeal to a growing populace of urban workers living in the country who seek, says Bill Morrison, president and CEO of TruServ Canada, "a rural quality of life and space." Now TruServ is ready to go beyond the 45 Country Depots already in place in Ontario to roll the format out nation-wide.The first store in the West will open in spring, Okotoks, Alta., but that's just the start. According to Morrison, there are about 130 possible markets for Country Depot, and he expects 10 more to be put in place next year (eight of them in Ontario), with 20-25 per year after that. "Country Depot will move away from its rural roots to appeal to people who work in the cities," says Morrison. He offered some insights into TruServ's strategy at a recent breakfast seminar hosted by the Canadian Hardware and Housewares Manufacturers Association. The Okotoks store is situated beside a Wal-Mart store. Morrison says he'll use a cluster expansion strategy, with aggressive expansion within certain regions, and he says the co-habitation with Wal-Mart is an effective strategy. The original format, typically a store in a smaller, secondary market, is being enlarged, to provide a wider range of products, and being situated, wherever possible, in the same parking lot as a Wal-Mart. (Note: The CHHMA has a good program this season, with Rona CEO Robert Dutton lined up to speak to the Quebec chapter November 30. For more info, click here or call: 416-282-0022)
RONABOUCHERVILLE, Que. — The number-two home improvement retailer in Canada has stepped up its expansion plans for next year. Rona inc. expects to open 10-15 stores each year through to 2007.That's up from the 3-5 per year originally planned over the next three years. Half will be Rona Home & Garden big boxes, with an equal number of traditional stores, flying either the Rona Home Centre or Rona Building Centre banner. It's all part of the company's plan to double market share by 2007.Those plans still include the search for further acquisitions, though on a smaller scale than have marked the company's rapid growth since 2000, when it began a buying spree with the purchase of the Ontario-based chain Cashway. And while a merger of the scale of Rona and, say, Home Hardware Stores Ltd., would establish Rona as the industry leader, the two companies are too different to ever realize such a union. Robert Dutton, president and CEO of Rona, admits, "they don't like our financial structure [Rona is publicly traded]. Home Hardware prefers to remain a co-op. I respect that." Nonetheless, such a union, he adds, would have given one company more than one-quarter of the retail home improvement marketplace in Canada. "You could own the business," Dutton says. Now Rona is setting its sights on strong regional players. "The market has a lot of smaller regional retail groups, in the $25-$100 million range. I have a lot of interest in that." He also wants to ensure the company reaches its goals through greenfields expansion, hence the increased rate of openings over the next three years. Five stores are already under construction. These include two big boxes, one in Richmond, B.C., and another in Gatineau/Hull, across the river from the nation's capitol. Sites already confirmed for traditional stores include Fort McMurray, Alta., and Vernon, B.C. The company has also hinted at possible further expansion at the distributor level. The recently announced takeover of Sodisco-Howden Group by CanWel has opened up "some opportunities for Rona to increase both its distribution and its retail businesses," says Sylvain Morissette, communications director for Rona. However, he would not add any further details.
LONDON, U.K. — Next January's DIY & Garden Show at Earls Court 2 in London is already bigger than this year's event and will be the biggest show for four years."We're seeing an increase in the number of U.K. suppliers wanting to take the initiative and meet buyers face-to-face at the show, and also from overseas companies targeting the U.K. market in the first non-Cologne year," says sales director Paul Grinsell.The exhibition consistently attracts visitors from more than 30 countries. Watch for suppliers from Austria, Belgium, Canada, Denmark, France, Germany, Holland, India, Slovenia, Switzerland and Taiwan. Overseas exhibitors include a record 22 American companies on a U.S. group stand organized by the Worldwide DIY Council. Members include the world's two biggest dealer-owned wholesalers, Ace Hardware and TruServ Corp. The DIY & Garden Show and Totally Tools take place at Earls Court 2 in London from January 16-18, 2005. For more information, or to register at no charge online, visit or call First Events: +44 (0)20 8462 0721.
PORTLAND, Ore. — A pressure-assist toilet that uses less water and certified framing lumber were among the items that made the list of 10 leading environmentally friendly products selected by BuildingGreen Inc., which publishes Environmental Building News.This is the third year that the publisher has identified products that primarily help conserve energy or natural resources. The newest additions to the list are included in BuildingGreen's GreenSpec directory.This year's list includes two products that convert sunlight into usable energy; a toilet-flushing mechanism that uses one gallon per flush, or 40% less the 1.6-gallon federal standard; and a new, non-toxic pressure-treated wood product that relies on a mineralization process within the wood to protect it from insects and decay without making the wood more corrosive. GreenSpec's co-editor Alex Wilson said that that his staff can barely keep up with the number of new eco-friendly products that have come onto the market in recent years. What's driving that development, he explained, is the U.S. Green Building Council's LEED Rating System (Leadership in Energy and Environmental Design), which awards points for certain product characteristics or the energy or water savings they can achieve. "Designers of LEED buildings are looking for green products, and manufacturers are responding," said Wilson, in a prepared statement. Versions of those standards have already started to make their way into Canada's building industry. The 2004 BuildingGreen Top-10 products are: ECO I Paver from E. P. Henry, TimberSIL a non-toxic pressure-treated wood from Timber Treatment Technologies, LLC, FSC-Certified Framing Lumber and Plywood from Potlatch, Ethos Carpet-Cushion Backing from Tandus-C&A Floorcoverings, EcoVeil TPO Interior Shade Screening from MechoShade Systems, Photovol Glass PV Glazing Panels from MSK Corp., Winston Series CPC Solar Water Heating Collector from Solargenix, EcoSpace Elevator from KONE, FlushMate IV Pressure-Assist Toilet Flush Mechanism from Sloan Valve, and the Cold Climate Heat Pump from Nyle Special Products, LLC.
MONTREAL — As senior director of merchandising at Sodisco-Howden Group, Claude Chalifour heads up the national hardware wholesaler's merchandising department, including an expanded team of category managers and support staff.Chalifour spent 15 years at Rona, most recently as purchasing director, and had additional experience at Loblaws, all of which he is bringing to bear to Sodisco's buying offices. "My role will be to put in place category management," he told Hardlines recently. But, he notes, everything that's done has to be effective from the standpoint of Sodisco-Howden's retail customers. "Everything starts from the retail side."Developing Sodisco-Howden's private-label programs will be one of his challenges, but he says he's not ready to talk about his plans there just yet, but adds enthusiastically, "I see a lot of opportunity there." However, his mandate also includes harmonizing assortments among Sodisco-Howden's three hardware warehouses — in Victoriaville, Que., London, Ont., and Langley, B.C. The result will be one price across the country for dealers to benefit from — something he draws on his experience in grocery to emulate. "Wal-Mart is doing it, Loblaws is doing it. Why can't we do it?"
WASHINGTON — The U.S. Commerce Department reported that the sale of new homes in the country rose 0.2% to an annualized rate of 1.226 million units, which would represent the third-highest level ever recorded. Analysts had predicted that sales would be flat that month.The increase occurs in a month when the U.S. gained 337,000 new jobs (the most in seven months, and when mortgage rates have continued to hover near all-time lows. Even the increases in interest rates imposed by the Federal Reserve over the past several months, and comments made by the Fed's chairman Alan Greenspan that the country's escalating debt and deficit were potentially calamitous to the economy, did little to tamp down what continues to be one of the strongest housing cycles in recent memory.An indicator of future sales found housing starts increasing in October by 6.4% to an annualized rate of 2.077 million units. The National Association of Realtors estimates that the sale of new and existing homes would hit an all-time high in 2004. (The sale of existing homes was off 0.1% in October.) However, the vitality of new-home sales varied by market last month. The Northeast saw the strongest gains, with a 19.7% increase to 85,000 units, followed by western states whose sales rose 12.7% to 417,000. But the South and the Midwest experienced declines of 9.1% and 3.6%, respectively, to 508,000 and 216,000 units. In October alone, 412,000 new homes were sold nationwide, vs. 408,000 in September. The sale of existing homes, while down in October by 0.1% to an annualized rate of 6.75 million units, was still good news because the general consensus among analysts was that the falloff would have been steeper, according to a poll of economists conducted by CBS MarketWatch. In the past year, existing home sales have risen 5.6%. The national median home sale price was $187,000 in October, up 8.8% from a year earlier. Existing home sales in the South rose 3.7%, while sales fell in all other regions: by 1.3 percent in the Northeast, 3.6% in the West and 2.8% in the Midwest.
SHANGHAI, China — Wal-Mart has bowed to pressure from the 123 million-member All China Federation of Trade Unions to establish union branches in their Chinese store. Last month, the Federation threatened to sue Wal-Mart and other companies based outside China, if they don't set up union branches in their China operations. Wal-Mart has agreed to permit branches of the official Communist Party-controlled union in its Chinese stores, if employees requested it. The Chinese market, which already sells $15 billion in goods to Wal-Mart, is regarded as a major expansion market for its retail operations, as well.REGINA, Sask. — The courts are siding with a union in its efforts to unionize a Wal-Mart store in Weyburn, in the southern part of the province. The union claims Wal-Mart has a concerted anti-union program (DUH!) and wants the documents handed over that will prove it. For example, Wal-Mart has threatened to close a store in Jonquiere, Que., if the union gets a foothold. In the latest case, three provincial appeals court judges ordered the documents in question turned over to the Saskatchewan Labor Relations Board. Wal-Mart is saying they may appeal to the Supreme Court of Canada. The world's largest company has 1.5 million workers worldwide, 65,000 of them in Canada.CALGARY — Sears Canada today opened a Sears Appliance & Mattress store at Westbrook Mall here. It's the first off-mall Sears store of this kind to open in Western Canada. Sears opened their first Appliance & Mattress store in Stoney Creek, Ont., and will open two more in that province (Burlington and Oshawa) before the end of the year, part of the retailer's effort to expand in the face of slower growth in new shopping mall development. OTTAWA — The Forest Products Association of Canada has expressed concern over the impact of the rapid and sustained appreciation of the Canadian dollar on the forest products industry and urged Canadian governments to take steps to ensure Canada remains competitive in international markets. FPAC presented its views during its appearance before the House of Commons Standing Committee on Finance. Canada's forest products industry annually exports over C$40 billion worth of product to external markets. It is estimated that each penny rise in the exchange rate translates into a $507 million loss in annual sales revenue.
Two more executives have departed Sears Canada, part of the shake-up following the appointment of Brent Hollister as new CEO, following the ouster of Mark Cohen back in August. CIO John Smith has been replaced by Scott Marshall, and position has been expanded to a senior vice-president and operations officer title, reflecting Marshall's supervision of technology, logistics, call centres and security ... Frances Magliocchi, formerly vice-president merchandising who was recently put in charge of business development as well, now replaces Barbara Duffy as senior vice-president of human resources.
Durable goods orders in the U.S. fell by 0.4% in October, says the Commerce Department. Falling demand for computers, cars and civilian aircraft were to blame. The drop would have been greater, save for strong military demand, as non-defence items dropped by 1.5%.
Total spending in retail stores advanced for a fifth consecutive month in September, says Statistics Canada, as retailers sold $29.1 billion worth of goods and services, up 0.2% from August, when sales rose 0.7%.Consumers paid 2.3% more in October for the goods and services included in the Consumer Price Index basket than they did a year earlier. This increase follows a 1.8% rise in September 2004. Gasoline prices were the primary reason for the large year-over-year increase. Excluding energy, the CPI was up 1.5% in October.

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