Signs of slowdown begin to appear regionally

TORONTO - As Canada's home improvement industry nears $40 billion in sales, it continues to be a major driver of the country's retail sector. In fact, one out of every ten dollars spent at retail goes toward products to improve, renovate and decorate the home, according to the latest retail report from Hardlines. Combined sales by Canada's hardware stores and building supply dealers, plus related hardware, seasonal and home improvement sales by Canadian Tire, mass merchants and club stores, increased by 7.3% to $39.43 billion in 2006, according to the Home Improvement Retail Report: 2007-2008. Growth was due to a number of factors: a housing market that remains relatively strong, a robust renovation market, continued consumer fascination with home décor as fashion, and a broadening range of "home enhancement" products appearing on retailers' shelves. For the first half of the year, hardware and building supply dealers across the country were up 7% over 2006. Saskatchewan and Newfoundland are emerging as the two hottest provinces for the retail home improvement industry. Each had double-digit growth for the first half of the year, as their economies are fueled by capital investment in developments in the resource sector, especially oil, plus a strong fall harvest in Saskatchewan. But signs of a slowdown are now appearing regionally. For example, while British Columbia and Alberta show increases, growth in Ontario and Quebec has slowed over last year, with an estimated increase of 5%. Atlantic Canada is steady with growth of between 3 and 5%. (Full details of the size and growth of the Canadian industry are in the 2007-2008 Hardlines Retail Report. Click here for more info  

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Castle builds brand to grow business

MISSISSAUGA, ON - A new corporate slogan, "Your Trusted Local Building Supply Dealer", is part of the Castle Building Centres Group's bid to build a consistent brand that will help existing and new members grow business. Speaking recently to an audience at a CHHMA breakfast, James Jones, vice-president of national marketing for Castle, explained that, while independent Castle dealers are encouraged to build a local reputation, network-wide tools for brand building, including in-store inspirational publications and a strong flyer program, will help dealers stay top of mind with consumers. On the trade side, the company is rolling out a series of new print ads to convince independent dealers of the merit of Castle membership. Dealers are also being offered support with succession planning and with a store refurbishment program that has been used in 10 stores over the last year. Another 60 stores are expected to pick up the program in the coming months. With a strong push on branding and positioning, the company may consider consolidating its marketing and advertising initiatives, which are currently done by a combination of in-house support and contract players. Castle, which has been historically low-key about the use of the buying group's banner at the dealer level, now has about 65% of members using the corporate name on its stores.  

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Canadian Tire expands auto programs

TORONTO - Canadian Tire and its dealers have introduced a major initiative in the company's automotive business that will see CTR and PartSource stores expand assortment, improve same-day automotive parts supply and enhance customer service. Under the program, CTR will increase the assortment at its three main auto parts distribution facilities from 35,000 SKUs to 75,000 SKUs. The company plans to overhaul its technology infrastructure for retail operations, purchasing and inventory management, warehouse processes and front-line service. It will also create a network of about 22 PartSource hub stores to supply same-day parts to between 75% and 80% of CTR's 468 stores. There are currently 67 PartSource stores across Canada; the company plans to increase that number to 200 by 2014. CTR expects to complete most of the changes over the next 24 to 36 months, and spend about $120 million to do so. But it anticipates that the new program will generate $120-$130 million in incremental auto parts sales for Canadian Tire by 2010, and over $200 million by 2014. "The revisions to the contract represent an important step in our ongoing strategy to improve productivity and rates of return at CTR. These changes enhance our confidence in our ability to sustain our earnings growth into the future," president and CEO Tom Gauld, said in a prepared statement.

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Canadians getting greener

OTTAWA - Canada's booming lawn and garden industry, which Statistics Canada estimates has grown from about $600 million in 2002 to more than $2 billion in 2006, will have to offer more alternatives to traditional fertilizers. According to a new study by StatsCan, Canadians - especially Quebecers - are using less pesticide on their lawns. The study reports that the proportion of households using pesticides dropped from 31% in 1994 to 29% in 2005. In Quebec, where there are pesticide bans in many municipalities, the proportion of homes using pesticides on lawns and gardens dropped from 30% in 1994 to 15% in 2005. Saskatchewan, Manitoba and Alberta led the country in pesticide use in 2005, with about two out of every five households using them on their lawns and gardens. Canadians show less interest, however, in reducing their environmental footprint when it comes to lawnmowers. Two-thirds of Canadian households with lawns and gardens owned a gas-powered lawnmower in 2006. According to StatsCan, in one year, the average gas-powered mower emits the same amount of a key smog pollutant as the average car traveling about 3,300 kilometres.

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Hardlines TV goes live

WORLD HEADQUARTERS - In response to growing need for immediate information and deeper insight into the rapidly evolving home enhancement industry, Hardlines Inc. has added online video streaming to hardlines.ca. Called HTV, the new feature will bring live interviews from trade and consumer shows, new store tours and product demos, as well as on-the-spot interviews with home improvement executives at various industry events. HTV will be produced by Brady Peever, who recently joined Hardlines with a degree in corporate media production. It will be fed by frequent news reports and features. "It's a way to give people an immediate sense of what's going on the industry, and allow them to keep abreast of changes and innovations in the sector," says Peever. "In short, it's all the stuff you can't read." "Hardlines has also been focused on bringing cutting edge education, information and training to the industry," says Michael McLarney, president of Hardlines Inc. "HTV is a new and very exciting way to take that to the next level." To watch the first episode of HTV, click here

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Lowe's sees opportunity in downturn

CHARLOTTE, NC - Lowe's sees a "window of opportunity" during the current soft business cycle in the U.S. to solidify its relationship with customers and improve the productivity of its operations. "Our goal is to create a new standard for the industry," Robert Niblock, Lowe's chairman and CEO, told investors and analysts at its annual conference, which the retailer held here last week. The downturn in the housing market, as well as drought conditions in several of its markets this summer, have had a negative impact on Lowe's sales and earnings in 2007. But the company is still on pace to open between 150 and 155 stores this year, including its first foray into Canada with six stores scheduled to open in the Greater Toronto market in December and January. And while it projects comp-store sales declines through 2010, the company anticipates double-digit sales and earnings gains during each of the next three fiscal years, when it expects to add between 135 and 140 new stores per year, and will enter Mexico in 2009. Lowe's also has a number of new store formats in the works that might fit better in different-sized markets than its typical 117,000-square-foot and 94,000-square-foot footprints. Under construction is an 80,000-square-foot store, with an attached drive-through lumberyard on the side, which the company will open next year. Lowe's is also developing a two-level store that would have 75,000 square feet of selling space on the first floor, 40,000 on the second and another 20,000 square feet for lawn and garden. Lastly, in the conceptual stage is a smaller store for standalone markets whose populations are less than 250,000. "We know how to run small stores," says Greg Bridgeford, Lowe's executive vice-president of business development, who recalled that when he joined Lowe's in the 1970s , the company's store size averaged 13,350 square feet.  

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