| CASTLE REVEALS SUCCESSION PLAN WITH FRAME HIRING |
MISSISSAUGA, ON — The hiring of Mike Frame marks another step in the growth of Castle's commitment to dealer recruitment. It's also the first step in establishing a succession plan for Castle Building Centres.
 Frame started last week as part of the dealer development team under Castle's national business development manager, Ron Marchetti. He will handle Eastern Ontario while Marchetti will now confine his coverage of the province to the West, until his retirement next August.
Frame was lured away from Rona, where he had been working as part of the team that is aggressively recruiting dealers in Ontario.
Marchetti has many years experience dealing with independents. Before joining Castle in 1995, he worked for eight years as marketing manager at the Ontario buying group, Homecare Building Centres. But his career in this industry started in 1956 at Aikenhead's Hardware in Toronto. In 1971, he moved to Beaver Lumber, and later worked for the buying group Allont, then Merchants Consolidated.
"We just had some big shoes to fill with Ron Marchetti's retirement a year from now," says Pro Wylie, president of Castle. "We investigated several people, and decided to act now rather than later next spring."
Frame joins a team that includes Ron Douglas in Atlantic Canada and Alan Schoemperlen, who handles Western Canada. When Marchetti retires, he will turn the dealer development helm over to Frame, who will then report directly to Wylie. Marchetti expects to continue working for Castle on "special projects" after that time.
Wylie's own contract with Castle was renewed at the beginning of this year for another four-year term. |
| BARGAIN OFFERS FRANCHISES, AUTHORIZED DEALERSHIPS |
ST-ANTONIN, QC — A new banner for Eastern dealers? Well, not quite new, but greater emphasis on potential franchisees reflects a new commitment by Bargain Building Materials to increase its ranks both in and out of its home province of Quebec.
 Bargain, which operates in French Canada as Matériaux à bas prix, is based in this community near Rivière du Loup, and has 14 stores already, which average between 5,000 and 7,000 sq.ft., plus another 3,000-5,000 sq.ft. of warehouse space. One more store is scheduled to open during the first week of December. This one, in Charlesbourgh, will establish the chain firmly in Quebec City. (Another store already exists in St-Nicholas, near Levis on the south shore from Quebec City.)
The company started as a purveyor of off-price building materials, and until about five years ago, these "imperfect materials" accounted for up to 90% of the retailer's sales. But since then it has been purchasing more and more first-grade products, and today they account for about 75% of Bargain's sales. Total retail sales reached $35.4 million in 2002.
"We made a complete switch in the line of products," says Jacques Dery, general manager of Bargain Building Materials. That switch was supported by its own lines of imported hardware products.
But Bargain has had one franchisee for almost six years in Stittsville, ON and the company is now going after more dealers on a franchise basis. "This program does work well," says Dery. "What we're doing is pushing the franchisee program and trying to get new dealers interested."
Given its broad coverage of Quebec with its own stores, Bargain is aiming the franchisee program at dealers beyond the provincial borders, especially in Ontario, New Brunswick and Nova Scotia, Dery says. and not just for francophone dealers. He sees great potential for the format in English Canada, as well.
Dery still wants to grow in Quebec, however, and a new "authorized dealer" program gives independents there the opportunity to get involved with Bargain on a more limited basis.
Under an authorized dealership, Bargain will offer five product lines: recycled paint, mouldings, flooring, hardware and hand and power tools. The hardware and tools are imported from the Far East under the Tomak name, which is proprietary to Bargain. The program is suited for dealers beyond the traditional building centre format, and can be picked up by paint stores, flooring dealers and other specialty dealers.
"The authorized dealership is brand new for us," says Dery. "We started offering it in July 2003, and we're getting more aggressive in marketing the concept since the beginning of September."
Response has already been good, he notes, with one dealer already signed and another nine that have already approached his company expressing interest. |
| TRUSERV SHOW FEATURES PET, GARDEN EXPERTISE |
WINNIPEG, MB — At its latest dealer market this past week, TruServ Canada Cooperative Inc. launched a number of initiatives for its members, including programs for pets and garden. In addition, a new POS system was introduced designed to be affordable for smaller stores.
The annual October Market was TruServ's biggest ever, with strong support by more than 400 dealer members from across Canada – representing True Value, Country Depot, V&S and FS Coop – and a sold-out participation by vendors. "There was tremendous spirit on the floor," says Ray Falkenberg, TruServ's vice-president, business development and marketing. "And vendors have been unanimous in reporting their biggest sales ever.
 During the annual member dinner, Pierre Levesque, chairman of the board and interim CEO shared the news of the company's recent growth. "We are extremely excited by our current year-to-date sales increase of 24%. This can be attributed, not only to our 41 new members year-to-date, but also to the 110 Country Depot and FS Coop members we acquired in January."
Those new dealers reflected TruServ's takeover of the retail operations of Growmark in Ontario. But the acquisition also added new expertise to TruServ's merchandising mix, which was reflected in the launch of Growmark's pet program and Grower's Edge gardening program to TruServ dealers. In addition, Growmark's unique Country Depot retail format was again showcased, as was TruServ's new "Color Made Simple" paint and décor area.
In addition, TruServ unveiled a new, scaled down POS system for its smaller members. The system is being provided by Calgary-based AMPM, and complements, rather than replaces, existing systems supported by Dimensions and Profitmaster.
The new offerings at the market appealed to both new and potential dealers, says Falkenberg. Twenty-two prospects were at this year's show, the most ever. Six of them have already joined the co-op since the show, he adds. |
| DO IT BEST RETURNS RECORD REBATES, PROMOTES DEALER PROGRAMS |
| INDIANAPOLIS, IN — At its latest shareholders' meeting, Do it Best Corp. returned rebates totalling US$98.2 million to its members. The rebate, the highest ever for the company, reflected the company's 1% sales increase to US$2.42 billion.
According to Bob Taylor, president and CEO of Do it Best, this is the highest rebate in the U.S., and marks a 36% increase in member rebates over the past five years. However, he added in a prepared statement, the co-op needs to keep looking for ways to support its members and ensure continued growth. He identified four key areas of success for his dealers: developing staff loyalty, leveraging their status as locally owned enterprises that are involved in their respective communities, developing long-term business plans in conjunction with head office, and tying in with Do it Best's own retail system.
"It's the only system in the industry designed to help independent retailers grow their businesses locally and that also allows members to pick and choose what works best for them." |
| ACE RELAUNCHES ONLINE FLYER PROGRAM |
| ATLANTA — Ace Hardware Corp., the dealer-owned wholesaler, has decided to relaunch a marketing program that failed to stir up much interest among targeted members only six months ago.
At its buying show here this week, Ace made available to its Commercial and Industrial Supply dealer-members, which number around 300, an Internet enabled program that allows them to create their own ad flyers. Using this tool, known as Ace CIO BYO Flyer and provided by Chicago-based TotalWorks Inc., dealers can download an ad page template on their own. Then, using pull-down menus, they can customize the ad according to product assortment, pricing and other factors. The same can be done to create catalogues.
Previously, Ace had been producing bimonthly flyers for its members' industrial-commercial stores.
A spokesperson for Ace told Hardlines that this program had been introduced originally at the co-op's spring buying show in Las Vegas, "but it didn't catch on." |
| BLACK & DECKER FACES THREAT FROM HOME DEPOT'S POWER TOOL INTRO |
| PHILADELPHIA — Black & Decker, which has long been one of Home Depot's primary power tool suppliers, believes it can maintain its position on that dealer's shelves, despite Home Depot's introduction this week of a line of Ridgid-brand corded and cordless professional tools that the chain heralded publicly as the biggest tool launch in its history.
In its latest quarter, which ended September 30, B&D reported a 5% increase in revenue to US$1.14 billion, and a 35.5% gain in earnings to US$74.4 million. Sales of power tools and accessories increased 1%. Through nine months, B&D's sales rose 2.3% to US$3.37 billion, and its profits jumped 25.6% to US$193.5 million.
During a conference call to disclose and discuss B&D's third-quarter financial performance, the toolmaker's CFO, Mike Mangan, said that he thought Black & Decker would continue to be viewed by Home Depot as "the number one preferred brand."
His comments came only days after Home Depot unveiled the 30-SKU Ridgid tool line, which supplements the Ridgid-branded stationary and benchtop tools the chain has been carrying for several years. The products are being supplied by Techtronic Industries.
Mangan, somewhat defensively, noted that B&D had been increasing its market position with Lowe's and that B&D saw the independent dealer market as being as important as Home Depot to his company's future sales growth.
B&D is hoping to avoid a repeat of what happened last year, when Home Depot dropped the supplier's Price-Pfister faucet line in favour of its own Glacier Bay private-label line, plus some fill-in from Moen and other brands. B&D stated in its 2002 annual report that the loss of that business would negatively impact its annual plumbing sales by US$60 million. Home Depot also accounts for more than 10% of the manufacturer's hardware sales. |
| WAL-MART GETS HEAT FOR LOW WAGES, ILLEGAL WORKERS |
| OAKLAND, CA — This city across the bay from San Francisco has banned all retail stores larger than 10,000 sq.ft. that sell non-taxable products, namely groceries. The move is an effort to block mega-stores such as Wal-Mart, which are accused of depressing wages and devastating the livelihoods of "mom-and-pop" independents. Wal-Mart has targeted California for another 40 stores over the next four years.
Hot on the heels of this news came the announcement that more than 300 illegal workers had been arrested last week at 61 Wal-Mart stores around the country. The bust occurred after an investigation that focused on janitorial crews employed by outside contractors.
The raids rounded up immigrants from a number of countries who were finishing their night shifts by the Bureau of Immigration and Customs Enforcement. |
| INDUSTRY STOCK WATCH |
|
COMPANY |
52-WEEK HIGH |
52-WEEK LOW |
CLOSE FRIDAY |
| Canadian Tire |
39.30 |
27.85 |
39.22 |
| Canfor |
10.95 |
7.09 |
8.77 |
| Costco |
39.02 |
27.00 |
33.72 |
| Goodfellow |
12.40 |
9.75 |
12.35 |
| Home Depot |
36.64 |
20.10 |
35.60 |
| Hudson's Bay |
10.74 |
6.41 |
10.74 |
| Lowe's Cos. |
58.94 |
33.37 |
57.85 |
| Rona Inc. |
23.75 |
11.75 |
23.00 |
| Sears Canada |
20.00 |
13.60 |
19.84 |
| Sodisco-Howden |
3.35 |
1.15 |
2.84 |
| Taiga Forest |
8.10 |
6.00 |
7.45 |
| Wal-Mart |
60.20 |
46.25 |
58.11 |
| West Fraser |
39.05 |
29.25 |
32.50 |
|
|
| COMPANIES IN THE NEWS |
| FEDERAL WAY, WA — Weyerhaeuser had net income for the quarter ended September 28 rose to US$82 million from US$13 million in the same period in 2002. Its quarterly revenue increased 6% to US$5.18 billion. The quarter included various charges against earnings totalling US$62 million. During the quarter, Weyerhaeuser reduced its debt by US$360 million to US$13.2 billion. It also reported that it incurred about US$25 million in countervailing and anit-dumping duties and related costs on Canadian lumber shipped into the U.S.
HAMILTON, ON — Camco, Canada's largest appliance maker, will close its operations as of December, 2004. The closing will affect up to 800 workers, and is cited as another casualty of free trade and globalization. The Montreal plant will remain in operation, however, producing clothes dryers.
LONDON, UK — B&Q has given staff a new handheld device that allows them to roam the store, freeing the POS process from the traditional checkout aisles. The UK's biggest DIY chain is testing its Mobile Electronic Sales Assistant (MESA), which allows roaming store staff, collectively known as the Service Squad, to deal with customer enquiries more efficiently and quickly.
TORONTO — Sears Canada Inc. is planning to open 50 or more stores in popular big-box outlet power centres during the second half of the decade. According to the Globe and Mail, Sears chairman Mark Cohen says that up to half of the new stores will be downsized department stores covering one floor only, while the rest will be new specialty outlets, potentially focusing on clothing or hardware. The retailer has been watching the shift by consumers, especially younger shoppers, away from traditional shopping centres to power centres.
ATLANTA, GA — Home Depot has launched a range of portable power tools under its proprietary Ridgid brand name. The new line was developed with Emerson Professional Tools and OWT, a wholly owned subsidiary of Techtronic Industries Co. Ltd., which also manufactures the tools. Aimed at contractors, woodworkers and serious DIYers, it consists of more than 30 cordless drills, mitre saws, laser guides and a table saw.
BURNABY, BC — Sales at Taiga Forest Products Ltd. for the three months ended September 30 were $306.2 million, up 27% from $241.6 million in the same quarter last year. Earnings for the three months were $4.4 million, down from $6.5 million last year. For the six month period, Taiga's sales were $564.6 million, with earnings of $5.0 million, compared with sales of $500.0 million with earnings of $8.1 million. Last year's quarterly results include an adjustment to operating income before income tax of $7.6 million, which increased quarterly net profit after income tax by $5.3 million.
NEW BRITAIN, CN — Stanley Works reported last week that its earnings for the quarter ended September 30 declined 23.8% to US$41.7 million on sales of US$715.7 million that were 7.5% higher than the same period a year ago. Through the first nine months of its fiscal year, Stanley's sales jumped 7.8% to US$2.08 billion, while its net income plummeted 56.1% to US$73.3 million. The company's third-quarter results included a US$17 million charge related to Stanley's ongoing corporate restructuring. However, the company managed to lower its debt by US$77 million in the quarter.
BOISE, ID — Boise Cascade Corp. has reported that sales from its Building Solutions Group increased 23.3% to US$828.1 million during the three months ended September 30. The group's operating income rose 288% to US$56.4 million. Through nine months, the Building Solutions Group generated US$1.40 billion in revenue, or 50.5% of Boise's total. However, those sales were off 1% from the same period a year ago. The group's nine-month operating income was only US$529,000, compared with US$15.2 million in the same period in 2002.
GLENVIEW, IL — Illinois Tool Works Inc. has reported higher quarterly earnings, helped by acquisitions and a weaker U.S. dollar. ITW saw its third-quarter net income rise to US$268.9 million from US$245.5 million a year earlier. Operating revenue rose to US$2.53 billion from US$2.40 billion. |
| PEOPLE ON THE MOVE |
|
At Taiga Forest Products Ltd., Kooi Ong Tong has been elected chair of its board of directors. Tong represents 3Cs Investments Ltd., a privately owned Cayman Islands corporation that recently acquired approximately 20.05% of Taiga. The company also holds an option to acquire further common shares, which would bring its share of ownership in Taiga to about 25.04%. Tong is a businessman with interests in media, technology and other businesses in Asia and North America.
|
| MARKET INDICATORS |
| Renovation spending is expected to increase 7.6% in the third quarter and grow by 4.4% to $33.3 billion in 2004, says the latest report by CMHC. The growth is being fuelled by strong housing starts and buoyant resales. A record 421,227 existing homes were sold in 2002, and low mortgage interest rates and growth in mortgage refinancing activities are expected to help keep this pace high throughout 2003 and 2004.
Inflation crept up again in September as Canadians paid 2.2% more for the goods and services included in the Consumer Price Index basket than they did in September 2002, says Stats Canada. This follows a year-over-year rise of 2.0% in August. But September's 12-month increase remains well below the recent highs of early 2003, when energy prices, and gasoline prices were providing the bulk of the upward pressure.
Wholesale trade was down by 4.6% to $34.2 billion in August. That's the biggest drop since the ice storm which ravaged Eastern Canada in January 1998, and marks the sixth decline in seven months. The August slump in wholesale sales was largely attributed to the power blackout that paralyzed Ontario and the Northeastern U.S. The automotive manufacturing sector in both countries was severely affected, further affecting Canadian wholesale. |
| NOTED... |
| Le Groupe BMR will host its annual trade show at the Quebec City Convention Centre on November 13 and 14. Besides humorist André-Philippe Gagnon as dinner entertainment, a number of dealers from other buying groups are expected. (We'll keep you posted — Michael) |
|
John Caulfield, Contributing Editor
vol. ix, #41 October 27, 2003
We're starting to get a lot of inquiries here at the World Headquarters about the shows next year. Undoubtedly, Practical World, the Cologne International Hardware Fair/DIY'TEC, is a must-attend for North American vendors who want to find new product and packaging ideas – and, of course – new customers. Buyers go in droves to find new sources of supply and new strategic alliances. For more information, contact Barbara Hills, b.hills@koelnmessenafta.com , 416.598.3343 or Beverly Allen here at Hardlines, bev@hardlines.ca. For travel arrangements, contact Carol-Anne Itel at Trade Show Travel, 877-873-7469; tradeshowtravel@shaw.ca
Your products deserve the best representation they can get. NORAL MARKETING knows the Canadian retail customer. Don't settle for anything less!
Contact Al Vanderveen at 519-439-6800, ext. 201, to find out how Noral can boost your sales in Canada. http://www.noralmarketing.com