Home Depot's Supply division wants economies of scale

TORONTO—Home Depot's commercial wholesale business has a role model – its retail parent. According to Dan McAreavey, president of HD Supply, Home Depot transformed the DIY market and Home Depot Supply will do the same for the pro market globally. One of the opportunities in the commercial wholesale channel, he noted, was just how fragmented it still is. If Home Depot's supply business follows the lead of its retail side, that fragmentation will be consolidated quickly over the coming years by Home Depot's efforts to buy up some, and drive others out of business. "Technology and talent will be the two things we'll rely on," he said, to execute that growth strategy—both globally and locally. HD Supply's acquisition targets will be those companies that have the potential to grow. He cited Brafasco, an industrial fastener chain with 28 outlets in Ontario. "We have a strategy to take that nationally." (In fact, the day after McAreavey's presentation, Brafasco opened a 29th outlet in Toronto, on Wilson Ave. just west of Highway 400), with four more openings scheduled in coming months.) He also seeks out companies that have experience that can be migrated to the rest of the division. "When you acquire these companies, you acquire the expertise that is there." Another area where HD Supply can replicate the successes of the retail business is on the supply side, where Home Depot's huge volumes are expected to help drive down costs to wholesale customers as well.

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Industry celebrates outstanding retailers at Awards Gala

TORONTO―Canada's finest retailers were honoured when the Outstanding Retailer Awards were presented at the recent Industry Awards Gala. The ORAs, presented by Hardware Merchandising magazine, recognized retail excellence in hardware, building supply, contractor-oriented, and large-surface formats. At the individual level, one Award went to the best young retailer under the age of 35. For a full list of winners, plus some cool pics from the Industry Awards Gala, click here.

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CanWel CEO confronts growth, challenges at Conference

TORONTO—What stands out about the CanWel of today is the range of businesses it encompasses. It has been aggressively consolidating, both horizontally as it buys up other wholesalers, and vertically, as it takes makes alliances or acquisitions to beef up its product range and the strategy behind this aggressive expansion was laid out at the recent Hardlines Conference by CanWel's president and CEO, Tom Donaldson. In fact, just days before the Conference, CanWel announced the purchase of five pressure-treated wood facilities across the country. But regardless of its add-on businesses, CanWel's central role remains that of a distributor, and with that in mind, said Donaldson, everything depends on right pricing and "speed to market." Keeping costs down proves challenging in the increasingly global economy. "Importation certainly puts margins under pressure," he said, "and you're going to have to continue to source the world to stay competitive." Jack Van Kessel, Donaldson's vice-president at the CanWel Hardware division, took over the podium to explain the status of that business and confront some of the concerns in the industry — and especially among CanWel customers — over the erratic fill rates coming out of CanWel's hardware business. The acquisition of Sodisco-Howden Group at the end of 2004 added three DCs to CanWel's infrastructure. It eventually closed down the West Coast facility, leaving one in London, Ont., and another in Victoriaville, Que. "Providing product from two distribution centres in Central Canada provides some logistics challenges," said Van Kessel. "Our fill rates are not where we want them to be and I'm aware of that," Van Kessel continued. "But we're focused on this and will get it fixed." He also said margin pressure is a priority for CanWel — getting prices down to help its retail customers stay competitive with larger chains. "Look to us for ‘best-in-class' fill rates going forward," he told the audience.

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BMR's new bags mean green at the check-out

LONGEUEIL, Que. —While the retail community internationally is grappling with the environmental impact of plastic bags at checkout, Canada has yet to focus on this issue. Nevertheless, Le Groupe BMR is not waiting. It has developed a re-usable bag that is being made available to its customers. The bags, imprinted with the BMR colours and logo, also feature logos from some of BMR's top vendors, including Task Tools, Sico Paint, and Quality Craft. The sheer volume of plastic bags generated at retail is being becoming an issue globally. In England, proposals are under way to initiate an "environmental levy" on the plastic bags. A similar bill has been put forward in Scottish Parliament, while a law already in place in Ireland has helped reduce bag use by 90% in that country. In Australia, a voluntary code is in place that has reduced plastic bag use by about 45%. Bunnings, the big box DIY chain, has been pro-active in introducing re-usable bags of its own to meet environmental concerns of its customers. BMR, which has 158 member dealers throughout Quebec, Eastern Ontario and the Maritimes, claims that its bags are the first re-usable bags from a home improvement group in Eastern Canada. They retail for ninety-nine cents.

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Weaker U.S. housing market drives West Fraser's 3Q loss

VANCOUVER—The tumble in the U.S. housing market took its toll on West Fraser Timber's latest results. The giant forestry company reported a loss of $8 million on sales of $809 million in the third quarter. That's a swing from earnings of $18 million on sales of $890 million in the third quarter of 2005. Year to date, earnings were $102 million on sales of $2.60 billion, compared to earnings of $99 million on sales of $2.75 billion for the comparable period in 2005. "The recent steep decline in U.S. housing starts and resulting decline in lumber prices dramatically affected our quarterly result," said Hank Ketcham, chairman, president & CEO of West Fraser, in a release. "The low lumber prices not only resulted in lower revenue but led to a write-down of log and lumber inventories of approximately $36 million." The third quarter was further impacted by a $5 million write-down due to the shut-down of a jointly-owned sawmill in Red Earth, Alta. West Fraser also expensed $17 million in lumber duty payments in the quarter, down slightly from $22 million in the previous quarter. With the finalization on Oct. 12, 2006, of the softwood lumber agreement with the U.S., West Fraser began paying an export tax of 15% to the Canadian government on shipments. However, the agreement has yet to be passed as legislation by Canadian Parliament. This is expected to occur in the fourth quarter, at which time West Fraser expects to get a rebate of approximately US$343 million before tax, plus interest.

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