John Caulfield, Contributing Editor
 vol. ix, #38 October 6, 2003

* Sodisco-Howden introduces Ace to Quebec * Home Hardware tries dollar sales to combat club stores * Rona says no thanks; Home Depot commits to home shows * Vegas vs. Chicago: latest hardware show update * Pro Group's new president wants new members, "larger footprint" * McLendon Hardware moves to larger facility * Consolidation, new markets challenge European suppliers

"Take away love and our earth is a tomb." – Anaïs Nin
MONTREAL — Sodisco-Howden Group has converted a number of its stores to Ace in Quebec, a decisive move given that the Ace name is virtually unknown in that province. However, it effectively rationalizes the wholesaler's banners, which have accrued through various acquisitions in recent years. The conversions affected 43 Ferplus and Bâtitout dealers that had been part of Sodisco-Howden's takeover of the hardware business of Marchands Unis in November 2001. Another 32 former Marchands dealers had already switched to Pro over the past year, says Lucie Désilets, business development manager for Sodisco-Howden. The Ace banner and programs are under license to Sodisco-Howden in Canada, following its acquisition of Ace's operations in this country earlier this year. The Ferplus dealers have taken on the Ace Quincaillerie program; the Bâtitout stores have switched to Ace Matériaux. The move is being supported by radio and television spots, a flyer this week, and another grand opening flyer next week. "This is our strategy in Quebec, because we're essentially starting from scratch and need to build awareness." Ace Matériaux is being positioned as the banner for dealers with a contractor and heavy DIY focus; Pro is being positioned for retail oriented home centres. Sodisco-Howden is committed to support Ace in Canada, says Désilets. More than 100 stores already fly the Ace banner, and she wants that number to double by the end of next year. Sodisco-Howden, which has recently hired an international financing company to evaluate its strategic options (a move seen by many as the first step toward being put up for sale), is also making changes to another of its banners. Do-it center, a home centre program initially developed in Canada under license from HWI (now Do-it Best Corp.) in the U.S. will be eliminated, due to Sodisco-Howden's acquisition of Ace: Ace and Do-it Best are heated competitors south of the border and Do-it Best has pressured Sodisco-Howden to drop the banner here. The 50-plus Do-it center stores in Canada are being encouraged to switch to Ace.
TORONTO — Home Depot Canada has signed a deal with dmg world media, an event and publishing company, to be the exclusive retail sponsor of 16 home shows across the country. The giant home improvement retailer has developed a modular booth that had a "test run" at the Calgary Home & Interior Design Show, which ran earlier this month, to get the bugs worked out. The finishing touches have been put on the display for the Toronto Fall Home Show, which ran October 2-5, to be followed by the BC Home & Interior Design Show, October 16-19. Other cities include Montreal, Ottawa and Edmonton. Claiming to reach more than one million attendees each year through their home shows, dmg media, which produces more than 300 trade and consumer shows annually, decided it wanted to partner with a home improvement retailer on a national scale. Rona Inc., which through acquisition inherited Lansing Buildall's position at a home show in Toronto, had first crack at the national offer, says Mark Hindman, director of marketing for Rona in Ontario. But his company did not want to commit to that many home shows. "dmg wanted someone to step in and commit to all 16," but he says Toronto was the only good fit. The home show has traditionally been the domain of the local home improvement dealer. However, Rona is not alone in deciding to leave the venue out of its plans. Totem Building Supplies opted out of the home show circuit a few years ago, says the company's vice-president marketing, Colin Robertson. Totem has 13 stores in Alberta, but in Calgary, for example, where Totem is headquartered, "the home show occurs at our busiest time of the year," he notes. "You have to take your best people off the sales floor and leave them down there for three or four days. But we need to be running the stores at full capacity." The home show was once a good place to offer how-to seminars, says Hindman at Rona. But this kind of education is now common in many Rona stores, "so what are we doing there?" For its part, Home Depot has invested in a team that will be devoted to setting up the retailer's interactive booth in each of the 16 shows, and for staffing the booth with Home Depot associates from local stores in each city. Using the slogan, "Stop dreaming, start planning," the 1,600-sq.ft. booth offers four vignettes, for bathroom, kitchen, workshop, and deck. Each vignette will be complemented by a freestanding kiosk that will offer product information, as well as information about Home Depot's At Home Services and Design Place. "We continually look for new and more interactive ways to communicate directly to our customers," says Pat Wilkinson, director of marketing for the Home Depot Canada, in a prepared statement.
ST. JACOBS, ON — It's hard to find a price lower than a dollar. That's likely a large part of why dollar stores have proliferated. But their growth has been at the expense of other retailers, including hardware. A new merchandising program, called the "Dollar value Program," got exposure at the latest Home Hardware dealer market. The program, which was developed at the senior level of Home's buying team, is aimed at holding onto sales that may otherwise go to discount stores. It also anticipates the rollout of Sam's Club by Wal-Mart Canada and the growth of garden products and housewares in non-traditional retailers such as Loblaw's. A variety of plastic kitchenware such as spatulas, tongs and other kitchenwares, as well as paint accessories and storage items, are featured in stacked laminated cardboard dump bins, all priced at a dollar. "The lower price points are necessary," says Joel Marks, director of merchandise at Home Hardware, "to ensure our share is not eroded on the lower priced merchandise. These items are a good defence strategy against the dollar stores, and they make great impulse items."
SCHAUMBURG, IL — Following the 2003 National Hardware Show in Chicago's McCormick Place, the hardware/home improvement and lawn, garden and outdoor living industries must now choose between staying in Chicago with newly created AHMA Hardware Show, or following the original show in its decision to move to Las Vegas in 2004. Referred to as "the Chicago event," by its owner, the American Hardware Manufacturers Association, the show will be held April 18-20 of next year, while the Las Vegas show will be held May 10-12. The AHMA Hardware Show will be divided into three separate events: "The World of Hardware & Tools," "The World of Lawn, Garden & Outdoor Living" and "The World of Home Decorating." The garden section promises to be the largest of the three, filling one entire building. Dedicated feature areas include the Garden Center of the Future, an actual working greenhouse; and Green Goods Pavilion, a show-in-a-show area of live goods. "Every aspect of the Chicago event has been changed, improved and enhanced to make it more productive and cost-efficient for exhibitors and attendees," says Bill Farrell, president and CEO of AHMA, in a prepared statement. "We've been encouraged and gratified by the strong show of support we've been getting from the entire industry." That's part of AHMA's strategy for going to market — its role as the U.S. industry's association — which should warrant support by the industry itself. NHS is taking a different tack. "We're not concentrating on getting support," says Robert Cappiello, president of the National Hardware Show. "We're concentrating on putting on a good show." NHS has been actively signing up exhibitors, and has contracts now with almost 1,400 vendors taking up 314,000 sq.ft. of space. "We're about 70% full. At this rate, we'll be sold out by January," says Cappiello. The AHMA, meanwhile, is gunning for the big names, including The Stanley Works, which hadn't participated in Chicago for two years before this. Other companies that have signed on include Fluidmaster, 3M, Ace Hardware, Chamberlain, Empire Level, Estwing, Melnor/Gardena, Orgill and Zircon. AHMA also cites strong support from the retail side, including Canada's Home Hardware and Réno-Dépôt. However, it should be noted that Home's own dealer market coincides with the AHMA Show, and Réno-Dépôt has been purchased by Rona. Both shows are putting a lot of emphasis on seminars. AHMA will offer "a dedicated educational program" and NHS will mount a comprehensive conference series of its own that already has 250 registered for it. In addition, the 2004 AHMA Hardware Show is supported by the U.S. Commerce Department's International Buyer Program.
Last week, Steve Synnott was named president of Pro Group, the Centennial, CO-based wholesaler marketing organization with 51 distributor members (which include Canada's Sodisco-Howden Group) that generate aggregate sales of US$3.4 billion. A 10-year company veteran, Synnott says his main focus as president would be to "keep the ship in safe harbor." He spoke with Hardlines about the company and his plans. What's your assessment of Pro Group, and where do you see its greatest potential for growth? We've been extremely fortunate because we've lost very few members to acquisition or bankruptcy. The pace of consolidation within the industry appears to be slowing. What we're looking to do is expand our distribution footprint [and sign up more] niche distributors that would fit well into our organization, like Cascade Wholesale [in Oregon] that specializes in power tools, or Reiss Wholesale [in New York] whose specialty is locksets. What programs do you want to move to the front burner? We have a lot of things in the works already. On November 1, we'll be moving into a new, 14,000-sq.ft. headquarters, about two miles from where we are today, that will give us about 26% more space. That facility will have two additional conference rooms that are equipped with high-speed technology, and the facility will allow for better collaboration of our staff. We recently initiated a partnership with the Marine Toys for Tots Foundation that has many of our stores serving as drop-off points for toys during Christmas, and I want to see that go forward. And on January 1, we'll be rolling out a new national circular program that, for the first time, allows for flexibility in product assortment. Dealers that carry building products and paint, for example, will be able to insert those items and tell their full story. I'll also be working to integrate more of our dealers into our programs. One that we're pushing hard now is plumbing and electrical. What's Pro Group's biggest challenge? We still need to find new ways to add value to existing customers who always want new, better, more, from our staff [of 42], which has been shrinking a bit. For example, this year we launched Pro Group Financial, which provides leasing services for store equipment. This program is in an incubation phase right now, but it should be profitable in a few years. You can try things like this when you're a financially strong company. We're running well ahead of budget and financial projections this year – and we're debt free.
BRUSSELS — Meeting for the second time since 2001, members of the French, German, UK and Belgium DIY manufacturer associations gathered here under their umbrella organization, Fediyma, for two intensive days of meetings. The European vendors' organizations were exploring ways to increase sales to DIY retailers, to become distribution partners with their customers and maintain innovation in their new product development.The objective: to increase sales and help consumers become more active DIYers, and to observe how retailers are trying to find ways to differentiate themselves as DIY competition continues to intensify at the retail level. The European DIY scene is becoming dominated by two or three major players in each market, except for Germany, which has not yet undergone the wrenching competitive concentration that France and the UK have felt, though industry experts expect Germany to undergo that same survival fight very soon. As a result, west European retailers increasingly are looking south and east to expand, with Italy, Spain and central and eastern European countries targeted for expansion. In those countries, DIY offers consumers a glimpse "into the good life" and for retailers, an immense opportunity because most of the consumers in those countries have the capability to undertake major DIY projects. And retailers such as B&Q and OBI are both also expanding in the Far East. Retailers noted that the homes in eastern and central Europe are in great need of improvement, so DIY opportunities are great for both large and small projects. Fediyma members heard how technology is going to affect them as retailers seek to improve their stock turns, margins and reduce operating expenses by adopting leading-edge technologies such as RFID tags, self-checkouts and self-scanning by consumers as they wander store aisles. For manufacturers, it will mean added costs and changed procedures, as well as changes in marketing efforts. One major European chain, Metro, is leading the world in exploring how technology can be used. In Rheinberg, Germany, it has a state-of-the-art test store devoted to technologies that can produce operational efficiencies while being accepted by shopping consumers.
RENTON, WA — McLendon Hardware, one of the industry's most successful independent hardlines retailers, is about to make a bigger splash in this town, where it already is one of Renton's main downtown attractions.The six-store company is planning to move its 45,000-sq.ft. flagship store into a 10-acre, 117,000-sq.ft. former Kmart. Gail McLendon-Baer, the company's president, told Hardlines that the new facility would also accommodate 5,000 sq.ft. of office space and bring inside its lumber and building materials, currently stocked in a 30,000-sq.ft. outside yard. All told, McLendon-Baer expects the retail selling area to be 105,000 sq.ft. Last year, McLendon Hardware generated US$60 million in revenue. McLendon Hardware currently stocks 120,000 SKUs, and McLendon-Baer says the larger facility would allow the dealer to expand its floor covering department significantly. The larger store would also provide much-needed parking spaces, which are virtually absent at the company's smaller store. While no permits had been issued yet, the move is expected to take place by mid-2004
Canadian Tire 37.30 27.45 36.60
Canfor 10.95 6.83 9.71
Costco 39.02 27.00 32.26
Goodfellow 12.24 9.75 11.50
Home Depot 34.99 20.10 33.63
Hudson's Bay 10.50 5.87 9.75
Lowe's Cos. 55.90 33.37 55.49
Rona Inc. 22.10 11.75 21.50
Sears Canada 20.00 13.60 18.42
Sodisco-Howden 3.35 1.15 3.15
Taiga Forest 8.10 5.85 7.45
Wal-Mart 60.20 46.25 57.48
West Fraser 39.05 26.27 34.87
CHARLOTTETOWN, PE — Home Depot Canada is in negotiations to secure a site in Prince Edward Island's capital city. Although the deal has not been finalized, the store is reportedly slated to open by October 2004. The retailer just opened its 97th store last Thursday, this one in Aurora, ON. It will open number 100 in Thunder Bay, ON on November 13. HALIFAX — AWARD Wholesale and Retail Distributors was just one of many companies to be uprooted by the devastation caused by Hurricane Juan last week. The storm swept through the city on the evening of September 28, and though it lasted under three hours, the high winds "just destroyed the city," says Tom Smith, president of the 98-store group. With trees knocked down and power lines out, Smith moved the offices temporarily into a hotel that had power, until he was able to move them back on the morning of October 2. TORONTO — Home Style Magazine recently selected Home Outfitters as the 2003/04 GIA Canada winner. The Global Innovator Awards, co-sponsored by the International Housewares Association, recognize housewares merchandising excellence in a national chain, and the company will be honoured next March (along with national winners from 22 other countries) at the Chicago Housewares Show. This is Home Style's fourth year as a co-sponsor. MISSISSAUGA, ON — Wal-Mart Canada has announced it will launch a private-label credit card program this fall for both Wal-Mart and Sam's Club. The program, developed with GE Consumer Finance, will mirror similar programs GE has provided for Wal-Mart in the U.S. and South America. The new agreement in Canada includes Wal-Mart's private-label consumer credit business and Sam's Club's private-label consumer, business revolving charge and business direct portfolios. The Wal-Mart business will be serviced by GE Consumer Finance's offices in Edmonton and a recently opened office in Toronto. MONCTON, NB — The Atlantic Building Supply Dealers Association has relocated to new, larger facilities that include conference facilities for members and associate members: 70 Englehart Street, Dieppe, NB E1A 8H3. All telephone/fax numbers the same. Telephone: 506-859-0062. HUNTSVILLE, NC — Lowe's month-old anti-smoking policy is stirring up dissent among some of its employees. On September 1, Lowe's, based in Wilkesboro, NC, enacted a policy that prohibited smoking on any of its properties, including outdoors. But 27 employees working at the company's store here have signed a letter protesting the policy as discriminatory. Among the signatories are three non-smokers. Lowe's had given workers six months' notice before the policy went into effect, and offered counseling services to help smokers quit. LONDON, UK — Kingfisher plc reports that B&Q, its home improvement retail division, enjoyed an 11.2% sales increase during its first six months, with retail profit growing 14.8% to more than £186 million. During the period, the company opened six new Warehouse big box stores and two mini-big boxes. B&Q plans to open three new Warehouses and two mini-Warehouses. BENTONVILLE, AK — Wal-Mart Stores unveiled its growth plans this morning for the fiscal year beginning February 1, 2004. In the U.S., 50-55 new Wal-Mart discount stores and 220-230 new Supercenters will be opened. Of those, 140 will be relocations or expansions of existing outlets, while the remainder will be built in new locations. The company will further expand its Neighborhood Market concept by adding approximately 25 to 30 new units in the upcoming fiscal year. In addition, the Sam's Club division is expected to open 35-40 outlets in the U.S.; about 20 of those will be relocations or expansions of existing clubs. Internationally, Wal-Mart plans to open 130-140 outlets in existing markets, 30-40 of them relocations or expansions. NEW YORK — Owens Corning has asked the Mississippi Supreme Court to revive its suit that would put some of the blame for asbestos companies on cigarette companies. OC has been in Chapter 11 bankruptcy protection since late in 2000. Along with other asbestos makers, it is trying to get the courts to hit on cigarette makers to share costs. A lower Mississippi court had rejected Owens Corning's argument in 2001, saying the company had no legal basis for its claim of damages. The judge in that case ruled Owens Corning could not claim damages for injuries not suffered directly.

A number of people have left Réno-Dépôt as the company braces for its assimilation by its new owner, Rona Inc. According to La Presse, which got its hands on an internal memo, the departures include: Laurent Mériaux, vice-president finance and development and the number-two person at Réno-Dépôt. He originally came from Réno-Dépôt's former parent, Castorama in France...Christine Beaulieu, vice-president IT and logistics...Nathalie Clément, director of legal affairs and corporate secretary...Daniela Maltauro, vice-president store real estate and development...Stepping in from Rona: Claude Guévin, executive vice-president and CFO, will now also direct finance and development at Réno-Dépôt...Martin Lacroix, vice-president finance, who is part of Guévin's team, will work on the Réno-Dépôt side, as well...France Charlebois, corporate secretary and general council, will be put in charge of legal affairs for Réno-Dépôt.

At The Pentair Tools Group/Porter Cable-Delta, Peter Bowes has been promoted to the position of director of retail sales & marketing. He was formerly director of marketing. Bowes replaces Randy Schnarr, who has left the company. (519-836-2840) Steve Synnott has been promoted to the role of president of Pro Group, based in Centennial, CO. He was formerly vice-president merchandising and marketing, as well as managing director for Pro Hardware. (An exclusive interview with Synnott appears elsewhere in this issue.) Beryl Buley has been appointed senior vice-president and general manager of home stores at Sears, Roebuck & Co. Formerly an executive at Kohl's Corp., he will oversee the Sears hardware, appliance and outlet stores, or some 1,300 off-mall stores … Buley replaces Dan Laughlin, who has been promoted to senior vice-president and general merchandise manager of appliances and electronics at Sears.
Sales of existing homes across the country through the Multiple Listing Service dropped by 9.1% in August from their record-breaking peak in July, the Canadian Real Estate Association reported yesterday. However, the average price of a home rose to a record $208,525 from $207,619 set in July, up 12.8% from a year earlier. Sales for the first eight months of the year were up by 1.7% from the same period a year earlier. In mid-September the association reported that the average August price of a home in 25 major urban markets was $225,859. The association reports twice a month on MLS home sales, once on sales in 25 major urban markets and then on all markets. Canada's gross domestic product increased 0.6% in July, reflecting gains across the economy and marking the largest monthly gain since April 2002. Industrial production advanced 1.2%, compared with a smaller US increase of 0.7%.
"We are looking in the near future to creating up to 200 new jobs on the Réno-Dépôt side in the store network, and to increase the sales of the Réno-Dépôt stores, and that means all the Réno-Dépôt stores." — Sylvain Morissette, director of communications for Rona Inc., on the recent changes at the upper management levels of newly acquired Réno-Dépôt.

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