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October 31, 2016 Volume
xxii, #41
“They that are born on Halloween shall see more than other folk.”
—Anonymous
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Industry leaders anticipate growth, with challenges, ahead
SPECIAL REPORT — A survey of attitudes of home improvement executives indicates that growth continues in the industry, despite macro challenges to the economy. One thing they all agreed on was that low energy prices have been the industry’s biggest challenge this year so far.
The largest concern retailers collectively listed was the economic conditions in Alberta and Saskatchewan. Steve Buckle, president of Sexton Group Ltd., says those two provinces represent more than 40% of his buying group’s purchasing volume in any given year. “That’s a big part of our picture, and it’s struggling greatly,” says Buckle.
Buckle says one of the toughest things for his members in Ontario and British Columbia, where they are actually experiencing a good amount of growth, is diminishing margins.
“The margin that our members are seeing continues to be challenged even in very good, strong marketplaces,” he says. “There’s just more competition out there and often the contracting firms and the home building firms are getting bigger and stronger and more demanding.”
Over at Home Hardware, Terry Davis, CEO of Home Hardware, echoes Buckle’s comments on the market in the Prairies. And he adds that other provinces, such as Newfoundland and Labrador, have also being impacted by the downturn—and it’s not necessarily just in energy-reliant businesses.
Tony Steier is the director of home and building supplies for Federated Co-operatives Ltd. (FCL). He notes that warm temperatures and lots of rain have only added to those economic concerns in the West. “The weather has been so unusual, it has affected business differently than in the past,” says Steier. In the face of these difficulties, shoppers are much more reticent to spend on items they don’t consider to be necessities.
Pascal Houle, CEO of Quebec-based BMR, echoes that sentiment. He adds that 2016 has been a year of consolidation, with the big news being the takeover of RONA by Lowe’s. The increasingly smaller selection of retailers has created “its own challenges in order to remain competitive.”
(This is an excerpt of the cover story in the latest issue of our sister publication, Hardlines Home Improvement Quarterly magazine. It’s in the mail now to 11,000-plus dealers and store managers across Canada. Click here to learn more about HHIQ!)
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Exclusive: TIMBER MART’s Bernie Owens talks to CHHMA members
LONGUEUIL, Que. — The Canadian Hardware & Housewares Manufacturers Association welcomed TIMBER MART President Bernie Owens as guest speaker at its fall breakfast seminar last week.
Addressing members at the Holiday Inn Montreal-Longueuil, Owens stressed the importance of independent dealers rallying under a flexible buying group to compete in a market that increasingly favours big boxes. He began by noting that he has experience from the vendor’s perspective. “As much as I’m on the buying group side of the fence,’ he told the gathering, “for 21 years I was on your side of the fence,” adding that he can relate to the challenges vendors face.
Owens gave an overview of the evolution of the group since he took the helm, recounting how a formerly loose cluster of regional banners learned to start “pulling in the same direction.” At the same time, he took pains to make it clear that in centralizing the direction of the company, its leadership has not sacrificed its flexibility in responding to diverse regional and local needs. Noting that member stores represent an array of formats and specialties—from gypsum dealers to lumber yards to garden centres—he acknowledged that there is no one-size-fits-all approach, and emphasized that TIMBER MART has “no cookie-cutter format to impose.”
Pointing to data from HARDLINES’ own Retail Report and a Washington Times report showing the decline in market share among independent hardware dealers in the U.S., Owens said he sees this trend extending to Canada. Membership in a buying group like TIMBER MART offers independent stores the kind of clout they need to compete with larger players, while respecting their independence and offering personalized support to stores.
He listed several ways the group keeps costs down for members—such as opting for a simple banner identity over a more expensive brand development, eliminating spot programs, and providing for pool buying and flexible shipping options. For example, he suggested, a local dealer may choose to serve as a pickup point for one or more neighbouring stores on a group order.
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Female panellists share insights at Hardlines Conference
NIAGARA FALLS, Ont. — The retail home improvement industry has long been a male-dominated industry. And while that is changing, is it changing fast enough? This question was examined by a panel of industry leaders—all women—at the 21st Annual Hardlines Conference.
The event, which gathered 165 people at the Sheraton on the Falls hotel in Niagara Falls earlier this month, was a forum for the latest ideas and intelligence on retail in general, and the direction of this sector in particular. The panel consisted of Sherri Amos, Director, Dealer Support, Home Hardware Stores Ltd.; Sara Clarkson, President, Storesupport Canada; Christine Joannou, Key Account Manger Retail Canada, MAAX Bath Inc.; and Jillian Sexton, COO of Hector Building Supplies, a TIMBER MART dealer in Pictou County, N.S. The panel was moderated by Beverly Allen, Publisher of Hardlines Inc.
Allen, who joined Hardlines almost 20 years ago, introdcued the panel by pointing out how much has changed in those two decades. Sexton from TIMBER MART reinforced that notion by saying that she prefers not to have to evaluate employees or customers on the basis of their gender. "I prefer to be gender blind now,” she emphasized.
Joannou of MAAX observed that home improvement has been rounded out over the years by the rise of housewares and décor, categories which traditionally cater to women. Allen reminded the audience of a survey conducted by ACNielsen for Hardlines in the early 1980s that determined that more than 80% of buying decisions about home improvements and renovations involve the woman in a household.
Retailers have to change how they cater to women, said Clarkson of Storesupport. Where she once loved to wander through a store, today her shopping tactics are much more targeted. “I am time-pressed, so I plan ahead before I step into a store,” she added. And she’s not the only one. Home Hardware’s Amos, a mother of four, said she always researches her purchases online so as not to waste any time in the store.
The service aspect of home improvement stores is a large part of helping customers successfully save time, Sexton added.
All the women on the panel made it clear that they don’t need to be treated differently from men. Yet opportunities abound for dealers who are imaginative, said Amos. Events in-store such as ladies’ nights can work well, if done appropriately.
For the future, all the panellists agreed that women need to be encouraged to build careers in this industry. Sexton summed it up when she said she looked forward to a future “where it’s an industry where everyone works in it and gender is not an issue.”
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LBM/L&G sector bucks retail trend with strong sales
TORONTO — Last week’s release of retail sales by Statistics Canada was full of mixed messages. For August, retail sales edged down 0.1% to $44.0 billion from the previous month, with lower sales at motor vehicle and parts dealers and general merchandise stores being the greatest contributors to the decline.
According to retail expert Ed Strapagiel, the bigger picture on retail in Canada is brighter. Total actual (not seasonally adjusted) retail sales were up 2.6% in August compared with a year ago. However, this rather modest gain was still an improvement compared to the prior month of July, he points out.
Retail overall is up 3.7% year to date. “That’s strong performance, especially considering that the gain for all of 2015 was just 1.7%,” Strapagiel says. “On the other hand, most of 2016’s gain so far happened in the first few months of the year.”
There is even more good news here for this industry: year-over-year sales by building material and garden equipment and supplies dealers were up 10.1%. In actual terms (not seasonally adjusted), sales were up 7.2% year over year, and up 7.3% year to date.
Strapagiel says this sector is not typical of retail in general, or where he sees retail going in the near term. “Home improvement and lawn and garden seems to be on a planet by itself,” he notes. “It’s bucking the trend.”
He notes that both housing and automotive are showing strength, “because those are not really bought. They’re financed. And with low interest rates, that’s pretty darned appealing.”
Strapagiel believes retail is at the top of a 12-month cycle and expects it to soften in coming months, citing factors such as lack of growth in the GDP, employment numbers, and even uncertainty around the upcoming election in the U.S. He anticipates that retail overall may grow by only 2.8% in 2016. “In short, Canadian retail is slowing down going into the final third of 2016 and the all-important holiday sales season.”
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Coast Distributors has announced the addition of Charles Cho to its outside sales force. Born and raised in British Columbia, Cho started his retail career in high school when his parents moved to Mission, B.C., where they owned a grocery store. From there, he worked at Safeway’s distribution centre for 15 years in Burnaby, B.C., then switching to the hardlines field, where he cut his teeth with King Marketing and RDTS.
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