AWARD Wholesale and Retail Distributors Ltd. provides co-op buying of commodities for its 98 member stores in Atlantic Canada, and funnelled $206 million in purchases through its offices last year. Hardlines have been supplied traditionally by existing wholesalers such as Sodisco-Howden Group. But now AWARD, a member of the umbrella buying group Matreco, might go it alone.

In Quebec, where buying groups have more of a tradition of providing warehousing for commodity products, fellow Matreco member Groupe BMR has been expanding beyond just building materials into hardware distribution over the past 18 months. The growth of BMR’s sales in this side of the business has not gone unnoticed by AWARD and its members.

Now there’s talk of a distribution centre, to handle both cross-docking and direct shipments from vendors, to be up and running in Halifax by early next year, with BMR as preferred supplier. AWARD has reportedly signed up more than 50 of its dealers to invest $35,000 in the new venture. No officials from either AWARD or BMR were available for comment at press time, but more news is expected in the near future.

AWARD, the Dartmouth, NS-based buying group with almost 100 stores and $350 million in retail sales, is reported to be considering the creation of its own hardlines distribution facility in the Halifax area, a move that leaves Jos Wintermans, president and CEO of Sodisco-Howden, both puzzled and disappointed.

“What we’ve been doing is providing a full-line, proven distribution centre in Atlantic Canada that has worked for the dealers there for many years,” he says.

AWARD’s new warehouse would have to be underwritten by the dealers themselves, and Wintermans wonders why they’d take the risk. “They’ll have to put up their own cash to support an unknown distribution choice – and a limited line supplier at that.”

The initial investment by each dealer is reported to be at least $35,000, but according to Wintermans, those dealers could eventually be on the hook for as much as $100,000. “Think about how much in sales any dealer would have to make to cover that outlay.”

Sodisco-Howden’s sales team has been meeting privately with AWARD dealers to make a case for the status quo and Wintermans says response to these meetings has been positive. However, the company’s own future has been put in question by the announcement in recent weeks that it hired an international finance company to chart strategies for its future, strategies that may involve continued acquisitions – or being put up for sale.

Formerly vice-president of purchasing for Cameron Ashley in Calgary, Robb was hired to run the company as its owner and president, Rick Anderson, prepares to cut back his day-to-day involvement. Robb sees lots of potential for growth of Peavey, which has 24 stores under the Peavey Mart banner in Alberta and Saskatchewan, plus one store each in British Columbia and Manitoba. He expects to add a couple of stores, “as the opportunities present themselves,” which, he says, will likely be “sooner than later.”

Robb sees a good fit for the Peavey format in other markets, especially urban and rural locations in western Saskatchewan and Manitoba. “It’s an extremely well-run company with loyal and dedicated employees,” he says. “My job will be to keep it well run – extremely well run.”

TORONTO, ON & SAINT JOHN, NB —With an eye to the cross-merchandising opportunities for its stores and gas stations, Canadian Tire Petroleum has struck a deal with Irving Oil Ltd. whereby Canadian Tire will take over 16 Irving gas stations and change them over to the Canadian Tire name.

The deal, which will more than double Canadian Tire’s gas bar presence in Atlantic Canada, involves Canadian Tire leasing stores in New Brunswick, Nova Scotia and Newfoundland and Labrador, while Irving continues supplying the gasoline. The two companies will split profits through a revenue sharing agreement.

“This agreement with Irving Oil represents a significant milestone in Canadian Tire Petroleum’s expansion strategy, which includes partnering at existing sites of other gasoline retailers under the Canadian Tire banner, and building new incremental sites and car washes in other parts of the country,” said Peter Kilty, vice-president, Canadian Tire Petroleum, in a prepared release.

Founded in 1924, Irving Oil currently supplies more than 800 branded locations in Atlantic Canada, Quebec and New England.

The largest department store chain in the U.S., it recorded an after-tax charge of US$89 million to restructure its home decorating chain, closing three Great Indoors stores and upgrading others in the process.

The threat of watching their own brands become mere commodities was just one of the issues confronting members of the French, German, UK and Belgium DIY manufacturer associations who gathered here recently under their umbrella organization, Fediyma.

Retailers face similar challenges. Can they grow organically or must all of their growth come from acquisitions? Will the high costs of technology and the resulting increases in efficiency further separate the market into the bigs and the littles, into the haves and have-nots?

Smaller retailers are banding together into buying groups and cooperatives, especially in countries such as Spain, which are being “invaded” by large retail chains. Spain, in particular, now has dozens of cooperatives and buying groups to serve its nearly 10,000 smaller independent hardware stores and DIY units.

Jim Lowe, corporate development director of the UK’s Focus Wickes group, said competition is forcing the development of “destination stores and destination category specialists.” He added that retailers will further divide the market into “light” and “heavy” formats, the light ones concentrating on décor, gardening and lighter DIY tasks, while the heavy market will be towards major building and remodeling activities. Focus stores serve the lighter markets; Wickes the heavy markets, he explained.

He expects that retailers who now focus on décor will further broaden their merchandise lines to include furniture and other home furnishings, which will affect traditional distribution channels of those products.

Further explanations of retailing’s segmentation came from speakers focusing on technology trends. While much of the technology is focusing on reducing retail operational costs, some of it will affect manufacturers’ operating methods as well as their own costs, such as RFID.

Electronic kiosks and self-checkout are the two most widely deployed emerging technologies worldwide, speakers pointed out. Kiosks are being used by such firms as Boots, Target, Williams-Sonoma and Crate & Barrel, while firms like Ahold, Tesco, Sainsbury, Metro and the UK’s Safeway have all been trying personal shopping devices.

AdWeek reported that Lowe’s, which spent an estimated US$265 million on advertising in 2002 according to Nielsen Monitor-Plus, a tracking service, requested proposals from ad agencies that, the magazine said, were due October 10. The search is being handled by Lockman Brooks Marketing Services in Charlotte, NC.

Like virtually every other retailer, Lowe’s is looking to tap into the burgeoning ethnic communities that are growing across the U.S. at a rapid pace. Dealers are particularly covetous of Hispanics, who now account for nearly 14% of the U.S. population and are expected to account for 25% by 2050.

In the third quarter, homeowners were remodeling their houses at an annualized rate of US$125.2 billion, 6.6% higher than annualized expenditures in the third quarter of 2002, according to the Joint Center for Housing Studies at Harvard University, in its quarterly “Remodeling Activity Index.” That annualized expenditure represents about 60% of the total amount spent on home improvement annually by Americans.

Kermit Baker, who heads up the Center’s Remodeling Futures Program, explained that favorably low interest rates in the U.S. continue to drive home sales. “With spending levels accelerating, the prospects are improving for remodeling in the coming year.”

TORONTO — Sears Canada‘s third-quarter earnings hit $12.1 million, up from $10.2 million a year earlier. However, total sales dipped 3.2% to $1.43 billion, down from $1.48 billion. Same-store sales increased 1.3%.

ATLANTA, GA — Home Depot has updated its website, making it easier for people to order products online. The redesign is also expected to improve Home Depot’s multi-channel marketing efforts. The new site features an expanded “know-how” section that shows step-by-step instructions and tips for completing home improvement projects, along with do-it-yourself articles.

EIGHTY-FOUR, PA — 84 Lumber Co. has been named Pro Dealer of the Year for 2003 at the most recent Pro Dealer Conference in the U.S. The Conference was sponsored by Home Channel News. In April of 2002 the company set a record by opening 20 new stores in one day, and will add another 20 stores this year, bringing the total to 453 stores in 34 states. The company is shooting for 20 more openings in 2004, says 84 Lumber’s president, Maggie Hardy Magerko. 84 Lumber reported sales of US$2.2 billion in 2002 and expects to surpass US$2.5 billion this year.

VANCOUVER, BC — For its third quarter, West Fraser Timber Co. reported earnings of $3 million on sales of $382 million. That’s down from earnings of $4 million on sales of $428 million in the third quarter of 2002. For the first nine months of 2003, earnings were $9 million on sales of $1.15 billion, a big drop from earnings of $102 million on sales of $1.23 billion for the same period a year earlier. The reduction in earnings was attributed mainly to a strengthening Canadian dollar, a strike at its Kitimat, BC mill and continuing duties on the sale of softwood lumber to the U.S.

TORONTO — Sears Canada Inc. re-opened its store at Yorkdale Shopping Centre in Toronto with a brighter interior, wider aisles, clear sightlines and colour-coded departments, all designed to help customers navigate the store more quickly and easily. Customer service centres have also been placed in highly visible locations and situated next to fitting rooms. The store also features a Sears Craftsman hardware department. The retailer also opened a Sears Home store last week in Boisbriand, QC. The 34,774-sq.ft. store specializes in furniture, accessories and major appliances. This is the 44th Sears Home Store in Canada.

VANCOUVER, BC — Prima Developments Ltd., through its wholly-owned subsidiary, Envirocoat Technologies, will begin distributing its coating products through two independently-owned Ace Hardware outlets in Lake Havasu, AZ and Yucaipa, CA. They are part of a chain of five Ace stores under one owner, and Prima hopes eventually to get its Envirocoat exterior paint and roof coating products into Ace’s warehouse. In Canada, Prima has a distribution deal with ICI Glidden.

Frank Greco has been appointed general manager of Roofmart, Eastern Canada. He was formerly at Canroof. (905-453-7870)

At Royal International Corp., Heather Janisse has been appointed sales manager, responsible for a number of Canadian and U.S. customers. She was formerly with Canadian In-Store, a division of Grant Brother Sales. (905-844-8268) … John Demaiter has been made a national service manager, responsible for all box stores nationwide. He was previously a national account manager. (905-309-5252)

House construction in the U.S. rose 3.4% from August to September, says the Commerce Department. That’s the second-highest rate since 1986, fuelled this time by low mortgage rates and pent up demand. Builders started work on 1.888 million homes seasonally adjusted last month, up from 1.826 million starts in August.

Steve Synnott, Pro’s newly appointed president, calls Sodisco-Howden “a good partner,” and lauds Jos Wintermans, Sodisco-Howden’s CEO, for “positioning that company for profitability.” Synnott concedes, however, that Sodisco’s hiring of investment banker NM Rothchild & Sons to review its business alternatives gave all indications that the wholesaler was being shopped around to potential buyers.

Synnott says there is “zero possibility” that Pro, with 51 members that generate US$3.4 billion in annual revenue, would bid for Sodisco-Howden to maintain its market position in Canada. However, he feels confident that his organization can negotiate a membership agreement with any buyer, even Rona Inc., whose name regularly crops up during any speculation about Sodisco-Howden’s future.

About 700 dealers in Canada fly the Pro banner. Pro Group has expressed concern with Sodisco-Howden’s program to allow some of its dealers to use the Ace Hardware name on their storefronts and in their advertising. (Earlier this year, Sodisco-Howden acquired Ace Canada’s inventory and receivables for about $15 million.)

“We’re not big fans of dual identity,” says Synnott.

According to Eric Konecsni, Home’s vice-president operations, Beaver’s original Markham, On offices, which have been wound down since moving most of Beaver’s people and operations to Home’s headquarters here in St. Jacobs, ON, still have three people working there, administrating the remaining former Beaver dealers who still operate with Beaver’s proprietary computer system, BLISS.

The last holdouts have a deadline of spring 2004 to make the switch to Home Hardware’s own Prism system, after which Home’s presence in Markham will be finished. Right now, says Konecsni, there are about 17 dealers who have yet to switch over, but, he notes, “The bulk have already moved. The final conversion will be over by April.”

Harris, president of Trendex, spoke recently at the Hardlines Marketing Conference. One area retailers have been slow to move on is data collection and management. He pointed out that in the ’90s there was a lot of money spent on POS equipment that would give real-time indications of sales. “But so far, very few retailers are using data to better manage their business.”

Using data which defined hardlines as power tools, lawn and garden items and homecare/comfort products, Harris says Sears is currently the largest retailer in Canada, followed by Canadian Tire and Home Depot. He adds, however, that no one retailer maintains consistent share across all markets.

Harris also predicts the death of at least two buying groups and the emergence of “lifestyle centres” in Canada.

Harris says the middle market is shrinking, while pointing out the emergence of new categories of luxury items, the effect of globalization on price and quality, and increasing wealth, especially in older households. He urges retailers to make sure product lines reflect changing population patterns. The 45-59 age range will grow 24.7% between now and 2011, and the number of Canadians between the ages of 60 and 74 will rise by 34.3%. During the same period, however, population growth of the 30-44 age range will drop by 8%.

The retailer, which first invaded Hawaii in 1993 when it opened a store in Honolulu, will employ 140 associates at the newest location, its sixth store in the state.

The Kauai Beach Press reported on its web site that the company paid nearly US$8 million for this project. The newspaper also reported that a number of local competitors have made some changes in their operations to differentiate themselves. The three-unit Hale Kauai, for example, introduced “The Contractors’ Store” that will allow its pro customers – who account for around 80% of its sales – access to its building materials section, home-planning department and a kitchen-cabinet showroom through the entrance of its lumberyard here.

The impact that Home Depot can make on any market, when it opens a new store, is evinced by the fact that it interviewed more than 500 people to fill the job slots in its new store.

VERNON HILLS, IL — Wickes, the U.S. building supply chain that was delisted from the NYSE last week, is getting a leg up from its major shareholder, Imagine Investments, which will provide up to US$10.5 million of financing. With its affiliate partners, Imagine owns approximately 51.7% of Wickes’ common stock and the cash infusion will enable Wickes to meet debt obligations that come due December 15, 2003.

DALLAS, TX — Only days after announcing it would pull up stakes in the Denver market, Builders FirstSource has jump-started its growth machine again by acquiring Davidson Lumber and Space Concepts, two businesses operated by Davidson Industries in Indianapolis. Builders FirstSource operates 58 yards and 82 manufacturing plants in 70 cities in 11 states. The addition of Davidson’s operations, which include truss and wall panel manufacturing, will add US$60 million to BFS’s revenue.

BENTONVILLE, AK — Wal-Mart had sales for September of US$23.39 billion, an increase of 13.0% from the same month a year earlier. Sales year-to-date were US$163.51 billion, up 11.2% from the first eight months of 2002. The Wal-Mart division’s sales for the five-week period were US$15.85 billion, up 12.7%, while year-to-date sales reached US$111.122 billion, up 10.6%. Sam’s Club sales for September were US$3.21 billion, a gain of 11.8%, and year-to-date sales were US$22.343 billion, up 8.6%. Sales by the international division were US$4.330 billion, up 14.9%; year to date they were up 15.8%.

FEDERAL WAY, WA — Weyerhaeuser Co. has agreed to the sale of approximately 168,000 acres of timberlands in west-central Tennessee to Fountain Investments Inc. Weyerhaeuser will use the after-tax proceeds, totaling about US$65 million, to pay down debt. The deal is expected to close in the fourth quarter of 2003. Earlier this year, Weyerhaeuser announced it would sell off its timberlands in Tennessee and North and South Carolina. The sale process in the Carolinas is expected to conclude later this year. Weyerhaeuser also acquired 1.7 million acres with the purchase of Willamette and now owns or manages approximately 7.6 million acres in the U.S.

ISSAQUAH, WA — Costco reported net sales for fiscal 2003, which ended August 31, of US$41.69 billion, up 10% from US$37.99 billion during the prior fiscal year. Profits for the year grew 3% to US$721.0 million, up from $700.0 million. Same-store sales increased 5% over the previous year. Net sales for the fourth quarter increased 11% to US$13.42 billion, while same-store sales during the period increased 7%. Profit for the fourth quarter decreased 3% to $239.4 million.

MEDINA, OH — Paint maker RPM International Inc. saw first-quarter profits rise 8%, thanks largely to its consumer business, although the industrial side is still lagging.
The paint manufacturer, whose brands include Rust-Oleum, says its fiscal first-quarter net income rose to US$47.7 million from US$44.2 million a year earlier.

Gary Robb has been hired to manage operations at Peavey Industries as general manager of the 26-store specialty hardware chain. He was formerly with Cameron Ashley. (403-346-8991)

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.

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.

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.”

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.

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.

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

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.

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’d look at any opportunity if there was a means of helping the independent dealer and if this was the right fit,” says Paul Straus, vice-president and CEO of Home Hardware. But added that his company is in no talks with Sodisco-Howden right now.

Speculation is running wild right now on the announcement that Sodisco-Howden had hired a M&A firm, NM Rothschild & Sons, to advise on the future of the company. Home would be one of a handful of competitors in a position to buy Sodisco-Howden’s operations, which include three distribution centres, one in Victoriaville, QC, one in London, ON and the other in Langley, BC.

But there are a lot of reasons why a buyout wouldn’t be a good fit, Straus goes on to explain. For example, with all the acquisitions Sodisco-Howden has made in recent years, it’s yet to harmonize computers and systems. “It would be complicated,” Straus says.

According to the study, which evaluates the size of the retail home improvement market and relative growth of the market by retail type, sales by hardware retailers in Canada have dropped from 13.6% of the overall market in 2001 to 12.1% of the market in 2002. That’s an 11% drop in sales, and a loss of 3.2% of market share.

Building centres, however, showed a slight increase, with their overall share of the retail home improvement industry rising 2.4% from 46.6% to 47.7%.

Hardware and home improvement sales grew by more than 8% in 2002 and represented almost one in 10 dollars spent by Canadians at retail last year.

Hardware and building supply dealers, mainly represented by independents, account for almost 60% of that industry. Their growth has been attributed to the performance of fewer, but stronger, players as they expand square footage, locations and services.

ST. JACOBS, ON — One of the services that garnered a lot of attention at the recent Home Hardware Spring Market was Home’s new gift card. The card, which can be loaded at POS with any amount desired, was designed to replace gift certificates, which the company claims were awkward and difficult to track.

Gift cards have been great for impulse sales, as well, and sales through a limited number of stores have been going through the roof. “We matched what we did in gift certificates annually in just two months,” says Bill Ferguson, dealer support manager at Home Hardware.

The card has an added sales dimension when sold in bulk at a discount to a script company – in effect, a jobber that resells the cards to charitable or fund-raising organizations. The script company keeps some of the discount and passes along the rest to the fund-raisers, who can in turn sell the cards to raise money for their own causes.

According to Ferguson, the gift card business in the U.S. is worth $36 billion annually.

The division, which had sales last year of US$3.77 billion, distributes more than 10,000 products in 14 categories, including structural panels, hardwood plywood, roofing, lumber, vinyl siding and particleboard. A separate division from Georgia-Pacific’s building products manufacturing operations, it employs 3,390 people in 63 facilities in the U.S. and one in Canada.

But GP wants to move out of commodity based businesses. Even though it is an industry leader in LBM distribution, it purchases less than 30% of its supply from GP’s own manufacturing facilities.

Distribution in the LBM sector is typically at the mercy of pricing changes, and recently the industry has been assailed by volatile prices for plywood and OSB. GP’s board wants to “create shareholder value by sharpening focus on Georgia-Pacific’s more stable, consumer-oriented businesses and our goals of reducing debt and strengthening
our balance sheet, it is natural that we fully review the strategic alternatives for the building products distribution business,” said Pete Correll, Georgia-Pacific chairman and CEO in a prepared statement.

In July 1999, BFS acquired Kellogg Lumber, whose two yards and manufacturing plant were generating US$47 million in annual sales. However, a combination of factors, including acquisitions in the Denver market by Stock Building Supply and Lanoga Corp., and a 14% decline in home building activity over the past three years, stymied BFS’s efforts to grow in Colorado.

“We have been the number-seven competitor in the market, which has made it difficult for us to respond profitably to the business downturn,” said Floyd Sherman, BFS’s chairman and CEO, in a prepared statement.

The pro dealer has decided to close its store in Denver (whose lease expired this summer), and to sell its store in Fountain, CO, to a buyer whose identity the company did not disclose.

Michael Turner, a principal with The Jian Group, a Fredericksburg, VA-based broker that helps many of the industry’s large pro dealers find suitable acquisition targets, told Hardlines that he expected BFS to step up purchasing in 2004, when it would concentrate on companies that offered value -added services like truss and panel manufacturing, and installation for home builders.

“Home Depot has been evaluating locations throughout Manhattan for several years,” said Tom Taylor, president of Home Depot’s Eastern Division, in a prepared release.

Both stores will be pedestrian-oriented, multiple-level “urban neighbourhood” stores, with a product assortment geared specifically for the downtown market. While the latest store will be about 83,000 sq.ft. in size, the Flatiron store will be considerably larger, a 108,000 sq.ft. outlet with two floors and a mezzanine. Since the urban neighbourhood format was launched in April 2002, the company has opened urban stores in Brooklyn and Staten Island, NY, and in Chicago.

When its repurchase plans were revealed, trading of Calloway’s shares on the Nasdaq SmallCap Market was halted at 62 cents, compared with $2.88 per share it traded for, on average, in the first quarter of 1998, which represented a five-year high.

TORONTO — Budget Canada opened its first rental kiosk in a Canadian Tire store this past weekend, with an opening in Pickering, ON. The move is part of a five-year agreement signed back in February 2002 between Canadian Tire and Budget, which will involve the installation of kiosks in up to 100 Canadian Tire stores by the end of next year.

EAU CLAIRE, WI — John Menard Jr., the secretive head of the world’s fourth largest home improvement retailer, is getting more trouble from the Internal Revenue Service than he is from Home Depot. The debt-free chain of 184 stores in the U.S. Midwest had sales of US$5.5 billion last year, but Menard’s own package pays him so lavishly that the IRS says he owes big time.

RALEIGH, NC — Stock Building Supply plans to open an 89,000-sq.ft. lumber distribution centre in Scertz, TX this fall. The facility, which will employ 100 people, will eventually be expanded to supply trusses and other building materials. It will complement an existing millwork operation that Stock acquired early this year when it bought Wenco Distribution from Jeld-Wen. The company operates 16 other yards and value-added facilities in Texas.

TORONTO — Hudson’s Bay Co. opened its 34th Home Outfitters store last week, this one in Halifax, NS. The new 34,000-sq.ft. outlet employs 60 and is the first Home Outfitters store in the Maritimes.

MARGATE, FL — Florida’s first Home Depot Floor Store opened here last week. Aimed at both homeowners and pros, the 25,000-sq.ft. store features carpet, ceramic tile, natural stone, rugs, wood, vinyl and laminates, as well as installation tools. It also features a design showroom for decorators, designers, builders, remodelers, contractors and architects.

TORONTO — Sears Canada has forged an agreement in principal to open a store in the Bower Place Shopping Centre in Red Deer, AB, although no opening date has been announced. The new location, in the city’s developing south-end retail hub, will replace a store in Red Deer Centre.

TORONTO — Carina Furniture Industries is being taken over by Montreal-based Dorel Industries. Carina is a leading RTA furniture maker, with sales of $81.4 million. The deal will make Dorel the number-two RTA furniture producer in North America. Carina designs and manufactures furniture under the Carina and SystemBuild brands, which are sold to the likes of Lowe’s, OfficeMax, Staples, Home Depot, Home Hardware and Wal-Mart Canada.

SAN FRANCISCO, CA — A sexual discrimination lawsuit could end up costing retail giant Wal-Mart hundreds of millions of dollars in payouts to female employees. The suit, launched two years ago by six female ex-employees, had hearings last week to establish whether the suit can be certified. Claims have been made that Wal-Mart routinely sidelines women into jobs such as cashier, which offer little chance for promotion. The lawsuit notes that 70% of Wal-Mart staff are women, while only 15% hold management positions. the judge in the case has yet to rule on whether the case can be elevated to class-action status, which could end up including 1.5 million current and former female employees. Wal-Mart is currently defending itself against 6,649 lawsuits.

Robert Lawton has been appointed director — commercial sales for Dimplex North America Ltd. Reporting to Martyn Champ, president of Dimplex, Lawton will assume responsibilities for the management, direction and planning of sales functions for the company related to its Chromalox and Electromode brands. Lawton’s background includes senior sales and marketing positions with Home Depot Canada, Nutone Canada and General Electric. (519-650-3630)

With the departure of its top hardlines merchant, Sears, Roebuck & Co. is losing the last of its old guard. Lyle Heidemann, 58, executive vice-president and general manager of hardlines, has announced he will leave at the end of the year, working through this fall to ease the transition for a replacement. Tina Settecase, vice-president and general manager of appliances, is considered by some as a possible successor.

The film crews were in Atlanta to make TV stars out of Home Depot‘s founders. Bernie Marcus and Arthur Blank will figure prominently in a film history that will appear on the “Biography” series, part of the A&E Network. The entertainment network and ABC News were in Atlanta last week to film a history of Home Depot, the home improvement chain Blank and Marcus started in the late 1970s. A&E will air the Home Depot history beginning November 19.

The composite leading index grew 0.5% in August, the second monthly gain at this rate, making July and August the two best monthly increases in over a year, according to Stats Canada. Manufacturing continued to weaken, though, notably as the workweek was reduced by the blackout in Ontario. Excluding this, the overall index rose 0.8%, the largest since May 2002. Housing was up for the fourth straight month, with housing starts rising in July due to strong demand.

Sales of new houses in the U.S. reached 1.15 million seasonally adjusted, says the Commerce Department. That’s up 3.4% from the July rate of 1.12 million seasonally adjusted, and a 12.2% gain from August 2002.

Officially, the company has announced that its board of directors has engaged N M Rothschild & Sons “to review business alternatives and provide recommendations on how to maximize Sodisco-Howden’s shareholder value.”

According to Jos Wintermans, president and CEO of Sodisco-Howden, the outcome of the review could mean any of the following: to find a buyer, to make additional acquisitions (Sodisco-Howden has purchased Smith-Barregar, Marchands Unis and Ace Hardware all within the past three years), or to merge with another partner.

But Sodisco-Howden will likely go on the selling block, say many industry insiders.

The company faces a board that wants it sold and a chairman who must retire this year. Sodisco-Howden’s major shareholder is Paribas Participations, which is facing the retirement of its chairman, Hubert de la Beaumelle, this year. But despite the naysayers to Sodisco-Howden’s viability, it serves a distinct role in the home improvement food chain, providing a full range of hardlines to independent hardware and building supply retailers across the country. And, despite the inordinate emphasis placed on specialty retailers, especially big boxes (not by the weekly electronic media, shurely – Editor), hardware and building centres, most of them independently owned, still comprise 60% of the market in Canada.

In fact, Sodisco-Howden ships to more than 800 franchise retailers under the Ace, Do-it, Bâtitout and Ferplus banners, and ships to another 800 independents, mostly building centres that belong to one of the many buying groups across the country.

Wintermans says the board is pleased with the company’s performance. For the first six months of the year, revenues were up 1.4% to $231.5 million and sales last year reached $482 million. However, he does not believe the stock attracts the kind of attention it deserves. “So how can we get better value for the efforts we have put in?” he says of the new initiative.

Wintermans expects a decision about the company’s future to be made within four to six months.

Albert Plant, a retail consultant who has worked extensively with clients such as RBC Royal Bank, along with Randy Harris, president of Trendex North America and Ed Strapagiel from Kubas Consultants, all agreed that Canadian consumers are likely to keep pouring money into home repair, renovation and furnishing.

Harris said the trend will continue to come at the expense of other retail categories such as footwear and apparel. Between 1990 and 2002, spending on clothing dropped from 5.1% to 3.8% of total consumer expenditure and sales of footwear dropped from 1% to 0.6%. Since 1995, sales of goods and services of furniture and household items have risen by 34.6%.

While home improvement products are expected to see steady growth, Plant said increased diversity and urbanization of the Canadian consumer market will produce change in retail formats and delivery. He calls this “retail Darwinism”; a phenomenon he said will affect department and specialty stores, suburban malls, mass merchants and box stores.

According to these analysts, department stores may become the dinosaurs of the retail world. With the exception of Sears, they have fared badly against competitors like Wal-Mart, which has seen sales go from $3 billion to $8 billion over the past decade.

The explanation for that is simple, said Harris of Trendex. Traditional department stores have lost market share because of tired merchandising, unmotivated staff, and ever-narrowing product lines.

Kubas Consulting’s Strapagiel underscored this point, providing data that showed close to 30% of Canadian shoppers surveyed in the VECTOM (Vancouver, Edmonton, Calgary, Toronto and Moncton) market described Wal-Mart as the place they preferred to shop or the place they shopped the most. And close to 50% of within that same group had shopped at Wal-Mart in the past 12 months. By comparison, about 10% of the same market said they preferred to shop at The Bay, and about 30% had shopped there in the last year.

Big boxes will continue to have significant impact on the hardware/home improvement industry, said Plant, because of their ability to implement consumer friendly features, such as in-store kiosks, wireless technology, smart cards and self-scanning check-outs.

Those technologies will become increasingly important in a highly competitive market, said Harris. He suggested that industry players who want to survive should awaken to the need for sound information on sales and consumer spending patterns. Better market intelligence, he said, might have helped retailers like Zellers, which Harris said took insufficient action in preparation for Wal-Mart’s advance into Canada.

CHICAGO — Growing the member base and growing, in turn the volume of purchases by each member, is a key challenge for TruServ Corp. as it goes through its turnaround.

“Our biggest challenge is share of wallet,” says TruServ president Pamela Forbes Lieberman.

She notes that even when the company had been saddled with a debt scandal, many dealers didn’t desert the ranks, but they did, she admits, start spreading their buying around. Winning back that business became a matter of trust. “Now we’re trying to earn that back.”

The effort is paying off, she adds, as recent refinancing has been just the latest step in regaining the trust – and loyalty – of the members. “We now have traditional hardware dealers who are buying 90% through us.”

Forbes Lieberman’s vision for remaking the company includes its culture as well as its financing. And part of rebuilding the trust factor includes the suppliers. She wants vendor relations that aim at true collaboration, “rather than saying we have a partnership, then demanding the lowest possible price.”

Sico will shut down the Para manufacturing plant in Brampton, ON by January 31, 2004 and move all production for colourants and alkyd products to a Toronto plant, while latex paint production will be consolidated into its plant in Quebec City.

Sico’s distribution centre in Toronto’s west end will close by December 15, and Para’s Brampton, ON facility will be used instead to handle distribution for Ontario, the West and Altantic Canada. The site will also serve Para and Sico architectural markets in Quebec and Ontario.

The company’s industrial operations will be driven out of Longueuil, QC.

Finally, customer service activities will now be concentrated in Longueuil for the Quebec market and out of Para’s Brampton facility for the Atlantic, Ontario and Western Canadian regions.

Berwind Group is a privately owned US$1 billion holding company. Besides Hunt, which sells into the commercial channel, Berwind’s companies range from chemicals, pharmaceuticals and biotechnology, to real estate investments valued at almost US$2 billion, and a land and resource management company that owns 150,000 acres of coal and natural gas rich land in Virginia Kentucky and West Virginia.

VERNON HILLS, IL — With its share price slipping, Wickes Inc. has been given notice once again that it will be delisted from the Nasdaq SmallCap Market, effective September 23. The home improvement chain, which specializes in supplying builders and contractors, is hoping its stock will remain eligible to be traded through the Over the Counter (OTC) bulletin board, provided a market maker enters a quote for the common stock on the same day it’s shut out of Nasdaq.

MONTREAL — Hart Stores Inc. has opened its first store in Ontario with a 30,000-sq.ft. outlet in the northeastern town of Kirkland Lake. The company already has 61 junior department stores in Quebec and Atlantic Canada, under the Hart, Bargain Giant and Geant des Aubaines banners.

BOISE, ID — Boise Cascade Corp. has announced it will pay for 60% of its previously announced acquisition of OfficeMax with common stock and 40% with cash. The merger agreement between the two companies previously contemplated that Boise would pay 70% with common stock and 30% with cash.The deal, which was announced on July 14, 2003, has been unanimously approved by the boards of directors of both companies.

ATLANTA, GA — Home Depot has begun installing real-time, digital video surveillance technology in all its stores throughout North America. The new system, a step up from analog technology, will employ approximately 40,000 video cameras to help reduce theft and fraud.

LONDON, UK — Kingfisher‘s home improvement business had a strong first half of the year, with retail sales up 15.3% to £3.9 billion and profit up 29.7% to £335 million. Sales growth and share gains were driven by new store openings and continuing strong same-store sales, which were up 5.5%. In the UK, B&Q and Screwfix had combined retail sales growth of 11.5% and retail profit growth of 16.3%. In France, Castorama and Brico Dépôt enjoyed combined sales growth of 10.7% and 31.1% rise in retail profit. The group’s ongoing international businesses, which include Poland, Italy, China and Taiwan, had a consolidated retail sales increase of 36.3%, and retail profit was up 67.4%.

LOS ANGELES — A woman here has filed a class action suit against Home Depot, claiming the retailer ignored a California law that limits deposits on contracts for home improvement projects to 10% of the overall price. Another company, All American Home Center, has also been named in the suit, which could end up involving thousands of homeowners.

LONDON, UK — Kingfisher plc is selling off its chain of 39 traditional format small DIY stores in Poland. They’re being purchased by NOMI, a fund managed by Enterprise Investors, a European private equity fund manager that will pay .£7 million for the stores. The net proceeds will be used to reduce group debt. Completion is subject to Polish regulatory and competition authority clearance, which is expected within two months.
Kingfisher will continue to operate and expand its Castorama large format stores in Poland.

Jim Robertson has left American Hardware Manufacturers Association to take on a position as manager of supply chain technology with National Gypsum Co., based in Charlotte, NC.

ProfitMaster Canada has added the following new members to its team, in addition to the previously announced appointment of Nicole Grenkow as marketing manager: Donna Evenson joins as project manager. She was formerly store manager for McDiarmid Lumber in Winnipeg’s St. Vital location … Monique Graboski has been appointed customer support analyst … Angus Graham has been named project manager. He has a broad retail background that includes working for Olympic Building Supplies, Kilcona Lumber and Charleswood Do-it centre … Lynda Hawke joins as project manager, Southern Ontario, joining the company from Hay’s Home Hardware in Listowel, ON, where she worked for the past six years as controller … Greg Kelly has been named regional sales manager, Central Canada. He was formerly area manager for Sodisco-Howden in the Manitoba region … David Lamont has been appointed purchaser, bringing with him 15 years experience in the technology industry … David Ledyit is now project manager, Southern Ontario. He worked most recently for Corol Technologies in London, ON. (204-889-5320)

Manufacturing shipments were up in July by 1.7% to $43.0 billion, while finished-product inventories fell back 1.0%. Meanwhile, Canada’s largest trading partner, the United States, continued to show signs of recovery. U.S. manufacturers boosted shipments by 2.5% in July, following a 1.5% increase in June. Manufacturers also continued to reduce inventory levels, which now stand at the lowest level since September 1997.

Residential construction in the U.S. reached US$449.6 billion seasonally adjusted in July, up 0.6% from June’s rate of US$446.8 billion seasonally adjusted. Overall construction put in place in July was US$879.8 billion, up 0.2% from June, and up 2.5% from July 2002. During the first seven months of the year, construction spending amounted to US$492.0 billion, up 1.8% seasonally adjusted from the same period a year earlier.

LONGUEUIL, QC — Le Groupe BMR Inc. has thrown its hat squarely into the hardware distribution ring with the inauguration of its newly expanded warehouse here. Almost 1,000 people were on hand yesterday for the grand opening of the new facility, which represents a $5 million investment by the co-op wholesale buying group to expand its existing LBM distribution centre. About 65,000 sq.ft. have been added, for a total of 120,000 sq.ft. This new warehouse already carries almost 15,000 SKUs of hardware, and supports an existing LBM facility in St-Augustin-de-Desmaures, near Quebec City.

Formed in 1967, BMR now serves 123 building centres in Quebec, eastern Ontario and northern New Brunswick. According to the group’s president, Yves Gagnon, the move to add hardware to its traditional mix of lumber and building materials began in 1997 with an initial investment of $3.2 million. “We decided to go as an integrated group, with one distribution centre providing both building materials and hardware for all our members,” he says.

BMR has been aggressive in its effort to establish itself as a player in hardlines distribution in Canada, a move that has raised many eyebrows in the industry, especially given the consolidation that has occurred at the wholesale level in recent years. BMR is part of the umbrella buying group Matreco, and Gagnon admits he has been talking with both Don Nash, president of Tim-BR Mart Ontario (Homecare) and Tom Smith at AWARD in Atlantic Canada about supplying the hardware supply needs of dealers outside the BMR ranks.

Though he won’t comment on the possible opportunities with other Matreco members, Gagnon is excited about the expansion strategy. “I think this will be a great opportunity for BMR, especially with what’s going on in the marketplace.”

BMR’s growth, with its expansion into hardware, has been significant. It’s gone from billing $150 million through the group in 1997 to $287 million in 2002. Gagnon says the group is up 35% already this year, and expects BMR’s billings to reach $400 million this year. During the same time, the group’s head office staff count has grown from 42 to 168.

Part of that growth, he admits, has come from the acquisition of Montreal-area chain Matco Ravary earlier this year, which has added about $66 million in sales through six stores.

In 2002, annual sales by Matreco Members exceeded $2.5 billion from coast to coast, an increase of about 15% over 2001.

The third-largest player is Home Hardware Stores Ltd. With almost 1,000 stores across the country, total combined sales by all its dealers in 2002 reached 3.48 billion. According to a new Hardlines report, the top four retailers in the sector account for more than 45% of the business in Canada.

MISSISSAUGA, ON — On September 1 Newell Rubbermaidannounced its quarterly net income had fallen year-over-year from US$88.6 million to US$73.8 million.

Two days later, the news didn’t seem to affect the performance of Newell’s CEO, Joseph Galli Jr., as he headlined the Hardlines Marketing Conference. Galli enthusiastically described the growth strategy of the company that has, over the last century, grown from a humble manufacturer of curtain rods into a huge multi-national company whose high-profile brands include Burnes picture frames, Irwin, Calphalon, Sharpie pens and its most high-profile acquisition, Rubbermaid.

Perhaps it was the fact that the sales of Calphalon products, Sharpie pens and Irwin hand tools were up 22%, 22% and 10% respectively – pushing overall sales up 4.3% in the quarter to US$1.97 billion that prompted Galli, who honed his skills at Amazon.com and Black & Decker, to speak so assuredly of the company’s future success.

Newell’s growth has been built on the 200 acquisitions the company has made in the last 20 years. This growth, said Galli, has engendered a new global culture that reaches across the organization.

“There’s been a geographic change,” Galli told the crowd. “We used to be a U.S. company with outlets, and executives in their twilight years would be rewarded with the management of a foreign office. Now we have strong teams in each location.”

Suggesting that regarding products as commodities is an obsolete mindset, Galli said that Newell Rubbermaid is moving forward by creating new business models and investing in the development of interesting “gotta-have” consumer brands.

Developing more useful products and compelling sales promotion means the company won’t have to chase the price point, said Galli. Higher prices haven’t hurt the company’s Sharpie pen line, sales of which have risen 20% this year over last.

“For some items, it’s not strategic to go with the lowest price,” said Galli. “People remember what they paid for a pen for about five minutes, but they remember the performance of the product for a long time.”

While Galli may choose not to chase the price point, he does want to have products produced in the cheapest possible market. Currently, Newell Rubbermaid has manufacturing plants in China, Mexico and Eastern Europe.

Canadian Tire’s 440 associate dealers own and operate their retail businesses. Their agreement with Canadian Tire requires them, among other things, to purchase merchandise primarily from Canadian Tire and participate in retail and marketing programs driven by head office. These obligations, as well as formulas for financial incentives, are all spelled out in the dealer contract.

The success of the negotiations are considered critical to keeping the dealer organization onside with Canadian Tire’s latest expansion plans. They involve some aggressive, and imaginative, enhancements to Canadian Tire’s “next generation” program, begun in 1994. More than 300 of the company’s 440 associate dealers have upgraded their operations under next gen, but the latest incarnation, called 20/20, is being rolled out in October following months of testing in a handful of stores in Eastern Ontario.

The new agreement, which goes to contract in June 2004, will be effective July 1, 2004 and stay in effect for 10 years, although the financial terms will be reviewed at the end of five years. The drafting of the definitive contract is expected to be complete before the end of 2003.

“We’ve been working to energize our members over the past two years to support the brand,” says AWARD president Tom Smith. Already, 34 of his 97 member stores have converted their stores to the Tim-BR Mart store signage program, and another 30 are identifying their businesses with the name in-store and in their own advertising efforts.

The program, says Smith, has been developed with all the Matreco partners, although Le Groupe BMR in Quebec maintains its own BMR brand in that province. AWARD members are being encouraged to make the change in large part through the efforts of John Morrissey, the group’s vice-president of merchandising and advertising. “We believe there’s a huge opportunity for the Tim-BR Mart brand in Atlantic Canada,” Smith adds.

NEW YORK — Lowe’s will open 25 of its smaller 94,000-sq.ft. stores by the end of this fiscal year, estimating that between 500 and 600 markets could support that format. According to the chairman and CEO of Lowe’s, Robert Tillman, the company, which plans to open a total of 130 stores in 2003 and 140 in 2004, expects the smaller stores would never represent up to 25% of Lowe’s total expansion in any given year going into the future.

Tillman was speaking recently at Goldman Sachs‘ 10th Annual Global Conference here.

Lowe’s CFO, Robert Hull, responded to questions about Lowe’s merchandising strategy by saying that he expected gross margins to increase “by lowering acquisition costs.” Tillman added that Lowe’s has not seen any “degradation” in prices, despite the fact that more of its stores are going head-to-head with rival Home Depot.

He was particularly pleased with Lowe’s performance in home decor and outdoor living. “We see phenomenal opportunities in the millwork category” he said. But unlike other big boxes that he referred to as “skimmers” — i.e., in a lot of product categories, but not deep in any — Lowe’s has focused on expanding its mix in such categories as appliances, fashion lighting and paint.

MISSISSAUGA, ON — Réno-Dépôt will keep its own name, at least for a while, following its takeover by Rona Inc. The announcement of Réno-Dépôt’s fate was clarified during a presentation by Rona president and CEO Robert Dutton at the Hardlines Marketing Conference last week. Réno-Dépôt’s Building Box stores in Southern Ontario will be switched to Rona Home and Garden, however. No decision has been made, however, on whether the stores will be developed as a separate, more traditional big box banner.

TORONTO & WATERLOO, QC — Canadian Tire has signed a deal to take on Canadian-made bicycles and accessories from Raleigh Canada. The line will be introduced to Canadian Tire stores across the country starting next spring. As part of the agreement, all bikes will be manufactured at the company’s facilities in Waterloo, QC.

MONTREAL — One of Canada’s fast-growing suppliers has announced it’s up for sale. MAAX has grown rapidly through the past decade with acquisition after acquisition. Now it’s looking to get acquired itself. The bath products manufacturer employs 3,800 people in 26 facilities around the world across Canada, the U.S. and Europe. The company had sales of $616.9 million for its last fiscal year ended February, 2003.

HOFFMAN ESTATES, IL — Sears will open its first Sears Grand store next month in Salt Lake City. That new format is a 150,000-sq.ft. freestanding outlet whose product mix will include deeper assortments in home fashions and home maintenance than found in the past, including Sears’ first nursery department. Also: more products to generate “transactional sales,” including music CDs and nonperishable goods.

NATIONAL REPORT — A weak supply of plywood is driving up prices. While it’s good news for building supply dealers, who see margins climb accordingly, builders and wholesalers alike are scrambling to get product. Low mortgage interest rates south of the border, coupled with fires in the West, a rainy summer and a big government purchase slated for the middle east, have affected prices.

Nicole Grenkow has left the Sexton Group to join ProfitMaster Canada as marketing manager, effective today. (204-889-5320)

Michel Perron has been elected to the position of chairman of the Canadian Retail Hardware Association for 2003/2004 term. He is the owner of Quincaillerie St-Sacrement and Quincaillerie St-Jean Baptiste, both in Québec City. Prior to working in the hardware industry, Perron owned and operated a restaurant in Quebéc City. He has been involved in the CRHA board for the past seven years. (905-821-3470)

Dave Covin has been appointed to the role of regional manager for Ontario at Emco BP. He was formerly national manager, retail services. (905-206-1628)

The rate of new home construction increased in August, to 233,900 units seasonally adjusted, from 223,500 in July, reports CMHC. Year-to-date, actual starts have exceeded last year’s level by 4.7%. Urban multiple starts were up 16.2% to 105,500 units in August, compared with 90,800 units in July. However, year-to-date actual urban multiple starts increased 16.1%. Urban single starts fell 4.2% in August to 98,800 units, reversing most of the previous month’s gains. Canada-wide, year-to-date actual urban single starts are down 3.6% over last year. Rural starts in August were estimated at 29,600 units seasonally adjusted.

U.S. retail and food services sales for August were $319.2 billion, up .6% from July and up 5.4% from August 2002, says the Census Bureau of the Department of Commerce. Total sales for the June through August period were up 5.3% from the same period a year ago. Retail trade sales were up 0.5% from July and were 5.1% above last year.

But watching Rona CEO Robert Dutton interrupt his presentation, and offer to sell an excess Réno-Dépôt store to the president of Home Depot Canada, was worth the price of admission.

The Hardlines Conference Series featured a full program of seminars, breakout sessions and networking events last Wednesday and Thursday.

Dutton, making his first-ever presentation to a wide audience in English Canada, closed the conference. The timing was perfect. As he stepped off the plane in Toronto to join us, his cell phone rang, bringing him the news that the much-anticipated approval by the Canadian Competition Bureau of Rona’s purchase of Réno-Dépôt had come through. When he walked into the room half an hour later with Claude Bernier, executive vice-president of Rona’s traditional stores, and Pat Bennett, senior operations director for traditional stores, by his side, he was beaming with happiness.

Dutton announced the news publicly a few minutes into his presentation, which brought a round of applause from the audience. He explained that the only condition put on the deal was that Rona must, after buying the chain, turn around and sell off the Réno-Dépôt store in Sherbrooke, QC. “Does anybody want to buy a store in Sherbrooke?” he asked jokingly, not realizing his biggest competitor was in the room. Annette Verschuren put her hand up gamely and asked, “How much do you want for it?”

Dutton explained the price tag: $11 million, including inventory. “You’ll have to do better than that,” Verchuren quipped. She then had to dash out to catch a plane to Atlanta.

Then the realization dawned: “Wait, was that Annette, was that Ms Verschuren?” he asked. I wanted very much to meet her!”

But that was just one of many surprises during the two-day conference event, which drew more than retailers, vendors, agents, analysts and media. Michael McLarney, editor and publisher of Hardlines, reported that the industry grew by almost 9% in 2002, and now comprises almost one-tenth of all retailing in Canada. Big box stores now account for more than one-fifth of that market, he pointed out, though it is no longer gobbling market share as rapidly as in the past.

And at the industry’s first-ever Gala Dinner, during a set of rocking blues music, the singer from the Cameo Blues Band invited volunteers to come up and sing. Tom Smith, president and CEO of AWARD, the Dartmouth, NS-based buying group in Atlantic Canada, rose to the challenge, singing a jaw-dropping rendition of “Summertime.”

Next year’s Hardlines Conference series will be held September 8-9, 2004.

Norman predicted that there’s still plenty of opportunity for growth, given the aging of Canada’s housing stock. Renovation spending on houses up to a decade old averages $1,000 per year, he said. That amount quadruples, however, once houses get between 11 and 20 years old. He pointed out that the houses built during the boom of the late 1980s are now entering the “renovation cycle.”

Resales reached 420,000 units in 2002, meaning roughly 50,000 more existing homes were sold last year than the average of the last few years before that, and well ahead of the 380,000 units sold in 2001, he said.

Renovation spending, which was lacklustre between 1991 and 1996, began a strong growth cycle in the latter half of the decade, peaking at a recent high of $30 billion, and becoming a key driver of home improvement spending in Canada. Norman predicted growth of 4% next year, keeping it ahead of general economic growth.

Demographic factors include the formation of more households, as young adults decide to move from parents homes (It’s about bloody time! – Editor), encouraged by a good economy. Norman countered the conventional wisdom that the housing market will crash when baby boomers retire and downsize. It’s just not a valid theory, he said, because the younger set is currently forming households.
(We’ll provide more coverage of the amazing presentations at our Hardlines Conference Series in next week’s edition.— Michael)

The credit line was arranged through a syndicate of seven lenders, headed by Fleet Capital Corp.

TruServ had sales of US$2.2 billion to approximately 6,300 independent retailer locations worldwide in 2002, even as that performance was overshadowed by the company’s debt load. However, for the first six months of 2003, TruServ was able to reduce its debt by US$209 million to US$208 million, and show a profit of US$20.8 million.

“We’re working on the refinancing to reduce interest expense, which was US$63 million in 2002,” TruServ president and CEO Pamela Forbes Lieberman told Hardlines in an earlier interview. “But by 2003 we expect it to be US$18 million. Our goal is to get the financing behind us so we can focus on helping our members grow and on helping our retail sales grow,” she added.

The added financial stability has been reinforcing dealer confidence, as well. Forbes Lieberman says member retention has been increasing. “We really strive for zero attrition, and we’ve signed on about 124 new members since January 1.”

The PDRA is going on its own following three years exhibiting in conjunction with the Canadian Hardware and Building Materials Show. The PDRA pulled out of CHS following this year’s show, held last February.

The new stand-alone event will feature about 150 exhibit booths, but a big part of the event is its educational program, which will include the latest in paint and painting techniques, interior accessories, computer technology, wallcoverings, decorative hardware and window coverings.

Nick Cichielo, CEO of the PDRA, says his association with CHS was a positive one, but lacked the focus he was looking for. “We just felt that this format is what our customers and our members are looking for.”

Before joining up with CHS, the PDRA hosted their event in conjunction with the Walls Windows Furnishings Association. The WWFA has been offered booth space at the PDRA show, says Cichielo.

Hanover, ON — The new Rona Building Centre in this small community in the heart of Southwestern Ontario’s farm community is also the company’s latest example of a store format that strives to attract both contractors and serious DIYers.

The dealer-owned store, which had its grand opening this past weekend, features strong décor elements of Rona’s Regional stores (their mini-big box format in Quebec), but maintains a strong back end, all within 10,000 sq.ft. “We had to develop a model at about 10,000 sq.ft., because we think it’s really needed in the market,” says Al Holton, a Rona dealer development manager who was integral to the development of the new store (shown here second from right; also l-r: Rona’s Claude Bernier. Rona dealer-owner Harvey Harron, Pat Bennett, and Serge Vezina).

The store squeezes about 18,000 SKUs into the new building, which features the high ceilings, bright modern lighting and high wall merchandising that typifies a big box. “We’re better focused on who the consumer is, and we’ve got more fashion into the store,” Holton points out. “We can’t be order takers anymore,” he says of the changing role of home improvement retailing. “We have to be an idea centre.”

The bright, DIY-oriented merchandising bears out his theory. But when he walks into the drive-through lumberyard, he points out the broad range of LBM. “We’re still in the lumber business. We haven’t forgotten our roots.

“You’ll see a lineage to those [stores] in the Manhattan store, but one that flows back to our warehouse stores,” says John Simley, a Home Depot spokesman, who stresses that the Manhattan unit would not resemble the Chicago outlet (shown here), in the toney Lincoln Park district. Home Depot chose this site in Manhattan, over several others it evaluated, because of its “favourable economics,” as well as its location, Simley adds. “It was a very complex deal, but this is a great site, near a Bed, Bath & Beyond and a Best Buy. Plus, it’s a grocery destination, so it has very high traffic potential.”

Home Depot opened its first warehouse store in New York in 1994, and currently has 75 units in four of New York’s five boroughs. It employs more than 18,000 there, and has targeted the city for further expansion in the next few years, partly to counter Lowe’s plans to enter and expand in this metro market.

TAMPA, FL — Home Depot will acquire Installed Products USA and Installed Products of California Inc. That company, collectively known as IPUSA, is one of the largest installers of replacement roofing in the United States. IPUSA has been a proprietary contractor for Home Depot since 1997. In Canada, a Toronto-based company called Installed Roofing Services manages a network of 50 companies that sells and installs roofing, siding, soffits and fascia for Home Depot’s Canadian division.

BENTONVILLE, AK — Labour charges against Wal-Mart Stores have been dismissed by the National Labor Relations Board in a case filed against the retailer in a Lake Elsinore, CA case. In a union vote in April 2001, union leaders filed multiple charges against Wal-Mart and blocked the election.

ALPHARETTA, GA — Despite record sales in the second quarter that were fueled in part by an acquisition of a power tools company, Newell Rubbermaid Inc.‘s profit in the period slid nearly 17%. The company also revised its full-year earnings outlook, reflecting lower sales expectations in its picture frames business, reductions in retailer inventory and greater price competition on its cheaper product lines. For the quarter ended June 30, Newell Rubbermaid’s net income fell to US$73.8 million, compared with US$88.6 million a year earlier. Sales at Newell Rubbermaid, Burnes picture frames and Parker pens increased 4.3% in the quarter to $1.97 billion from $1.89 billion.

BOISE, ID — Boise, the wood products supplier, has decided to “eliminate completely” its purchase of wood products from endangered forests as they are mapped out and defined by major conservation and environmental groups. Boise stated that, effective in 2004, it would no longer harvest trees from old-growth forests in the U.S. It also said it would work with government and conservation groups to identify endangered forests in the U.S., Canada, Indonesia and Chile.

OTTAWA — Canada is claiming a victory in the latest round declaration in its battle over softwood lumber tariffs imposed by the U.S. A NAFTA panel consisting of three Americans and two Canadians has ruled unanimously that the U.S. has yet to prove that Canadian softwood exports threaten the American lumber industry. The panel has given the U.S. industry 100 days to provide concrete proof of the claim.

The latest ruling beefs up the Canadian position even more positively than a previous ruling by the International Trade Commission. The NAFTA panel said it found that the ITC did not adhere to its own rules, and ignored evidence that questioned whether American lumber producers were threatened by Canadian imports.

Investment in new housing construction reached $7.8 billion in the second quarter, up 8.4% from the second quarter of 2002, says Statistics Canada. The greatest contribution to this growth came from increased investment in the construction of single family homes (+6.0% to $5.3 billion), primarily the result of a substantial rise in the average value of this type of unit. Investment in the construction of new apartments was also up sharply (+21.2% to $1.4 billion). This growth is related to a marked increase in the number of housing starts for apartments.

Employment has declined for the fourth time in the last five months, according to Statistics Canada. Employment has increased in 2003, by only 0.3%, compared to growth of 2.6% during the first eight months of 2002. In August, the unemployment rate increased 0.2 percentage points to 8.0%, a rate not seen since December 2001.

Despite expectations that employment in the U.S. would continue to expand, 93,000 jobs were lost in August, says Labor Department. The unemployment rate declined to 6.1% from 6.2% in July. The economic recovery in the United States is now in its 22nd month, without reversing constant job losses, but economists said that was apparently because of a surge in the number of people who, having lost jobs, listed themselves as self-employed rather than unemployed.

Hardlines is truly international! We’ve gone live as the daily news link for the 2004 National Hardware Show in Las Vegas. Check out the site: www.04nationalhardwareshow.com for more info!

A total of about 10 full-time and 10 part-time people were let go. The result is a combined merchandising team that focuses on both the traditional and big box stores, rather than two separate teams like before. In addition, the buying team will focus more on working with the vendors, focusing on negotiating pricing and buying product and leave some of the advertising and promotional issues to the restructured merchandising team.

Normand Dumont is vice-president merchandising for the expanded merchandising team, which will handle all promotional and advertising concerns, including product promotion for the flyer programs. Marc Dufresne‘s responsibilities as executive vice-president of purchasing and logistics expands, with all purchasing directors now reporting directly to him. He also takes over the duties once overseen by Pierre Charron, formerly vice-president of purchasing for hardware, who was among those who left the fold.

TORONTO — Just back from a visit to the new store in Orangeville, ON, Annette Verschuren, president of Home Depot Canada, and president of the EXPO division of Home Depot, is enthusiastic about the store’s first month of operation. “We’re 40% ahead of plan,” she says. “It’s fantastic.” Nor is it having an impact on the Home Depot store in the neighboring community of Brampton, she’s quick to add.

The idea of cannibalization — new stores stealing market share back from existing stores, as well as from competitors, is a common pattern in the expansion of many chains. In fact, McDonald’s franchisees in the Northeast U.S. actually filed a lawsuit against the corporation more than a decade ago, citing overstoring having a negative impact on their own businesses.

It’s also an issue for Home Depot in the U.S., where CEO Robert Nardelli is investing actively in upgrading older stores as new ones keep being built. But in Canada, Home Depot’s penetration is not as great overall, leaving it more room to expand, not just in new markets, but backfilling existing markets. A new store opened in Edmonton early in June, and locations are on the books for both Toronto and Vancouver.

In the meantime, smaller stores have proved viable in towns like Kelowna, BC, Owen Sound and Bracebridge, ON, and Moncton, NB.

While stores continue to be updated on an ongoing basis, Verschuren points out that the chain is not that old in Canada. The first stores, six Aikenhead’s outlets purchased from the Molson Cos. in 1994, don’t match the vintage of Home Depot’s first stores in the U.S., built more than a decade and half earlier. Nardelli spent US$1.7 billion on capital improvements to his stores during the first six months of the year.

According to a new study by our sister publication, Hardlines Quarterly Report, the growth of home improvement big boxes in Canada has flattened in the past two years. But Verschuren insists her company is not finding any slowdown.

“Home Depot Canada is doing extraordinarily well, year to date. We’ve had one of our best quarters ever,” Verschuren says of the second quarter, when the parent reported 10.5% sales growth to US$17.99 billion. And while same-store sales increased only 2.2%, it marked a swing from same-store declines in the two previous quarters. Home Depot’s revenue increased 8.3% to US$33.09 billion and its earnings jumped 8.2% to US$2.21 billion.

Verchuren says the Canadian division is once again outperforming the company overall.

VANCOUVER — The panel reviewing the U.S. Department of Commerce’s softwood lumber countervailing duty determination within the World Trade Organization has ruled the U.S.’s so-called “cross border” methodology violates U.S. obligations under the WTO agreements. The methodology has been used by the Commerce Department as the basis for setting its 18.79% countervailing duty on Canadian softwood lumber imports.

“The U.S. Department of Commerce itself has said in earlier lumber cases that cross-border comparisons are inherently arbitrary and capricious and the reasons for that conclusion are still valid,” says John Allan, president of the BC Lumber Trade Council in a prepared statement.

This latest ruling in Canada’s favour victory follows a NAFTA panel decision earlier this month that also ruled the Department of Commerce’s cross-border methodology illegal.

The hardware and home improvement industry swelled by 8.5% from 2001 to 2002, making it one of the hot retail sectors in the country. Sales by all hardware and building centre retailers, as well as sales of renovation and repair and seasonal products by department stores, club stores and Canadian Tire, are also included in the profile.

The greatest growth came from the big box stores. This category killer retail format, led by Home Depot Canada and RONA Inc., now accounts for more than one-fifth of the industry – from only 157 stores at the end of 2002.

It’s important to note that the big box rivalry in Canada has quickly shrunk to two major players, plus one strong regional. Home Depot Canada had almost $4 billion in sales in sales from its 89 outlets, while RONA generated an estimated 1.3 billion from its 41 big box format stores. At the end of September, its acquisition of another big box chain, Réno-Dépôt Inc., is expected to close, adding 20 stores and $847 million in sales and making Rona the number-two home improvement retailer in the country.

The big box playing field mirrors the situation in the U.S., where Home Depot dominates, with US$58.2 billion in sales, but Lowe’s makes for an aggressive competitor, even though it has approximately half the stores and half the sales of its rival. Menard’s, a strong independent big box chain, is situated mainly in the U.S. Midwest, similar to the only other big box company in Canada, Kent, which has seven large-format stores in Atlantic Canada and is owned in turn by privately held Irving Cos.

Independents are faring well, still accounting for more than half the industry’s sales overall. However, market share of the independents has shrunk somewhat over the past two years, even as overall sales continue to grow – often at record rates.

The 2003 Hardlines Retail Industry Report, a special report in PowerPoint format that takes an in-depth look at the Canadian hardware/home improvement industry, will be released at the Hardlines Retail Strategies Symposium on Wednesday.

WILKESBORO, NC — A new survey has found that men and women view themselves as equals when it comes to home improvement projects.

A poll of 1,000 people, conducted recently for Lowe’s Cos. by Ipsos Public Affairs, found that 82% of men and 83% of women agreed that both sexes have equal abilities when it comes to learning about home improvement. Melissa Birdsong, Lowe’s director of trend forecasting, read these findings as evidence that men and women “prefer to collaborate on projects and learn new skills together.”

Nearly three quarters of those polled said that women didn’t require female-only demonstration clinics. Another 65% said that it didn’t matter whether they received do-it-yourself instruction and advice from a man or a woman. This last finding indicates that women are being taken far more seriously as legitimate DIYers by store personnel.

The survey found that 62% of the women polled consider themselves to be between an intermediate and an expert do-it-yourselfer. Most own basic hand tools plus a few power tools, and one in five women owns an extensive collection of hand and power tools.

There are still differences that separate the sexes on the home improvement front, however. For example, a majority of those polled said they considered exterior projects to be male oriented.

The signatories were KB Homes, the fifth-largest homebuilder in the United States, which has had a longstanding working relationship with the National Resource Defense Council, an advocacy group that has taken the Bush administration to task for its environmental policies; Hayward Lumber, an eight-yard, US$115 million pro dealer in California whose owner, Bill Hayward, is one of the industry’s most vocal environmental advocates; and Staples, the office-supply dealer with more than 1,500 stores in 10 countries and US$12 billion in annual sales.

Tongass National Forest, North America’s only temperate rain forest, is larger than West Virginia and has 17 million acres of forest. The issue at hand is whether more roads should be built to gain access to what U.S. Forest Service documents show could be up to 870 million board feet of wood, enough lumber to build more than 43,000 houses.

LONDON, ON — TSC Stores has taken over a former Growmark store, and will relocate it as the 22nd TSC store, which is scheduled to open December 1, 2003. The store comes with a UPI gas bar.

TORONTO — Canadian interior designer Brian Gluckstein has joined the Hudson’s Bay Co. line of brands for home. GlucksteinHome will be introduced exclusively at Bay stores across Canada for Spring 2004, offering an expanded range of merchandise and price points.

NEW YORK — Restoration Hardware has reported a smaller second-quarter loss, bolstered by improving sales at stores open at least a year and cost cutting. The company, which operates about 100 stores in 31 states, said it lost US$2.8 million in 2Q, compared with a loss of US$3.8 million a year earlier. Same-store sales rose 9.9%. Total sales climbed 13% to $96 million.

HOFFMAN ESTATES, IL — Sears Roebuck disclosed that it would take a charge against third-quarter earnings that could range between US$75 million and US$100 million to cover costs related to its decision to close three of its 21 Great Indoors home décor outlets. The retailer also intends to convert another Great Indoors to an outlet format. At one time, Sears had planned to open 150 Great Indoors by 2007.

DALLAS — U.S. Home Systems here has agreed to sell, furnish and install (SFI) kitchen cabinet refacing and laminate countertops in four states for Home Depot. This one-year pilot program will be offered in 229 Home Depots and seven Expo Design Centers in Washington, Oregon, California and Colorado. In Canada, Toronto-based Installed Roofing Services manages a network of 50 companies that sells and installs roofing, siding, soffits and fascia for Home Depot’s Canadian division.

DETROIT — Kmart Corp. narrowed its second-quarter loss to US$5 million, from US$293 million a year earlier. Sales fell 21.3 % to US$5.65 billion, from US$7.18 billion. Same-store sales declined 5.4%. Kmart lessened its losses by cutting its selling, general and administrative expenses by 20%.

AMSTERDAM — Hafin, a leading European manufacturer of garden furniture, has signed a letter of intent to take over the activities of a Belgian competitor, Lawn Comfort, a move that is expected to strengthen Hafin’s position in the French, Spanish and German markets. The deal will close October 1, 2003. Hafin will add the upscale Lawn Comfort brand to its own Flair range.

Year-over-year retail sales growth by large retailers in June of clothing, footwear and accessories, and hardware, lawn and garden products and services all declined, according to Statistics Canada. The strongest year-over-year gain for the group of large retailers was seen in health and personal care products, while the remaining commodity groups posted weak increases.

SARS, mad-cow disease, a rising loonie and weaker growth caused the Canadian economyto decline at an annual rate of 0.3% during the second quarter, according to a new report by Statistics Canada. This marks the first time the economy has contracted on a quarterly basis since the third quarter of 2001, when the world was feeling the aftershock of 9/11.

Check out our daily news link: www.04nationalhardwareshow.com every single morning! — Michael

Since the transaction has not yet been completed, the operating profits generated by the Réno-Dépôt stores have not yet been consolidated into Rona’s results.

Consolidated net sales (sales through the warehouse to dealer members and sales at retail through its corporate retail holdings) for the first six months of the year amounted to $1.17 billion, compared with $1.16 billion a year earlier.

During a conference call with analysts, Rona president and CEO Robert Dutton added that more details of Rona’s plans for consolidation of the Réno-Dépôt purchase and Canadian expansion will be unveiled at next week’s Hardlines Marketing Conference.

KITCHENER, ON — It’s a long way from Winnipeg, but that’s just the point of TruServ Canada establishing a new distribution centre in Southwestern Ontario. With the addition of more than 100 retail customers through its acquisition of Growmark‘s retail business in Ontario at the beginning of 2003, TruServ wants to beef up its presence in Eastern Canada and position itself as a full-line distributor.

The 240,000-sq.ft. distribution centre, with 15,000 sq.ft. of office space, is about one hour west of Toronto, and right across the road from Home Hardware‘s own LBM distribution centre. Officials from TruServ in Winnipeg and from Growmark in both the U.S. and Canada were on hand for the ceremony, including Tony DiEmanuele, who will be in charge of the new facility, and Ray Falkenberg, vice-president of business development and marketing for TruServ Canada.

The significance of the move means this Winnipeg-based co-op distributor wants to be the alternative of choice in an industry that has seen intense consolidation at the wholesale level. The buyout of Ace Hardware‘s assets in Canada by competitor Sodisco-Howden Group meant independents had very little in the way of options for a full-line hardware wholesaler. TruServ wasted no time attempting to fill the bill, with a pilot project with Castle Building Centres that has since expanded to include Sexton Group.

Meanwhile, Groupe BMR in Quebec has expanded its hardware distribution, and has been wooing fellow Matreco members to sell them hardware. In fact, BMR will officially launch the expanded distribution centre later in September.

SPECIAL REPORT — Home Depot and Lowe’s, the industry’s two largest retailers, reported strong sales and earnings gains for the three months ended August 3. However, investors weren’t as impressed with Home Depot’s performance as they were with Lowe’s.

Depot’s sales grew by 10.5% to US$17.99 billion for the quarter, and its same-store sales increased 2.2%, compared to same-store declines in the two previous quarters. The retailer’s net income rose 9.9% to US$1.299 billion. Through the first six months of its fiscal year – during which it spent US$1.7 billion on capital improvements in its stores – Home Depot’s revenue increased 8.3% to US$33.09 billion and its earnings jumped 8.2% to US$2.21 billion.

Lowe’s quarterly sales increased 17% to US$8.77 billlion, and its same-store sales grew by a robust 6.9%. Quarterly earnings rose 27.8% to US$597 million. Through six months, Lowe’s profit increased 25.5% to US$1.02 billion on sales of US$15.98 billion that were up 14.5%.

International Business Seminar: Hardlines believes strongly in companies building their businesses by looking beyond traditional borders – geographical or otherwise. This session will give everyone a load of concrete tips, contacts and money saving leads for building your overseas business. Featuring Industry Canada, the Council of American States in Canada, and more!!!

Retail Strategies Symposium: This half-day seminar will explain what the latest trends in housing and demographics mean for retailers and suppliers in home improvement. It’s also a great primer on the industry itself: size of the market, breakdown by store type and product category, niches and strategies of the key retailers, etc. Featuring Deirdre McMurdy of Global Television and Peter Norman of Clayton Research.

Jos Wintermans, president and CEO of Sodisco-Howden: With an eye to change, and a sensibility that takes a longer term outlook, in the last two years he’s made the changes to Sodisco-Howden that this company has needed for a decade. He is going to talk about the role of Canada’s only remaining full-line hardware wholesaler. He says Sodisco-Howden is going to be around for a long time. Let’s find out why.

John Herbert, general manager, German Retail Association: I can’t say enough about this guy. He has this amazing, brilliant retail mind. If anyone has ever seen the Knauber chain in Germany you’ll know what I mean (and I know a lot of you have, including Home Depot and Canadian Tire, which both borrowed ideas from this pioneer of “soft DIY”). He then joined Home Depot as vice-president of the EXPO division, before returning to Germany. Be sure not to miss this one!

Tanya Hanson-Rocca, Roblynn Home Hardware: Out of all the young retailers in all of North America – not just Canada, but the U.S. too – Tanya was chosen as last year’s Young Retailer of the Year Award winner! She has managed to double sales and increase customer counts a gazillion times over. She rocks! Of all the people to tell the story from the front lines, this year it’s definitely Tanya.

Joe Galli Jr., head of Newell Rubbermaid: The branding wunderkind, he developed the DeWalt sub-brand, which provided a brand for Black & Decker that quickly established itself as the choice for pros. Now he’s working his organizational magic at Newell Rubbermaid. Acquisitions such as the recent American Tool takeover prove Joe’s definitely still on top of his game. I met Joe just once, at a press conference in Chicago a few years ago and he’s one dynamic individual.

Robert Dutton, president and CEO, Rona Inc.: With the acquisition of Réno-Dépôt, expected to close in a matter of weeks, Rona will be the number-two home improvement retailer in Canada. So it’s nothing short of amazing that Robert Dutton, the top man at Rona, has agreed to close the two-day event.

I am confident this is going to be the strongest Conference Series yet. I look forward to seeing you on September 3-4, 2003! Call for details: 416-489-3396 or <click here>.

The power went out at 4:10 p.m. EST, affecting some 50 million people from Boston to Thunder Bay. Within an hour, people were buying up emergency supplies. At Grey’s Hardware, a Sodisco-Howden customer in mid-town Toronto, Steve stood in darkness as a steady stream of people came in for batteries, flashlights, matches and candles.

But it was the lineups at a few gas stations through the night in Toronto that were crazy, as word got out of pumps that were working.

Even by noon the following day lineups remained fierce. At the Canadian Tire store in mid-town Toronto, I couldn’t see the end of the lineup of cars and didn’t want to hike down in the blazing 30 degree-plus heat (so much for that investigative journalism award — Editor) but drivers I spoke with reported waiting up to half an hour as they wound their way slowly up Church Street. Local station City TV came earlier in the day to get a news piece, and Bill from City TV was still there hours later helping with traffic in and out of the gas pumps.

Inside the store, people were buying up emergency supplies. James, in a black suit and flower boutonnière, was in line with the store’s last six portable gas containers. He needed them to fill with diesel fuel to keep the generators going at the hotel he works for. Someone in the line behind him pleaded unsuccessfully with him to give up one of the canisters.

At the Rona Home and Garden in Scarborough, in Toronto’s east end, the air conditioning was left off on Friday morning, in deference to government requests to ease up on electricity usage. But when the manager discovered that the nearby Wal-Mart and Home Depot both had the air conditioning on, he went back and threw it on too.

Meanwhile, Hardlines worked indefatigably from the back yard, writing the news, barbecuing everything that had been salvaged from the freezer and making coffee for the troops on the Coleman stove. Hardlines never sleeps!

Confined to just one floor of the North building, and to the South building, at McCormick Place, even these were tough to fill, as empty spaces abounded at the back of the former and wide aisles characterized the latter.

About one-third of exhibitors, or 700 booths, were international, including a large contingent of Asian companies.

But with smaller size comes different expectations, and the most successful attendees were those who modified those expectations. Buyers didn’t come in droves, but they came nonetheless, representing most major retailers from both North and South America, and from Europe, as well.

The ones most conspicuous by their absence were representatives from Wal-Mart U.S., as the giant retailer was reportedly holding a managers’ conference during the same time. (Both Wal-Mart Canada and Wal-Mart Mexico were there.)

Just some of the buyers from Canada included Réno-Dépôt‘s Joseph Piro, Luc Nantel, Patrice Duguay and Jean Lamarche. Home Hardware, represented by Ken Friedmann and John Dyksterhuis. Sodisco-Howden sent a team headed by Al Lynn, national director of merchandising. Ken Sexton and Brian McGillivray from Sexton Group were there; Federated Co-op‘s Garry Fairbrother and Dave Dwyer were there, too.

Did even these retailers come up short, though? Probably not, as the show was only strong in hardware, tools and lawn and garden. The lack of plumbing and electrical suppliers obviated the need for buyers in these ranges. Unfettered by the demands of the big vendors, those buyers who did attend had time to look in the booths of small, specialized – and unfamiliar – exhibitors.

“It used to be that 90% of the guys knew me,” said Home Hardware’s Friedmann, who is tools and hardware buyer for the St. Jacobs, ON-based co-op wholesaler. “Now, people are saying, ‘who are you,’ despite the fact we represent 1,000 stores in Canada.”

Lynn at Sodisco-Howden, however, was not completely enamoured of the show. “I’m very disappointed with the lack of support by the vendor world; I question the validity of the show,” he said.

He, like just about everyone at the show, expressed his concern with the fate of the event. The show’s owner, Reed Exhibitions, has split from its major partner and sponsor of the show, the American Hardware Manufacturers Association. Both organizations will host shows of their own -only weeks apart – in the spring of 2004.

“I’m concerned about next year, with the split. Then you’ll have two so-so shows – and I don’t want to go to both,” Lynn said.

CALGARY, AB — Tim Urquhart, currently vice-president Western Canada for Cameron Ashley Building Products, has been chosen to head up Tim-BR-Marts Ltd. Following Barrie Sali‘s announcement back in January that he would retire as president and CEO of the Vancouver-based buying group at the end of this year, the search for his replacement has garnered endless speculation.

With another week to go before he finishes a special project for Cameron Ashley’s parent, Guardian Industries, Urquhart will start at Tim-BR-Marts as vice-president and general manager, effective September 2. For the next four months, he will work alongside Sali, getting settled into his new position.

Sali will retire at the end of December; on January 1, Urquhart assumes the title of president.

Urquhart beat out more than 100 other people for the job, including some very senior people who reportedly were surprised not to be a shoo-in for the job. But Urquhart’s background includes buying, sales and operations – all considered important skills. He owned his own store – a Home Hardware Building Centre in Brampton, ON, and later served as building products manager at Homecare Building Centres (now Tim-BR-Mart Ontario).

“That position really gave me insight, not just into Tim-BR-Marts, but into Matreco as well,” Urquhart says. Tim-BR-Marts, along with Tim-BR Mart Ontario, Groupe BMR in Quebec and AWARD in Atlantic Canada all belong to the umbrella buying group Matreco.

Tim-BR-Marts has been plagued with defections by some of its key members to a rival group, Independent Lumber Dealers Co-operative. At the same time, many younger members of Tim-BR-Marts were questioning Sali’s salary arrangement, which pays him a percentage of rebates earned each year for the group. The board of directors has continued to renew Sali’s contract at the same percentage rate through the years, despite – or perhaps because of – the fact the company has grown 1,000-fold since Sali took it over in 1970.

Even with recent losses, however, under Sali’s leadership Tim-BR-Marts remains one of the leading building materials buying groups in Canada, and managed to top $1 billion in dealer sales in 2002.

Urquhart is prepared for the challenge. “Regardless of the dealers we’ve lost, we’re still a very large force in building materials retailing in Canada,” he says. He intends to keep his home in Calgary, while he spends much of his first year on the road, visiting dealers and listening to their concerns. He will divide his time between Calgary, the Vancouver head office, and the group’s second office in Winnipeg.

Randy Martin, Tim-BR-Marts’ director of merchandising, will work with Urquhart in an expanded role. “It’s a good opportunity for Tim-BR-Marts,” he says. “Tim’s got a varied background and he’ll bring a great deal of expertise into this organization.”

Then, major vendors, led by Black and Decker and Bosch, began an exodus from the show, changing both its size and makeup dramatically. This past week’s show filled a took up only 430,000 sq.ft.

Add in the fallout from 9/11, a bear stock market and continuing consolidation in the North American home improvement industry and what’s an ailing Hardware Show to do? Reed wanted to move the show to Las Vegas, where it already holds a number of its shows. The AHMA, with deep roots in its home town of Chicago, and representing a base of members headquartered in the Midwest, said no. Other proposed changes could not find consensus either, so AHMA tried to buy Reed out. Price was based on the show continuing to dwindle in size, and this time Reed said no. In order to avoid litigation by the AHMA, Reed agreed to sever its agreement.

But both sides are determined to mount the definitive industry event. Reed went ahead with some of the initiatives it believed would resuscitate the show. These included moving NHS to Las Vegas, a move, says Reed’s Rob Cappiello, which has consistently boosted attendance at other shows, plus offering free drayage (the cost of moving the exhibitor’s booth and equipment from the loading dock to the show floor), and reducing the booth rental rate by more than a third.

The AHMA, still keen on a Chicago location, launched its own show, the AHMA Hardware Show. It started by matching Reed on pricing. One thing both sides could agree on was moving the date of the show to the spring. The AHMA will hold its new show April 18-20, 2004. NHS will be held just three weeks later, from May 10-12.

By the end of the show, Reed had more than 700 signed contracts from vendors. Bill Farrell, president and CEO of the AHMA, is taking another tack, waiting until September 15, the deadline for reserving booth space. Then, Farrell says, he will announce his bullpen. He reportedly has let slip that he has participation in the “triple digits” but will say no more. However, by the end of the show, he was able to announce that The Stanley Works has committed its support and participation in the 2004 AHMA Hardware Show in Chicago. In addition, Stanley’s director of corporate marketing services, Scott Bannell, has joined the AHMA Industry Advisory Council.

Practico will source U.S. products through Ace for its own outlets. As part of the deal, Practico’s distribution facilities will also be able to supply locally manufactured products to Ace 84 other outlets in Mexico.

Do-it Best will begin upgrading Matusa’s 22 stores and increasing their SKU count from about 5,000 to 12,000-plus. Currently, the stores rely heavily on counter sales, for reasons of both convenience and theft prevention. One of Do-it Best’s challenges will be to reformat the stores to more DIY-oriented, self-serve merchandising.

Existing home sales are still on the rise this year, however. The Canadian Real Estate Association reports that sales in 25 major markets across the country rose from June to July by 14.5% seasonally adjusted. The average price of resale homes in July stood at $225,122, an 11.7% increase from $201,504 a year earlier.

TORONTO — Canadian Tire Corp. made $64.4 million in its second quarter, up from $58.6 million a year ago. Total retail sales were $2.16 billion, up 5.5% from $2.05 billion in 2002.

KAMLOOPS, BC — Weyerhaeuser Co. has pledged $40,000 in cash and product to help families affected by hundreds of fires that have ravaged the Interior of British Columbia over the past several weeks.

OTTAWA — Mario Giannetti, president of Preston Hardware (seen here at the National Hardware Show) hosted his company’s annual customer appreciation event this past weekend. The warehouse was cleared out, and vendors were brought in to provide product demos and info seminars.

BARRIE, ON — TWI Global Inc. has named Can-Save as distributor for its DeckZone and ELuminate deck and rail lighting in Ontario and the Maritime provinces. Can-Save has also formed a partnership with Shawmark Floors to supply its laminate flooring lines in Ontario.

BENTONVILLE, AK — Wal-Mart announced 2Q net income of US$2.44 billion, up about 21% from last year’s US$2.02 billion. Income from continuing operations totaled US$2.3 billion, up 14.7% from last year’s $2 billion. Total sales rose 11.3% to US$62.64-billion, from last year’s US$56.27 billion. Total same-store sales were up 3.2%, triggered by a 3.1% increase for Wal-Mart Stores and a 3.6% gain at the retailer’s Sam’s Club outlets.

MISSISSAUGA, ON — With the first outlets slated to open this fall, Wal-Mart Canada has launched a membership drive for Sam’s Clubs in the Greater Toronto Area. Business memberships will cost $40, while an individual membership will cost $45.

KITCHENER, ON — Onward Hardware (division of Richelieu Hardware) begins moving its headquarters today into expanded, 40,000-sq.ft. facilities, representing a doubling of both space and inventory. The move should be completed by this time next week. The new address is: 520 Conestoga Road, Waterloo, ON N2L 4E2. The phone number (519-578-3770) and fax numbers stay the same.

MONTREAL — Richelieu Hardware will acquire a U.S. firm, Pacific Coast Supply, and Canadian group, Teamwood Distribution. Privately held Pacific Coast Supply runs two specialty hardware distribution centres near Seattle, WA and Portland, OR. The acquisitions are expected to add about $8 million in annual sales.

OAK BROOK, IL — Ace Hardware Corp. saw net earnings for the second quarter increase to US$34.5 million from US$33.5 million in the second quarter of 2002, on sales of US$831.8 million, versus US$834.0 million in 2002. For the first six months of 2003, net earnings increased 16.9% to US$48.8 million on sales of US$1.55 billion, compared with US$41.8 million in 2002 on sales of US$1.54 billion. Highlights of the period included the opening of 26 branch stores by existing Ace dealers and 41 new stores who converted to Ace from other hardware co-op. Ace also purchased a facility to beef up its distribution on the West Coast, which will start shipping in the first quarter of 2004.

INDIANAPOLIS — Do-it Best Corp. ended its fiscal year with record sales and rebates. Sales by its 4,200 member dealers reached US$2.42 billion. Rebates comprised 13.7% of sales through the Do-it Best warehouse, or US$98.2 million. Wholesale sales were up 3.1%, with paint, plumbing, outdoor and home décor leading the pack, while unit sales of lumber and building materials were up about 12%.

CAMPBELL, CA — Zircon Corp. has filed suit in United States District Court to enforce the patent for technology found in many of its stud sensors. The “DeepScan” technology allows Zircon’s stud finders to find wood and metal studs, joists and rafters up to 1½ inches deep behind walls. However, Zircon attests that The Stanley Works is infringing on the patent with Stanley’s IntelliSensor Digiscan stud finder and wants damages.

WASHINGTON, DC — The U.S. Federal Trade Commission has, for all intents and purposes, approved the sale by Masco of its Baldwin and Weiser Lock security hardware divisions to Black & Decker, which the two companies first disclosed on July 1. The deal still needs approval from regulatory agencies in certain foreign countries, as well as from the companies’ respective boards of directors before a definitive agreement can be reached.

Neil Hastie, CIO of TruServ Corp., has resigned from the dealer-owned buying group, which has initiated a search for his replacement. Hastie had been instrumental in developing many of TruServ’s information technology tools, including its data warehouse for members and other online ventures.