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.

Trois Rivières, QC — An old name is new again in this province. Unimat, the name of a now defunct wholesaler, is the latest banner to be offered to independent dealers. It’s the effort of the regional dealer-owned wholesaler, Co-opérative Fédérée de Québec, to develop a retail program for independent hardware and building centre dealers who aren’t co-op members.

Since its inception late last year, two renovation centres and one hardware store have been signed to the new banner.

Claude Gingras, director, hardware and building materials for Co-op Fédérée, won’t say what long-term potential he sees for the Unimat banner in Quebec. He merely insists his organization will develop dealers one at a time, as independents seek out alternatives to other banner programs. “We have a structure for both kinds of retailer,” Gingras says. “We have a good program – an offer for independents.”

Co-op Fédérée has also been busy updating its member stores. Averaging 12 upgrades a year since 2000, the company has converted 53 in total. However, the co-op wholesaler has already converted 15 this year, with another six planned by the end of 2003. “This will be our biggest year,” says Gingras. The group has 156 stores in total, representing about $245 million in retail sales.

Updated stores often involve adding square footage and new merchandising, as well as a new colour scheme and updated Co-op store logo. A big part of the renovations allow for the expansion of product lines that appeal to an increasingly important customer – women. “This helps very much with increasing the variety of décor products and helping to bring in more women,” says Gingras. Featuring more and better lighting creates a more pleasant shopping environment, he adds, enabling shoppers to find things easily and encouraging the purchase of impulse products.

It’s the latest step in a strategy to provide brands that are exclusive to HBC stores. The following Westinghouse products will be launched at select Zellers and Home Outfitters stores beginning this fall: small kitchen appliances, microwave ovens, vacuum cleaners, fans, clocks, timers, alarm clocks, personal care appliances, heaters, humidifiers and air cleaners. Additional product categories will be introduced over the next 12 months.

Salton operates in Canada under the Maxim Toastmaster name.

Part of the branding strategy includes the launch of a series of “beyond” appliances, which are designed to enhance the functionality of conventional appliances, starting with a line of technologically advanced vacuums that are cordless and run on batteries.

Toronto, ON — What services and support are available to companies looking south of the border or overseas for new business? The International Business Seminar, which kicks off the Hardlines Conference Series on September 3, 2003, will feature concrete information on finding customers and distributors for your products in other countries.

One of the featured presenters, Bill Macheras, is a marketing and trade officer with Industry Canada’s International Trade Centre. His job is to assist Canadian companies, particularly small and medium-sized companies, with their exporting needs. With a specialty sector is building products, he has been with the International Trade Centre for three years and has previous public and private sector experience in banking, law and communications.

Hardlines will provide an overview of key retail customers overseas, while members of the Council of American States in Canada will present the many programs available for U.S. trade. For more information about the International Business Seminar and the Hardlines Conference Series, call 416-489-3396 or click here.

Tillman will be joined by many of the retailer’s senior-level executives, who will be among the first wave of 1,000 to 1,200 employees to relocate into the new facility from Lowe’s headquarters offices here. The company’s store operations, merchandising, finance and marketing departments will operate out of Mooresville, while its real estate, accounting and information technology departments will remain at Wilkesboro, which currently is home to between 2,800 and 3,000 employees.

The Mooreville facility, which will be on a campus that includes a seven-acre lake, is expected to eventually expand to 1.2 million sq.ft. The decision to add this new support centre is in line with Lowe’s ongoing retail expansion, which will add 270 new stores in 2003 and 2004.

Montreal, QC — Tembec Inc. reported a drop in gross sales for the third quarter to $808.9 million, down from $872.6 million in the same period a year earlier. Net earnings inched up to $70.5 million, compared with $68.7 million in the corresponding quarter of 2002 and $34.2 million in the second quarter of this year.

Cleveland, OH — Sherwin Williams reported that its sales for the second quarter increased only 1.3% to US$1.5 billion. Its earnings rose 2.4% to US$110.1 million. The company said wet weather hindered its sales growth. Its paint stores saw their sales for the quarter increase 2.4% to US$933.8 million. Same-store sales inched up 1.7%, but this segment’s operating income declined 0.8% to US$122.6 million. Through six months, Sherwin Williams’ stores reported a 2.6% gain in sales to US$1.65 billion, a 1.6% increase in same-store sales and a 6.8% decline in operating income to US$152.6 million.

Townson, MD — Cost cutting is paying off for Black & Decker, which reported that its profits for the quarter ended June 29 rose 14.5% to US$75.7 million. However, the company couldn’t completely weather lower orders from its two largest customers, Home Depot and Lowe’s, which caused its sales for the quarter to decline about 1% to US$1.12 billion. Sales of power tools and accessories specifically were off 6% in the quarter. Through six months, B&D sales increased 0.5% to US$2.09 billion, and its net income rose 20.2% to $119.1 million.

New Britain, CT — Net income at Stanley Works for the second quarter fell a whopping 80% to US$12 million, on sales of US$700 million, which increased 8% over the same period a year ago. The company attributed the decline to US$48 million in charges related to its closing its Mac Direct business, as well as severance and pension benefits for John Trani, who will retire as the company’s CEO later this year. Among the factors that contributed to Stanley’s ongoing financial difficulties was the decision by Home Depot to drop the supplier’s line of entry doors from one of its regions.

St. Paul, MN — Sales worldwide increased 10% for 3M in its second quarter, pushing earnings up nearly 15%, from US$539 million to US$619 million. Quarterly revenue went from US$4.16 billion last year to US$4.58 billion.

Duncan, BC — Doman Industries continues to struggle through restructuring, and has obtained an extension of its bankruptcy protection from the Supreme Court of British Columbia as it considers a new loan package, this time from Tricap, which was part of an earlier loan deal. Doman is an integrated forest products company and the second-largest coastal woodland operator in BC.

Greensboro, NC — Mohawk Industries has reached an agreement to buy the Lees Carpet division of Burlington Industries, which is now in Chapter 11 bankruptcy proceedings. Lees Carpet had US$262 million in sales last year, accounting for more than one-quarter of Burlington’s sales. Mohawk is the second largest carpet maker in the U.S. and the country’s biggest floor coverings manufacturer.

The composite leading index posted a moderate gain of 0.3% in June, slightly stronger than last year’s growth over the same period, says Statistics Canada. All the indicators of household demand rose or were stable, led by housing, which was up 0.7% in June, its best since a 2.2% advance in February. Both housing starts and existing home sales increased, as employment rebounded from two consecutive losses and mortgage rates stayed low. Sales of durable goods, which have been very volatile in recent months due to rebate programs for autos, also turned up.

Although their sales increased in 2001, non-store retailers – who reach consumers through everthing from infomercials, direct-response advertising, catalogues, door-to-door sales, home parties and by vending machines, still only accounted for 3% of all Canadian retailing, says Statistics Canada. They provided $10.5 billion in goods and services, a 2.9% increase over 2000.

Sales of new single-family houses were up 4.7% in June to 1.16 million seasonally adjusted, says the U.S. Census Bureau. While the increase is a healthy one over the previous month, it’s also fully 21.0% higher than the rate in June 2002.

Last week, however, both sides managed to come to an agreement to settle their respective lawsuits out of court. Neither side would disclose any details, as the terms of the settlement were confidential.

Matco Ravary recently released its second-quarter results, which reveal a company stripped of substantially all its assets following the sale to BMR. In the second quarter and for the six-month period ended April 30, 2003, Matco Ravary recorded revenues of $1.3 million resulting mainly from the sale of 108,736 Rona shares, as well as interest income from investments.

Bonuses for the two senior officers of Matco Ravary, Carmel Chaput, chairman, and Gilles Nolet, president and CEO, plus the cost of professional services, made a $0.7 million dent on the books, while another $0.4 million was payable to the two executives’ pension funds following the sell off.

Trendex North America is one of North America’s largest consumer syndicated marketing and research firms specializing in the Canadian market. The company regularly tracks consumer purchases of household equipment, household textiles, soft goods and sporting goods.

The Hardlines Marketing Conference is part of the Hardlines Conference Series, being held September 3-4, 2003 at the Delta Toronto Airport West Hotel.

Toronto, ON — What’s ahead for the supply chain? Now you can find out at the Hardlines Marketing Conference on September 4. We’ve just signed the Electronic Commerce Council of Canada (ECCC) to one of our breakout sessions at the Conference to give a valuable and timely update on the latest changes and standards being applied in data synchronization. ECCC is the organization in Canada working to harmonize standards and bring this industry in line with initiatives being developed jointly with UCCnet in the U.S.

Michael Sadiwnyk of ECCC will discuss the rationale of global e-commerce standards for the supply chain. Data synchronization will be a key driver of this coming e-collaboration. Sadiwnyk will describe the global standards landscape and present the key players involved internationally and nationally, and explain how data synchronization can benefit and enhance the efficiency of the supply chain.

The data sync session is one of three breakouts being offered at the Hardlines Marketing Conference. For more information about the whole Hardlines Conference Series, September 3-4, 2003, call 416-489-3396 or click here.

Last Thursday, the Census Bureau reported that single-family housing starts in June rose to an annualized rate of 1.462 million units. That’s 7.6% higher than the rate in June 2002. Overall housing starts, which include multi-family dwellings, increased 5.5% to 1.803 million units.

Mel Martinez, the Secretary of the Department of Housing and Urban Development, stated that the Bush administration remains committed to increasing home ownership among minorities by 5.5 million by the end of the decade. As part of that effort, the administration this year has proposed a US$113 million increase for the Department’s HOME Investment Partnerships Program; US$200 million for the “American Dream Downpayment Fund” to help low- to moderate-income families become first-time homeowners; US$2 million for research to help reduce regulatory barriers to affordable housing; and US$10 million toward housing counseling to help low-income individuals and families find and maintain homes.

On the same day, the Labor Department reported that weekly jobless claims fell to 412,000 in the week of July 12, from a revised 441,000 the prior week. The four-week running average declined to 424,000 from 427,500. And continuing claims fell to 3,654,000 in the week of July 5 from 3,771,000 the previous week.

“The rate of loss seems to be abating,” Mark Zandl, chief economist for Economy.com, was quoted by Reuters. “The economy is still losing jobs, but at a slower rate, so we’re heading in the right direction.”

Bentonville, AK & Wilkesboro, NC — Anticipating a wave of Americans who will want to use their federal tax refund for home improvement projects, Lowe’s will allow easy cheque cashing this year in its stores. As a convenience to its customers, no purchase will be required.

“Historically, we know when consumers have access to additional cash, many homeowners will choose to spend a portion of that money on projects that improve their largest asset – their homes,” said Larry Stone, senior executive vice-president of operations at Lowe’s, in a prepared statement.

Starting July 25, the U.S. government will begin mailing out 25 million tax rebates totaling US$14 billion.

A few days after the Lowe’s announcement, Wal-Mart said it would offer the same kind of service. Customers will be able to cash their federal tax refund cheques at any Wal-Mart or Sam’s Club store.

According to Wal-Mart, 20% of its customers don’t have bank accounts.

The company’s building materials distribution division reported a 31% increase in its quarterly operating profit to US$21 million.

Through the first six months of its fiscal year, G-P generated US$9.62 million in revenue, down from US$12.02 million in the first half of 2002. (Unisource contributed US$2.8 million of those 2002 sales.) Profit stood at US$34 million, compared with a US$567 million loss in the first six months of last year.

Pete Correll, G-P’s CEO, said that “every segment” of his company’s business was performing below last year’s pace and that profit gains were the result of cost-cutting measures.

Dryden, ON — Weyerhaeuser Co. will close its pulp and paper operations here as the forest products market continues to shrink. The closure, effective October 11, 2003, will be a permanent one, affecting about 330 hourly positions. Weyerhaeuser will take a US$7 million after-tax charge against its second-quarter earnings for costs associated with the closing.

Toronto, ON — Hudson’s Bay Co. has arranged a new line of credit, secured by the company’s inventory. The 364-day $650 million secured revolving credit facility will be used for “general corporate purposes” and replaces the company’s current unsecured $480 million operating line. GE Corporate Financial Services will act as administrative agent for the credit line, and work with Bank of America as lead arranger. Inventory at the end of the first quarter was valued at $1.7 billion.

Oak Brook, IL — Ace Hardware has struck a partnership with paint supplier Pratt & Lambert, allowing the co-op’s members to expand their paint lines into a higher-end price point. By November, Pratt & Lambert, one of Sherwin-Williams’ architectural coating brands, is scheduled to start supplying its Accolade and Red Seal lines to Ace dealers.

Eighty Four, PA — 84 Lumber is opening three stores this month, including one in Montgomery, AL. The building centre chain operates eight other locations in Alabama, including Albertville, Bessemer, Chelsea, Huntsville, Irondale, Northport, Pelham, and Pell City. The building centre, the company’s 449th, is more than 40,000 sq.ft. in size. The other two new outlets are in Gainseville, FL and Cartersville, GA.

Boise, ID — Timber and paper giant Boise Cascade is making a strategic repositioning to migrate into the office supply business with the announced acquisition of OfficeMax Inc. for more than US$1.5 billion. The move will provide alternatives to the company’s ailing paper business and expand on the office supplies business that already exists in Canada. Boise is paying a 25% premium over the July 12 closing share price, and the deal is expected to close in the fourth quarter.

Nashville, TN — Tractor Supply Co. had a 50.3% increase in profitability during its second quarter, with net income reaching US$27.4 million, from US$18.2 million in the prior year period. Net sales in the second quarter grew 14.6% to US$449.4 million, compared with US$392.0 million last year. Same-store sales increased 1.2%. During the second quarter, the company opened 13 stores.

Tel Aviv, Israel — ZAG, a division of Stanley Works that is considered the world’s leading supplier of toolboxes, reportedly has agreed to purchase the toolbox business from an Israeli rival, Keter Plastics, for US$30 million. The pact calls for ZAG to acquire Keter’s toolbox business, and Keter to continue making the boxes for ZAG as a sub-contractor.

Anthony Sabo has been named general manager of the rental business at TruServ Corp. Bringing 15 years of rental experience to the position, Sabo was most recently director of fleet operations for United Rental in Greenwich, CT. Now he will manage TruServ’s in-store and stand-alone rental businesses: Just Ask Rental, Grand Rental Station, Taylor Rental, and Party Central. He will report to Fred Kirst, vice-president of maintenance repair and operations for TruServ’s Rental Division and Home & Garden Showplace.

Wholesale sales edged up 0.2% in May with $35.9 billion in goods and services sold, reports Stats Canada. The uptick ends three consecutive months of contraction. Since the start of 2003, sales have fallen an average of 0.1% per month. Despite the weakness in sales since the start of 2003, total sales for the first five months of the year were up 6.1% over the same period of 2002.

Retail sales in the U.S. grew by 0.5% in June to US$310.4 billion, says the U.S. Commerce Department. After flat sales in May, the June increase was the biggest gain since March. Excluding automobiles, retail sales were actually US$236 billion, up 0.7% from last month and up 3.8% from June 2002.

Mitre 10 has more than 900 stores throughout Australia and New Zealand. Now it wants to add up to 25 big boxes under the MEGA banner.

Leduc spent eight years at Réno-Dépôt, and was with the company during its efforts to transform itself from a traditional chain of building centres in the Montreal area into a big box player. Leduc started out as a store manager in Quebec and then Ontario when Réno-Dépôt rolled out The Building Box, its banner for English-speaking Canada. By the time he left, he was director of logistics and supply chain for Réno-Dépôt.

Now he’s helping the Kiwis to battle the arrival of Bunnings, the largest home improvement chain in Australia, with 110 warehouse stores, 100 traditional stores and about 14% of the market there. Bunnings already has a presence in New Zealand. Bunnings’ owner, Wesfarmers, bought the Hardwarehouse chain in 2001 and converted them to big boxes, including three in New Zealand. The retailer will open another store, this one in Christchurch, in October.

The arrival of the big box is being met with some incredulity. “My belief is that they are struggling with the economies of scale in a country with a population of only four million,”” says Ross Middleton, group editor of Marketplace Press Ltd., which publishes New Zealand Hardware Journal. “My contention has always been that big boxes are not suitable or sustainable in this country.”

This isn’t the first time Mitre 10 has relied on Canuck expertise. The company’s banner and look were developed by Toronto-based The Watt Group back in the mid-80s.

Staying top-of-mind with retail, DIY and pro customers is a huge challenge. Join Meadwell over lunch and find out how to meet that media awareness challenge head on. With more than 30 years of marketing, communication and branding experience for clients that include General Foods, CIBC, Sun Life, Bell Canada and Molson Breweries, he will deliver valuable pointers on optimizing any company’s brand and increasing media awareness.

Hardware Merchandising has partnered with Hardlines to present this important session, which will be part of our incredible two-day Conference Series. The event will be available at no charge to registered delegates of both the Hardlines Retail Strategies Symposium on September 3 and the Hardlines Marketing Conference on September 4. To book your seat, contact us at 416-489-3396.

Atlanta, GA — Home Depot continues to look in southern Florida for a location where it can place a distribution centre that local development sources say will be between 500,000 and 750,000 sq.ft. in size.

The Palm Beach Post reports that the retailer is considering several locations, including Port Everglades and the Palm Beach Park of Commerce, where Walgreen’s, the drug store chain, currently operates a large facility.

However, the South Florida Business Journal has already reported that Home Depot has gotten cold feet about the Port Everglades location, where it was expected to signed a 30-year lease for 54 acres by this month. The newspaper reported that Home Depot, which is working through Industrial Developments International, is also considering the Beacon Lakes industrial park in Miami-Dade County.

Housing starts had dropped slightly in May, to 197,900 units seasonally adjusted, but they increased again a month later, hitting 210,400 seasonally adjusted in June.

Year to date, overall actual starts in Canada are up 2.6% over the first half of 2002. Actual urban multiple starts have increased 12.6% when compared with the same period in 2002. However, year to date, actual urban single starts are down 4.7% compared with the first six months of 2002.

So far this year, housing is at 213,800 units seasonally adjusted, putting starts ahead of the CMHC’s forecast of 205,500 for 2003. As a result, Dugan expects a bit of slowing in the second half of the year to conform to the CMHC forecast. Starts for the year to date are up 5.3% over the 203,050 units seasonally adjusted in the first six months of 2002.

“The pace of activity in Canada’s housing market is just great,” says Dugan. “In spite of some mixed signals coming out of the economy, the key drivers for housing markets – labour markets, consumer confidence and interest rates – continue to ensure that the housing market remains at a high level.”

Looking at markets regionally, the only area where urban single starts actually fell in June was in British Columbia, down 3.8%. The biggest boost in starts there came from urban multiples, especially in the Vancouver area, increasing 11.0% to 82,800 units seasonally adjusted in June 2003, from 74,600 in May.

Carol Frketich, British Columbia/Yukon regional economist for CMHC, says that, despite the drop in single starts, the decline is nowhere near what had been forecast. “What we’ve been seeing to drive year-to-date singles in B.C. is the super low interest rates and the market tapping into a lot of pent-up demand.”

For the rest of the year, she expects single starts to plateau and multiples to keep increasing. June singles hit 10,200 seasonally adjusted and multiples reached 10,800. Year to date, multiples in B.C. are up 20.8% and singles are up 17.2%. “Combined starts in this province are up almost 19%,” she points out, noting that the housing market remains very healthy – and a key factor in the growth of the province’s economy.

Elsewhere in the country, the biggest increase from May to June was in Ontario, where starts were up 13.5%. Multiples were up 28.2% seasonally adjusted from May, while singles were up 3.9%.

Unlike B.C., however, total starts from January to June in Ontario were down 2.4%, compared with the same period in 2002. Seasonally adjusted starts for the first six months were down 1.9%.

Norwalk, CT — As of last Monday, the two organizations mounting industry hardware shows in 2004 were able to start selling booths for their respective events.

Both Reed Exhibitions, based here, and the American Hardware Manufacturers Association, in Schaumburg, IL, are partners this year in the National Hardware Show, which takes place August 9-11 in Chicago. But their partnership ends with this year’s show; in 2004 they’ll both have shows of their own. Reed continues with the National Hardware Show name, mounting a show in Las Vegas from May 10-12, 2004, while the AHMA will keep the venue, McCormick Place in Chicago, with the AHMA Hardware Show, April 18-20.

According to Robert Cappiello, industry vice-president for the National Hardware Show, in the past week his team was able to sign up more than 200 exhibitors and fill close to 50,000 sq.ft. of space. “For the first week,” he says, “I can’t complain.”

Both organizations are looking to gain converts from the existing show. However, that show’s base of support has shrunk over the years, and at aproximately 500,000 sq.ft., is less than half the size it once was. The AHMA’s own membership comprises a percentage of the existing show, a factor expected to add to the support of its own show in 2004, which it touts as “the industry’s official show.” It already has the support of several retail organizations, as well as the U.S. Department of Commerce and its “International Buying Program.”

However, Reed’s Cappiello says many of the exhibitors that have signed up for his event are in fact companies that had already opted out of the existing show. “One-third of our exhibitors are not currently at NHS,” he says. “To have that many people returning is a big deal.”

William Farrell, president and CEO of the AHMA, was not available for comment at press time.

Colder weather last month affected Sears’s home appliance sales, especially air conditioners. That category has emerged as a primary battlefront in Sears’s efforts to cling to its market share in appliances, which has been eroding in recent years due to competition from home improvement big boxes. Sears captures nearly 39% of the US$36 billion appliance market, but that’s down from 41% in 2001. Lowe’s, now the number-two seller of heavy appliances in the U.S., and, to a lesser degree, Home Depot, have been pinching the Sears appliance business, which has led the mass merchant to cut its prices and match those of its big box competitors for the first time.

Sears is also is trying to reduce its warehousing and delivery costs by encouraging more customers to take home their appliances on the day of purchase.

Atlanta, GA — Home Depot‘s CEO Bob Nardelli wants his company to become more than just a DIY retailer. He foresees a role as a “home aggregator,” supplying both goods and services for every aspect of home improvement, according to a report in the Financial Times. With more than 1,500 stores, the company is fast reaching saturation, and the new initiative should open doors to a US$500 billion industry. He expects the company’s financial stability and credit terms to appeal to larger contractors, and he also anticipates moving the company into other at-home services, including installing water treatment systems or at-home power generation.

Bentonville, AR — Wal-Mart Stores Inc. reported net sales in June of US$24.64 billion, up 11.1% from the same period a year earlier. Year-to-date sales were US$101.96 billion, up 10.2% from US$92.50 billion a year earlier. The Wal-Mart division’s sales for the five-week period were US$16.70 billion, up 9.5%. The division’s year-to-date sales reached US$69.24 billion, up 9.3% over US$63.40 billion during the same period a year earlier. Sam’s Club sales for the five-week period were US$3.38 billion, up 8.0 %. Club sales for the twenty-two weeks were up 7.4%.

Issaquah, WA — Costco Wholesale Corp. reported net sales of US$4.28 billion for the five weeks ended July 6, 2003, up 11% from US$3.85 billion a year earlier. For the first 44 weeks of its 2003 fiscal year ended July 6, 2003, the company reported net sales of US$34.95 billion, an increase of 9% from US$32.00 billion during the same period a year earlier.

London, England — Kesa Electricals had a healthy introduction to the London and Paris stock exchanges last week. Made up of the former Kingfisher electrical retail chains, Kesa began trading as a spin-off of parent company Kingfisher plc following a successful demerger of the Kesa unit. Kesa operates 790 stores in seven European countries, with sales of around £3.4 billion.

London, England — Kingfisher Plc has sold off its French specialist builders merchant business, Dubois Materiaux, to Point.P, a division of Saint-Gobain Building Distribution. The deal is worth for 100 million euros (C$157 million). Proceeds from the sale, which is expected to close by fall 2003, will be used to reduce Kingfisher’s debt. The company says it wants to focus on large-scale, mass merchandise home improvement retailing through its B&Q, Castorama and Brico Depot banners.

Beijing, China — Wal-Mart opened its first club store in this city last week, and has plans to open at least two more. Wal-Mart already has 26 outlets in China, including four existing Sam’s Club stores.

Boca Raton, FL — Spear & Jackson, a vendor of garden tools with world headquarters in Sheffield, England, has made a deal, through its French division, with OBI, one of the largest home improvement retailers in Europe. The deal calls for Spear & Jackson to supply a new line of garden tools to OBI‘s 27 stores in France.

Consumers spent a total of $68.6 billion on goods and services in the first quarter, says Stats Canada, up 4.7% from the first quarter of 2002. Year-over-year spending in retail stores in the first quarter was up for all major commodity groups, except automotive. Despite following a 4.9% year-over-year increase in the fourth quarter of 2002, these gains were the slowest since the third quarter of 2001, when sales were affected by the events of September 11. Consumer spending on home furnishings and electronics reached $5.2 billion, up 1.4%. Within the home furnishings and electronics commodity grouping, sales of indoor furniture declined 2.9%. Spending on home furnishings (floor coverings, draperies, bedding and home decorating products) was up 2.9% and sales of major appliances rose 3.7%.

New house prices continued their climb in May, as the New Housing Price Index reached 116.0 (1997=100), up 0.6%, from April. According to Stats Canada, this index of contractors’ selling prices increased 4.4% on a 12-month basis. A favourable housing market and higher prices for labour and land continued to push prices up nationally. Land increases were observed in seven of the 21 urban centres surveyed. St. Catharines-Niagara, ON led the way with an increase of 1.3%, followed by increases of 1.1% in Toronto and Saint John-Moncton-Fredericton. Significant increases were observed in Vancouver (+0.8%) and Hamilton, ON (+0.6%).

Affected by bad weather, the value of U.S. construction projects under way in May fell 1.7% from April to US$869.8 billion seasonally adjusted, according to the U.S. Commerce Department. That’s the third monthly decline this year. Spending on new residential housing units reached US$322.1 billion seasonally adjusted in May, 0.7% below April’s estimate of US$324.5 billion. Non-residential building construction dipped 0.4% US$157.0 billion.

U.S. wholesale inventories in May were US$289.3 billion, down 0.3% from April but up 2.3% from the same period a year ago. Sales were US$233.4 billion, down 0.5% from last month but up 2.6% from May 2002. May 2003 sales of merchant wholesalers were US$233.4 billion, down 0.5% from April, but up 2.6% from May.

Leaving concerns about shareholder value to president and CEO Wayne Sales, CTR president Mark Foote has been looking carefully at the stores themselves – and how to build both traffic and purchases. The result of corporate surveys – and a lot of internal reflection – has resulted in a renewed focus on the customer.

Foote is trying to figure out how to increase the customer experience at CTC stores, especially in light of some troubling factors. First of all, same-store sales have been below industry average for years, with growth coming largely from new or expanded stores. But those expansions and refits are coming to an end within the next three years. Also, customers’ shopping baskets have gotten smaller even as the frequency of their visits has dropped.

As it turns out, each different business within the store – for example, automotive and sporting goods – serves as a distinct destination for shoppers. So the company wants to encourage more cross-over shopping between these departments. One hurdle, though, has been the emphasis in its flyers on convenience and day-to-day items, such as cleaning products. These products build traffic and repeat customers, something Sales has always believed is important to compete against the likes of Wal-Mart. But the company is faced with the challenge of moving a customer who has come into the store for Comet Cleanser on special to make a more upscale purchase, such as the higher end Persona housewares or Mastercraft Maximum power tools.

According to CTC spokesperson Jennifer Sexton, the new strategy ties in with the company’s new store positioning, which will be realized with its “20/20” store concept that rolls out this fall. The initiative is building on the “start” positioning of CTC – as the starting point for repair and renovation projects. “It’s just evolving that and going along further from where we’ve come from.”

The solutions, which will be unveiled by Foote at a senior management meeting for the retail division later in July, include more staff training through its e-learning initiative, as well as more boutiquing and cross-merchandising on the retail floor to get people to do more than just convenience shopping. As more space is opened up in the stores under the 20/20 concept, more attention will be given to housewares and home décor, in an effort to attract more female shoppers – and increase the size of the consumer purchase.

After the management team digests the new customer-first mission, the strategy will be delivered to the dealers at their fall market in October.

Toronto, ON — The Canadian Retail Hardware Association has launched a new customer loyalty program for its member retailers. Called ToolPoints, the initiative enables customers to collect points at store level and redeem them for prizes during specific promotional events.

Developed with Charles Marketing Group C.M.C., a program is set up with the retailer tailored to that retailer’s specific business needs. The promotion-specific program allots points to customers to build return traffic for a retailer over the course of a store relocation, seasonal sale or a grand opening. It’s supported by heavy in-store signage, price reductions and a local direct mail campaign.

At the True Value store in Guelph, ON, the program was applied to a four-week summer sale to unload excess inventory. According to Don L’Heureux, owner of Guelph True Value Hardware, the program increased sales by 14 times on the opening day of the event. Humbertown True Value in Toronto also used the program, while the True Value in Schomberg, ON is about to try it, as well.

On July 1, B&D, based here, and Masco, based in Taylor, MI, announced they had signed a letter of intent calling for B&D to buy Weiser and Baldwin, two businesses that generated US$250 million in revenue in 2002, or about 16% of Masco’s sales from its decorative architectural products group (which, by the way, was the company’s highest profit margin group last year, at 21.2%.)

Masco, which has owned Baldwin since 1982, and has owned Weiser since 1987, has a well-earned reputation for its aggressive acquisition and disposal of its business properties. It has been telling investors and analysts over the past several weeks that it is evaluating all of its divisions to see which parts of its corporate network are candidates for expansion or for sell-off, according to Samuel Cypert, a Masco spokesman.

“We think this deal makes sense from a logistical, marketing and purchasing standpoint, and will ultimately benefit consumers,” he says.

For B&D, Weiser and Baldwin would fill out its price and product assortment in the security hardware category. Barbara Lucas, a spokesperson for B&D, noted that Kwikset, the best-selling lockset brand in the U.S., is sold primarily as an opening price point, although recently that brand has been expanded to include mid-priced models as well as an upper-end line called Society Brass. Weiser is generally marketed as a mid-priced lockset line and Baldwin Brass as a premium line.

There could be manufacturing synergies in this deal, too. Weiser, which is based in Tucson, AZ, makes its products in Nogales, Mexico. B&D is currently making parts for its Kwikset line in Mexicali, Mexico, said Lucas. (Weiser’s Canadian distribution is out of Burnaby, BC).

It will be interesting to see, as well, if this deal gives B&D a better shot at regaining shelf space in Home Depot’s stores. Last year, Depot reset its door hardware department chain wide, and gave Schlage Lock the dominant position. Kwikset and Baldwin currently command four of the department’s 12 sections. Home Depot currently does not carry Weiser.

The Atlanta Business Chronicle reported last week that Cal/OSHA notified Home Depot in June that its California stores may have safety problems. The publication also reported that Cal/OSHA is reviewing Home Depot’s accident records over the past several years.

Home Depot continues to be plagued by news that its warehouse home centres present a safety risk to employees and shoppers. Last May, a six-year-old boy was crushed to death by falling patio doors in Home Depot’s store in Pharr, TX. And OSHA records show that, since 1999, twice as many employees – 39 – have been injured in Home Depot’s stores nationwide as those injured in Wal-Mart and Lowe’s stores combined.

Home Depot officials told the Chronicle they were unaware that OSHA was directing more attention at the chain, saying that the company continued to enforce safety standards in all its stores.

Cal/OSHA operates independently of the federal agency, and many of its rules are more stringent that the national standards.

The Chronicle reported that three employees in Home Depot’s stores in California had been injured by falling merchandise over the past six months, despite a law passed in the state last year that requires warehouse stores with racking higher than 12 feet to install safety netting across higher-stocked products and to establish customer-free “safety zones” when forklifts are loading and unloading stock.

Leading the pack, of course, was the world’s largest corporation, Wal-Mart, whose revenue jumped more than 12% in 2002 to US$246.5 billion, and whose earnings rose 20.5% to US$8 billion. Home Depot remained the country’s second-largest dealer, followed by the supermarket chain Kroger, the discounter Target Stores and the general merchant Sears.

For the second consecutive year, Sears dropped down a spot on Stores‘ list.

The rest of the Top 10 was comprised of the membership club Costco, the supermarket retailers Albertson’s and Safeway, and the mass merchants JC Penney and Kmart.

Other home improvement dealers that made Stores‘ Top 100 were Lowe’s, which finished 12th, Menard’s at 43rd, Sherwin-Williams at 60th, and 84 Lumber 93rd. Had it been included, Stock Building Supply would have ranked 69th.

Toronto, ON — Cameron Ashley Building Products has changed its name to Guardian Building Products Distribution Canada Inc. The name change is in keeping with the company’s move to consolidate distribution entities within the Guardian Building Products group under one brand name, says Canadian president Bruce Allen.

Toronto, ON — Canadian Tire began operating a bank on July 1st. The move is expected to streamline the retailer’s branded Options MasterCard program, which, until now, has been regulated separately in each province and territory, adding to administrative costs. The launch of Canadian Tire Bank, following federal approval under the Bank Act, will reap CTC an estimated $6-$8 million annually once the implementation costs are covered. Anytime the CTC Options MasterCard is used, even at another store, users will qualify for the company’s loyalty building Canadian Tire money.

Atlanta, GA — Home Depot recently purchased an integrated merchandise and assortment planning software solution from Marketmax, which provides retail planning and optimization software. According to Home Channel News, the program will allow Home Depot to analyze and tailor product assortments and fine-tune its inventory forecasting.

London, England — Kingfisher plc reported last Friday that its board of directors has approved the demerger of Kingfisher’s electrical business, Kesa Electricals plc, including the consolidation of Kingfisher shares. The demerger should become effective today, and Kesa Electricals will be listed on the London Stock Exchange, with a secondary listing on the Premier Marche in Paris. As a result of the demerger, Jean-Noel Labroue has resigned as a director of Kingfisher to become CEO of Kesa Electrical.

Bentonville, AK — The Arkansas Supreme Court has overturned a decision that barred labour unions from soliciting in Wal-Mart stores. The chain has been the target of a number of unions, most recently the United Food and Commercial Workers. While Wal-Mart says it’s still reviewing the court’s opinion, the union hailed the court’s decision as a clear victory.

Toronto, ON — HGTV and Home Depot Canada have begun auditioning hosts for a one-hour prime-time special that will air on HGTV in fall 2003. Called “the Superstar Challenge,” they say they’re simply looking for people with a knack for fix-up – and a flair for the camera.

Robert Walker has joined CanPly, the Canadian Plywood Association, as Plywood specialist, Ontario and U.S. A 30-year veteran of the building materials distribution industry, his background includes working for AFA, Metric and Canfor. With the new appointment, the Ontario office of CanPly has moved. The new address is: 44 Gretna Drive, Brampton, ON L6X 2E7. (905-457-9519; walker@canply.org)

The Canadian economy contracted in April as it shrank by 0.2% from March. The April shrinkage was the first monthly decline since Sept. 11, says Statistics Canada. Consumer demand also slowed abruptly in April.

The U.S. economy has defied expectations of a quickening economic recovery. Manufacturing activity continued to shrink in June and construction spending dropped in May by the largest amount in a year. Meanwhile, the U.S. Commerce Department reported that the seasonally adjusted annual value of construction projects under way in May was US$869.8 billion, a 1.7% decline from April. This also surprised analysts, who had on average forecast a 0.3% increase.

The U.S. economy lost more jobs in June as the unemployment rate shot higher, the U.S. Department of Labour reports. Non-farm payrolls were down by 30,000 jobs during the month. Economists had been expecting a decline of about half that size. The unemployment rate, meanwhile, rose sharply to 6.4% in June, from 6.1% the month before.