Special thanks to our sponsors:
· JDA Software, sponsor of Sodisco-Howden Group,
Newsmaker of the Year
· Sterling Commerce, sponsor of Rona Inc.,
and Richelieu Hardware, Newsmakers of the Year

And to these fine sponsors of the Outstanding Retailer Awards by Hardware Merchandising:
· 3M
· Dimensions Retail Systems
· IKO
· CGC
· Zircon

Exhibitor presence was down again, especially as major vendors continue to vote with their feet. However, the show was aggressive in recruiting new companies, which showcased a wide range of the very new and innovative products that buyers seek. While numbers dropped from 500 exhibiting companies in 2002 to 400, 165 of them were brand new to the show. And a lot of them were pretty cool. (See next week for our highlights from CHS — MM). The new product showcase featured 350 products.

Nonetheless, compare vendor numbers to as recently as 1999, when 720 companies were represented at CHS.

While new and innovative companies added lustre to this year’s show, veteran companies with new products also got good response. Henkel was back after an absence of several years, spurred by an abundance of new products it wanted to show off. While U.S. attendance fell off post-9/11, a number of American companies were present. For Hillman, it was their second year at this show, back due to good response the previous year.

Taymor, Delta Porter Cable and CanWel were among the traditional suppliers who hung in. “Dealer attendance was down,” admitted Mike Piggot of CanWel, “but we’re still writing some good business.”

However, sales were off for a large number of exhibitors interviewed, even though the show introduced a number of initiatives to increase buying in the aisles, including a lot of show specials. Dealer attendance appeared lighter again this year (the show’s official tally of attendance was not ready as of press time), though Sunday, the first day of the show, had some good traffic.

Stephen Murdoch, communications coordinator for CHS, concurs: “Quantity was down, but quality was up,” he said. “We heard that from a lot of exhibitors. Eveybody I talked to said they met quality buyers.”

Buyers were definitely present: Greg Hollander of TruServ Canada brought three with him, and so did Jean Lamarche of Réno-Dépôt. Joel Marks brought members of his team from Home Hardware, as well. Home Depot‘s head hardware buyer, Peter Vernon, was spotted on the show floor, and ILDC let its dealer members loose following its buyer negotiations on Sunday morning.

Schurman Building Supplies brought 14 people from PEI to the show. While much of that attendance may have been on the strength of the fact it won an award in Hardware Merchandising’s Outstanding Retailer Awards, two Schurman buyers said they saw some new and interesting items. “We picked up a few things and placed a few orders,” said Angela Millar, buyer for plumbing and paint. “I didn’t find as many plumbing vendors as I would have hoped for, though, and saw nobody new in that category.”

A number of initiatives were attempted this year. Training and information seminars abounded, and Centre magazine’s Awards program was admirably executed by editor Elena Opasini. But a number of ideas either misfired or failed to get off the ground, due to their last-minute nature. A vendor-buyer breakfast, apparently modelled after Hardlines‘ own Meet the Buyers Breakfast Series, failed to attract adequate attendance and was cancelled two weeks before the show – and only days after it was announced in the first place. A contractor night, built around a power tool information event, attracted only a limited number of tradespeople and kept the show open until 8 p.m. on the second day, to the chagrin of many exhibitors who had no involvement with the event.

The seminar program was better than ever this year, with speakers such as Anthony Stokan and Dr. Richard Loreto presenting. Still, they weren’t as well attended as they could have been. “The seminars were good, but we have to make them more central and perhaps tie them into a lunch,” said Murdoch. “We had a lot of people saying they had trouble finding the rooms.”

The show’s future is further confounded by talk of the Lumber and Building Materials Association of Ontario pulling its support of CHS. The LBMAO merged with CHS in 2000, after its own Canadian Home Centre Show was discontinued and some board members expressed concern about both the attendance at the show and the LBMAO’s return on its investment.

Non-exhibiting vendors were charged $200 for walking the show, a reasonable price on the face of it, since these vendors did not have to incur any show setup costs. And exhibitors were favourable to this restriction. However, vendors that had participated in the past resented being hit with the charge. As one said, they wanted a chance to see the show first-hand to evaluate their future participation.

In fact, the surcharge managed to keep away at least one of the inventors sought after by CHS. A woman phoned the World Headquarters just last Thursday, looking for information on how to break into the market. She admitted being frustrated by the cost of attending the show.

CHS’s declining attendance is a common challenge for trade shows today, including the National Hardware Show in Chicago. However, the Canadian show is actively – and admirably – trying to reinvent itself and the show management is optimistic it can turn the event around.

“We’re pleased,” says Murdoch. “I know a couple of things have to be revaluated, but we’ll be bigger and better next year.”

The dates for next year’s show are February 1-3, 2004.

Arlington, TX — Home Depot has announced it will begin expanding its lawn and garden specialty stores in Texas and will open its first new store in Arlington, near Dallas-Fort Worth, on February 13. Additional locations will open later this Spring in Plano, Grapevine, Lewisville and Dallas.

Home Depot Landscape Supply has been tested in three markets around the retailer’s home base of Atlanta, GA since last summer, expanding on Home Depot’s seasonal and live goods assortments, and aiming at the trade customer as well as the serious consumer. Each store has approximately 30 staff, including certified nursery experts.

Each store stocks a wide selection of products ranging from live goods and chemicals to tools and landscaping materials. A 12,000 sq.ft.climate-controlled area includes a tool rental department in front of a covered greenhouse. Each store also features up to seven fenced-in acres called the “Pro-Yard.”

The stores are set up with separate entrances for the professional landscaper and the DIYer. The pro side of the store features job-lot quantities with bulk items stacked nearby. The other side of the store resembles a greenhouse, complete with exotic plants and flowers.

“These stores are our response to demands from professional landscapers and avid do-it- yourselfers alike,” says Todd Williams, president of Landscape Supply. “We want to take Home Depot’s lawn/garden offerings to a higher level to reach a new set of customers.”

According to Home Depot Canada’s president, Annette Verschuren, she wants to let the company’s specialty store formats get tested thoroughly in the U.S. before she considers bringing them north of the border.

Joe Galli Jr., the head of Newell Rubbermaid, has been the centre of attention as he pushes Newell through acquisition after acquisition (see Companies in the News for the latest from Newell — Ed.). He has agreed to speak at the conference along with two key Canadian retail leaders, Jos Wintermans, president and CEO of Sodisco-Howden Group, and Sylvain Toutant, president and CEO of Réno-Dépôt.

John Herbert, general manager of BHB, the German retail hardware association, will speak, as well. Herbert is a true expert on the international retail scene who has seen duty on both sides of the Atlantic. He is the former general manager of Knauber, a ground-breaking DIY chain in Germany that became a mecca for everyone from Home Depot to Canadian Tire. Herbert was picked by Home Depot to become vice-president of its Expo stores and develop that banner in the U.S., before moving back to Germany in 2001.

The innovation and passion of an award-winning independent wil be represented by Tanya Rocca, owner/manager of Roblynn Home Hardware in Oromocto, NB. Rocca won the Young Retailer of the Year Award for all of North America last year.

The Hardlines Marketing Conference annually brings together North America’s leading retail executives for a forum of ideas, innovation, trends and networking. About 200 retailers and vendors are expected at this year’s Conference, which will be held at the Four Points Sheraton Hotel, near the Toronto International Airport. It’s part of the Hardlines Conference Series, running September 3-4, 2003. The Series includes the third annual Retail Education Forum on September 3, an intensive half-day focusing on the competitive issues specifically affecting the industry, such as housing trends, economic forecasts and trends within home improvement retailing. The International Business Seminar, “Global Selling: tools for opening overseas markets,” will be held in the morning before the Education Forum, completing the two-day series.

For more information on the Hardlines Conference Series, and to take advantage of Nancy’s early bird specials, contact: nancy@hardlines.ca or call 416-489-3396.

Nexfor lost US$6 million in the fourth quarter, compared with a break-even in the final quarter of 2001. Revenues were up 19% to US$384 million on the strength of acquisition, while earnings for the year reached US$13 million on a sales increase of 12%.

Faced with stiff competition from China and Mexico, Canada’s largest appliance maker may close its Canadian manufacturing. Camco, 51% owned by American-based General Electric, reported a “modestly solid” 4Q profit, but added it’s looking elsewhere.

Masco has purchased Powershot Co. In Canada, both Arrow Fastener Inc. products and Powershot products will be distributed by Jardel Distributors.

Freeport, IL-based Newell Rubbermaid will relocate to Atlanta, GA. Newell plans to build a 300,000-sq.ft. complex somewhere in north Fulton County. The company employs about 350 at its current headquarters. Newell has 48,000 employees worldwide.

Sherwin-Williams Co. had an increase of 26% in its 4Q profit, boosted by cost cuts and paint sales to DIYers. However, the faltering U.S. economy has cut into Sherwin-Williams’ industrial and automotive business. The company posted a quarterly profit of US$57.1 million, compared with US$45.4 million. Sales rose 2% to US$1.16 billion. The company expects 2003 to be a tough year, due to uncertain worldwide economic conditions, the threat of war with Iraq and the slow, long-term recovery expected in the domestic economy.

Pro Wylie, president of Castle Building Centres Group, received the Industry Achievement Award from the Lumber and Building Materials Association of Ontario last week. On receiving the award, Wylie announced he has renewed his contract to head up the Castle buying group for another four years. (905-564-3307)

Eric Roberts has been named director of sales, consumer markets for Osram Sylvania. He assumes the newly created position after stints at Sealey, Moulinex and Sanyo Canada. (905-671-5582)

Catalina Lighting Inc. has promoted James W. Scott to the position of managing director of its Canadian subsidiary, Catalina Canada. Scott has been with Catalina for the past seven years, most recently as vice-president of sales and marketing, responsible for managing the company’s large Canadian retail accounts. He replaces Don Planche, who has left the company. (905-795-9995)

In December, U.S. residential construction spending hit a record US$434.6 billion seasonally adjusted, according to the U.S. Commerce Department. A 1.2% increase in spending pushed the value of residential and commercial construction projects to US$858.3 billion seasonally adjusted, following a 0.9% increase in November.

Sodisco-Howden Group
Jos Wintermans of Sodisco-Howden receiving the award from Desmond Preudhomme of JDA

Rona Inc.
Curtis Popovich of Sterling Commerce presents the award to Claude Bernier of Rona

And at the Canadian Hardware and Building Materials Show:

Ezgi Unal, Henkel Canada, demonstrating new products:

In the same ceremony, Montréal-based Richelieu Hardware Ltd. won the Vendor Newsmaker Award.

“Each of these companies has made a huge impact on the retail landscape over the past year,” said Michael McLarney, editor and publisher of Hardlines. “Rona made headlines across the country for the bold launch of its IPO when other companies were pulling back. The aggressive consolidation efforts of Sodisco-Howden Group have changed indelibly the character of hardlines distribution in Canada. Richelieu has sustained rapid growth while maintaining the infrastructure to deliver superior products and services.”

In February, Sodisco-Howden acquired the hardware and building materials assets of Marchands Unis Inc., potentially increasing its annual revenues by 25% and making it the strategic partner of choice for an increasing number of independent retailers. But that was only the beginning of a year in the headlines.

In June, Sodisco-Howden announced a partnership with Aeroplan, becoming the first retailer to reward Aeroplan Miles for home improvement purchases. Then in October, the company announced that it would purchase all shares of Ace Hardware Canada Ltd. The purchase of Ace is pending regulatory clearance and is expected to close in the first quarter of 2003.

Rona began the year by creating more than 1,200 new jobs and announcing that 2001 had been a record year, with a 36.8% increase in net income. By the end of its second quarter in 2002, Rona boasted a record performance, increasing its net earnings by a whopping 113.1%.

Rona’s staggering growth continued, and by the end of the year, Rona Inc. was officially welcomed into the Toronto Stock Exchange.

Richelieu began the year with its 27th consecutive quarter of growth. First-quarter sales were up by 15% from the same period in 2001. Richelieu’s exceptional growth continued throughout 2002, and in September, the company made its latest acquisition, 75% of Menuiserie des Pins Ltée, a Québec manufacturer and distributor of products for window and door manufacturers.

“Our Vendor Award winner, Richelieu Hardware, has been a key consolidator in the hardware industry,” said McLarney. “At the same time, it has proven itself an innovator in both products and merchandising for home improvement retailers.”

Toronto, ON – Even as Home Depot in the U.S. battles bad press and worsening stock prices, the Canadian division, now one of only six in North America, shows no signs of letting up. After opening 14 stores in 2002, another 14 are planned for this year. Although, says Canadian president Annette Verschuren, her CEO is pushing for even more. “Bob Nardelli wants me to open more,” she says. “I’ll see if I can get [a 15th store] opened this year.”

Nardelli has already announced Home Depot will open 200 stores this year. That’s the same number it opened last year, down from the highs of the late ’90s, when a new store was opening, on average, every 36 hours and the stock split five times over the last decade. Nardelli is relying on much of that expansion from its international divisions, including Canada.

In fact, the Canadian division leads the pack. “Our sales performance still exceeds that of the whole company,” Verschuren says. While Nardelli expects less than 10% growth company wide, Verschuren is confident Canadian growth will stay in the mid to high double digits in the year ahead.

A number of factors are driving the sustained growth north of the border. Verschuren’s team faces a less mature big box market than in the U.S. In addition, there’s a lack of aggressive expansion by competitors like Lowe’s stateside. While Rona is bent on expansion, its big box plans are not as ambitious as Home Depot’s, and Réno-Dépôt is keeping quiet about its plans for at least a couple of more weeks (we’ll keep you posted—MM).

But Verschuren also knows that not all of her new stores will necessarily be as big as their predecessors. Home Depot Canada is actively developing store footprints up to 20% smaller than the standard 135,000-sq.ft. size. It’s also looking for inner city sites to develop what Verschuren calls “Home Depot light” stores. Called “urban neighbourhood” stores in the U.S., where pilot sites have been erected in Chicago and Brooklyn, they weigh in at no more than 65,000 sq.ft.

While she’s alluded to an urban store in Toronto’s West end, to relieve pressure on the Stockyards store at St. Clair and Keele, the first confirmed urban location will be in Vancouver’s Park Royal shopping complex in North Vancouver. In fact, says Verschuren, that city can accommodate another four Home Depot stores.

Prout’s Castle Building Centre houses a 6,000-sq.ft. store-within-a-store, supplied and merchandised by TSC Stores Ltd. Called TSC Villager, the section carries a selection of farm and hardware products, providing add-on sales for Prout’s traditional LBM trade, while carving out a new niche for the 21-store TSC chain.

Nor has the quiet experiment gone unnoticed. “We’ve had a lot of interest in this concept, from quite far afield,” says Roy Carter, president of TSC. “From the U.S. and from local operators, too.”

The Villager program has been in place for just one year. However, both companies have enough confidence in the concept that they’ve extended their operating agreement for another two years.

Home Depot Canada has registered in the province of Prince Edward Island. The registration is standard procedure for any company intending to do business there. Annette Verschuren, president of Home Depot Canada, once told this Editor that Charlottetown is a city she’s considering. Over the Christmas holidays, the retailer also had pollsters evaluating customer habits at its store at Highway #7 and Yonge Street in Thornhill, just north of Toronto. Appears a store at Bayview and Elgin Mills is under consideration to tap into the lucrative community of Aurora, north of there. In the West, Prince George, BC is slated to get a Home Depot, probably a smaller store. We’ll keep you posted…

A.E. Hickman Co. Ltd., which sold off its three building centres to Chester Dawe Ltd. in June 2001, is being sued by John Deere Ltd. for more than $2 million owed to the tractor manufacturer by bankrupt Hickman Equipment Ltd. According to the St. John’s Telegram, Hickman had guaranteed all debts to John Deere back in 1985. The suit applies to purchases of heavy equipment, as well as to amounts owing under a lease/finance agreement with Hickman Equipment.

TSC Stores Ltd. has relocated its head office in London, ON. The new address is: 1950 Oxford St. E., London, ON N5V 2Z8. Phone stays the same (519-453-5270). The warehousing, from two facilities at the old Industrial Rd. address, is expected to begin consolidation into the new location in about three months.

Weyerhaeuser‘s Saskatchewan forestlands operations have been certified to meet the Canadian Standards Association‘s standard for sustainable forest management. The CSA Z809 standard covers 4.9 million hectares (12.1 million acres) of forest in the Prince Albert and Pasquia Porcupine Forest Management Areas.

In its continued effort to centralize its operations, Home Depot has announced it will roll its New England division, which includes stores from New York to Maine, into the Atlanta-based Eastern Division. The Eastern Division will be expanded accordingly to support 600-plus stores. The consolidation will take place over the next 60 days, leaving the company with six divisions, down from nine when Bob Nardelli took over the company two years ago.

Home Depot is about to begin construction of a new western distribution centre in Stockton, CA, according to a report in Home Channel News. The 756,000-square-foot facility will cost an estimated US$27 million, and is expected to be finished by August. The new warehouse will serve Home Depot stores in Northern California.

Selectone Paint Ltd. has partnered with specialty paint producer Devine Color, a new premium paint from Oregon, to handle the manufacturing and distribution of the line in Canada. The launch, at this year’s Canadian Hardware and Building Materials Show in Toronto, features a selected palette of 115 colours developed by the line’s innovator, Gretchen Schauffler.

Sinclair-Erie Ltd., one of the existing supplier partners of Waterloo, ON-based Supplierpipeline Inc. has purchased the assets of Erie, a manufacturer of wheelbarrows and contractor tools. This follows the addition last Fall of a new Supplierpipeline stocking warehouse in Mississauga, ON.

Kmart Corp. has received judicial approval to close 316 stores. The judge overseeing the ailing retailer’s bankruptcy proceedings granted final approval for the closure of 316 stores and gave permission to proceed with a US$2 billion exit financing package. The sell off should leave Kmart with about 1,500 stores, compared with about 2,200 before it went into bankruptcy one year ago.

Robert Niblock has been promoted to president of Lowe’s Cos. Niblock joined Lowe’s in 1993 and currently serves as executive vice-president and CFO. In his new role, he will be responsible for store operations, merchandising, logistics and distribution, reporting to chairman and CEO Robert Tillman … Larry Stone, executive vice-president operations, has been promoted to senior executive vice-president operations … Dale Pond has been promoted to the position of senior executive vice president merchandising. He was formerly executive vice-president merchandising. (1-800-445-6937)

The monthly growth rate of Canada’s composite leading indicator rose to 0.4% in December. This upturn was led by the firming of the stock market, as well as strong domestic demand. Two components fell, four were unchanged and four rose. Services employment was up 0.7%, while durable goods, especially furniture and appliances, continued to increase gradually, with housing remaining strong.

This year it’s right in the Civic Ballroom of the Sheraton Centre Hotel, Toronto. We’ve joined with the folks at Hardware Merchandising to mount the First Ever Industry Awards Breakfast. This combined program guarantees a great wakeup for the CHS.

The Awards Breakfast is free to Hardlines subscribers, and to guests of Hardlines and Hardware Merchandising magazine (with some restrictions!). You must reserve your space, so please RSVP to Nancy at 416-489-3396; nancy@hardlines.ca . It’s filling up fast, so reserve now!

Special thanks to our sponsors:
· JDA Software
· Zircon
· Sterling Commerce
· Dimensions Retail Systems
· 3M

Montréal, QC — Sodisco-Howden Group is actively promoting all its banners to customers and prospects. Ferplus and Batitout, the two banners picked up from Marchands Unis at the beginning of last year are in the mix, but Ace isn’t – yet. (The Competition Bureau is currently wading through Sodisco-Howden’s application. Despite the delay, the acquisition of Ace Hardware Canada is expected to close by the end of February.)

This, just three years after Sodisco-Howden made a big push to rationalize its banners. It went from five effectively to two. Pro is the flagship for both hardware and building centre dealers, while Do-it center remains the distributor’s specialty building centre banner, supported by about 70 dealers across the country. Jos Wintermans, CEO of Sodisco-Howden Group, insists the Do-it banner will get continued support, especially in light of the fact these dealers, typically larger yards, provide big volumes for Sodisco-Howden.

However, Do-it, which is managed out Sodisco-Howden’s London, ON division, D.H. Howden, is not being developed very aggressively. In fact, Do-it’s point man, Ernie Bruce, left the company last summer.

Ferplus, on the other hand, is suitable for smaller hardware stores. The program comes without the added costs of full flyer programs . “It’s suitable for the independent who wants to remain independent and choose the assortment of programs that’s best for them,” says Celine Gamache, vice-president marketing for Sodisco-Howden.

Like Do-it center, Batitout remains a viable option for building centre dealers.

“They’re well known banners, so we’ll continue to support them,” says Gamache.

The member groups are busy communicating the philosophy and benefits of the alliance to individual dealers, as well. Sexton, for one, has been holding meetings that include reviewing the key commodities suppliers being targetted under the new deal. “It’s an opportunity for us to get some feedback on issues dealers are facing, especially with some of these suppliers.”

Negotiations with Reliance also give suppliers a point of entry with individual member groups for additional sales and programs. The other members are Castle Building Centres, Federated Co-operatives, Coopérative Fédérée de Québec, Torbsa, Delroc Industries and Irly Distributors.

“Suppliers are recognizing up front that we’re in a different league now,” says Pro Wylie, president of Castle, “and some of them had to make adjustments in their pricing and rebates.” The combined retail sales of the group are expected to top $3 billion. Castle and Sexton make up Reliance’s two largest sources of building materials volume (Saskatoon-based Federated Co-op has greater sales overall, but these include petroleum, farm supplies and grocery).

While Home Depot’s store locations are feeling the effects of cannibalization in the U.S., the Canadian division remains strong, and Nardelli took time during the analysts’ meeting to praise the performance of Home Depot Canada, under its president, Annette Verschuren.

Home Depot expects to open 200 stores and add 40,000 associates in fiscal 2003, but plans for its high-end Expo Design Centers continue to be slowed. Expo was to be Home Depot’s bid for high-end renovation customers, but a faltering U.S. economy has slowed expansion plans. While Home Depot opened 11 new Expo Design Centers last year, it will open only two this year. Some of its 52 existing stores will be remodelled, as well. No Expo stores are planned for Canada in the near future.

Programs for this year include: a garage sale to let exhibitors sell discontinued items and clear outs; a $50 early bird discount on booths; Auto Focus pavilion featuring the latest automotive aftermarket products. At a breakfast session for sales agents on February 3, agents and reps will receive tips on getting the most out of their agreements with their principals. First-time exhibitors will get showcased, as well, letting buyers zero in on new ideas all in one area.

“We are extremely excited by the positive changes we have made for the 2003 edition of CHS,” says Maura Bella, CHS director. “The success of CHS depends on our ability to adapt to the changes taking place within the industry.”

CHS 2003 takes place February 2-4 at the National Trade Centre on Toronto’s Canadian National Exhibition grounds.

Rona Inc. exhibited for the first time in Saskatoon last week at the Prairie Showcase. The company has stated many times its desire to develop its dealer base in the West. Claude Bernier (r), executive vice-president of Rona’s traditional stores, was present with Rona’s store development team of John Longo (l) and Al Holton (centre). Rona started exhibiting last year at the Atlantic Building Supply Dealers Show in Moncton, NB.

Hurt by US$26 million in countervailing duties, and the cost of integrating Willamette Industries, Weyerhaeuser reported 2002 net earnings of US$241 million on net sales of US$18.5 billion. This compares with net earnings of US$354 million on net sales of US$14.5 billion for 2001.

Tembec‘s consolidated gross sales for the first quarter reached $840.8 million, up from $792.6 million a year earlier. The company generated a net loss of $41.8 million, compared with a net loss of $44.7 million at the end of the first quarter a year earlier. EBITDA totalled $18.2 million, down from $60.1 million.

Do it Best Corp. is hosting 35 Executive Retail Symposiums across the U.S. next month. The aim of the program is to provide member-retailers with business management tools to ensure longterm success. Topics will include increasing profitability, succession planning and the benefits of the latest technology.

Leviton Manufacturing has acquired OnQ Technologies Inc., a supplier of structured wiring and home networking technology. The purchase is part of Leviton’s growth as a supplier of home networking and residential products. OnQ will be joined with Leviton Integrated Networks, the company’s existing structured wiring division, creating Leviton OnQ.

Canadian softwood timber producers are claiming a victory over the latest favourable ruling by the World Trade Organization. The B.C. Lumber Trade Council, which represents companies responsible for almost half of Canada’s softwood lumber shipments to the U.S., is welcoming the WTO Appellate Body’s ruling on the so-called Byrd Amendment, which had the U.S. giving money to U.S. companies deemed to have been hurt by Canadian softwood lumber.

Linda Nodello, the ebullient marketing director of the Canadian Hardware and Building Materials Show, departed last week, just two weeks before the show itself. Nodello had spent 13 years in the employ of the show’s owner, the Canadian Retail Hardware Association. Nodello is the last of the old guard to change; a new sales team spearheaded by Lynn Cronin was put in place over the past two years and show manager Joe Edwards, absent after a lengthy sick leave, was replaced recently by Maura Bella as CHS director. No replacement has been named for Nodello. (905-821-3470)

The Consumer Price Index increased by 3.9% in December 2002 over December 2001. The increase in inflation was less pronounced than November’s 4.3% increase. However, that was due mostly to a drop in the Ontario electricity index.

Spurred by low interest rates, U.S. housing starts were up 5% in December, says the Commerce Department. For the year, work was started on 1.70 million homes and apartments, up 6.4% from 2001, ending the best year for new housing since 1986.

This year, we’re combining the world famous Hardlines Industry Awards Breakfast with the Outstanding Retailer Awards. This combined program guarantees a great wakeup for the CHS.

The Awards Breakfast is free to Hardlines subscribers, and to guests of Hardlines and Hardware Merchandising magazine (with some restrictions!). You must reserve your space, so please RSVP to Nancy at 416-489-3396; nancy@hardlines.ca . Remember, the Hardlines Show Breakfast is held exclusively for Hardlines subscribers and guests, so be sure and join us!

Special thanks to our sponsors:
· JDA Software
· Zircon
· Sterling Commerce
· Dimensions Retail Systems
· 3M

Vancouver, BC — After 33 years at the helm of the West’s largest buying group, Barrie Sali has confirmed he will step down at the end of his current contract with Tim-BR-Marts Ltd. at the end of December 2003.

Sali called a meeting of his dealers in Saskatoon just prior to the WRLA Prairie Showcase to advise them of his decision, which he announced internally on January 11.

Sali led Tim-BR-Marts since its early years as a group with 22 stores in Western Canada. At the time, he said he could take the group to $100 million in sales within a decade. Today, sales through its 185 member stores surpass $1 billion annually.

Known at times as the toughest buyer in Canada and a man many loved to hate, he was in fact fiercely loyal to his dealers (referring to them as “my guys”) and to key suppliers, as well as a devoted family man.

Over the past two years, Sali has steered the group through a turbulent time. the historically stable group saw the defection of some of its key members to ILDC. However, Tim-BR-Marts dealers have given Sali overwhelming support right up to the end. The group has managed to maintain its status as one of the country’s top buying groups, adding new volumes from the growth of members such as McDiarmid Lumber and Slegg Lumber, and through the expansion of its drywall supply business.

Three brothers have sold off their shares. Dave Thorogood will leave as manager of the Midnapore store in Calgary. Doug Thorogood was formerly Totem’s buyer for flooring, carpet, furniture and storage. He’ll be replaced by Jim’s nephew, Rob Thorogood, who comes over from a manager’s role at the Forest Lawn store in Calgary. Dick Thorogood was vice-president, operations. He’ll be replaced by Jim’s son Ryan Thorogood, who was formerly buyer for doors and mouldings.

Colin Robertson, Totem’s vice-president, marketing, has also sold off his interest in the company. However, he’ll continue on for two more years. He’s been with Totem since it started in 1970.

Besides his duties as head of the company, Jim Thorogood will keep his hand in the buying side as buyer for lumber and plywood, assisted by Jackie Gorlick. “I do it more because I enjoy doing it,” he notes.

“It was tough one for everybody,” says Thorogood of the exit of so many seasoned members of the team. “But we’re fortunate to have some young, capable people to fill the roles.”

Totem has been steadily growing in the Alberta market, despite the plethora of big box competitors, especially in Edmonton and Calgary. The chain’s 14th retail store (it also has a contractor yard) will open by this Fall in St. Albert, just outside Edmonton.

How many more stores does Totem intend to open? “I don’t know that there is a magic number,” says Thorogood. “The economy is very, very good, but we have to make the money to buy each one.” He adds that sales in 2002 grew from about $180 million to “well over $200 million.”

Meanwhile, the upgrading of existing stores is ongoing. A major renovation was made in Edmonton, including an addition that took that site from 20,000 to 36,000 sq.ft., while an expansion of the Grande Prairie store is currently under way.

Close to 600 sales agents attended the show last year, spurring show officials to develop a program catering to them specifically. Following the seminar, Serdivan will be available for individual, 15-minute consultation sessions to any agents who wish to discuss legal issues confidentially. The breakfast seminar will be held on the last day of the show, February 4, at 7:30 a.m. in Room 107 of the National Trade Centre in Toronto. Tickets are $45 each.

To register for the seminar and breakfast, contact Shona Paterson: 905-821-3470; spaterson@crha.com.

Castle Building Centres Group Ltd. has added the following new members: AFAB Industries Inc., Rocanville, SK; Cape John Industries Ltd., La Scie, NF; Harwell Hesco Electrical Supply Co. Ltd., Toronto, ON; Strathmore Building Supplies, Strathmore, AB; North Cobalt Flea Market, North Cobalt, ON; Northland Lumber Ltd., Melfort, SK.

Randy Britton has established Randy Britton Sales and Marketing, representing West Bend as its sales agent in Canada. Britton was formerly with West Bend Canada as sales manager before the Canadian operation was closed. He’s on the lookout for additional lines. You can contact him at: 519-856-1031.

The Canadian Hardware and Housewares Manufacturers Association will feature the impressionist André-Philippe Gagnon as entertainment for the 2003 Industry Gala Night, Sunday, February 2, 2003 at the Royal York Hotel. The fund-raiser for Easter Seals is a key social event during the Canadian Hardware and Building Materials Show. For more info, call: 416-282-0022.

The research and technology environment of the University of Manitoba Smartpark has added its first tenant: ProfitMaster Canada. The new address is: 300-135 Innovation Dr., Winnipeg MB R3T 6A8; phone: 800-340-4492.

Kmart Corp. has confirmed it will close more 326 stores and lay off 37,000 across the U.S. Kmart filed for bankruptcy court protection a year ago, then closed 283 stores the time. The company had a profit of US$349 million in January, but same-store sales fell 5.7%.

Santa Fe Custom Shutters and Doors, New Mexico manufacturer, has been awarded US$12 million after Home Depot, its only customer, cut off orders, despite verbal reassurances to the contrary. The loss of business drove the supplier out of business. Home Depot says it does not intend to appeal.

Bonni McChesney has left Coleman Powermate after four years to start McChesney Sales, a sales, warehousing and distribution company in Brantford, ON. (519-720-0745)

Mary Houston is now sales manager for Nielsen and Bainbridge in Markham, ON. The art and framing company supplies retail chains, OEM and independent frame shopgalleries. She was formerly with News Canada Marketing. (905-475-7511)

Brad Rossetto, formerly head of PPG Architectural Coatings Architectural Coatings Canada as architectural coatings director, has been made managing director, Asia Pacific, for the Transitions Optical division of PPG Industries, based in Australia … Todd Bourgon, formerly key account manager, has been promoted to regional sales manager for Architectural Coatings. (905-790-5335) … Robert Fierheller remains team leader, dealer development for the Canadian Architectural Coatings Business. (905-790-5336) … Jeff Duldhardt has joined as retail sales representative for Southwestern Ontario … James Dornn has joined on as area manager for Manitoba. (Main: 905-790-5349)

Reynold Hert has been named vice-president, Canadian Forestlands for Weyerhaeuser Co. He will manage Weyerhaeuser’s timberlands operations from the B.C. Interior to New Brunswick, reporting to Richard E. Hanson, executive vice-president, Timberlands and International … Paul Perkins will become vice-president, Policy and Planning for the Canadian operations. He will be responsible for strategic and geographic planning for all of Weyerhaeuser’s assets in Canada. (604-669-8714)

The Mibro Group has expanded it sales team: David Jones has been promoted to the position of director of national accounts. He was most recently national account manager … Larry Lucyshyn has been promoted to director of national accounts. He was most recently national account manager … Robert Sehn has joined Mibro as of director of regional accounts. Everybody reports to Stephen Jones, senior vice-president sales. (416-285-9000)

Investment in non-residential building construction reached a record high in the fourth quarter, says Statistics Canada, fuelled by spending in the public sector. Overall, businesses and governments spent $6.4 billion, up 1.2% from the third quarter.

The Awards Breakfast is free to Hardlines subscribers, and to guests of Hardlines and Hardware Merchandising magazine (with some restrictions!). You must reserve your space, so please RSVP to Nancy at 416-489-3396; nancy@hardlines.ca . Remember, the Hardlines Show Breakfast is held exclusively for Hardlines subscribers and guests, so be sure and join us!

London, UK – Hammered by the ailing German economy, Kingfisher plc will close its six-store German subsidiary, Castorama Deutschland GmbH. The move is part of the Group’s review of its international home improvement operations. The closures will take place over the next eight months and affect 391 staff. The financial impact to Kingfisher will be an anticipated exceptional charge of around £35 million ($87.2 million).

Castorama established itself in Germany in 1990 and operates stores in Kamen, Koblenz, Wildau, Chemnitz, Castrop-Rauxel and Kassel. In recent years, the stores were enlarged and converted to big boxes under the Casto-Depot banner. Despite the repositioning, the chain is expected to incur a £5 million ($12.5 million) loss on sales of £40 million ($99.7 million) for the fiscal year ended February 1, 2003.

Réno-Dépôt, Castorama’s Canadian division, is part of Kingfisher’s review process, but a key criterion for consideration is each division’s profitability. “At this time, Réno-Dépôt is performing in line with our own expectations and generating a profit,” says Jonathan Miller, a spokesperson for Kingfisher in the U.K.

But other considerations include long-term prospects. “At the end of the day, the purpose of the review is to identify markets where we’ll get the greatest return on our investment,” Miller adds. “At the moment, we plan to complete our review by the end of this month, when any actions concerning a particular division will be announced.” In the meantime, it’s business as usual for Réno-Dépôt, which currently has 19 stores, and is expected within a few weeks to announce further openings in 2003.

Rona, which owns about 30% of Matco Ravary, did not make a counter offer to BMR’s bid in earlier negotiations. In October 2002, BMR submitted two proposals to Matco Ravary’s board, the second of which was accepted. Rona could have submitted a counter offer, but chose not to.

If the sale does go through, ownership of the Montréal-area chain, which has sales of about $60 million, mainly to contractors, would revert to a syndicate of 16 BMR dealers and operate under the BMR banner. Although Matco Ravary has seen profits slip in recent years, the stores give Rona an effective beach head in the Metro area.

The program has proven to have special appeal for Black & Decker, whose DeWalt brand is aimed directly at the trades. B&D has been absent from the show in recent years, and though the company will not have a booth this year, the Power Focus event gives the company an appealing forum for being involved. Delta Porter Cable, a long time exhibitor and supporter of CHS, is the other company to sign up so far for this event, with others pending.

Show hours on Monday have been extended to 8 p.m. to accommodate the contractor traffic. The show will close on Tuesday, February 4 at 1 p.m. instead of 3 p.m. On Sunday, February 2, the show starts at 9 a.m., right after the Industry Awards Breakfast presented by Hardlines and Hardware Merchandising at the Sheraton Centre Hotel in Toronto.

CHS 2003 takes place February 2-4 at the National Trade Centre in Toronto. Registration is free in advance or $25 at the door. Non-exhibiting manufacturers who attend CHS 2003 will now pay a registration fee of $200. For show information, visit www.crha.com or contact Maura Bella at (905) 821-3470; fax: (905) 821-8946; crha@crha.com.

According to David Weingarden at CMHC, the market remained strong last year thanks to low mortgage rates, growing employment and increasing incomes. He also mentions that Canada’s inventory of completed and unoccupied new housing “is very close to the lowest levels ever since we’ve been recording them, so that tells us there’s a very strong demand for housing, which has to come from additional stock.”

However, there are signs that things may slow down into 2003. Housing starts dipped in December, reaching 198,500 seasonally adjusted, down 6.7% from November’s rate of 212,900 units. Urban single starts rose 0.7%, but urban multiple starts fell 17.9%. In addition, the value of building permits issued in December was down 2.7% overall and residential intentions fell 7.8%, an indicator of the expected level of construction activity in the months ahead.

Despite the decline, the level remained high, as construction intentions revolved around the $4.0 billion mark for the fourth time in the last five months. However, the previous month’s level remained 30.8% higher than November 2001.

Nevertheless, Weingarden expects a healthy start to 2003. “Basically, inventory levels show demand is still there, so I expect the market to remain robust, at least in the near term.”

Mutual Hardware Inc. has moved from its location on Argentia Road in Missauga, ON to: Suite 402, 627 Lyons Lane, Oakville, ON, L6J 5Z7. New phone: 905-337-1184; fax: 905-337-1185.

Tractor Supply has reported year-end sales of US$1.21 billion, up 42% from the previous year. The company expects net income to range from US$36.1 million to US$37.1 million, up from US$25.8 million. 4Q earnings are expected to be higher than previously estimated because of strong sales of winter work clothing and heating products.

The U.S. claims it would drop duties on Canadian softwood lumber if this country will adopt U.S.-style forestry practices. Since last Spring, Canadian suppliers have been forced to pay an average tariff of 27% on exports to the U.S. This means opening the market to the highest bidders, and potentially unprecendented U.S. control of Canadian timber sources.

Mired in bankruptcy proceedings, Kmart Corp. will likely announce a raft of closings next week. Analysts and industry experts expect the retailer to close between 300 and 500 stores. The company also intends to emerge from bankruptcy sometime this year.

Sandy D. McDade will take over the role of senior vice-president at Weyerhaeuser Canada, when Bill Gaynor retires later this year. McDade will also assume the role of president, Weyerhaeuser Co. Ltd., a wholly owned subsidiary of Weyerhaeuser Co. … Susan Mersereau will become vice-president, Information Technology and CIO, replacing Thom Ped. (604-669-8714)

Alison White has departed from Innovak, where she was product manager, to join Globe Electric in the newly created position of merchandising manager. She reports to Dave Creglia, Globe’s vice-president of marketing. (1-800-361-2861)

New house prices continued to climb in November, as Stats Canada’s New Housing Price Index rose 0.6% from October, up from 0.5% a month earlier. Compared with November 2001, this index of contractors’ selling prices increased 5.0%. A healthy demand for new housing in conjunction with increased costs to builders for skilled labour and building materials helped push prices upward nationally.

Construction in the U.S. was up for the third straight month in November, reports the Commerce Department. Construction spending on homes, hotels and highways increased 0.3% to US$843.2 billion from October, which was up 1%.

This year, we’re combining the world famous Hardlines Industry Awards Breakfast with the Outstanding Retailer Awards. This combined program guarantees a great wakeup for the CHS.

The Awards Breakfast is free to Hardlines subscribers, and to guests of Hardlines and Hardware Merchandising magazine (with some restrictions!). You must reserve your space, so please RSVP to Nancy at 416-489-3396; nancy@hardlines.ca . Remember, the Hardlines Show Breakfast is held exclusively for Hardlines subscribers and guests, so be sure and join us!

Advertise your products online and take advantage of our bonus circulation at CHS. Reach 2,000 more qualified readers at Canada’s premiere trade show! Be part of the excitement that is Hardlines. Contact Beverly Allen, Marketing Manager, for details: bev@hardlines.ca

The delay does not, however, bode ill for the deal, says Sodisco-Howden president and CEO Jos Wintermans. “The parties are working well together,” he says, referring to his company’s negotiations with both Ace and the Competition Bureau. “There’s no reason to believe that this won’t be closed in this quarter, or at the latest early in the next quarter.”

He explains that a routine investigation is under way, delayed more by the Christmas holidays than any complications in the deal itself. Wintermans has met with them already, and has additional briefs prepared to send them this week.

On October 22, 2002, Sodisco-Howden announced it had signed a letter of intent with Ace Hardware Corp. of Oak Brook, IL to purchase the assets and outstanding shares of Ace’s Canadian operation. The result will be a strategic alliance that sees Sodisco-Howden licensing the Ace banner in Canada.

Boucherville, QC — With more than one-quarter of its business already coming from Western Canada, Rona Inc. wants to continue expanding its dealer base in the West, says Robert Dutton, president and CEO of Rona.

In an exclusive interview with Hardlines Quarterly Report, Dutton outlined his plan to make Rona a household name west of Ontario. “That’s why we want to build a new distribution centre in the West in 2003,” he says. “Our facility in Calgary is currently 80,000 sq.ft. To accommodate growth, we’ll need around 200,000 more sq.ft. That will give us a good base for recruitment and to expand our Revelstoke and Revy stores.”

Dutton has made clear his intention to continue looking for further acquisitions. While he admits to having some discussions with retailers, no deals are on the table at this time. Rona owns almost 11% of the hardware/home improvement market (according to HQR’s ranking of the industry’s top retailers). Dutton wants to push that share to 20% by 2007.

(For the full interview with Robert Dutton, see the latest issue of our sister publication, Hardlines Quarterly Report. Also in that issue: our annual Retail Trends Report and the incredible Buying Group Org Chart.)

Cologne, Germany — A world forum on home improvement retailing will kick off the 2003 edition of Practical World, the International Hardware Fair/DIY’TEC. Organized by BHB, the German association of hardware retailers, the one-day conference will be held on Saturday, March 8, 2003.

Practical World Conference will feature Joseph Galli, Jr. of Newell Rubbermaid, former Home Depot executive Jim Inglis, Gilles Caille of Fediyma (and past presenter at the Hardlines Marketing Conference), George Adams of Britain’s B&Q, and many others. The highlight of the day will be a keynote by Robert L. Tillman, president & CEO of Lowe’s Cos.

Topics of the day will include panel discussions on the international DIY scene, partnerships between retailers and suppliers, and new concepts in consumer preferences. The day concludes with a cocktail reception, beginning at 5:30 p.m.

Cost for the Practical World Conference is 490 euros + VAT. This includes lunch, beverages and admission to the Practical World Hardware Fair, which begins the following day. Discounts are available for multiple registrations.

(For more information about attending Practical World and the Practical World Conference, contact: Barbara Hills, Canadian manager for Cologne International Trade Shows: 416-598-3343; colognet@idirect.com. )

Goodfellow Inc. reported 1Q sales of $128 million, up from $109.6 million a year earlier. Net profit for the period was $406,000, compared with $1.2 million during the first quarter of the previous year. The dent in profits was attributed in part to extremely competitive markets since September 2002, combined with a sharp downturn in U.S. business. Goodfellow is Eastern Canada’s largest independent re-manufacturer and distributor of lumber products and the largest distributor of hardwood flooring products in Canada.

Home Depot said it expects its profit for fiscal 2002 to be between US$1.53 and US$1.55 a share, versus earlier expectations of US$1.57. The retailer blamed lower-than-expected U.S. holiday sales of power tools and hardware, and a “challenging environment” well into fiscal 2003. Home Depot earned $1.29 a share in fiscal 2001.

Home Depot opened its 1,500th store last month, this one one in Abilene, TX. The company expects to finish the fiscal year, which ends January 31, 2003, with a total of 200 new locations.

Softwood lumber producers got a Christmas present from the federal government, $15 million to help them while Canada battles with the U.S. over its ridiculous tariffs on Canadian softwood. The money will be used by lumber industry associations that have acted as liaisons between Ottawa and the sector.

84 Lumber Co. reached a milestone at the end of 2002, exceeding more than US$2 billion in sales for the first time in the company’s history. The Pennsylvania-based retailer, which focuses on professional contractors, claims to be the largest privately-held building supply company in the U.S., with 435 stores in 34 states and another 11 component plants in nine states. Sales in 2002 rose16.5% over 2001.

Canarm Ltd., a producer of consumer lighting products and ceiling fans, was awarded as one of Canada’s Top 50 best managed companies.The awards program recognizes Canadian companies that have world-class best business practices in a range of industries, including technology, retail, manufacturing and services.

Intercraft, a division of Newell Rubbermaid, relocated at the end of December 2002. The new address is: 6711 Mississauga Rd., Unit 404, Mississauga, ON, L5N 2W3; phone: 905-363-2350.

Restoration Hardware anticipates that fourth-quarter results will fall well below plan, citing weaker-than-expected Christmas holiday sales. The California-based high-end home furnishings retailer expects to post a net profit of 25-30 cents a share, down from previous guidance of 41-42 cents. Restoration is projecting same-store sales to grow a modest 2-4% in the fourth quarter, compared with its initial target of high single-digit to low double-digit growth. In December 2002, the company delayed filing its quarterly report to correct accounting irregularities. The errors will have no effect on earnings for the current fiscal year, the company said.

Greg Bolig has been appointed vice-president of sales for Builders FirstSource‘s Southeast Group. The newly created appointment is part of a revised sales strategy for the retailer. He will direct and support the group’s sales efforts to create a stronger, sales-oriented approach to the business.

Canadian consumers experienced a 4.3% increase in inflation in November, compared with the same month a year earlier, according to Statistics Canada’s Consumer Price Index. This increase is considerably larger than October’s 3.2% rise, but due largely to low energy prices last year.

Wholesale sales rose 0.6% in October to $35.5 billion dollars, says Statistics Canada. However, not including automotive products, which were up 3.6%, total wholesale sales would have been flat (-0.1%). Otherwise, wholesale sales have been on the rise since the fall of 2001.

Housing starts in the U.S. edged up in November by 2.4%, partly reversing a big slide in October, says the Commerce Department. But home building intentions, as tracked by sales of building permits, were down 2.7%.

Sales of new homes in the U.S. rose 5.7% in November, according to a government report. The lowest mortgage rates in more than three decades encouraged buyers, especially first-time buyers, as affordable, single-dwelling housing led the way.

Mark your calendars now for the Hardlines Conference Series, September 3-4, 2003. September 3 features our International Business Seminar and Retail Strategies Symposium. September 4 is our BIG BIG Hardlines Marketing Conference. Don’t miss these incredible industry events!

Winnipeg, MB — It didn’t take long after the announced buyout of Ace Hardware Canada by Sodisco-Howden Group for other suppliers to step in to fill the distribution gap. Just days after the deal was announced on October 22, TruServ Canada sent a letter to independent dealers across the country, inviting them to consider TruServ as a hardlines supplier. This marked the latest move in the dealer-owned co-op’s bid to become an alternative wholesale supplier outside its own dealer base.

The first step was a pilot project with 20 members of Castle Building Centres Group about two years ago. These dealers did not want an affiliation with any other banner and the new deal gave them access to TruServ’s lines, not including its private label products, without having to become member dealers. TruServ already has a strategic alliance with Castle, whereby Castle dealers who adopt the True Value name and colours have access to all of TruServ’s programs and inventory, including private label.

“We’re putting together a strategy that will complement our existing membership,” says Léo Charrière, president of TruServ Canada. “In the past, we’ve only sold to members. We have a directive to go beyond that now,” he says. That directive was made possible once TruServ got out from under its ownership by TruServ in the U.S. The Canadian operation was able to buy its way out of that ownership by the U.S. parent and currently pays it a license fee only.

“The possibility is certainly there for TruServ to supply more of Castle’s dealers,” says Pro Wylie, president of Castle. “TruServ offers an alternative. We’re pleased with TruServ and always have been. The bulk of our business is currently with Sodisco-Howden, and we’re very, very pleased with them, as well.”

A recent alliance with Growmark in Ontario will give TruServ more critical mass in that province, says Charrière. TruServ has taken over the distribution of hardlines to Growmark’s 150 co-op stores and Charrière hopes the deal will enable TruServ to establish its own distribution centre somewhere in Southern or Southwestern Ontario sometime next year.

This and other observations about the future of the industry were discussed by the who’s who of Québec’s home improvement industry in a panel discussion hosted recently by ADMACQ, the Québec association of hardware and building supply dealers.

The panel featured Claude Bernier of Rona, Jos Wintermans of Sodisco-Howden Group, Roger Plamondon of Home Depot Canada‘s Québec division, Claude Gingras of Coopérative Fédérée and Yves Gagnon of Le Groupe BMR. The discussion was moderated by Jacques Nantel, a professor at University of Montréal and chair of its e-commerce department.

Facing growth by the big boxes, independents have no choice but to seek consolidate among themselves. Rona has been one of the first groups representing independents to become a consolidator on a large scale. As a result, they have big boxes, traditional stores and specialty outlets under the Rona umbrella. “We have a diversified dealer base. We’re able to play in different markets at the same time,” said Rona’s Bernier. “And we have an acquisition strategy, which has helped us to grow quickly.”

Other independents are seeking strength in numbers, as well. For example, Co-op Fédérée’s membership in the new Reliance “super-group” is an example of recent “soft” consolidation – loose alliances that leave the individual groups intact.

To face the changes of the decade ahead, retailers must effectively market through a number of channels, including the Internet. Whether they buy online or not, retail websites are effective means of delivering product information, renovation and repair tips, and price comparisons.

Succession is an issue that threatens the long-term viability of many independents. Family members, and the larger work force in general, are not enamoured of retail as a profession, let alone a lifetime career. Ensuring a fresh generation to take over the reins is a challenge.

Despite this challenge, many groups are prepared. “As far as we’re concerned, it’s not really a problem for us, because our organization is a network and a new generation is already coming in,” said Gingras of Co-op.

Another trend to expect more of is the “store within a store,” noted the panelists. This can be either a franchise occupying space on a retailer’s floor or a section dedicated to one company’s program. The practice is a common one with mass merchants.

Boucherville, QC — The syndicate of underwriters of the Rona IPO exercised their over-allotment option on December 3 to buy an additional 1,225,000 of Rona’s common shares, for a total of $16,537,500. The over-allotment of shares came from some shareholders themselves, namely dealer owners and former dealer owners, not from the company itself. As a result, Rona did not get any of the proceeds of the offering.

The over-allotment enabled these dealers to get a return on some portion of their investment in Rona.

Rona’s executives have an option to sell off shares, as well. The option was created on January 24, 2002 when the board of directors of Rona set up a share option plan for designated members of Rona’s senior management. This plan was set up to induce the participants to take measures to increase shareholder value and to create conditions that were favourable for Rona to make a public offering.

Members of senior management have the option to take any options they were granted after the close of the IPO. However, they may not sell the underlying shares for at least six months after the closing date of November 5, 2002. If they do wish to sell, they must keep their options in escrow according to an escrow agreement, which states that 15% of the balance of the shares in escrow can be released on the 180th day following the closing date, 30% of the balance of the escrowed shares can be released on the first anniversary of the first release date, and 50% can be released on the second anniversary. The balance of the escrowed shares can be released on the third anniversary of the first release date. The escrow agreement will naturally apply only to any options that have been taken.

In addition, a number of senior managers and dealer owners have placed in escrow a portion of common shares they purchased in the past.

Business sessions, running simultaneously during off hours of the show, will be introduced to attract a larger retail attendance focused on sales staff.

The show’s opening night mixer will sport a new format, as well. A Mardi Gras theme in the Ramada Plaza Crystal Palace Amusement Park will feature games, rides and other attractions.

The Chairman’s Reception and ABSDA Annual Banquet the following evening will take place at the Delta Beausejour Hotel. The show, now in its 49th year, is produced by the Atlantic Building Supply Dealers Association. For more information, contact: 506-858-0700.

Recent consolidation has had its impact on membership at Mutual Hardware Inc. The buying group for hardlines retailers and distributors will lose Ace Hardware Canada, as that’s now part of Sodisco-Howden Group. Growmark‘s membership will end as the co-op’s hardlines requirements will now be supplied by TruServ Canada, another Mutual member. In addition, The Eddy Group will leave Mutual at the end of this year.

The Canadian Association for Stock Car Auto Racing will have a booth at the 2003 Canadian Hardware and Building Materials Show. CASCAR will be part of Auto Focus, the new pavilion dedicated to automotive aftermarket products for hardware retailers. CASCAR will display race cars at its booth, conduct autograph sessions with CASCAR stars and feature an interactive display. CASCAR joins a number of other groups that have committed to CHS, including Sodisco-Howden Group, Castle Building Centres and Taiga Forest Products.

Home Depot has announced it will integrate its Midwest and Southwest divisions into one combined operating division called the Central division. The new Central division will be headquartered in Chicago, servicing more than 457 stores and employing nearly 67,000. The company said it plans to maintain offices in Dallas and Mexico and says no material financial
impact is anticipated as a result of the integration. (see also “People on the move”)

Task Tools and Abrasives broke ground recently on a new, expanded distribution facility in Delta, BC. The company is currently headquartered in nearby Richmond. It will move from its existing 30,000-sq.ft. facility to the new headquarters, which will weigh in at 70,000 sq.ft., on April 1, 2003.

Costco Wholesale Corp. reported net sales of US$3.24 billion for the four weeks ended December 1, 2002, a 7% increase from US$3.04 billion in the same period of the prior fiscal year. For the first 13 weeks of its 2003 fiscal year, Costco had net sales of US$9.84 billion, up 8% from US$9.13 billion.

Home Depot has launched FAST, (front-end accuracy and service transformation), a massive initiative to enable customers to scan their own products and check themselves out. It also provides cashiers with touch-screen technology that will reduce price checks and cut down on theft. The new technology will be in place in 300 stores by the end of this year.

Home Depot‘s newly formed Central division will be headed up by Bill Patterson, who served most recently as Midwest division president, which was absorbed into the new division, based in Chicago. Patterson, who has been with Home Depot since 1999, will also oversee the company’s Mexico division, which continues to be managed by its division president, Ricardo Saldivar … Joe Izganics has been named president, services based in Home Depot’s headquarters in Atlanta, GA. Izganics most recently served as Division president of the company’s Southwest division, based in Dallas, TX, which is being absorbed into the newly formed Central division. Services is a business unit that specializes in in-home and commercial installation services, including roofing, siding, kitchens and baths, decks and fencing, and heating and cooling.

Signs of a slowdown on construction sites have yet to materialize, as the value of building permits in October were on par with July’s record high. The value of building permits totalled $4.0 billion in October, up 6.9% from September, due largely to residential construction intentions. the value of non-residential permits totalled $1.4 billion in October, up 10.9% from September.

Moncton, NB — Executives of Sodisco-Howden Group and Ace Hardware finished the last leg of a cross-country tour here today, presenting the new order of Ace Hardware in Canada to existing Ace dealers.

Jos Wintermans, president and CEO of Sodisco-Howden, travelled with Paul Ingevaldson, president of Ace Hardware Canada, and Pat Bennett, the company’s vice-president sales, to update dealers about the changes in the system following Sodisco-Howden’s acquisition of Ace Canada and the licensing of the Ace name last month. Over the past two weeks, they met with dealers in Toronto, then Calgary and Vancouver in succession. The Moncton stop was delayed by heavy snow storms that blanketed the northeast two weeks ago.

“The turnout by dealers has been excellent,” says Wintermans. “And the reaction by those dealers has been excellent, as well.”

Ace has about 120 bannered dealers in Canada, and ships to about 300 more on a wholesale supply basis. By the end of the year, Ace’s offices in Markham, ON will be closed, and the Brantford, ON distribution centre will be shuttered by the end of the first quarter of 2003.

Chicago, IL — The Cologne International Hardware Fair will begin alternating its industry focus, starting in 2003. At a gathering of media in its North American offices, officials of the Cologne Trade Fairs organization announced plans to enhance its home improvement trade show, which was renamed Practical World last year. Starting next year, and in consecutive odd-numbered years, the show will focus on interiors and furnishings. In even-numbered years the emphasis will be on hardware, tools and building materials.

The alternating approach will enable specialty vendors to target the year in which they can focus on Cologne. From year to year, the show will be anchored by a large number of companies that will continue to exhibit annually.

Also at next year’s Practical World, admission will be opened to skilled trades, architects and planning engineers.

Practical World, the International Hardware Fair/DIY’TEC, will be held in Cologne March 9-12, 2003. For more information, contact Barbara Hills, Cologne Trade Shows sales manager Canada, at 416-598-3343, colognet@idirect.com.

While AWARD’s growth reflects, in part, an increase in the ranks of dealers — eight new members were added in the past year, while three existing members added new stores — same-store sales by members will be up 10%-14%, says Smith. “It’s fantastic growth, really. We’re also very confident that the strong Atlantic Canada economy is going to continue.”

Newfoundland and Nova Scotia have been especially buoyant, he notes, fuelled by oil and gas, not to mention homeowners’ unrelenting desire to buy and renovate. And while next year’s housing starts are expected to be flat, a good sign, he adds, the repair and renovation market is expected to grow considerably.

This buying team has yet to be finalized. When it is, they will head to Wal-Mart’s world headquarters in Bentonville, AK over the next few weeks and then set up when they return.

Wal-Mart announced its plans last week to introduce its warehouse club concept to this country. Currently, Costco is the only existing warehouse club operator. It has 60 stores with estimated sales of $8.5 million in Canada.

Igloo Building Supplies Group is the latest retailer to join the Independent Lumber Dealers Co-operative. Igloo is an Edmonton-based independent with six stores, including two in the North West Territories. With more than $60 million in sales, it serves the northern communities and has a large overseas business in house packages, especially to Japan. Igloo will leave Tim-BR-Marts for ILDC effective January 1, 2003.

Kent Building Supplies has broken ground on a new store in Quispamsis, NB. The 35,000-sq.ft. outlet is part of Kent’s program to erect larger-sized building centres, ranging up to 65,000 sq.ft. in size. This one will replace an existing store in that market, a former Home Hardware dealer that was bought up by Kent.

The IRLY Group, the dealer-owned building materials distribution organization headquartered in Surrey, BC, has added two new members in that province: Shuswap Building Supplies in Scotch Creek and Black Creek Farm Feed Supply in Black Creek.

Tim-BR Mart Ontario (Homecare Building Supplies) has signed LBMX as its authorized EDI communication facilitator for the electronic processing of invoices. More than half of Homecare’s supplier invoices are currently processed electronically. The endorsement of LBMX is designed to add more EDI trading partners that are currently using the services of LBMX.

Domtar Inc. has decided to close its wood products remanufacturing facility in Daveluyville, QC and its hardwood lumber operation in Sault Ste Marie, ON. The facilities will close on January 31st, 2003, affecting 20 jobs. Hurt by softwood countervailing penalties, Domtar is exiting certain businesses, such as the ones being closed, to focus on its softwood production.

Hudson’s Bay Co. reported net earnings of $7.7 million on sales of nearly $1.72 billion. Profits were up from $4.5 million, while sales slipped down from $1.76 billion last year. Sales for Zellers fell 2.8% to $1.07 billion, while same-store sales fell 2.6%. At the Bay, sales fell 0.6% to $625.1 million and same-store sales declined 3.7%.

Newell Rubbermaid has reached an agreement to buy American Saw & Manufacturing, a power tool accessories and hand tool maker which sells under the Lenox brand. Headquartered in East Longmeadow, MA, American Saw had 2001 sales of US$185 million and employs over 800 people worldwide. The US$450 million cash deal is expected to close by year-end.

GUS, a British retailer, has agreed to buy the Homebase Group, a chain of home improvement stores, for US$1.42 billion. Part of the money used to make the acquisition will go to repay Homebase debt. The purchase will give GUS a foothold in the fast-growing U.K. home improvement market at a time when low borrowing costs have spurred consumer spending on houses and home furnishings. GUS’s main business is Argos, a catalog retailer, and Homebase will be part of the Argos Retail Group.

Dave Aubel has been promoted to the position of general manager – Canada at Milwaukee Electric Tool Corp. In his new role, he will be responsible for the management and continued growth of Milwaukee’s Canadian operation. Aubel has been with the company since 1996 as sales administration manager. Prior to joining Milwaukee, he worked for Chicago Pneumatic Electric Tools Division. He replaces Doug Chislitt. (416-439-4181)

Canada’s gross domestic product was up 0.8% in the third quarter, fuelled by new housing and exports. However, consumer spending stayed flat and business capital spending slowed. According to Statistics Canada, the economy lost some steam near the end of the quarter, with GDP edging up only 0.1% in September.

Canadians will spend more than $1 billion shopping online this holiday season, says a new report by Ipsos-Reid. According to the report, about 23% of Internet users intend to buy a gift online this season, up from 21% last year.

Montréal, QC – Some of Québec’s leading home improvement retailers put aside their competitive differences last week to talk about issues facing all retailers over the next decade.

About 280 retailers and vendors attended “The future of retail: where will we be in 10 years?,” a panel discussion featuring Claude Bernier of Rona, Jos Wintermans of Sodisco-Howden Group, Roger Plamondon of Home Depot Canada‘s Québec division, Claude Gingras of Co-opérative Fédérée and Yves Gagnon of Le Groupe BMR. The discussion was moderated by Jacques Nantel, a professor at University of Montréal and chair of its e-commerce department.

The event was mounted by ADMACQ, the Québec association of hardware and building supply dealers, and hosted by the association’s executive vice-president, Donald O’Hara.

The continued growth by big boxes will insure continued consolidation, but BMR’s Gagnon observed that the remaining players will themselves be stronger – and more savvy. “We’ll have to be better prepared,” he said.

Wintermans of Sodisco-Howden said the search for good staff will continue to be a key challenge, even as companies search for better operations and technology. “The big challenge is not technology, it’s human resources. Who can design a managerial system that brings the best out of everyone?” he asked rhetorically.

Coopérative Fédérée’s Gingras agreed, pointing out that retailers need a structure that enables people to grow in their careers. He mentioned a new initiative at Coopérative Fédérée, “Co-op Academy,” which helps staff improve their skills and academic standing. “The success of our network is directly tied to the quality of our people,” he added.

They also discussed the growing importance of female customers and the need to match that trend by attracting more women into the business itself. Plamondon noted that Home Depot stores have evolved to accommodate women, with wider aisles and brighter lighting. “We’ve also put a lot more into our décor centre, because that’s an up and coming sector, without losing focus on our core business.”

He added that his company is also responding corporately to the need for women, including the fact that his boss a woman (Home Depot Canada president Annette Verschuren). Gagnon of BMR agreed that women have changed home improvement retailing, noting that they now account for half his dealers’ business. He said the industry had typically been “macho,” but this has been changing over the years, “and those who are responding to that change are prospering.”

Wintermans was not so quick to agree that good employees should be distinguished by gender. “A company is either responsive to its customers or it’s not.” Gingras added: “Whether they’re male or female, customers want bright, clean stores.”

(Next issue: more on staff development, succession and vendor relations – Editor)

Rona has so far opted not to exercise that right, however, and the revised offer from the BMR affiliates has been accepted by Matco Ravary’s executive team. According to Yves Gagnon, president of BMR, the latest offer amounted to $24.5 million in cash, plus the assumption of $13 million in Matco Ravary’s debt. That debt has been mounting as the contractor-oriented retailer has fought to retain profits in a market increasingly crowded by the likes of Home Depot and Réno-Dépôt. Sales hover around $60 million annually.

Under the terms of the new offer, Carmel Chaput, chairman of Matco Ravary, and Gilles Nolet, president and CEO, will stay on for an unspecified term. They will not be required, as in the original offer, to repurchase any Matco Ravary shares. The offer closes by November 28, by which time Rona can come back with its own counter-offer, if it so chooses. While such an acquisition by the dealer-owned wholesaler fits with its stated strategy to purchase more retail chains, the company has been busy reorganizing existing acquisitions and managing a recent IPO. A spokesperson for Rona says the company has “no comment” on the deal at this time.

When asked if there is any truth to the rumour that BMR plans to open a big box of its own somewhere on the south shore, BMR’s Gagnon is vehement in his denial. “No, not at all!” he insists. Growth, he says, will continue to come strictly through membership of independent dealers.

It will also put them in direct competition with the likes of Rona and Home Hardware, as Unimat stores will join Coopérative Fédérée on a co-op basis. Director of the Unimat program is Gaetan Bilodeau, formerly a buyer with Marchands Unis, who joined Coopérative Fédérée a few months ago.

Claude Gingras, director of hardware and building materials for Coopérative Fédérée, would not comment on how many stores are being targetted for the Unimat banner, but it’s expected to cater to small and medium sized dealers.

Unimat was actually a name used by a buying group of seven building materials wholesalers that had connections with OCTO Plumbing and AHW. The group folded in 1990.

Prompted by specials such as the 35th anniversary sale, which took 35 fast-moving products and put them out at tremendous savings for dealers, the show was considered a healthy buying show by dealers and vendors alike. Hardware sales alone grew from $11.1 million at last year’s BMR show to $16 million this year, reflecting the addition of almost 600 SKUs to BMR’s newly expanded hardware distribution centre in Longueuil.

BMR’s private label lines have become so extensive that the group has introduced a catalogue of them to assist the dealers. It includes a broadened range of hand tools, and a new paint line and paint accessories program.

Other sectors that are growing for BMR dealers include seasonal, especially lawn and garden, with an overall increase in demand for higher quality products.

Wal-Mart will introduce Sam’s Club stores to Canada, beginning with 4-6 outlets in Ontario by the Fall of 2003. The freestanding, 100,000-sq.ft. outlets will provide wholesale prices to members. Specific locations will be confirmed over the coming months.

Taiga Forest Products has purchased a building materials distribution centre in Rocklin, CA from Louisiana-Pacific. The facility comprises 15 acres of land and 100,000 sq.ft. of warehouse and covered storage space. This marks Taiga’s first significant U.S. investment.

The Canadian Hardware & Housewares Manufacturers Association will hold the 15th Annual Industry Gala on February 2, 2003 at the Fairmont Royal York Hotel. Held in conjunction with the Canadian Hardware and Building Materials Show, the Gala, which raises money for Easter Seals, will feature impressionist André-Philippe Gagnon. For tickets and sponsorship info, check www.chhma.ca. Over the years, CHHMA has raised over $400,000 in support of Easter Seals.

Canfor Corp. has struck a deal to sell wood from three sawmills operated by formerly insolvent Skeena Cellulose Inc. in northwest British Columbia. Canfor and the new owner of Skeena, NWBC Timber & Pulp Ltd., reached a deal under which Canfor will sell lumber produced at Skeena’s Terrace, Kitwanga and Carnaby mills. The lumber will be sold under the Canfor brand in North America and co-branded with Skeena in overseas markets. Terms of the deal were not revealed.

Lowe’s Cos. Inc. earned US$339.2 million in its third quarter, up from $250.5 million a year earlier. Third-quarter sales increased 17.6% to US$6.41 billion from US$5.45 billion.

London Drugs will open its second store in Saskatoon on November 26. The new location, in Lawson Heights Mall, follows the company’s first opening in that city four months earlier. The new, 35,000-sq.ft. location will include a photo processing service and pharmacy, as well as audio-video, consumer electronics, health, beauty and cosmetics, and fragrance departments. Other specialized departments range from a creative kitchen to an Internet café and an in-house computer repair service.

While sales were up for Tembec in its fourth quarter, it suffered a loss of $16.0 million before unusual items, compared with net earnings of $4.9 million in the corresponding quarter a year earlier. For the fiscal year, consolidated gross sales reached a record $3.4 billion, a 13% increase over the prior year.

At the recent BMR dealer show in Québec City, Jean-Claude Turcotte received an emotional farewell – including a standing ovation and a gift from the members of a trip for two to Italy. Turcotte, who was lumber and building materials buyer for BMR, is retiring after 40 years in the hardlines business. His replacement is René Choiniere. (450-463-2441)

Wholesale sales remained at $35.2 billion in September, says Stats Canada. Adjusted for inflation, wholesale sales actually fell 0.7%. Advances in seven sectors were primarily offset by lower wholesale sales of industrial machinery and equipment (-1.6%) and automotive products (-1.3%). These two sectors represent approximately 33% of the total value of wholesale trade. However, metals and hardware were up 1.3%, lumber and building materials gained 1.0% and household goods edged up 0.5%.

Consumers paid 3.2% more in October for goods and services, as reflected in the Consumer Price Index, than in the same month a year earlier. This increase is considerably larger than the 2.3% observed in September. Excluding the effect of energy prices, the CPI increased 2.9% from October 2001 to October 2002, says Statistics Canada.

Sales for plumbing and heating wholesalers exceeded $325 million for the first time in October and were up 9% from September. According to the Canadian Institute of Plumbing and Heating, year-to-date sales were up 7% over the same period in 2002; plumbing was up 10% and waterworks was up 3%.