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%.

Montréal, QC – If merchandising and presentation are everything for good store layout, then why not for the environment in which the dealers themselves are expected to buy? The spare, sensible warehouse presentation of some dealer shows was nowhere to be seen at the Rona show last week, held downtown at the Palais de Congrès (or, for that matter, the BMR show, held this past weekend in Québec City. More on BMR next week – Michael).

And good thing, too. The Rona show, which featured 500-plus vendors, accounts for about 60% of total year’s purchases by the dealers. New vendors were asked to come with innovative merchandising ideas for their products and all this was reflected in the look of the show.

Attention to detail included an abundance of plants and flowers throughout the aisles and common areas enhanced by wood flooring underfoot. A model home – a four-sided structure to showcase the latest windows right in the walls – was also featured.

A move to more high-end offerings was clearly visible on the show floor, including hot tubs built for two, sophisticated lighting and high-style faucets. Rona’s Paint Café attracted a lot of interest, this year featuring plans for a scaled down version that will fit against the wall in smaller stores.

The gala dinner held Saturday night hosted 1,700. Highlights included a presentation by Rona president and CEO Robert Dutton, who gave an emotional, heartfelt tribute to his mentor, former chairman Henri Drouin.

In his speech to the dealers, Dutton commented on the company’s commitment to keep growing the retail base. Corporate expansion, with large format stores, will focus on Québec and Ontario, while Rona’s recent IPO will help fuel investment in the dealer owned network. “We have continued to recruit independent owners and especially to support our dealer owners in the expansion and modernization of their stores. Since 1999, we have renovated nearly 300 points of sale,” Dutton noted.

“The quest for operational efficiency,” he continued, “… is definitely critical to our success. First of all because it allows stores to function and respond to customer needs. And then because it has an enormous impact on the profitability of the entire network. For example, we save about $20 million a year through synergies arising from the Rona, Cashway, Revy and Lansing integration. And that’s actual savings, not projected savings.”

While Dutton said in his speech that the Revy name will be dropped in Rona’s Western stores by the end of 2003, expect the change to take place much faster – within the first half of the year. The Lansing and Cashway names in Ontario will, however, remain in place for now.

Profits for the company hit $1.2 million, up from $0.3 million. For the nine-month period, revenues were $367.2 million, up 22% over the same period in 2001.

While Sodisco-Howden continues to strengthen its financial position, president and CEO Jos Wintermans says the company is not about to rest on its laurels. “But the strategy of continual strengthening of our results, thanks to our strategy of growth to increase the top line and productivity to enhance bottom-line results, is paying off.”

Sodisco-Howden took a hit in its first quarter, a one-time integration charge of $1.8 million to absorb the Marchands Unis acquisition. The buyout of Ace Hardware Canada will close at the end of this year. “Howden gives us strength in English Canada, and especially in Ontario,” says Wintermans. “The Ace acquisition more equally divides our strength across Canada.”

As for further acquisitions, Wintermans says the company remains open to opportunities, “but for now, we have a perfectly good lineup of banners and strength in the marketplace. Now, it’s a question of winning more business from these customers – of winning more hearts.”

In fact, the push for more emphasis on making deals begins with the exhibitor application form itself. “Right at the top of contract we said we expect [exhibitors] to offer rebates or introductory offers exclusive to the show,” says Bob Elliott, president of the Canadian Retail Hardware Association, which owns CHS.

“It’s very important to us that we get the vendors to support the concept. We’ve been told by dealers and dealer groups that this has to be more of a buying show.” Elliott adds that the show has always offered specials; part of CHS’s job is to raise awareness of that.

According to Elliott, almost one-fifth of exhibitors have already confirmed they will offer retailers special or extended terms, while 15% will offer merchandise displays and 12% have committed to volume discounts.

The 2002 show drew 16,985 and played host to 1,006 exhibits from 464 participating companies. The 2003 show will be held February 2-4, 2003 at the National Trade Centre, Exhibition Place, Toronto.

Costco Canada Wholesale Corp. announced, then postponed selling new cars to its members. When the pilot project goes, cars will be displayed in test stores in the Ottawa region; customers will be directed to one of four local Chrysler or Ford dealerships to close the deal – with a Costco discount of up to $400.

Beginning January 2, 2003, CGC‘s building centre dealers in Canada will be able to order CGC ceiling tile and grid through the company’s customer service centres. The centres already handle CGC’s line of gypsum products, interior finishing products and cement board. CGC ceiling products are distributed by CanWel Distribution Ltd.

On the heels of a 36% increase in its 3Q profits, Loblaw announced that its next two new stores will include medical clinics. The service will complement the pharmacies in the stores, which will be located in Richmond Hill, north of Toronto, and Ottawa. The latter will have doctors onsite. (But will they help bag groceries during peak times, too? – Editor)

The Paint and Decorating Retailers Association and the Walls Windows Furnishings Association are returning to the Canadian Hardware and Building Materials Show to create a show within a show entitled the Décor Showcase. More than 100 exhibits will be featured, plus certification workshops and seminars aimed at both retailers and decorators.

Wal-Mart‘s 3Q earnings hit US$1.82 billion on sales of US$58.7 billion, up from US$1.48 billion a year earlier. Sales were up 11.5%. Same-store sales were up 3.5% during the quarter; Wal-Mart stores were up 4.2% and Sam’s Club rose 0.4%.

Restoration Hardware began airing its own television special, “Restoration Home For The Holidays,” this past weekend. It’s hosted by Restoration founder Stephen Gordon and will appear in 100 U.S. markets. Segments include Christmas crafts and traditions and building a cozy fire.

Target Corp. earned US$277 million on sales of US$10.2 billion for the quarter. That’s up 9.3% from sales of US$9.3 billion a year ago. The company expects to earn 15% per share growth for the year.

At Selkirk Canada Corp., Bob Emmell has been appointed to take on additional responsibilities as national sales manager – Canada. In his new role, he will be responsible for sales of Selkirk, Supervent and SuperPro Chimney venting and fireplace brands to the Canadian retail, wholesale and hearth distribution channels. (1-800-263-9308)

Non-residential building construction in the third quarter was up 0.3% from the second quarter and up 1.6% from the third quarter of 2001, reflecting a healthy non-residential building construction sector, says Statistics Canada. Edmonton’s index rose 0.8% from the second quarter, followed by Calgary (+0.6%), Halifax and Toronto (+0.4%), and Montréal, Ottawa and Vancouver (+0.3%).

October’s retail sales in the U.S. were flat, says the U.S. commerce department. The stalled results follow a drop of 1.3% in September. Consumers spent less on cars and restaurants, but more on fashion.

*****

>Home Depot’s sales grew by more than 20% last year in Canada. But do you know the other company that’s building stores at a brisk rate?
>Four companies account for almost half the home improvement market in Canada. Who are they?
>Big boxes make up almost a fifth of the market today. Where will they be in three years?

These are the kinds of questions that get answered in every issue of HARDLINES QUARTERLY REPORT. A one-year subscription is only $379! Contact nancy@hardlines.ca for more info or click here to order from our website!!! (Alright already, the ads are bad enough, but what’s with all the exclamation points? – Editor)

Mississauga, ON – The newest Rona Home and Garden store, just west of Toronto, encorporates many features that will represent the company’s “Next Generation” of stores.

According to Pierre Dandoy, executive vice-president of Rona’s big box stores, the newest outlet carries about 40,000 SKUs, a product mix that will set a standard for the country, with variations to account for regional differences between the GTA, Québec and the West. The store stands on three pillars, says Dandoy: instore expertise, everyday low pricing and a “proudly Canadian” brand position.

A number of departments have been buffed up, showcasing features not typical in a Revy store – but common enough in Rona’s big boxes in Québec – including a greater emphasis on boutiquing. “We try as much as possible to show the product as it would appear in the home,” says Dandoy. “You have the ambience of the home right in the store.”

Kitchen and bath has been made more upscale looking. Tubs and sinks are displayed in racking that’s faced with a veneered finish, rather than sitting in metal racking, another touch from Rona’s big boxes in Québec.

The seasonal department has been expanded, too. “We want to be the most important company in retail for seasonal,” says Dandoy as he surveys the huge assortment of Christmas accessories and decorations that greet one upon entering the store. The seasonal theme continues down the power aisle, which features snow throwers.

New categories include cleaning and home maintenance, while knockdown furniture has gotten a facelift with an assortment that will eventually be adopted in Québec. Flooring and lighting are examples of other departments that have been freshened up. In flooring, all related products, including tiles and hardwood, are put together. The lighting department has been similarly grouped in a 10,000-sq.ft. boutique.

The tool corral has been opened up at both the front and back to encourage more traffic, while the checkout within the corral has been eliminated altogether.

Dandoy says this store was already erected when he started introducing Rona’s Next Generation concepts. Therefore, it’s about halfway to where he’d like to see the concept. Ensuing stores will build on the changes at this store, with enhancements, he says, that will focus on making the stores easier to shop.

Vancouver, BC – Independent dealers in Western Canada are finding the value in aligning themselves with the Tim-BR Mart national banner program. According to David Beck, who oversees store planning for Tim-BR-Marts Ltd., many are even putting the brand ahead of their own identity, something that independents have often been reluctant to do.

Tim-BR-Marts is part of the Matreco group, which includes AWARD, BMR and Homecare (Tim-BR Mart Ontario). Except for BMR, Matreco’s Québec-based member, the groups have been converting their members to one national brand, a subtle reworking of the Tim-BR-Marts name.

The program consists of both interior and exterior details. Flourishes include brighter signage, new end cap signage and the brand’s slogan: “Good neighbours, good advice.” The outside of the store updates the peaked big box-style entrance with an arch to mark the entrance clearly. “We wanted something progressive, a young fresh look,” says Beck. “The arch was, to us, very clean.”

Of the 185 Tim-BR-Marts stores in Western Canada, Beck says 59 have been converted or are in the works, 15 of them in this year alone. Recent conversions include Salmon Arm and Powell River, BC. The next to open will be a new store for Bill Lutes in High River, AB. Lutes Building Supplies will open its doors sometime early in 2003 with the full Tim-BR Mart package.

London, ON – TSC Stores are appearing more and more on television and in association with special events. “We’ve become more aggressive in the last two years with advertising and promotion,” says Roy Carter, president of the chain of farm and hardware stores through Southwestern and Central Ontario.

TSC is also attaching its name to special events, including the Western Fair in London, the Woodstock Farm Show and the Royal Winter Fair, running this week in Toronto.

“We’re trying to communicate to people beyond our normal listening audience that we’re a good spot to shop for our core categories of hardware and farm supplies,” Carter continues.

Total retail sales for the quarter were $1.50 billion, a 7.6% increase from 2001. Same-store sales were up 4.4% for the quarter. Year to date, Canadian Tire Retail total retail sales were $4.19 billion, up 6.8%. Same-store sales were up by 3.2%.

Doman Industries will get relief from creditors for up to 90 days under the Companies’ Creditors Arrangement Act. Doman has reached a deal with some lenders to help the company reduce its long-term debt from $1 billion to $400 million and provide up to $100 million of new capital.

Canadian Tire has forged a five-year supply and technology agreement with NAPA Canada, whereby NAPA will supply Canadian Tire stores with emergency parts and automotive products not normally kept in stock. The deal is part of CTC’s strategy to grow its automotive business.

Canadian Tire has introduced a Christmas gift-giving program featuring more than 300
products. The program features products that are completely new to Canadian Tire’s assortment. Sections organized by themes offer home entertaining gifts, barware, candles, picture frames, office accessories, travel items, gardening gifts, gifts for golfers and hockey fans, luggage, calendars, framed art and pre-wrapped gifts.

Sears Canada has opened a Furniture and Appliances store in Calgary that reflects the retailer’s latest design concepts for its furniture and major appliances business. The 43,000-sq.ft. store is the prototype that showcases groupings of both contemporary and traditional home furnishings, wider aisles, new lighting and a softer colour palette for in-store signage.

Planters’ Pride has appointed the following distributors: Greendale Garden Products for Ontario, Halifax Seed Co. for the Maritimes and Labon Inc. for Québec.

On November 5, the Canadian Retail Hardware Association and Lumber and Building Materials Association of Ontario met with the House of Commons Standing Committee on Finance to discuss how to increase economic prosperity. The submission was supported by a coalition of three key industry groups, the Canadian Retail Building Supply Council, the CRHA and the Canadian Hardware and Housewares Manufacturers Association. The submission outlined industry support for reduction of both the national debt and taxes.

Wal-Mart Stores reported net sales for October of US$18.5 billion, up11.3% over last year. Sales for the year to date were US$174.6 billion, up 12.1%. The Wal-Mart division’s sales for the four-week period were up 12.7%.

Mitchell Mailvaganam has joined Planters’ Pride, a division of ITML Horticultural Products, as product co-ordinator. A graduate of the University of Waterloo, ON, he reports to Don Gayford, director, retail operations. (905-791-2600)

At the Canadian Retail Hardware Association, Maura Bella has been named director of the Canadian Hardware & Building Materials Show. She continues to hold her position as director of administration. Joe Edwards, show manager, is currently on indefinite medical leave. (905-821-3470)

Builders took out $3.7 billion worth of building permits in September, down 6.9% from August, says Statistics Canada, the second consecutive monthly decline. Residential permits fell by 4.4% to $2.4 billion, the result of a sharp drop in construction intentions for multi-family dwellings. Non-residential construction intentions fell by 11.3%.

A report by ReMax says housing prices in Toronto will go up 7% next year, but still fall short of the national average. Prices across Canada are expected to rise by about 10%. Strong migration into the Greater Toronto Area, job growth and low mortgage rates are fuelling the housing boom in Toronto, where sales were up 19% in October from the same time last year.

Consumer spending in department stores fell in September by 3.2% from August, bringing department store sales to $1.70 billion seasonally adjusted for the month. This is the lowest level so far this year. Despite recent declines, department store sales in the third quarter were up 5.6% from the third quarter of 2001. Compared with the second quarter, however, department store sales were down a slight 1.1%. This was the first quarter-to-quarter decline since the fourth quarter of 1999.

Do you know…
* Where do women prefer to shop for home repairs?
* What women think of big boxes?
* Why women are comfortable shopping Canadian Tire?
* How much money do women spend when they go home improvement shopping?
* Which renovation projects women prefer?

Find out with Women and Home Improvement: Understanding Female Shopping Habits.
Act now! Order your copy of this important report today! Call Nancy, of course! or email nancy@hardlines.ca or click here to order on the Hardlines website.

Mississauga, ON – The opening of Rona‘s 41st big box store came just days after the closing of Rona’s initial stock offering on the Toronto Stock Exchange. So, while the 140,000-sq.ft. store had some many merchandising innovations that reflect Rona’s “Next Generation,” this week we’ll focus on the company’s growth plans. (More on the “Next Generation” in next week’s edition of Hardlines – Editor)

Robert Dutton, president and CEO of Rona, was at the opening with a full entourage of Rona brass, including Pierre Dandoy, executive vice-president of big box stores, Claude Bernier, executive vice-president of traditional stores, Rob Wilbrink, vice-president operations and development for Ontario and Al Cheney, vice-president operations for Rona’s Revy stores.

While other companies are retreating from floating shares on the stock exchange, Rona’s offering worked – and Dutton insists he’s pleased with the results. “We can pay down $49 million in debt [the retirement of debentures currently in circulation] and now I have $100 million to support my development plans. That’s enough to invest in a number of projects,” he says.

Those projects include investment in Western expansion, which is very important to Rona, says Dutton. The Western distribution centre will be expanded from 80,000 sq.ft. to 200,000 sq.ft. next year to support that expansion. Growth is also going to come from dealer recruitment, especially in the West, where Rona also has plans for ground up stores.

But further acquisitions are important, says Dutton. The company will look for regional chains to buy and own corporately. It is also on the lookout for another wholesaler to buy, though Dutton declined to identify any prospects.

The company is well poised for growth, Dutton points out. With three types of stores, traditional hardware and building centres, big boxes and specialty retail formats, including Botanix. Will there be any more big boxes announced by Rona this year? Not likely, but with IPO under their belts, Rona plans to step up their expansion in 2003.

The show takes place only weeks after the announcement of Sodisco-Howden’s takeover of Ace Hardware Canada. Ace dealers have been invited to attend, as well.

Historically, Sodisco-Howden has mounted a show in Montréal for its Québec dealers and another show in Toronto for its dealers supplied by the Howden Division. Those shows have been combined into the Montréal event. Wintermans says the event was successful in attracting dealers from from across the country, where the event was presented in English and French. “It has much more clout,” he says.

To further consolidate its presence to its dealers, Sodisco-Howden will not exhibit at the Canadian Hardware and Building Materials Show in February. Through the ’90s, Howden had actually stopped putting on a Howden show, and instead tied its spring buying activities to the CHS. While the first year managed to pull in a reasonable showing of Howden customers, within three years the involvement with the national show was pulled.

Home Depot began its expansion into Québec in August 2000, after a non-compete clause between Home Depot and Réno-Dépôt eroded. “It’s been a very aggressive expansion program,” says Roger Plamondon, regional manager for Québec. “You can’t be a national player without being in Québec and the population warrants that we have a certain number of stores there.”

Plamondon adds that the company has gone into the greater Québec City area with what it believes is the optimum number of stores. “We’ll evaluate very carefully how the market is being covered. The market conditions will dictate, but two was the ideal number we calculated.”

A number of observers have questioned Home Depot’s viability in this market, but Plamondon is confident of the move. “Historically, Québec City has shown a willingness to try new brands. So we’re not that concerned from that standpoint, as long as we do the job we’re supposed to do.”

He says features such as tool rentals, and an installed program will set Home Depot apart from the Québec-based big box competitors.

With the addition of a store on the South Shore in Greenfield Park on December 5, Home Depot will have 12 stores in Québec province by the end of this year.

Canfor suffered a third-quarter net loss of $11.8 million, versus net income of $19.6 million a year earlier. The third-quarter losses reflect lumber export duty charges of $35.8 million after tax
(compared to $17.2 million for the prior quarter and $11.5 million for the corresponding period in 2001). While year-to-date net income increased to $69.5 million, net sales fell $27.8 million, due largely to lower lumber prices and lower pulp shipments. The company is feeling the crunch of softwood lumber duties from the U.S. Canfor plans drastic cost-cutting measures, which will include laying off about 300.

Domtar Inc. had net earnings of $59 million on net sales of $1.4 billion during the third quarter of 2002. During that period, the company formed a new forest products group, which combines both timber and lumber operations.

GSW Building Products has named RDTM to handle its sales in Québec and RDTS for store service, effective November 1, 2002. Both companies are led by Robert Di Tomasso.

Emco Ltd. had net earnings for the third quarter of 2002 of $14.1 million, compared with $8.2 million for the same period in 2001. Sales for the third quarter reached a record level of $383 million, increasing 6% over the comparable period last year. Sales for the quarter for distribution were 9% higher than 2001.

Sales in the third quarter by Doman Industries were $175.6 million, compared with $174.1 million in the third quarter of 2001. Sales in the first nine months of 2002 were $465.5 million, down from $608.8 million.

MAC Call Center was recently appointed to handle consumer help lines in Canada for appliance manufacturer Hamilton Beach Proctor Silex. In July, it added to its client roster. Its customer roster includes Porter Cable Delta, GSW/Canadian Tire, Masonite, Unilever and Bridgestone Firestone.

Sico Inc. posted a 47.8% increase in net earnings in its third quarter, to $4.2 million. That’s up from $2.8 million in the same period last year. Sales were up17.8% to $66.6 million. These results contributed to a 49.9% increase in net earning for the first nine months to $12.0 million. Sales grew by 14.1% to $204.6 million.

Tembec has reopened its value added centre in Cranbrook, BC, which was temporarily closed a year ago as a result of the U.S. imposed penalties on softwood lumber. Retooling to facilitate alternative processes and products made the reopening possible.

Slocan showed continued losses in the third quarter, to $1.8 million, an improvement from the net loss of $2.1 million in 3Q 2001. After including income taxes and the unrealized loss on U.S.$ denominated debt, however, the net loss was $12.3 million, compared with a net loss of $8.0 million.

A class action suit against paint manufacturers has ended in a mistrial. The judge in a case in Rhode Island that tried to hold paint manufacturers responsible for the health hazards of lead-based paint ended in a mistrial when the jury became deadlocked trying to decide whether lead-based paint, which the federal government banned in 1978, posed an immediate or potential public hazard. The judge has to decide whether there will be a new trial.

West Jordan, a community in Utah, will the site of a new-style Sears store. The 200,000-sq.ft. store is scheduled to open by October 2003. It will be twice the size of the largest existing Sears stores, will mark a change in traditional Sears retailing formula. It will incorporate centralized checkout, fewer store divisions and, for the first time in 40 years, a toy department.

Gary Hamilton has been appointed executive director of the Western Retail Lumbermens Association, effective December 2, 2002. He will be working with the Judy Huston, the retiring executive director, for three months before stepping into the role fully on March 1, 2003. Hamilton was formerly with TruServ Canada Co-operative, where he had positions as a manager and buyer. Before that he was in management positions at Sears Canada in both Winnipeg and Toronto. (204-957-1077)

At the Canadian Retail Hardware Association, which owns and operates the Canadian Hardware & Building Materials Show, Maura Bella has been named as director of CHS. Bella is a 22-year employee of the CRHA, who most recently held the position of director of administration. In her new role, she will oversee all activities of CHS, including the implementation of strategy, sales, on-site activities, promotions and finance. She replaces Joe Edwards, show manager, who is currently on indefinite medical leave. (905-821-3470)

David (Jesse) Jessop has joined Zellers as regional vice-president for its stores in Western Canada. Jessop comes over from Home Depot Canada, where he spent 10 years in a variety of positions. He was most recently regional operations manager for Home Depot in Eastern Canada. (905-792-4400)

Low rental vacancy rates and strong demand for commercial spaces helped keep the construction industry healthy in 2000, says Stats Canada. Total revenues rose 12.3% to $121.0 billion from 1999. Residential construction was up 12.2% and non-residential construction was up 10.6%.

Montréal, QC – Sodisco-Howden Group has acquired Ace Hardware Canada, putting to rest months of speculation about the fate of the U.S. wholesaler in Canada.

The deal, worth $15 million plus an eventual net benefit of $6 million in net tax operating losses, closed last Tuesday, concluding discussions that began in earnest about three months ago. Ace had been losing money ever since it lost its initial – and largest – customer, Beaver Lumber, when that chain was purchased by Home Hardware Stores in the Summer of 2000. Ace’s shipments to former Beaver dealers wound down until March 31, 2001. By signing new Ace dealers and through a series of supply agreements with buying groups, Ace tried to grow in Canada, but volumes didn’t pick up fast enough to ensure its long-term viability.

Ace’s business in Canada is now worth about $40 million, reflecting shipments to 127 bannered or co-bannered Ace dealers, as well as another 300-plus independent building centre dealers who relied on Ace to beef up their hardware assortments. The added volume will be driven out of Sodisco-Howden’s London, ON distribution centre, giving Sodisco-Howden about $482 million in sales.

Ace is strong with companies such as Homecare Building Centres in Ontario and Winnipeg-based Sexton Group. They, along with other customers, including United Farmers of Alberta, will have the option of continuing the Ace programs under Sodisco-Howden’s license.

According to Jos Wintermans, president and CEO of Sodisco-Howden Group, one company had to buy the other, as the hardware distribution market in Canada, he says, wouldn’t support two players. But the deal leaves Ace’s presence in Canada intact, as Sodisco-Howden will support Ace’s banner and programs under a licensing arrangement that reflects Ace’s activities in 56 other countries around the world. Sodisco-Howden Group, in turn, will have access to all of Ace’s programs and brand support. Dealers served by Ace will continue to get that service, but from Sodisco-Howden.

“It’s a win-win,” says Wintermans. “It’s a viable relationship that keeps the Ace name in Canada and gives hardlines retailers an alternative.”

As recently as last month, when Paul Ingevaldson, vice-president corporate strategy and international business for of Ace Hardware in Oak Brook, IL, spoke at the Hardlines Marketing Conference in Toronto, Ace had affirmed its commitment to supporting the independent dealer North America-wide. That support, said Ingevaldson at the time, is a counter-offensive against the incursion of the big boxes.

Ingevaldson sees the deal as a strategic alliance between the two groups that will fulfill Ace’s mandate to support the independent. “We’ll be able to bring Ace programs into Canada through Sodisco-Howden,” he says. “We’re looking at it as a long-term relationship. We can also assist in some buying power opportunities, and in that way deliver better pricing to the Canadian independent.”

The deal is expected to close by the end of the year, at which time Ace will close its Markham, ON head offices. Its Brantford, ON distribution centre is expected to close by the second quarter of 2003. A warehouse in Calgary was shuttered earlier this year.

Fort Wayne, IN – Suppliers are getting benefits from their supply agreements with Alliance International LLC, and the group has done a study to prove it. Suppliers with consolidated supply agreements who are actively selling all three members of the group, namely Rona Inc., Home Hardware Stores Ltd. and Do it Best Corp., have realized an average sales increase of 27% over the past three years.

“The study shows the strong commitment of the Alliance partners to grow their businesses with suppliers who think globally, then act locally,” says Greg Thomas, executive director of the Alliance. “This not only means that these suppliers are increasing their sales, but are also developing stronger business partnerships with each Alliance member.”

More and more, the Alliance is seeking out suppliers who are internationally focused. The development of strong partnerships, Thomas says, can benefit suppliers through group purchases, reduced logistics costs and better sales promotions.

“The Alliance represents the best opportunity for any supplier to grow their market share in North America,” says Ray Gabel, vice-president of hardlines purchasing and marketing for Home Hardware. “We welcome these international partnerships to help our dealers grow their sales and profits.”

At least 15 product category reviews are conducted each year, but the group is also looking for synergies in its purchases of supplies and services. Several non-resale categories, such as shopping bags and other store supplies, are currently under review.

The Alliance represents nearly 6,000 retailers through its three members, with combined wholesale volume of about $9 billion.

“It’s a feather in the cap of Sodisco-Howden, because it brings a fair piece of business their way,” says Ron Marchetti, central business development manager for Castle Building Centres Group. “However, I think it’s unfortunate that Ace has left the market, because it gave everyone a choice.” Sodisco-Howden is the primary supplier for Castle, but the group also has a wholesale supply agreement with TruServ Canada and buying synergies through the Mutual Hardware buying group. About 10% of Castle members are currently dealing with Ace.

Marchetti’s colleague, David Morton, Castle’s lumber buyer, is more emphatic, however. “It’s a dark day for Canadian hardware retailers,” he says. “It leaves one less competitor in the market and that spells doom and gloom for independent retailers.”

Dealers carrying Ace products look forward to continued support of Ace products and programs under the licensing arrangement made with Sodisco-Howden. “I don’t think it’s going to make any difference,” says Steve Webster, a Tim-BR Mart dealer in Elmvale, ON. “As far as we’re concerned, we’ll continue to have a hardware supplier.” Webster likes the Ace programs, but already relies on Sodisco-Howden for about 60% of his hardware needs.

Other dealers, who have the full Ace program, will probably have more of a headache trying to switch over to Sodisco-Howden’s SKU numbers and bar codes. Randy Martin, director of merchandising for Vancouver-based Tim-BR-Marts Ltd., anticipates some challenges for dealers who rely more heavily on Ace, especially those who have only recently switched to Ace. But he expects Sodisco-Howden’s western distribution centre in Surrey, BC to increase turnaround times for customers in the West. About 20% of Tim-BR-Mart’s dealers deal currently with Ace.

St-Basile-le-Grand, QC – Matco Ravary, a chain of six building centres in the Montréal area, has received an offer from an affiliate of Le Groupe BMR to acquire Matco Ravary for about $26 million. Matco Ravary is a publicly traded company, owned in part by Rona Inc.

The deal calls for BMR to pay cash for the company, giving the privately owned wholesale buying group a foothold in Québec’s major urban market. It will also be the first outright acquisition by the group, which sells to 125 independent building centre dealers in Québec and in francophone communities of Ontario and New Brunswick. Matco Ravary has also agreed to pay BMR break-up fees of between $100,000 and $500,000. BMR will assume liabilities estimated at $13.6 million.

Gilles Nolet, president and COO of Matco Ravary, and Carmel Chaput, chairman and CEO, principal shareholders in the company, have agreed to invest about $4 million back into the deal in the form of shares. They will also stay on with the company under the new ownership.

The deal is conditional pending due diligence and approval by Matco Ravary’s board of directors.

Household, cleaning and convenience hardware items will be added to the truck next month when Home Depot Canada starts using GroceryGateway for home deliveries. The service will start next month, according to a report in Friday’s Toronto Star, which quotes the publisher of Hardlines (enough cheap self-promotion! – Editor).

Goodfellow Inc. reported a net profit for the year of $7.4 million on sales of $505 million, compared with $4.6 million last year. Net profit for the fourth quarter was $1.8 million on sales of $150 million, compared with $1.8 million on sales of $127 million a year earlier.

Home Depot Canada opened its first store in Abbotsford, BC last Thursday. This is the 85th Home Depot in Canada.

Drummond Metal Products has announced its certification as a Smartwood company. Smartwood is part of the Rainforest Alliance, and the certification ensures that wood used in Drummond products are from well-managed forests, independently certified in accordance with the rules of the Forest Stewardship Council.

BPB has announced the launch of a new branding strategy to tie together its identity through its various companies. The BPB family of companies in North America – BPB Celotex, BPB Marco, BPB Westroc and BPB Gypsum (formerly James Hardie Gypsum) will now be known as BPB. The name change will also affect some products, including its gypsum board, which will now be branded “ProRoc.” Its compounds and textures will be part of the “ProFin” line. New packaging will be phased in on a gradual basis.

All the assets and certain liabilities of Snapper Inc. have been sold to Wisconsin-based Simplicity Manufacturing, by Snapper’s parent, Metromedia International Group. Simplicity makes residential and commercial lawn and garden equipment.

The Sherwin-Williams Co. reported an increase in consolidated net sales of 4.4% in the third quarter, to US$1.43 billion, and an increase of 2.4% for the first nine months to US$4.03 billion. Biggest gains came from domestic architectural paint sales, a growing DIY market and aggressive promotion.

Manufacturer’s shipments in August were up 0.6% to $43.9 billion, says Statistics Canada. However, the increase was largely due to higher fuel prices. The wood products industry increased as well, continuing to recover from recent lows.

Canada’s composite index continued to rise, albeit gradually, in September, according to Stats Canada, with a 0.2% gain. Housing was up 0.5% and further gains in manufacturing outweighed further losses in the stock market. Starts of single-family dwellings continued to rise, nearly equalling the 12-year high set in May. Purchases of household goods have expanded steadily since early in 2000. Excluding the stock market, the composite index rose 0.5%.

“We’re trying to bring the companies together,” says Joseph Piro, general merchandising manager for Réno-Dépôt, ” but it’s not an easy task, as each company has its own way of buying.”

Piro was speaking at the “Meet the Buyers Seminar” hosted by Hardlines, in association with ADMACQ – the Québec association of building supply dealers – and the Canadian Hardware and Building Materials Show. Currently, Castorama is targetting categories such as flooring, tiles and some outdoor furniture. About 5% of Réno-Dépôt’s total purchases are done on a consolidated basis with its European partner.

In Canada, collective opportunities are overseen by Richard Martoccia, vice-president of synergies, a former vp of merchandising for Réno-Dépôt.

Montréal, QC – “Hi, you’ve reached the voice mail of Al Lynn. Please leave a detailed message after the tone…” The opening words from Sodisco-Howden Group‘s merchandising director brought a roar of laughter from the vendors gathered last week at the Hardlines “Meet the Buyers Seminar.” They were there to hear from some of Canada’s top buyers, and Lynn’s mock voice message was a familiar reminder of the challenges of getting through to buyers.

Along with Christian Nadeau, who does the hardware buying at Le Groupe BMR, Lynn represented the needs of the independents at the seminar. Joseph Piro, general merchandising manager for Réno-Dépôt, spoke on behalf of the big box sector.

The challenge for vendors to make contact has been especially tough at Sodisco-Howden, where 70% of the buying team is new within the last six months. Lynn had some tips for cutting through the voice mail clutter:
* If you’re a listed vendor, say so in the message. Then specify which of Sodisco-Howden’s three distribution centres you’re listed in.
* If you’re not currently a listed vendor, say something about your product that will make you stand out from the other 50 already received that morning.
* Use email. When you land an appointment, follow up the phone call by emailing an agenda of the upcoming meeting, stating your goals and objectives.

One thing that both Nadeau and Lynn stressed in their presentations was the need to be able to close the deal on the spot. If an agent or rep is coming in, they have to be prepared to handle all aspects of the negotiation. If not, the deal could be lost.

Pat Bennett, vice-president sales for Ace Hardware Canada, says Home Depot has led the way to better margins with more emphasis on profitable selling. “There’s not a price game anymore,” says Bennett, who is himself a former Home Depot Canada vice-president. “Big boxes are going after margins, not sales.”

Don Nash, president of Homecare Building Centres in Ontario, agrees. Everyone is looking, not only for more sales, but for increased margins, he says. “We’re keeping our guys really competitive on pricing.” He cites cities such as Owen Sound, Windsor and Sudbury, all recent targets of big boxes. “They’re coming into all these communities, and we’re still up 15%.”

Smaller retailers can leverage other advantages, says Bennett. “Independents can compete with fair pricing, but also with knowledgeable customer service,” he says. “Our independents are saying that they have had to raise the retail price on more than half their items because Home Depot is so high now.”

In Atlantic Canada, where Kent has both big boxes and traditional format building centres, dealers are finding the pricing easier. “We love competing against Kent!” says one Pro dealer in New Brunswick.

Dealers are also getting better at holding their own when a big box comes to town. “Certainly, they’re tough competition,” Nash explains. “But we’ve learned how to compete against them in terms of the customers.” For example, when competing on bids to supply materials, dealers look to point out differences in product quality or specs to potential customers. They also look at other, less obvious factors, such as delivery policies and timing issues, when quoting customers.

Waterloo, ON city council has bowed to the forces of Wal-Mart, saying it can’t afford a legal battle to oppose the retailer’s bid for a spot in a power centre on the north end of the city. The site will be close to the town of St. Jacob’s, home of Home Hardware Stores Ltd. Wal-Mart is currently in the courts trying to get approval for a store in the nearby town of Guelph, a community that has fought the Wal-Mart application for years.

Sears Canada reported total revenues for the second quarter of $1.593 billion, up 0.5% from $1.585 billion for the same period last year. Merchandise sales increased 0.7% and same-store sales fell 3.0%. Earnings for the quarter, excluding non-comparable items, were $24.8 million, compared with $8.8 million.

Do it Best Corp. handed out its largest rebate ever at its October Market this past weekend in Indianapolis, IN. The co-op distributed a total of US$95.7 million in rebates to its dealers, reflecting dealer purchases of US$2.4 billion. It has 4,300 co-op members worldwide, but none in Canada (Sodisco-Howden Group‘s 53 Do it centres are not affiliated with Do it Best).

Kingfisher plc has increased its ownership in Hornbach, Germany’s leading DIY big box retailer, with the purchase of 17.4% of Hornbach’s non-voting preferred shares for €36.2 million in cash. This gives Kingfisher, the world’s third largest home improvement retailer, a total interest in the business of 21.2%.

Taiga Forest Products Ltd. recorded 2Q sales of $241.6 million, compared with $230.1 million for the same period in the previous year. Earnings for the quarter were $6.6 million, compared with $1.1 million. Sales for the six months ended September 30 were $499.8 million, up from $465.6 million in 2001. Earnings for the same period went from $3.8 million in 2000 to $8.1 million.

Tembec has announced plans to shut down its Kirkland Lake, ON sawmill indefinitely as a result of the weakness of the softwood lumber market and U.S. countervailing and antidumping duties. The closure will take effect within the next month and will affect 23 employees in addition to 38 already laid off.

Camco announced net income of $1.9 million for the third quarter ending September 21, 2002, up from a net loss of $0.1 million for the same period last year. Total sales for the third quarter were $171 million, up from $169 million in 2001. Camco recorded net income of $5.0 million on sales of $483 million for the first three quarters of 2002. Sales for the first three quarters of 2001 were $438 million, resulting in a net loss of $3.5 million.

West Fraser Timber has reached an agreement with Daishowa Canada Co. to acquire Daishowa’s interest in Quesnel River Pulp Co. , giving West Fraser 100% ownership of the joint-venture, which was formed in 1979. The terms of the agreement were not disclosed. The deal is expected to close on October 31, 2002.

Philip Orsino, president and CEO of Masonite International Corp., is the recipient of the 2002 Rotman Distinguished Business Alumni Award from the University of Toronto‘s Rotman School of Management. Orsino, a 1976 graduate of the U of T, heads up the world’s largest manufacturer commercial and residential doors, with 70 facilities in 12 countries. In the past 12 years, sales have grown from $230 million in 1990 to an estimated $2.4 billion in 2002. (905-670-6500)

John Costello has been hired away from his position as chief global marketing officer at Yahoo! to join Home Depot in Atlanta in the newly created role of chief marketing officer. Costello, a marketing and brand strategist, has more than 25 years of experience in consumer goods, retailing and technology. He will be responsible for Home Depot’s worldwide marketing and advertising, branding and research, as well as working with senior leadership team on long-term growth strategies and report directly to Nardelli.

Ian Cheshire has been appointed chief officer, international and development for Kingfisher plc. He has been with the company since 1998 as director of strategy and development. He reports to Francis Mackay, the company’s non-executive chairman. Kingfisher’s Castorama Group includes Réno-Dépôt in Canada.

Manufacturer’s shipments in August were up 0.6% to $43.9 billion, says Statistics Canada. However, the increase was largely due to higher fuel prices. The wood products industry increased as well, continuing to recover from recent lows.

World Headquarters, Toronto – Changes at the Canadian Hardware and Building Materials Show in 2003 include a new venue for the Hardlines Newsmaker of the Year Awards and Show Breakfast.

The event, exclusive to Hardlines subscribers and guests, has outgrown the facility at the National Trade Centre at Exhibition Place in Toronto. Last year, more than 150 senior retail and vendor representatives filled a room at the show. Next year, it will move to the Sheraton Centre Hotel in downtown Toronto, to accommodate our ever-growing audience and to make room for an expanded program. The Newsmaker Awards will be presented in tandem with the Outstanding Retailer Awards, which are mounted by Hardware Merchandising magazine.

The combined event will be called the first-ever Industry Awards Breakfast. Hardlines presents an award to one retailer and to one supplier who have made headlines over the past year. The Outstanding Retailer Awards recognize the accomplishments of dealers across Canada in six categories.

“By joining forces, we hope to have a much larger, more prestigious event, while continuing to provide support to the show itself,” says HM publisher Steve Payne.

The event will be held at the Sheraton on Sunday, February 3, from 7:30 a.m. to 9:00 a.m. Shuttles from the hotel will be available to take delegates to the show at no charge following the Breakfast.

“We’ve made no bones of the fact that we are on the lookout for two or three more members,” says Andrew Battagliotti, general manager of ILDC. With about $800 million in retail sales, Revy had once accounted for almost half the group’s volume – and the representation it needed in Western Canada. Replacement of both the volumes and the Western presence have been taken up by the addition of two retailers, J&H Builders Warehouse in Saskatoon and Dauphin, MB-based McMunn & Yates. But ILDC continues to search for more potential members in the West.

But that’s not the only place new members could come from. The loss of Revy also meant the departure of Lansing in the Greater Toronto Area. “We’re also looking in the GTA,” says Battagliotti.

While the departure of Revy represented lost volume to ILDC, the retailer was more DIY oriented than many of the group’s other members, and their buying team very strong. Because of the strong contractor orientation of many of the group’s new and existing members, LBM volumes are increasing and buying committees becoming more cohesive, says Battagliotti.

In addition, ILDC has shored up its purchasing clout through its alliance with Sodisco-Howden Group within the Spancan buying group. The hardware wholesaler’s involvement provides ILDC members with its “own warehouse,” says Battagliotti.

London, ON – Like Home Depot, TSC Stores is slowing its expansion over the year ahead to concentrate on upgrading existing stores. TSC president Roy Carter finds the comparison amusing, but the growth of this Ontario chain of hardware and farm stores is serious business for him.

In the last fiscal year, which ended in August, TSC opened three stores, in Cambridge, Peterborough and Bowmanville. The latter two stores represented the company’s most eastern expansion to date. In addition, a test is under way of a hardware “boutique” format in Prout’s Building Centre, a Castle dealer in Forest, ON. But the year ahead will be devoted to refurbishing at least three stores and relocating one or two.

Carter does plan one store for next year. “We have a lot of customers driving for up to an hour and a half to our Chatham store, so we see a market for another store in Southwestern Ontario.” While a site has yet to be finalized, it will be aimed at customers as far away as Windsor. Carter expects it to be up and running by October 2003.

Home Depot has opened two purchasing offices in China, in Shanghai and Shenzhen. The retailer currently sources from 40 countries, with China the largest supplier by far. Proprietary brands, including Ryobi, Hampton Bay and Glacier Bay, are all made in China. About 7% of Home Depot’s products are imported; the company intends to increase that to 10%.

Costco Wholesale Corp. reported net sales for fiscal 2002 of US$37.99 billion, up 11% from US$34.14 billion a year earlier. Same-store sales increased 6%. Net sales for the fourth quarter rose 10% to US$12.05 billion from US$10.91 billion. While U.S. sales were up 7% for the year, international sales, of which Canada is a part, were up 2%.

Bluelight.com, Kmart Corp.‘s Internet service provider, has filed a motion with federal bankruptcy court seeking approval for its sale to United Online Inc. Under the terms of the agreement, United Online will pay about US$8.4 million for the assets of BlueLight.com’s ISP and email service, which has about 165,000 subscribers.

IBM will help move Wal-Mart suppliers to a standardized Internet-based data interchange system to help the retailer trim its expenses further. The system will change how purchase orders, invoices and shipping notices are exchanged with its suppliers. Wal-Mart will encourage suppliers to begin using an Internet-based system, and IBM will help them build the system using WebSphere integration software.

Stanley Works slashed its quarterly earnings forecast amid weak sales and production problems at its mechanics tools unit, prompting a drop in its shares to 21-month lows.

Maytag Appliances has announced it will close a facility in Galesburg, IL “as part of its ongoing cost improvement initiatives.” Wind down will begin by the second half of 2003, with the closure by late 2004.

Don’t miss Practical World 2003, the Cologne International Hardware Fair/DIY’Tec. The 2003 show is March 9-12. For show information, contact Barbara Hills at 416-598-3343 or email colognet@idirect.com. To book your flight and hotel, call Carol-Ann Itel at Trade Show Travel, 1-877-873-7469 or email tradeshowtravel@shaw.ca .

The Women’s Consumer Products Network will host its Annual Connections Conference on October 17 at Lionhead Golf & Country Club in Mississauga, ON. Registration and breakfast will begin at 7:30 a.m., followed by a morning of powerful speakers and an afternoon of lunch, networking and golf. Click here for more details.

Housing starts in Canada decreased 6.6% seasonally adjusted in September to 200,600 units from a revised 214,800 units in August, according to CMHC. Urban multiple starts reached 70,900 units, down 17.6% from 86,000 in August. Urban singles, however, were up 0.9% to 104,500 units from 103,600 units. Rural starts remained steady in September at 25,200 units seasonally adjusted. Estimated urban starts for January to September are 26.7% higher than for the same period last year. The single-detached market increased 34.7% while multiples increased 17.0%.