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%.

Calgary, AB – Ace Hardware Canada continues to roll out a supply arrangement to outfit stores belonging to United Farmers of Alberta. The program, which was introduced in the Spring of this year, is currently in six of the farm co-op’s 34 outlets, with new conversions occurring at a rate of about one every three weeks.

“We’re very careful with the conversion,” says Barry Hofstetter, head buyer at UFA. “We want to make sure it’s effective, so whole sections are being changed at a time. Let’s do the whole hardware section, or the whole tool section at a time,” he explains.

UFA serves 106,000 active members through its 34 retail outlets, and through more than 120 petroleum and fuel cardlock outlets located throughout the province, as well as in British Columbia and Saskatchewan.

The advertising initiative becomes possible following the remerchandising of the Ontario stores to reflect programs and brands now supplied out of Rona’s main warehouse in Boucherville, QC. Lansing, along with the former Revy stores, had been getting product out of the distribution centre in Surrey, BC which Rona took over upon the purchase of Revy back in June 2001. The result is simplification of everything from buying to merchandising, says Rob Wilbrink, vice-president operations and development for Rona Ontario.

The fliers will share products on the hardware side, while certain brands, especially in building materials and paint, are still not common to Cashway and Lansing, Wilbrink says.

The “Home Safety Zone” will feature products and information on how to protect the home against fire, carbon monoxide and intrusion. Products include fire extinguishers, smoke alarms, entry alarms, security lighting and other related items. The “Healthy Home Zone” focuses on creating a cleaner indoor environment, with featured products such as thermostats, air purifiers, dehumidifiers and water filtration products.

In Canada, the program kicked off with a safety awareness event on October 5. Working in conjunction with Child Find and the Canadian Red Cross, a free child identification and safety clinic was held in all Home Depot stores across Canada on the weekend. Parents could pick up a colour photograph of their child, receive a free parent’s identification and participate in various entertainment activities.

Blaming the brutal costs of the U.S. softwood lumber penalties, International Forest Products will relocate its McDonald cedar facility to Sumas, WA in the Fall. The plant, located in Fort Langley, BC, was to be relocated later this year.

Wal-Mart Stores plans to add about 48 million sq.ft. of new retail space next year, an increase of more than 8%. In the U.S., Wal-Mart will open about 45-55 new discount stores and 200-210 new Supercenters next year (Wal-Mart’s fiscal year begins Feb. 1). The retailer will open 20-25 smaller Neighborhood Market stores and 40-45 Sam’s Club stores. It will also build three new regional distribution centres and six food distribution centres next year. In Canada, Wal-Mart has just opened four new stores: a second location in Moncton, NB and the relocation of its Etobicoke, ON store in Toronto’s west end; a new store has gone into Woodstock, ON, while a smaller 63,000-sq.ft. location has been erected in Brooks, AB. The openings bring the company’s store count in Canada to 201.

Home Depot has opened its tenth store in Mexico, this one in Tijuana. It entered the Mexican market in June 2001 with the acquisition of Total Home, and bought another chain, Del Norte, in the Spring of this year. Home Depot intends to open two more stores in Mexico before the end of the year.

Tembec has announced it will cut back production at its Mattawa, ON sawmill, affecting 64 direct jobs. The move is a result of the heavy softwood lumber penalties imposed by the U.S., coupled with a weak lumber market.

For the second quarter ended August 31, MAAX Inc.‘s profitability increased 35.9% with net income of $9.9 million, up from $7.3 million a year earlier. Sales were up 11.5% to $147.2 million, from $132.1 million. For the first half of the year, net income rose 40.1% to $20.7 million.

Canadian Forest Products Ltd. has achieved certification of some of its B.C. forest operations to the Sustainable Forestry Initiative, representing the largest such certification in Canada. The operations include 3.18 million hectares in Prince George and Quesnel, and 180,000 hectares in Canfor’s tree farm licence near Prince George. The certification follows a successful third-party audit by KPMG Performance Registrar Inc.

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.

Described as “sluggish and stagnant,” manufacturing in the U.S. slowed in September. According to the Institute for Supply Management’s index of business activity, activity declined to 49.5 from 50.5 in August. Analysts had expected it to come in at 51.

Boucherville, QC – The proposed initial public offering of shares by Rona Inc. is currently under review by securities agencies as part of the formal IPO process. A detailed prospectus has gone out to financial institutions, and Rona management is currently awaiting feedback before proceeding.

After that, if appropriate, Rona will begin a “road show” to sell the merits of its shares to traders across the country. Then, by the end of this year or the beginning of 2003, the company can go ahead with the IPO.

The money raised by the share offering is earmarked for a number of things. One is to repay $49 million in debentures to lenders. Another is to facilitate “organic growth,” that is, ongoing investment in existing dealers’ operations and technology infrastructure. The company also wants to expand the efficiency and capacity of its distribution, including a proposed new distribution centre in Calgary. Finally, Rona is committed to continued growth, including the addition of more independent dealers and the possible acquisition of additional wholesalers.

Bolstered by a strong economy, interest rates that stay down and housing expected to stay strong into next year, Rona wants to strike while the iron is hot.

“We think this is the best time for Rona,” says Sylvain Morissette, director of communications for the company. We are a developer in the market, and a developer in the economy. The company wants to grow,” Morissette continues, “not only by increasing the network with new stores, either by recruitment or through acquisition, but also by continuing to work with vendors. We will remain key purchasers in this industry in every market in Canada where we have stores.”

The company is renewing its expansion efforts in different regions of the country. A property owned by Home Depot in Moncton, NB will finally be developed, with an expected opening date of Spring 2003. Even Charlottetown, PE is under consideration. “The numbers are in and they look very positive,” says Annette Verschuren, president of Home Depot Canada.

Expansion will continue in Québec, as well, a province that has been the focus of much of Home Depot’s growth this year. The latest opening in that province was in Boisbriand on September 19. It will be followed by Greenfield Park in the Montréal area before the end of the year. Two stores will open simultaneously in Québec City by October 31.

The company will have 12 stores in that province by the end of 2002, nine in the Montréal area, two in Québec City and one in Gatineau.

Home Depot has been tinkering with slightly smaller footprints – around 90,000 sq.ft. plus 15,000 sq.ft. of garden centre – about 30,000 sq.ft. smaller than the standard format. Sarnia is the site of one such downsized store. Other locations that may accommodate this format in the year ahead include Grande Prairie, AB and Prince George, BC.

Smaller sites are being sought, as well, for Home Depot’s neighbourhood urban store concept – what Verschuren refers to as “Home Depot light.” Designed to situate between standard-sized Home Depot stores, the urban stores eliminate most of the lumber and focus on convenience, storage, cleaning products and special orders. Tests of these 65,000-sq.ft. stores in New York and Chicago have spurred Verschuren to search for suitable locations in Canadian urban centres. Toronto, Montréal and Vancouver are all under consideration, although no sites have been picked yet.

On the tech front, Home Hardware introduced “Home Xtra,” a secure website for Home dealers that will enhance, and eventually replace, a great deal of the printed newsletters and information the company sends out to its members. Features of the site include full-colour previews of the year’s flier programs, regional specials, and a “chat room” for dealer input and the exchange of idea s.

The project is being spearheaded by Tony Krotz, dealer education manager, who also serves as editor of the site. The site will be able to tailor information for dealers, letting them pull up info of concern to them, instead of wading through reams of paper. “Eventually,” he says, “the paper will go away.”

But, he admits, it won’t go away any time soon. By Krotz’s estimate, barely half of Home Hardware dealers have Internet access, and for some of them, that access is at home only, not in the store. He hopes that, as the Home Xtranet site increases in popularity, it will drive up Internet use among the members. Planned features such as electronic credits and returns should be further incentives for adopting the new technology, he adds.

Facing the realities of a maturing marketplace and aging stores, Home Depot in Atlanta says it will start spending more money on upgrading existing stores. This year, 85% of the retailer’s capital spending budget of US$3.6 billion will go toward 200 new stores, leaving 15% for upgrades to existing stores. However, in future, more will be spent on older stores.

Rona Inc. already makes 5,000 fast moving products available for sale on its website, www.rona.ca. The main purpose of the site, which gets an average of 250,000 visitors per month, is to provide product knowledge and home improvement tips. However, the company has put an online strategy in place that will see the number of online products as much as double over the next two years. Available either by home delivery or through a local Rona dealer, they are mainly smaller seasonal and housewares related products.

Lowe’s Cos. expects earnings to grow 19%-20% annually over the next two years, while revenues are expected to rise by 18%-19%. The increases will be fuelled by store expansion: the company says it wants to add 130 stores in fiscal 2003 and 140 in fiscal 2004.

Menards, the number-three home improvement retailer in the U.S., is rolling out extra-large big box stores. The privately owned company owns 165 stores, but intends to start building 15-20 of the 225,000-sq.ft. stores.

Lee Valley Tools, the specialty tool and garden catalogue company, opened its 10th store this weekend, this time in Burlington, ON. The 11th will open in February in Coquitlam, BC.

Richelieu‘s third-quarter sales reached $65.3 million, up 12% over $58.5 million for the same period a year earlier. EBITDA grew 12% to $9.0 million, compared with $8.1 million. Net earnings rose 21% to $5.2 million, up from $4.3 million. For the first nine months, sales were up 15% to $189.2 million, while net earnings jumped 24% to $13.5 million.

Sico Inc. has announced its intention to purchase, occasionally, by way of a normal course issuer bid, for cancellation purposes, up to 285,290 common shares, representing 5% of the company’s outstanding common shares as of September 26, 2002.

Warren Parr has joined TSC Stores Ltd. as purchasing manager, to increase efficiencies in TSC’s distribution centre. Parr was formerly with the D.H. Howden Division of Sodisco-Howden Group, as director of purchasing there. (519-453-5270)

Sales for the wholesale plumbing industry increased a modest 2% from August 2001, according to the Canadian Institute of Plumbing and Heating. The slowdown follows record-breaking increases in June and July. Total August sales declined in all regions but Québec. The plumbing and heating industry is expected to exceed last years total sales of $3.1 billion by at least 3%.

Mississauga, ON – Reliance Buying Group Inc. was christened last week with the signing of seven existing buying groups under one aegis. The new group represents almost 1,200 dealers and total retail sales of $3.4 billion.

Five of the groups involved are already allied under the Evergreen group: Castle, Delroc Industries, Federated Co-operatives, Co-opérative Fédérée de Québec, and IRLY Distributors. The new alliance joins these groups with the two members of the National Alliance, Sexton Group and Torbsa. Each group holds an equal share in the Reliance buying group, which will operate out of Castle’s head office in Mississauga, ON.

The presidency of the Reliance Group will be shared in its first year by Terry Elliott, president of Delroc, and Brian Kusisto, president of Sexton. All sides were careful not to link Reliance with its forebears. “This is not an amalgamation or merger of the Evergreen and National buying groups,” Kusisto said to the roomful of vendors gathered to hear the announcement. In fact, both National and Evergreen will be wound down after 2002. Vendor negotiations that would occur with both these groups in November 2002 will be replaced by Reliance negotiations. Purchases will begin through the new group starting January 1, 2003. “Clearly, Reliance is the new force in home improvement retailing,” Kusisto added.

The group is open to further expansion. “We definitely have an interest in considering new members in this,” says Kusisto. “we think there’s room for more consolidation and we see ourselves as well positioned [to be the consolidator].”

While the buying groups have been discussing alliances and mergers for decades, the decision to move ahead with the Reliance group came about relatively quickly. Negotiations began only within the past three months, during which time suppliers were quietly contacted and introduced to the concept. These suppliers have been generally optimistic about the news. Many already face different levels of purchasing loyalty from group to group. By placing them under one umbrella, some suppliers may benefit if a smaller customer can increase their buying levels to match those of their fellow Reliance members.

As one vendor one pointed out, the kind of consolidation this agreement represents is necessary for independents, and will help ensure their long-term viability. Another vendor said he simply looks forward to fewer meetings with buyers.

Winnipeg, MB – Growmark Inc. has signed a letter of intent with Winnipeg-based TruServ Canada Cooperative Inc. to form an alliance between Growmark’s retail division and TruServ’s operations.

While a number of details are yet to be ironed out, the deal will involve blending the distribution activities of both co-ops, to create efficiencies and establish which product lines can most effectively be handled by each company to respective member dealers. For example, both firms offer lawn and garden products, but Growmark has more extensive assortment of upscale offerings, a program for nursery stock. In addition, Growmark’s pet food business is very strong, an opportunity for TruServ’s Pet Junction program.

The alliance is intended to result in Growmark’s 112 FS and 36 Country Depot dealers being serviced by the alliance, with shipments and buying for most categories being done by TruServ.

Rather than divesting itself of its retail division (Growmark has four other agro-related divisions), “we’re looking at this as an investment in TruServ’s business,” says Jim Hoyt, executive director of Growmark’s Canadian operations. “We’re now assessing what’s the most efficient distribution for our members collectively, and the critical mass of this alliance makes this more feasible.”

“The alliance will eventually integrate TruServ’s and Growmark’s stores into a common platform for ordering,” says TruServ president Léo Charrière.

The deal also replaces a reciprocal supply agreement Growmark had with Ace Hardware Canada. Under that arrangement, Ace had supplied Growmark members with hardware, while Growmark was able to supply lawn and garden, workwear and some farm related products.

Charrière sees opportunities for Growmark’s existing banners, especially the Country Depot stores, which feature a consumer-friendly retail format that appeals to both sexes. He would like to try and expand this banner, even boutiquing it in existing TruServ stores. “We look forward to taking the expertise Growmark has developed over the years and pushing it out.”

The result, Charrière adds, will give TruServ sufficient presence in Ontario eventually to establish distribution of its own, complete with buying offices, in that province, reducing cycle times to Central and Eastern Canada. “It’s going to increase our presence out in Ontario and becomes an important stepping stone for better distribution to Atlantic Canada.”

The deal is subject to due diligence, and is expected to be finalized by the end of this year.

Dartmouth, NS – Construction begins this week on a new store for Pierceys, the Building Material People. The store, the fifth for the privately held chain, will open in Elmsdale, a community just north of Halifax, early in Spring 2003.

“This facility will be modeled after our award winning Tantallon store, but will also include several additional service features,” says Peter Korecki, president and COO of Pierceys. While he would not disclose details of the new look, he noted that the 30,000-sq.ft. store, like the Tantallon outlet that opened in 1998, will have more of a retail focus than the other stores in the chain. Pierceys has traditionally derived about three-quarters of its sales from contractors. The new stores are targetting a 50-50 mix of trade and consumer business,with more emphasis on DIY-friendly lines.

“We’ve been expanding the seasonal lines with great success,” says Korecki. This includes snow removal products in Winter and lawn and garden in Summer – including more high-end pine and cedar lawn and garden furniture. “Customers are willing to pay $90 for a cedar Adirondack chair.”

He adds that Pierceys makes these products from its full-service mill, which was the heart of the company that began in 1915. Sales reached $63 million in 2001 and Korecki expects growth in the area of 9% this year.

Richelieu Hardware Ltd. has finalized the acquisition of 75% of Menuiserie des Pins, which manufactures products for window and door manufacturers. Management of Menuiserie Des Pins will retain 25% and remain involved in the operations of the company.

Castle Building Centres Group has added the following members: Prescott Building Centre, Prescott, ON; Ultimate Windows & Doors, Saint John, NB; Lameque Construction, Lameque, NB; Clear Lake Home & Garden Centre, Onanole, MB; and MacGregor Home Centre, MacGregor, MB.

Black & Decker Corp. is recalling about 140,000 cordless electric lawn mowers sold since 1996 after receiving 11 reports of electrical parts overheating and nine reports of minor property damage from the mower. The mowers are sold under the Black & Decker name and through Sears Roebuck under the Craftsman brand.

Faced with debt and asbestos litigation, Georgia-Pacific would like to sell off parts of its business and focus on building products. But a proposed share offering intended to raise about US$1 billion to pay down debt has been thwarted by the threat of asbestos litigation.

Mark Mossman has been appointed sales manager for Unilock Ltd. in Canada. He was formerly at Ace Hardware Canada, where he was central and eastern sales manager. (416-646-9000)

Wholesale sales increased 0.7% in July, with wholesalers achieving $34.8 billion in sales. Since November 2001, wholesale sales have generally followed an upward trend, after a relatively flat sales period from the spring of 2000 to October 2001. The metals, hardware, plumbing and HVAC sector was up 1.3%; the lumber and building materials sector and the household goods sector both grew 0.9%.

The Consumer Price Index climbed 2.6% from August 2001 to August 2002, says Statistics Canada. This follows a 2.1% year-over-year increase in July. Energy prices were largely to blame.

U.S. housing starts fell for the third consecutive month in August. The 2.2% decline was greater than analysts were expecting.

My thanks to everyone who attended! And a special thanks to our Conference sponsors!

Platinum sponsors: Brandid, CHEP Canada, Cologne International Trade Shows, Home Depot Canada, JDA, RBC Royal Bank, Sterling Commerce. Gold sponsors: canadianretail.com, Natural Resources Canada, Temple Scott Associates, and Wolf Gugler & Associates.

Retail Strategies Symposium platinum sponsors: ACNielsen Canada, Canadian Hardware and Building Materials Show.

International Business Seminar platinum sponsor: Practical World International Hardware Fair/DIY’TEC.

Ingevaldson would not reveal his plans for Ace’s future in Canada, calling those plans “strategic,” but did give some important clues. This country, he said, is an important part of Ace’s strategy, integral to a North American approach to providing independents with tools to ensure their viability competing alongside big boxes and discount retailers.

Within these larger trading zones, independents must begin to think more like retailers and adapt quickly to changing consumer needs and trends. That may be the biggest challenge facing owner-operators, who are often reluctant to give up their autonomy and commit to a business model that abdicates many business decisions to a more centralized body.

But Ingevaldson insists the old model of the independent dealer is no longer workable, and says independent dealers who don’t adapt will be crushed by the next generation of smaller formats that are the inevitable next step for the big boxes.

To support the fundamental change that’s required, Ace Hardware continues to roll out its Vision 21 program. It calls for dealers to sign contracts agreeing to use programs that will establish centralized IT systems, bring accounting and inventory onto a central site, increase emphasis on the effective use of retail data, and develop consistent category management, more appropriate pricing and enhanced customer service. Dealers are also expected to agree to future programs not yet even developed.

The challenge, says Ingevaldson, will be to get independent dealers to focus on retail. But the ability to do so, and to give customers what they want, will become increasingly important as consolidation occurs in the sector.

While increased consolidation will contribute to an unfavourable climate for smaller organizations, there are still opportunities for those willing to focus on bringing innovative products to the marketplace, says Greg Thomas, executive director of Alliance International LLC. Even though big box retailers and chains may enjoy the efficiencies that come with consolidation, the result is often reduced consumer choice and less innovation. This is where the independents can fit in.

The absence of key vendors from international buying shows makes the shows an excellent arena for smaller players, says Thomas. His organization, for example, is currently looking around the globe – including Europe and Asia – for fresh, interesting products and ideas that will appeal to consumers. That also means staying committed to selected trade shows. The fact that large vendors have disappeared from these shows means other vendors have a better chance of connecting with new buyers.

According to Thomas, those who want to play in the global field need to do three things. They must know and understand prospective customers, understand the differences between the Canadian and U.S. marketplace and understand the competition and what it takes to beat them.

They must also understand their own organizations. Too often, said Thomas, his own buyers end up making introductions among sales people from Canada and the U.S. who meet for the first time at an Alliance buying meeting.

Réno-Dépôt may be at the mercy of Castorama‘s new strategy. Now 100% owned by U.K. retailer Kingfisher, Castorama will consider pulling out of markets in which it’s not the number-one player, says a report in NHCN. This includes Canada, as well as operations in Belgium, Brazil and Turkey.

Canadian Tire Petroleum is looking for existing gasoline retailers to convert to the Canadian Tire banner. In a pilot program with Imperial Oil, CTC will convert three Esso stations to the Canadian Tire Petroleum banner. CTC will operate these sites, while Imperial Oil will continue to supply them. The three pilot sites are in Trois Rivières, Baie-Comeau and Sept-Iles, QC. CTC is also in discussions with other gasoline retailers. This re-branding strategy is part of a five-year plan to grow the number of gas stations in markets where Canadian Tire stores exist. This will be done through both new sites and conversion of existing dealers. They’re not alone: Wal-Mart Canada opened its first gas bar in Dryden, ON in July.

The North West Company Fund reported second quarter consolidated revenues of $186.6 million, up 7.7% from 2001. Same-store sales were up 3.5%. Second-quarter earnings reached $9.1 million, up 28.9%.

Jean-François Lachance has been promoted to the position of vice-president sales and marketing at Royal International Corp. He was most recently director of marketing at Royal. Prior to that, he was a hardware buyer at Rona Inc. (1-800-465-4566)

The Canadian Retail Hardware Association has appointed a new board of directors for the year ahead. Bill Towndrow has been named chairman. He is owner of Lunenburg Pro Hardware, Lunenburg, NS … The CRHA has named some new people to its board: Brigitte Michel-Finlay is newly elected. She is manager and owner of A&J Home Hardware, Sudbury, ON … Christine Hand is also new. She is owner of Handyman Home Hardware, Manuels, NF, which received the 2001 Walter J. Hachborn award for “Store of the Year” … Don L’Heureux is the third new member. He is owner of Guelph True Value Hardware Just Ask Rental, Guelph, ON. (905-821-3470)

Timothy Farrell has been appointed executive vice-president and COO of the American Hardware Manufacturers Association. He has been with the AHMA since 1993, when he started as assistant manager, events/expositions. Most recently, he held the position of vice-president, domestic-international operations. (847-605-1025)

The value of building permits increased 3.0% to $4.0 billion in July. Residential intentions reached $2.4 billion in July, up 6.2% from June, due entirely to multi-family permits. Single-family construction intentions retreated for a third consecutive month. In July, 18,250 new dwellings units were authorized. Year over year, the residential sector recorded a 34.2% gain, whereas the non-residential sector was down 7.9% from the same period in 2001.