Whether it’s e-commerce, supply chain woes, self-checkouts, or drone deliveries, the retail home improvement industry will feel the impact of a number of important trends heading into 2023.

Some of those trends were presented by Hardlines’ own Michael McLarney at the 2022 Hardlines Conference, which was held in the fall. Drawing from the most recent Hardlines Retail Report, McLarney outlined some of the forces affecting dealers and suppliers.

#1. E-Commerce. This is the obvious one, said McLarney, but it’s impact must not be underestimated. He cited some of the incredible e-commerce gains retailers have made. Canadian Tire saw online sales increase 280 percent during Covid. Its online sales penetration through the middle of 2022 was around eight percent. Likewise, Home Depot saw online sales penetration reach more than 13 percent.

However, McLarney pointed out, independents are not capitalizing on their digital potential. Drawing on data from a Hardlines survey earlier in the year, McLarney shared that online sales by independents represent as little as one or two percent of sales, with many citing zero online sales. While some significant exceptions have emerged during Covid, those independent dealers doing double-digit sales in e-commerce are rare indeed.

McLarney challenged the industry to improve its online presence for independents, while stressing the need to maintain a physical retail space that provides a destination and solution centre for customers. In the end, he said, “It’s not how you tie in your e-commerce with your retail, it’s the other way around.”

#2. Improving the supply chain. Many retail groups have invested heavily in improvements to their own supply chains, including DC systems and processes. For example, at the time of the Hardlines conference, Home Hardware had just put the finishing touches on its new warehouse management system. The new system gives Home the ability to ship 150 dealer orders daily and 1,500 orders weekly through three distribution centres across Canada. And the retailer can now ship customer orders to the store or to their home.

Other groups made investments in their DCs, including Lee Valley Tools, at its main DC in Ottawa, while Federated Co-operatives Ltd. built a new LBM DC near Regina early in 2022.

Some major retailers made hacks of their own to get through, investing directly in the supply chain themselves. Canadian Tire invested in part ownership of a port in British Columbia, while Home Depot leased ships of its own to improve its supply of product from overseas.

#3. The last mile. The costliest and most logistically challenging part of the route from the DC to the customer’s front door is that so-called last mile, McLarney said. Smart retailers are making alliances with service companies that specialize in getting products to the customer’s door in innovative ways.

FedEx is using bicycle couriers to make deliveries in Calgary, Ottawa, Windsor, Toronto, and Vancouver. In the U.S., Walmart is using drones in 34 cities, while Amazon has been testing robots that travel along sidewalks to get parcels to customers.

#4. Loyalty programs. Once considered a value-add, loyalty programs are increasingly central to retailers’ marketing strategies. As online sales have grown, so has the importance of keeping customers aligned virtually.

Canadian Tire’s loyalty program, called Triangle Rewards, provides an umbrella for all of Canadian Tire’s banners, including Marks and PartSource. The retailer claims to have 70 percent of Canadian households as Triangle members. And Home Hardware made the news this fall when it switched to Scene+ after terminating its relationship with Aeroplan.

McLarney observed that a good loyalty program has to be integral to a retailer’s message. He referred back to Canadian Tire’s overwhelming success with the Triangle Rewards program. “Like e-commerce and customer service, a loyalty program can’t be a tack-on piece of your brand. It has to be a living part of it.”

#5. The contractor customer. “Many years ago the head of a buying group asked me why Hardlines reports on Home Depot so much. I told him it was to keep his dealers informed about all the ways the giant retailer is going after their contractor business,” McLarney said. “Pros account for only four percent of Home Depot’s customers, yet they make up 45 percent of its sales.”

Meanwhile, Lowe’s Canada has aggressive contractor programs of its own, such as its VIPpro program that offers special pricing and hours, supported by an app that lets pros keep track of their orders and billing with Lowe’s.

Home Hardware also has a dedicated pro program, while banners like Kent, Peavey, UFA, and Federated Co-operatives have all been making changes to better accommodate their contractor customers.

#6. Private brands. Proprietary labels have been the cornerstone of good retail for decades. But their importance has sharpened through Covid. At Canadian Tire, private labels account for almost 45 percent of sales. The company plans to launch 12,000 new private-label products across all its banners by 2025.

Home Hardware relaunched its Benchmark label during Covid and has added more brands for everything from lifestyle and kitchenware products to power tool lines for pros. But most hardware and home improvement retail groups are making similar investments in their own brands.

#7. Human resources. “HR issues have loomed large during Covid. Your people are your biggest variable cost and the biggest investment you can make,” McLarney said. The critical importance of taking care of workers has been highlighted exponentially over the past two years. Hiring and wages remain major concerns, he observed, “while issues concerning worker well-being have come to the forefront during Covid.” Hardlines even launched a newsletter of its own to address HR issues within the industry.

(This info was pulled from our 2022 Hardlines Retail Report, a massive study of Canada’s retail home improvement industry. It gives proprietary data on the size and annual growth of the industry, along with analysis of the top players in the industry. A must-have for any marketer preparing for 2023! Click here now for more info!)

Independent dealers now testing self-checkouts in select stores

JL’s Home Hardware is a three-store operation in Guelph, Ont., about an hour west of Toronto. Those stores, a building centre and two hardware stores, are the first Home Hardware stores to get self-checkout technology. But dealer-owner Andre Belisle said that the store is not going to replace humans with machines.

“The self-checkouts are already tested and fully operational as an added service and option for customers who wish to use it,” Belisle said. “Our full-service checkout option will always remain. Our intention is to improve our service for our customers and that includes providing options for any customer’s preference.” The stores are continuing with full-service checkouts while the new format is tested.

Acceo, a retail technology provider based in Montreal, installed the self-checkout units at JL’s, as well as at RONA Matériaux Magog Orford, a building centre in in Magog, Que. While many Lowe’s Canada and RONA corporate stores have received self-checkouts from another supplier, this is the first RONA independent dealer to get the technology.

The installations both went smoothly, according to Marc Leblanc, Acceo’s senior vice president of home and building supply industry ERP.

Lowe’s seasonal and pro sales continue to buoy its quarterly results

Lowe’s growth in the third quarter of 2022, which ended Oct. 31, highlighted the strength of various segments of the business, including the inherent strength of the pro customer and the continued acceleration of online sales.

Sales were fed by both DIY and contractor customers, with comps up overall three percent for the quarter. According to Bill Boltz, Lowe’s EVP merchandising, the company expects that DIY momentum to continue through the fourth quarter as well. Pro business continued to surge, with comp pro sales up 36 percent over two years of Covid. He shared the details on a call with analysts following the release of the company’s Q3 results.

Comp sales of hardlines products at Lowe’s were down somewhat as the company saw spending return to more normal patterns. However, this does not mean homeowners were shifting their discretionary spending. In fact, selling events around holidays have remained strong, driven by product innovation in those categories. For example, consumers were spending $300 and up on specialty Halloween decorations. And Christmas is rolling out with more expensive trees as consumers show a willingness to trade up.

Strong sellers in the quarter were appliances, paint, kitchen and bath, and flooring. A deal with Sherwin Williams in the U.S. will result in the rollout of a new colour wall across all Lowe’s stores south of the border through 2023.

Lowe’s latest business outlook pegs total annual sales for the full 2022 fiscal year (which includes a 53rd week) at between $97 billion and $98 billion, compared with $96.2 billion in 2021. Comp store sales are expected to be flat to negative one percent.

The Western Retail Lumber Association has named Steve Buckle, CEO of the Sexton Family of Companies, as the recipient of its 2022 Industry Achievement Award. The award will be presented on Jan. 19 during the WRLA Building & Hardware Showcase in Winnipeg.

LM2 Marketing has announced the appointment of Mike Hachey as its newest partner and account manager, starting this week. Hachey brings 30 years of industry experience to the role including a series of merchandising leadership positions. At the same time, the company said that VP and account manager Richard Lépine will retire after 47 years in the hardware trade, while staying on in a consulting capacity.

At BMR Group, Caroline Dionne has been named VP, finance. A graduate of HEC Montréal, she continues to report to André Lavoie, EVP, shared services. Dionne joined the company in 2021 as senior director, corporate accounting, and was appointed senior director, finance, in August 2022.

At Home Hardware Stores Ltd., Chief Information Officer Gino Gualtieri has left the company. He’s been replaced by Chris Marinis, who has been promoted to the role of vice-president, information technology. He brings over 25 years of IT experience in the retail and transportation industry to this new role.

Michael Morris has been promoted to the position of SVP of sales at Derby Building Products. Morris started with Derby in January 2018 as a regional sales manager and was promoted to VP of sales in September 2019.

DID YOU KNOW…?

… the latest edition of Hardlines Dealer News is emailing to subscribers on Wednesday? Topics covered include the Canada Revenue Agency demanding to know from Kent Building Supplies which contractors spent more than $20,000 with them this year! Hardlines Dealer Newsis monthly and it’s free: click here to subscribe now!

AD Building Supplies – Canada (formerly TORBSA) is welcoming Velcan Forest Products as a new member, effective Jan. 1. Velcan has manufactured and supplied framing materials and prefabricated wood components for the building industry for some 30 years. It has two Ontario locations, in Ottawa and Oshawa.

Ed Bulley, owner of Ed’s Building Supplies in Fort Nelson, B.C., is the newest RONA affiliate dealer. Serving the area since 1955, the store will undergo a 10,000-square-foot expansion. The total retail space will be 17,000 square feet, with an 11,750-square-foot roofed lumber space and a 20,000-square-foot outdoor lumber yard. Over 400 SKUs will be added across different categories, such as lighting, flooring, and appliances.

Canac, the independent home improvement chain based in the Quebec City area, has received approval from the city of Magog, Que., for development of another store. It’s expected to open in 2024. Canac has more than 30 locations throughout Quebec.

The newest location for Wolseley Canada had its grand opening last week in Oakville, Ont. The 21,000-square-foot facility offers a full range of Wolseley Canada’s roster of plumbing and HVAC products. Vanessa Sawicki-Dunn is the manager of the Oakville branch. Burlington, Ont.-based Wolseley Canada has 220 locations.

Ace Canada has a new location in Arthur, Ont., as owners Doug and Barry Eidt opened their third Ace store this month. Under manager Brent Bowen, the 4,800-square-foot store includes a small farming section alongside pet categories and traditional hardware offerings. The Arthur location joins the Eidts’ Ace stores in nearby Mitchell and Exeter.

Lowe’s Canada’s PROvember campaign raised nearly $40,000. The campaign, held in most Lowe’s, RONA, and Réno-Dépôt stores, gave pro customers the opportunity to make a donation at checkout to support men’s health organization Movember Canada, which focuses on mental health, prostate cancer, and testicular cancer.

Home Hardware dealer-owner Kimberly Seguin-Gauthier is relocating her store in Essex, Ont., to a new, larger location. The store will involve a $13 million investment in the new site on 12 acres of land. According to AM 800, the local radio station, Seguin-Gauthier said she has plans to develop the surrounding parking area on the property with additional businesses.

Lowe’s Cos. has developed the next steps in its “Total Home” strategy. The retailer has plans for growth across five focus areas: deepening pro penetration, accelerating its online business, expanding installation services, driving localization, and elevating its product assortment. The moves are designed to enhance Lowe’s omnichannel capabilities and position it as a one-stop home improvement shopping destination. 

NOTED

Some 7-Eleven stores are testing licensed dining areas (Wow—your gobsmacked Editor). Seven locations in Alberta are expanding their “restaurants into licensed locations with dine-in seating areas” (according to the press release). The release assures us that 7-Eleven’s “adult customers can now enjoy freshly prepared meals from 7-Eleven Canada.” Those culinary delights [sic] include “7-Eleven’s Crispy Classic Chicken wings, ‘hot from the oven’ pizza, as well as Alberta craft beers.” Remember, you read it in Hardlines! 

OVERHEARD…

“Technology is a huge accelerator. We can’t react to change anymore; we have to get ahead of the curve. And if you want to know what’s next, get to that young generation to teach you.”
—Tony Cioffi, president of Lowe’s Canada. He spoke at the 26th annual Hardlines Conference earlier this fall.

The Canadian Labour Congress (CLC) and the United Steelworkers union (USW) have filed a complaint with a federal watchdog about the alleged treatment of garment workers in factories in Bangladesh that make clothes for Mark’s, a division of Canadian Tire Corp.

The Nov. 21 complaint to the Canadian Ombudsperson for Responsible Enterprise, in Ottawa, claims that the garment workers are paid “poverty wages.” The factories in question employ thousands of workers. The complaint states those workers should be making up to five times more in salary to represent a living wage.

In a joint press conference by the USW and the CLC, Marty Warren, Canadian national director of the USW, said the organizations have brought evidence that reveals that “Mark’s and Canadian Tire Corp. have failed to ensure the workers in its supplier factories are paid living wages. The complaint alleges that this is a contravention of the international human rights standard.”

Warren added that the two associations have made “repeated attempts to engage with Canadian Tire to acknowledge that they have failed to take meaningful action to address human rights harms it causes and contributes to in the supply chain.” He said the company has the resources and influence to assure that rights be respected. “They need to be pushed to live up to their core responsibilities.”

In the same press conference, Kalpona Akter, executive director of the Bangladesh Centre for Workers Solidarity, said garment typically workers live in overcrowded housing conditions. They are working six days a week and up to 12 hours a day, Akter said, making much less than a dollar per hour. “Any garment worker will tell you that isn’t enough.”

Canadian Tire responded to a query from Hardlines with a statement saying the company adheres to the law. “Canadian Tire Corp. works to ensure that its suppliers comply with all local laws; this includes compensation. As part of our activities to ensure compliance, CTC regularly tracks wage rates and works with reputable third parties to audit factories that manufacture our owned brand products.”

But the disparity underlines the need for western companies to understand their supply chains beyond just price and top-line safety concerns. Doug Stephens, retail consultant, speaker, and author, zeroed in on this concern in his presentation at last month’s Hardlines Conference in Niagara-on-the-Lake, Ont. Most firms, Stephens said, have a pretty good mental map of their first-tier vendors. But “by the time you get to their second-tier vendors, it gets a bit murky. By the time you get to their vendors’ vendors’ vendors, it’s a black box.”

This disconnect within the supply chain goes beyond simply price, Stephens said, and has been an issue for decades. An article in Harper’s magazine more than 20 years ago followed a pair of IKEA buyers on their visit to a Chinese furniture factory. The buyers insisted on a price cut of 50 cents off the price of the product being manufactured. But the factory owner complained that such a cut would force him to eliminate the lunch program that enabled him to feed his workers each day.

The lines blur when suppliers try to pass the responsibility for accountability down the line of the supply chain. But the model of shifting risk needs to be replaced with risk sharing, Stephens insisted during his presentation. “Shared risk needs to become a core business objective,” he said, in order to avoid “data silos or deserts.”

Stephens pointed out that intelligence will be key to rebuilding supply chains more comprehensively. “Surprisingly, most supply chains today operate on a few microscopic pieces of info: what is our sales velocity, what is our on-hand, what is in transit, what’s our turnaround?”

Dealer recruitment, product reviews are all part of the mix at BMR, says VP

Delegates at last month’s Hardlines Conference got a tour of the latest initiatives and innovations at BMR Group, thanks to a presentation by Charles Grégoire-Béliveau, VP merchandising. Self-quarantined due to Covid protocols, he appeared on a video screen from his home in Quebec, offering what he referred to as “BMR 2.0.”

Based in Boucherville, Que., BMR is a buying group with full distribution facilities for both hardware and LBM. A subsidiary of Sollio Cooperative Group (formerly La Coop fédérée), it has more than 275 stores in Quebec, the Atlantic Provinces, and Ontario.

Grégoire-Béliveau explained to conference delegates that the company is continuing to sign new dealers in Ontario and the Atlantic Provinces, all the while pursuing expansion in its home province. It offers four store formats: the “full featured” BMR store, BMR Pro for contractor-oriented dealers, a convenience format called BMR Express, and AgriZone, which exists as either a standalone or a store-within-a-store, specializing in the farm market, including the maple-sugar industry.

“We are building BMR 2.0 and our vision is to be the leading independent retailer [in our industry] in Canada.”

The company has done a thorough review of its product assortment over the past 14 months, Grégoire-Béliveau revealed. “We are going to be investing in specific categories: building materials, plumbing—where the number one project is kitchen and bath, flooring, and seasonal.”

In addition to listing these categories as opportunities, Grégoire-Béliveau didn’t shy away from mentioning “a number of challenges” that the industry faces. He cited inflation, consumer-spending patterns having changed so much after the pandemic, the difficulty of attracting labour, the housing market slowdown, and interest rate increases.

Retailers now stretch Black Friday sales online and in-store over several days

Black Friday, the shopping holiday that follows American Thanksgiving every third week of November, used to be a one-day shopping blowout, similar to Boxing Day in Canada. With the advent of internet sales, Black Friday was soon followed by Cyber Monday, an opportunity for retailers to continue offering sales, this time online.

Now, thanks to the borderless nature of online selling, Black Friday has become an international phenomenon—and a protracted sales opportunity. Home Depot Canada’s Black Friday started last week and is advertised to continue until Dec. 4.

At Lowe’s Canada, big sales started last Thursday, with Cyber Monday featuring more sales, though mostly through online orders. The Lowe’s Canada website promises great deals in categories that include appliances, snowblowers, tools, flooring, and lighting.

In a throwback to the mania of bricks-and-mortar holiday sales, Canadian Tire’s latest flyer promises “Doorcrashers” with discounts of up to 70 percent. Not to be outdone, it also offers “Red Thursday” specials, to entice Canadian shoppers to open their wallets a day early. The retailer’s Black Friday event runs to Nov. 30, offering everything from tech gadgets to outdoor sportswear.

A check of Home Hardware’s website shows that its sale will also run to the end of the month. Early Black Friday specials from Home Hardware include deals on heavy appliances, snowblowers, and, of course, Christmas decorations.

As Canadians begin travelling to shows again, the National Hardware Show at the end of January will be a big draw for many. The show is co-locating with the NAHB International Builders’ Show and NKBA’s Kitchen & Bath Industry Show at the Las Vegas Convention Center.

The Canadian Home Products Trade Association (CHPTA) is taking advantage of this triple show to host a booth of its own. The CHPTA will have a 10-by-20-foot space on the show floor. Members can share some of the space in the group stand, either with a table-top or with a company’s own floor merchandisers. Chairs and a meeting table will also be available.

In addition, a representative from each participating company will be required to spend a certain amount of time in the booth during show hours.

“It’s something we’re piloting,” says Sam Moncada, president of the CHPTA. “And going forward we’d like to have more Canadian participation.” He says there’s room for a total of 10 companies to participate, adding that three have signed up already. If the response to the group stand is greater than expected, the association has the option to secure more space for a bigger booth.

“We want to give all Canadians who want exposure in Vegas the chance to get that in an affordable way,” says Moncada.

Participation in the group stand will cost each participant CD$1,500. That price includes two tickets to CHPTA’s “Canada Night” event, which will take place on Jan. 31 from 6 p.m. to 8 p.m. In addition, participating members have the option of buying a listing in the NHS show directory for an extra cost of US$350.

The booth will be available to all members, Moncada says, by offering space for them to gather. Many of his members will be walking the show, and this gives them a location to host meetings of their own on the show floor.

“I think there’s value for our members. When an exhibitor can spend $20,000 or $30,000 for their own booth, this provides more value and demonstrates that the association can collaborate to help them.”

(Interested companies can contact CHPTA’s Michael Jorgenson at 416-282-0022, ext. 134; or mjorgenson@chpta.ca.)

Edyta Drutis has been promoted to vice president, brand and marketing for Blanco North America. In this role, she will lead integrated marketing, branding and communications efforts for the company across the U.S. and Canada. She started at Blanco Canada in 2014 as marketing manager. Most recently, she served as the director of brand and communications for Blanco North America.

At Intertape Polymer Group, Peter Durette has been appointed CEO and a member of the board of directors. Prior to joining IPG, Durette served as president of the Corrugated Packaging business at WestRock Corp. He is replacing Gregory Yull, who spent 30 years with IPG, including 12 years as CEO and president. Yull will continue on as a board advisor to help with the transition. Clearlake Capital Group, LP acquired IPG in June 2022 in a take-private acquisition.

DID YOU KNOW…?

… that the latest edition of Hardlines HR Advisor went out to subscribers last week? In this issue, Sexton Group’s Eric Palmer shares his insights into investing in your people; and Taiga’s Zaida Fazlic talk about finding your own leadership style. If you’re not already receiving HR Advisor, click here to sign up for free!

Home Hardware is testing self-checkouts at JL’s Home Hardware, a three-store operation in the town of Guelph, Ont., about an hour west of Toronto. Those stores, a building centre and two hardware stores, are the platform for the new self-checkout technology, initiated with tech partner Acceo. Staff at the stores monitor and assist at the self-checkouts while continuing to operate their full-service checkouts.

The Canadian Tire store in Vernon, B.C., was hit by a fire recently and the RCMP is investigating the suspicious circumstances of the blaze. No one was injured, but it did cause extensive damage. The fire appears to have been started outside in the store’s garden centre. It quickly spread and did damage to an adjacent exterior wall.

Steve’s Hardware and Variety Store in Montreal’s West Island is the process of closing. The store has operated since 1983 in the Pointe-Claire Plaza. Steve Naday and his wife Toni have decided to retire, and have spent the past month selling off inventory to patrons who had benefited from the store’s expertise for almost 40 years.

The importance of small-town retail is borne out by the fate of a hardlines retailer in the Prairies. Last Mountain Coop has been closed since August, disrupting residents in the town of Nokomis, Sask. It closed its doors because of staff shortages, but it’s the town’s only gas station and farm and ag centre and locals are feeling the pinch. The store, a member of Federated Co-operatives, has been actively trying to hire new team members and hopes to open in the near future.

Three out of four locations of Money’s Worth Renovation Center are closing, the regional business website Huddle reports. The budget chain’s Bible Hill, N.S., store will be the last one standing with the closure of the stores in Dieppe, N.B.; Amherst, N.S.; and Summerside, P.E.I.

RONA Fort Erie in Fort Erie, Ont., last week presented $46,600 to Community Outreach Program Erie (COPE). In support of the Lowe’s Canada Heroes Campaign, the store team under manager Jeff Hill held a benefit performance called “Fort Erie Rocks!” on Sept. 17. It featured Juno-winning rock band Honeymoon Suite.

Canac, the independent home improvement chain based in the Quebec City area, has received approval from the city of Magog, Que., for development of a new store. Canac applied for the approval a year ago, and the new location is expected to open in 2024. Canac has more than 30 stores throughout Quebec.

Employees at Lowe’s Canada’s offices and distribution centre in Boucherville, Que., have found their access to work severely limited by ongoing closures of the Louis-Hippolyte Tunnel-Bridge that joins the south shore with the island of Montreal. However, since the end of October employees have been provided flexible work options. The work considerations apply to all workers, regardless of whether they rely on the Tunnel-Bridge to get to work. Closures are expected to continue until the end of 2025.

SUPPLIER NEWS

Aluminum railing system maker Regal ideas Inc. was at this year’s DeckExpo in Las Vegas. The company was awarded “Best in Show” in the Outdoor Living category for its innovation and Crystal Rail system. Along with its newest products, Regal ideas also launched its 2023 Look Book, aimed at inspiring homeowners and designers. The look book can be found here.

ECONOMIC INDICATORS

In the ninth straight month of falling sales, existing home sales in the U.S. dropped 5.9 percent in October to a seasonally adjusted annual rate of 4.43 million. That’s the lowest that sales have dropped to since December 2011, with the exception of a very brief fall at the beginning of the pandemic. However, prices continue to rise, along with interest rates, keeping housing affordability low. (National Association of Realtors)

OVERHEARD…

“In truth, our supply chains today are not sophisticated and they’re not advanced. We haven’t learned much about supply chains in at least 160 years.”
—Doug Stephens, aka the “Retail Prophet,” speaker, consultant, and author. He spoke at the 27th annual Hardlines Conference last month in Niagara-on-the-Lake, Ont.

The world’s two largest home improvement retailers released their third-quarter results last week. Both provided strong numbers, especially given the big gains enjoyed by them—and pretty much the entire industry—over the past two years.

But if their respective financials are any indication, the days of crazy Covid-fuelled growth are definitely easing.

Home Depot’s Q3 profits rose 5.1 percent to $4.34 billion on revenues that were up by 5.6 percent to $38.87 billion. Strong numbers on their own, but by comparison this was more normal growth compared with an increase of almost 10 percent in the same quarter of 2021. Home Depot’s comp sales for the latest quarter were up by 4.3 percent, also down compared to 6.1 percent a year ago. Canadian comps were below that average and U.S. comps were up 4.5 percent.

Lowe’s reported profits of $154 million, which included a pre-tax non-cash asset impairment charge of $2.1 billion related to its Canadian retail business, compared to profits that more than doubled in the third quarter of 2021. Sales reached $23.48 billion, up from $22.92 billion a year earlier. Comp sales for the quarter grew by 2.2 percent, while comp sales for the U.S. home improvement business increased three percent, boosted by revenues from pro customers, which were up 19 percent.

On a monthly basis, Lowe’s and Home Depot saw their strongest comps in August, which then slowed in September and October (both retailers have Jan. 31 year-ends).

Both companies reported that DIY sales were back up, helping drive results. Through Covid, contractors represented the main sales driver, especially for Home Depot. While that customer base continues to be the strong growth vector, the retail customer is definitely making a comeback.

Online sales have also come more in line with traditional growth rates. Lowe’s saw its online business grow by a healthy 12 percent, on top of the 25 percent growth realized last year. Home Depot’s online business was up almost 10 percent compared to the same period a year earlier. About half those sales were fulfilled through its stores.

Looking ahead to the rest of the year, Home Depot has forecast annual growth for 2022 of three percent. Lowe’s expects similar yearly growth of between two and three percent.

U.S. analysts not as interested in sale of Lowe’s Canada as you’d think

Lowe’s executives shared more details about the sale of its Canadian business during a call with analysts last week. The analysts’ call is a Wall Street tradition: after the company’s results are posted, usually by 8 a.m. that morning, the top execs hold a phone conference with the analysts who guide decisions for the investment community.

These calls typically start with prepared comments from key executives, followed by questions from the analysts. (Journalists can listen in but not ask questions on these calls.)

Marvin Ellison, chairman, president and CEO of Lowe’s Cos., led his company’s call last week. He was joined by Bill Boltz, EVP merchandising; Joe McFarland, EVP of stores; and CFO Brandon Sink.

Ellison offered a viewpoint that housing starts and interest rates won’t affect Lowe’s as much as some investors might think. Ellison’s claim was that the DIY and pro business that drives most home improvement retailers, including Lowe’s, is not directly linked to those data sets.

Ellision then moved to the sale of Lowe’s Canada to private equity firm Sycamore Partners. That deal was announced at the beginning of this month and is expected to close early in the new year. The problem, Ellison admitted, wasn’t what was wrong with Lowe’s Canada—aside from how it didn’t fit in with the mother ship or the profit levels of a U.S. company.

“Over the last few years, we focused on the retail fundamentals of our Canadian operations, which brought the Canadian business to profitability and improved its operating cash flows,” Ellison said. “However, for this business to achieve the profitability in line with the U.S., significant incremental capital investments would be required to streamline the banners and improve operating margins.”

The Canadian business provided too much complexity for the U.S. head office. The Lowe’s/RONA/Réno-Dépôt multiple banners and various ownership models were unlike anything Lowe’s operates south of the border. While no analyst on the call said so, they are constantly comparing Lowe’s performance against its rival Home Depot, which operates in Canada the same way it does in the U.S.

Ellison noted that complexity and the importance of sticking to the core U.S. business and growing market share there. “This transaction will simplify our business model, improve our operating margins and return on invested capital, while enabling us to deliver sustainable value to our shareholders.”

Reality check: while the deal has rocked the Canadian market, igniting the national media and even warranting air time on CBC radio morning shows across the country, the topic of the Canadian divestiture elicited a grand total of zero questions from the analysts on that call.

Kent must open books to CRA to share its pro accounts, court rules

The Federal Court of Canada has given the Canada Revenue Agency the green light to comb through the records of Kent Building Supplies’ pro and commercial customers.

A division of J.D. Irving, Kent has 48 building centres and big boxes in Atlantic Canada.

In its latest push against the underground economy in construction, the tax agency had applied to the court to obtain “significant data” on pro customers’ purchases from Kent dating back to Jan. 1, 2019.

Kent is now required to forward to the CRA the name and contact information, CRA business number or SIN, and total transaction amounts for all contractors belonging to the retailer’s Kent Pro loyalty program who have spent more than $20,000 annually.

Hardlines contacted Kent but was referred to the only statement parent company J.D. Irving issued, to the National Post, calling CRA’s action a “common and routine practice for home improvement retailers in Canada, where select contractors are concerned.”

They’re right—and it seems to happen regularly in November when the year is coming to a close. Home Depot Canada faced the same battle at this time in 2019. A court order was required, forcing Home Depot Canada to turn over records of sales to its contractor customers for the years 2013 through 2016.

Two years earlier, RONA went to court to attempt to block CRA from doing the same thing. At that time, the feds investigated RONA’s trade customers at some of its stores for the years 2012 to 2015.

In 2018, CRA estimated that the underground economy exceeded $50 billion, with residential construction accounting for about half of that.

Concerns about shrinking housing markets in this country have been borne out by the latest numbers indicating slowdowns in both new and resale housing.

Sales of existing homes actually edged up by 1.3 percent between September and October, according to the Canadian Real Estate Association. But that’s the first monthly gain since February. These numbers are adjusted for seasonal variations in housing markets, but the actual number of transactions in October plummeted by 36 percent compared to the same month last year.

About 60 percent of all local markets saw sales rise in October, although both gains and declines were generally small across the board. The largest gain, a six percent increase in Greater Vancouver, was offset by a 2.4 percent decrease in activity in Montreal.

New housing is softening as well. October’s annualized rate of housing starts came in at 267,055 units, down 11 percent from September’s high of 298,811 units. The rate of total urban starts also declined by 11 percent, falling to 245,234 units.

Multi-unit urban starts decreased 13 percent to 188,189 units, while single-detached urban starts fell by four percent to 57,045 units. Rural starts were estimated at a seasonally adjusted annual rate of 21,821 units.

Investment in building construction declined 0.6 percent to $20.9 billion in September, StatCan reports, all due to residential spending. The residential sector decreased 1.3 percent to $15.4 billion. Conversely, the non-residential sector rose 1.6 percent to $5.4 billion.

The Lumber and Building Materials Association of Ontario has announced the appointment of Trevor Small to succeed David Campbell, who stepped down as president effective Nov. 1 after 20 years in the role. Small grew up in his family’s building supply business and also owned and operated one of his own in Bowmanville, Ont., in addition to his experience on the vendor side of the business.

Paul Wood resigned last week as CEO of Giant Tiger Stores Ltd. Gino DiGioacchino, a member of the board of directors and a former senior VP at Home Depot Canada, has been appointed to the role on an interim basis.

DID YOU KNOW…?

… The latest edition of Hardlines Dealer News went out last week? In this issue, we talk to some top RONA dealers for their take on the Lowe’s Canada sale; plus an expanded interview with Home Hardware’s chief marketing officer, Laura Baker. If you’re not already receiving Hardlines Dealer News, click here to sign up for free!

The 2022 BMR Buying Show was held at Quebec City’s Centre des congrès. The event returned to a fully in-person format this year following last year’s primarily virtual show, enabling dealers and vendors to gather in the historic city to network and trade. BMR Group’s gala capped off the event.

Walmart Inc. has posted an increase of nearly nine percent in sales for the third quarter, as Americans turned to its groceries to stretch their budgets. In Canada, net sales were up 5.5 percent while comp sales rose by 5.2 percent. The retail giant’s net loss of $1.8 billion was driven by settlement of litigation related to opioid sales in its pharmacy business.

Ace Hardware Corp. reported record third-quarter revenues that reached $2.2 billion, up 10 percent from the third quarter of 2021. Profits were up slightly to $100.6 million, an increase of $1.3 percent. Ace’s 3,600 retailers reported a 5.8 percent increase in U.S. retail same-store sales. Estimated retail inflation of 11.2 percent helped drive a 9.5 percent increase in average ticket. Same-store transactions were down 3.4 percent. 

BuildDirect Technologies Inc., the Vancouver-based internet LBM seller, reported Q3 revenues of $22 million, down from $22.3 million in the comparable period of 2021. Profits declined to $6.9 million from $8.1 million a year earlier. Revenue from pros reached $19.4 million, representing 88.2 percent of the company’s total revenue and a 5.6 percent growth from the previous quarter.

Wolseley Canada held a grand opening last week for its newest branch, located in West Kelowna, B.C. The 17,000-square-foot facility offers a full range of Wolseley Canada’s plumbing and fire protection products, with HVAC products to be added over time. Jarett Smith is the store manager.

IN MEMORIAM

Jim Gillies has died at the age of 76 after a prolonged illness. Gillies held senior sales and marketing positions with Newell Companies and Fiskars Garden Tools. He served for several years on the board of the CHHMA (now CHPTA). Gillies is survived by his wife Marlene, son Jeff and daughter Kim, and four grandchildren.

ECONOMIC INDICATORS

Housing starts in October were at an annualized pace of 267,055 units, down 11 percent from September’s high of 298,811 units. The rate of total urban starts also declined by 11 percent, falling to 245,234 units. Rural starts were estimated at a seasonally adjusted annual rate of 21,821 units. (CMHC)

Investment in building construction declined 0.6 percent to $20.9 billion in September, dragged down by a 3.4 percent drop in Quebec. The residential sector decreased 1.3 percent to $15.4 billion. (StatCan)

U.S. housing starts in October were at a seasonally adjusted annual rate of 1,425,000, representing a 4.2 percent drop from the previous month, and down 8.8 percent year over year. Single‐family starts fell by 6.1 percent.

NOTED

We noted in People On The Move that Gino DiGioacchino has taken over the interim leadership of Giant Tiger Stores following the departure of CEO Paul Wood. DiGioacchino was well known in this industry for many years as second in command at Home Depot Canada during the growth era under then-president Annette Verschuren. How did spelling-challenged Hardlines consistently get DiGioacchino’s name right on such an uncharacteristically regular basis? Our over-worked editor used Auto Correct; when he typed “Gino D” the full name inserted automatically, thereby ensuring the highest editorial standards that you, our Faithful Readers, encounter here several times a year.

OVERHEARD…

“I would like to thank our entire Canadian team for their hard work and dedication to our customers, and we look forward to collaborating with Sycamore Partners in executing a seamless transition.”
—Marvin Ellison, chairman and CEO of Lowe’s Cos., on a call to financial analysts last week, when he gave a few more details of the sale of Lowe’s Canada.

Lowe’s Cos. has entered into a “definitive agreement” to sell its Canadian retail businesses to Sycamore Partners, a private equity firm based in New York.

The price was “$400 million in cash and performance-based deferred considerations,” according to the release. (figures are in USD.) For that, Sycamore acquires some 450 stores that include 70 Lowe’s big boxes in Canada; about 150-corporate owned RONA stores; the wholesale supply business of another 210 independent RONA stores; plus Reno-Depot’s 20 corporate stores, in addition to Dick’s Lumber.

Lowe’s Companies had acquired the vast majority of these stores on May 20, 2016, for US$2.4 billion, at the time valued at CDN$3.2 billion.

“The sale of our Canadian retail business is an important step toward simplifying the Lowe’s business model. While this business represents approximately 7 percent of our full year 2022 sales outlook, it also represents 60 basis points of dilution on our full year 2022 operating margin outlook,” said Marvin R. Ellison, Lowe’s chairman, president and CEO.

Sycamore Partners, based in New York City, specializes in retail and consumer businesses. Other holdings include Staples, Ann Taylor, Talbots, Dollar Express, and Aeropostale.

In a note to Canadian vendors, Lowe’s Canada president Tony Cioffi expressed his support for the deal saying, “We look forward to teaming up with Sycamore, with its in-depth knowledge of, and appreciation for, the Canadian market through its ownership of Staples Canada/Bureau en gros.”

Meanwhile, other Canadian home improvement retailers are watching the deal with interest, especially in light of the future of the affiliate, or independent, dealers flying the RONA banner. “It’s too early to say if BMR would be interested in acquiring the RONA business,” said Alexandre Lefebvre, CEO of BMR Group, “especially as we’re looking at the market ahead with concern.” 

Regardless of the future of the economy, however, he says his company can continue to have a strong appeal for RONA dealers. “This is an opportunity for BMR—100 percent.”

Sycamore Partners’ managing director Stefan Kaluzny, said: “We are honoured to partner with Lowe’s to establish Lowe’s Canada and RONA as a standalone company headquartered in Boucherville, Quebec.… We look forward to working with the company’s management team to build on its 83-year history as a leading Canadian home improvement business.”

(To read the full release from Lowe’s, click here!)

Following sell-off, Lowe’s Canada president says stores will switch to RONA

The news that Lowe’s Cos., based in Mooresville, N.C., is selling off its Canadian division to New York City-based Sycamore Partners, a private equity firm, has rocked the retail home improvement industry—and lit up the news feeds.

The news has also sparked sarcasm from some journalists and business analysts in Quebec, where RONA, acquired by Lowe’s in 2016, had been a legacy brand in the province for decades. The business was sold to Sycamore yesterday for a mere US$400 million cash—plus unspecified performance payments—only six years after Lowe’s had paid US$2.4 billion (CDN$3.2 billion) for RONA inc. The new deal is expected to close early in 2023.

In a letter to vendors, Lowe’s Canada president Tony Cioffi stated, “Under our new ownership, we will maintain a strong commitment to our Canadian- and Quebec-based vendors, including through our ongoing involvement in the ‘Well Made Here’ initiative, meant to encourage the purchase of domestically manufactured quality products.”

Cioffi also shared that the Lowe’s big box stores will change names eventually. “There are no significant changes planned for the stores. We will eventually move away from the Lowe’s banner in Canada in favour of the RONA banner in a manner that ensures the least possible disruption to our business. Otherwise, you will see minimal change.”

A further clarification to the announcement of the sale was sent out the following morning, reaffirming that Lowe’s Canada will remain headquartered in Boucherville, Que., on the south shore of Montreal. It also notes that the deal includes “includes performance-based deferred consideration.”

Lowe’s Canada says it is working to make the transition to the new ownership a “seamless” one, “with minimal disruption for our 26,000 associates. It will remain business as usual, including unchanged compensation and benefits.”

Atlantic association holds HR conference to examine hiring, retention issues

About a hundred dealers and suppliers gathered last week at the Halifax Convention Centre to hear from HR experts on the challenges of finding and retaining workers. The conference was put on by the Atlantic Building Supply Dealers Association (ABSA). 

One session outlined the opportunities to hire new Canadians, including immigrants and refugees. The need to do more of this type of hiring is clear because Atlantic Canada has the highest ratio in Canada of workers in the retail home improvement industry who are age 55 and over. 

Denis Melanson, ABSDA president, told attendees that salary is typically not the main reason why workers quit. “Money is typically number four or five on the list of why people leave,” he said, adding that employees are more likely to leave because of bad management. “Hey, they don’t like you. It’s rarely that fifty cents an hour.”

Another speaker, recruiter, author and former CBC broadcaster Pierre Battah (shown here), talked about what a leader needs to do to improve employee retention. “What have you learned over the past two years ab​out retention?” he asked. Stressing the importance of an inclusive workplace, he remarked, “people need to feel ‘I belong here.’”

(The ABSDA HR Conference offered some great speakers. Hardlines will feature more on their presentations in upcoming editions of our sister publication, Hardlines HR Advisor.—Your 50-cents-an-hour Editor.)

Peter Norman, one of the top land and housing economists in the country, took the economic pulse of the nation at last month’s Hardlines Conference in Niagara-on-the-Lake, Ont. “Uncertainty and caution are what we’re going to talk about,” he said at the outset of his presentation. “Uncertainty but also some good things.”

First, the good news. “If your industry involves construction, you’ll have found that business has been quite good lately,” Norman said. “But the economy is in transition and all sorts of stuff is going on.”

Inflation was the first topic that Norman tackled in his analysis of that “stuff.” The Consumer Price Index was up 6.9 percent in August, the most recent month for which stats were available at the time of Norman’s presentation. Transportation cost increases led the way at 10.2 percent in August, food was at a 9.6 percent increase, and shelter was up 6.6 percent year-over-year.

Norman predicted “one more 75-point change” in the Bank of Canada policy interest rate to come. He was slightly pessimistic. A week after his speech, on Oct. 26, the central bank raised its rate by 50 basis points. The Bank of Canada rate currently sits at 4.0 percent. Norman compared that to the three previous peaks over the past 20 years: 3.0 percent in October 2008, 4.5 percent in November 2007, and 5.75 percent in January 2001.

Norman prognosticated that the Bank of Canada rate will stay around 4.0 percent for “12 to 18 months … then we might see that rate come down.” The Bank of Canada’s stated goal is to bring inflation down but, as almost everyone has been observing, the economy is slowing quickly and may downshift into a recession.

And there’s more behind the Bank of Canada’s plan, Norman said. In addition to inflation control, the central bankers are worried about supporting the Canadian dollar. 

Still, the effect of the interest rate increases on retail sales are easy to predict. “If you’re taking out a mortgage right now you are paying roughly twice the rate you were about a year ago,” Norman said. “The market effect is that house prices come down. It is not a bubble bursting but the market is adjusting to these new rates.”

“People renewing their mortgages, who got them four or five years ago, have no choice but to renew at these new rates. And they will not be spending as much money in hardware stores.”

Norman had good news to share, as well. “500,000 more people have jobs than a year ago,” he said. However, the  peak employment month was June and employment has been flat since then. Firms have slowed their hiring because of risk, Norman said.

The overriding question is: “Are we going into a recession or not?”

Norman said yes. “Expectations are that the recession will last through the end of next year.” Ending on good news, the economy is being stimulated by lots of new consumers, Norman said. “We had almost 656,000 immigrants last year. That’s 703,000 new Canadians including the birth rate.”

DID YOU KNOW…?

… that Hardlines HR Advisor (HRA) can help your store with valuable information on hiring and retaining employees? Don’t have an HR department, you say? Then you are the HR department—and you can build your HR skills with HRA. (If you’re not already receiving HR Advisor, click here to sign up for free!)

Marc Chevalier Inc. in Bedford, Que., has joined TIMBER MART as the group’s newest member dealer. Marc Chevalier Inc. opened earlier this year and offers an array of building materials like roofing materials and exterior cladding. It occupies a large acreage which includes a 3,000-square-foot store and a 1,500-square-foot warehouse, with room for future expansion.

Lowe’s Canada is launching PROvember in most of its Lowe’s, RONA, and Réno-Dépôt stores, through Nov. 23. PROvember, an event directly linked to the VIPpro program, includes a vendor tour, in-store breakfast meetings, exclusive offers and rewards, several contests, as well as a partnership with the Movember Canada organization. Additional offers and discounts will complement existing VIPpro benefits. Pro customers will also get the opportunity to make a donation at checkout to support Movember Canada, which is dedicated to men’s health with a focus on mental health and suicide prevention, prostate cancer, and testicular cancer.

The Royal Canadian Mounted Police are investigating after a fire at a Home Hardware store on Pender Island, B.C. Security camera footage appears to show a woman with short brown hair breaking into the store and setting the blaze, which caused some $10,000 in damage. According to police, the suspect travelled to the island by ferry on Oct. 8, the night before the incident.

Giant Tiger Stores will hold the grand opening on Saturday, Nov. 12 of a fourth location in Windsor, Ont. The 17,500-square-foot store is located at 1745 Huron Church Road. Giant Tiger stores are stocked with affordable, on-trend home and family fashions, brand-name groceries, and everyday essentials at low prices.

IKEA Canada is expanding its network of plan-and-order points with a location in Brossard, Que., on Montreal’s south shore. The Quartier DIX30 retail and leisure complex will be the newest site for the concept, which allows customers to design custom home projects. They can make appointments for one-on-one consultations with IKEA specialists and test out products from a selection of home furnishings. The Brossard location will join existing plan-and-order points in Kitchener, Ont., and Boisbriand, Que.

W. W. Grainger reported Q3 sales of $3.94 billion, up 16.9 percent from the comparable period in 2021. Net earnings soared by 43.4 percent to $426 million, or $8.27 per diluted share, compared with $297 million a year earlier. The results exceeded the expectations of analysts surveyed by Zacks, who projected earnings of $7.19 per share on revenues of $3.88 billion.

SUPPLIER NEWS

The Monarch Group of Companies, a supplier of siding, roofing and building materials in Alberta, has been acquired by ABC Supply of Beloit, Wisc. The Monarch Group operates Monarch Siding Centre Inc., Monarch Exterior Centre Inc., and Monarch Metal Systems Inc.

This is the first international move for ABC Supply. The five Monarch locations in Calgary, Edmonton, Acheson, Red Deer, and Lethbridge will continue to operate under the Monarch brand. No financial terms of the acquisition were released. Last month, ABC Supply acquired the U.S. operations of siding supplier Kaycan Inc.

ECONOMIC INDICATORS

Total U.S. construction spending for September reached $1,811.1 billion, up 0.2 percent from August’s level of $1,807.0 billion. (U.S. Commerce Dept.)

NOTED

The latest episode of our podcast series What’s In Store is now live! In this edition, we talk to Geneviève Gagnon, CEO of Groupe Gagnon, a flourishing chain of stores in Quebec. She talks about her trajectory from law school to the multiple businesses she now manages and her passion for supporting palliative care. (Sign up now to get updates about the latest podcasts in your inbox!)

OVERHEARD…

“The Eisenwarenmesse – International Hardware Fair is the most important platform for our industry. It’s both a barometer of trends and a trendsetter. In other words, it’s the networking platform for the global hardware trade. I’m very happy to be in Cologne, meeting so many colleagues from all over the world.”
—John Herbert, general secretary of the European DIY Retail Association and the Global Home Improvement Network, on the success of the show, which was held in Cologne, Germany, last month.

Suppliers and retailers from across Canada gathered last week to honour the retail home improvement industry’s best hardware and building supply retailers.

The occasion was the 30th Annual Outstanding Retailer Awards, presented during a Gala Dinner at the annual Hardlines Conference. The event was held Oct. 18 at the Queen’s Landing Hotel in Niagara-on-the-Lake, Ont.

Retailers were honoured in eight categories covering the range of hardware and home improvement retailing formats. This year’s winners were:

• Best Hardware Store – Quincaillerie Jean Denis (Home Hardware), St-Raymond, Que. Sophie Denis and Philippe Moisan, Owners. Award sponsored by JRTech Solutions.
• Best Building Supply or Home Centre under 15,000 square feet – Grunthal Lumber (Castle), Grunthal, Man. Mel Funk and Murray Rempel, Owners; Mike Bourgeois, Manager. Award sponsored by Johns Manville Canada.
• Best Building Supply or Home Centre over 15,000 square feet – Grande Prairie Home Hardware Building Centre, Grande Prairie, Alta. Kevin Gillman, Manager. Award sponsored by Trex.
• Best Contractor Specialist – Pierre Naud Inc. (BMR), Trois Rivières, Que. Marc-André Lebel and Philippe Lebel, Owners; Jessica Bastarache, Manager. Award sponsored by the North American Hardware and Paint Association (NHPA).
• Best Large Surface Retailer – Lowe’s Pickering, Pickering, Ont. Angelo Tzogas, Store Manager. Award sponsored by the National Hardware Show.
• Retail Spirit Award – Gander Bay Building Supplies (Castle), Victoria Cove, Gander Bay, N.L. Deborah and Todd Brinson, Owners. Award sponsored by Kohltech.
• Best Young Retailer – BMR Paulin Moisan Inc., St-Raymond, Que. Marianne Moisan and Mathieu Moisan, Owners. Award sponsored by Acceo.
• Marc Robichaud Community Leader – RONA Fort Erie, Fort Erie, Ont. Dennis Doidge, Owner; Jeff Hill, Manager. Award sponsored by BMF.

The winners were carefully chosen from a field of high-quality nominees submitted from every part of Canada. The winners stood out within this elite group thanks to their ability to exceed in the areas of good business practices, customer relations, innovation, and niche marketing.

“The past two and a half years were marked by a level of disruption not seen in this industry in our lifetime,” said Michael McLarney, president of Hardlines Inc. “In a field of entries where the bar was already raised high by pandemic conditions, this year’s winners shine bright.”

Hardlines Conference reunites the industry in Niagara-on-the-Lake

The 26th Annual Hardlines Conference hosted almost 150 delegates at the Queen’s Landing Hotel in Niagara-on-the-Lake, Ont., last week. The in-person gathering was supplemented by a large number of delegates watching virtually from their devices.

The two-day event at the Queen’s Landing Hotel represented a veritable who’s who of the industry, with attendees from BMR, Castle, Federated Co-op, Home Hardware, Lowe’s/RONA, Peavey Industries, and Sexton Group, among others. Virtual delegates included top execs from Home Depot and RONA along with key independent dealers. The vendor community was well represented on both the LBM and hardlines side of the industry, with a number of wholesalers, sales agents, and distributors in attendance.

Presentations by senior executives from BMR, Lowe’s Canada, and Sexton Group were followed on stage by thought-provoking presentations by a well-known housing and land economist and one of the country’s leading retail gurus.

The traditional opening pub night, held in a nearby Irish pub and hosted by RONA, was packed, noisy, and opinionated. For many delegates this was their first national gathering in our industry in almost three years.

Alison Fletcher, owner of Cookery—a kitchenwares retailer with stores in Toronto and Montreal—opened on day one with a no-holds-barred description of the career battles she has gone through in several decades in the food and beverage industry. Cookery’s charismatic owner urged delegates to follow their dreams—and the data.

Eric Palmer, VP and general manager of the Sexton Group, gave a personalized overview of the dealer-focused organization founded in 1985 by industry icon Ken Sexton. Palmer talked about his own career path through the organization. He also referenced the recent sale of the Sexton Family of Companies to an investor group, PFM of Regina, Sask., in a deal that is expected to close later this fall.

Altus Group economist Peter Norman, no stranger to Hardlines Conference delegates (he has appeared at the conference more than a dozen times), was blunt at the outset of his presentation. “Uncertainty and caution are what we’re going to talk about this morning,” he warned. “But also some good things,” he promised. The upside? Canada is not likely to experience a housing crash, Norman said. But interest rate hikes will likely mean the heady times for home improvement retailers are over.

Zaida Fazlic, VP people, culture and change management at Taiga Building Products, focused on the skills required to be a good leader. She talked about collaborative leadership and servant leadership, which both require listening carefully and authentically to the feedback and needs of employees.

Tony Cioffi, president of Lowe’s Canada, outlined how his organization, which includes the RONA and Réno-Dépôt banners, was able to lead the industry in converting to e-commerce during the early days of COVID. He gave some detailed insights into how his banners are not resting on their laurels, but tooling up for any future interruptions from future public health crises.

Charles Grégoire-Béliveau, VP merchandising at BMR, took delegates through a tour of what he called “BMR 2.0.” The Quebec-based group is continuing to expand in Ontario and the Atlantic Provinces as well as aggressively signing new dealers in its home province.

Rob and Joanne Lawrie, winners of an Outstanding Retailer Award at last year’s conference, talked about their company’s growth from a single store in Annapolis Royal to seven Home Hardware stores today. Rob had straight-talking advice for anyone who thinks expansion should stop once an extra store is added to their single one. “Do not stop at two stores,” he said. “Do not do it!”

Doug Stephens, known as the Retail Prophet, was back from last year, too, by popular request. He explained why our supply chains became so broken by the pandemic and offered a prescription to avoid future fractures to supply that includes a change in philosophy from always seeking the lowest landed cost for products.

Starting next year, the Hardlines Conference is going on the road. Our 27th annual conference will take place at the Chateau Whistler in Whistler, B.C., Oct. 17 and 18, 2023.

Lowe’s Canada’s president talks to delegates about the changing face of retail

The pace of change in retail has been accelerating, Tony Cioffi told the 2022 Hardlines Conference last week, and it’s about to ramp up even more.

“It’s really important that we adapt to change faster than we have ever adapted before,” Lowe’s Canada’s president said in his address. Flexibility in the way consumers shop is one example. “Today they might want buy-online-pick-up-in-store. Tomorrow they might want to buy online and get it delivered. The next day they might want to come in” to shop in person.

That makes a seamless omnichannel experience more crucial than it has ever been. The average grill purchase, Cioffi noted, is preceded by more than 60 online searches, but only one in-store visit—making it imperative to get the experience of that in-person visit right.

One way that Lowe’s Canada is working toward that seamless experience is by having staff assist in placing orders for items that are available only online. Those items can be shipped directly to the customer’s home. The plan is to have those stores and staff receive credit for such sales by the end of next year.

Another part of the equation is making the best possible use of staff talent. With the labour shortages exacerbated by the pandemic, self-checkout has been “a godsend,” Cioffi says, freeing up would-be cashiers to serve in more complex roles.

Customer expectations around delivery are also evolving. “Two-day delivery is the norm,” with most shoppers expecting to receive items in no more than three days. “Soon, same-day will be the expectation,” Cioffi declared, adding that for about a third of customers it already is.

Lowe’s Canada is responding to demand by changing the way it warehouses orders. “We have three stores in Quebec that we’ve converted this year into direct distribution centres.” Cioffi noted the company has just opened a new bulk DC in the Calgary area.

He continues to look for more ways to work with vendors to respond to customers’ needs. “I’m always challenging our buying team: can the vendor deliver directly to the customer? Can the vendor deliver to the job site?” he said.

“At the end of the day, in this inflationary market, we can’t impose [more] costs on our customers. We need to find a way to be more productive together.”

Canada’s third-largest LBM distributor is poised for some strong growth, and it intends to stay close to its preferred vendors to realize that growth.

“Our vision does not just apply downstream to our customers, but also upstream to the vendors,” says Mike Schneider, vice president of business development at Gillfor Distribution.

The Woodstock, Ont.-based wholesaler was established when OWL Distribution in Woodstock, Ont., and McIlveen Lumber, an LBM wholesaler based in Calgary, merged in 2017. A year later, the company added Brown & Rutherford in Winnipeg and Brunswick Valley Distribution, based in Fredericton. But the acquisition of Bolton, Ont.-based AFA Distribution, completed on June 30 of this year, was the play that catapulted the company to a new plateau.

Schneider says 2023 will be a year of rapid growth, as the company will unite all its divisions clearly under the Gillfor brand (see our Oct. 10 edition—Editor). Gillfor’s vision includes working with “best-in-class vendors and developing real partnerships to grow the market and to take share.”

Gillfor is working to combine its offering to its dealer customers across the country. The base of its existing lines is the specialty building materials category, while the AFA acquisition added a broader range of LBM commodities to the mix. The company’s push in 2023 will be toward a more consolidated approach to the market as it will relaunch all divisions under one brand: Gillfor.

However, Schneider says, that uniformity of marketing will not be at the expense of the wholesaler’s regional strengths, as realized through almost 20 facilities countrywide. Rather, Gillfor’s centralized model will enable it to implement its national programs along with that regional sensitivity, which will come down to the account managers serving their customers in each region and the branches themselves.

“We have an unbelievable respect and confidence in our managers at the branches,” he says. “We believe they are the pillars.”

At BMR Group, Jean-Marc Prudhomme has been named VP, forest products, reporting to CEO Alexandre Lefebvre. Prudhomme joined BMR in 2011 as director of purchasing and was most recently senior director, commodity sales and purchasing.

DID YOU KNOW…?

… the latest edition of Hardlines HR Advisor hits inboxes on Wednesday? In this issue, we talk about the role of great mentors, plus managing the transition back to in-person work. If you’re not already receiving HR Advisor, click here to sign up for free!!

The Home Depot Canada’s nine stores in Atlantic Canada will donate $125,000 to the Canadian Red Cross for relief efforts following Hurricane Fiona. Each store will donate over $13,000 to show their support to local Castle Building Centres Group has announced the addition of Maderas, a new member in Rouyn-Noranda, Que., The new store will be a full-service home improvement centre complete with lumber yard, warehouse, and retail space. For co-owners Jonathan Gauthier and Hugo Dallaire Savard, it’s the fulfilment of a long-time dream to open a building centre.

Peavey Industries will open the doors of its newest store, in Salmon Arm, B.C., by the end of the month. The approximately 25,000-square-foot store in Centenoka Park Mall will be the third Peavey Mart in the province, joining locations in Dawson Creek and Kamloops. It will be the chain’s 91st location overall. It follows on the heels of an opening last month in Bedford, N.S., which was the chain’s first Peavey Mart store in the Maritimes.

SUPPLIER NEWS

Canadian Tire Corp. has submitted a request for a zoning variance that would allow the development of two high-rise residential towers at its downtown Toronto flagship. The design from Adamson Associates Architects preserves the façade of the current retail location. A new Canadian Tire outlet would anchor the project, which would consist of 49-storey north tower opposite a 41-storey tower fronting the subway. A new green space would replace the gas station at the existing store.

The Home Depot in the U.S. has launched a jobseeker marketplace to connect skilled tradespeople to trades professionals in the construction and home improvement industries. It’s part of Home Depot’s “Path to Pro” program to help address the growing skilled labour shortage in the U.S. Skilled trades jobseekers can visit PathtoPro.com to create a profile, upload their resumé, and add photos of their work to connect with Home Depot’s pro customers looking to hire in their local area.

SUPPLIER NEWS

JELD-WEN of Canada is donating $25,000 to the Canadian Red Cross to aid relief following the impact of Hurricane Fiona. The Canadian Red Cross is providing emergency shelter, financial aid, food, and clothing to those affected. The Government of Canada matched donations made by individuals and corporations up until Oct. 23.

JRTech Solutions has secured agreements to install its shelf label technology and cloud platform in 24 RONA affiliate stores. Among them are the nine stores under RONA Moffatt & Powell.

A.O. Smith, Blackstone, and Mansfield Plumbing have been recognized by Lowe’s Cos. as the retailer’s 2022 Vendor Partners of the Year. At the same time Lowe’s presented its Sustainability Award to Owens Corning, which has cut its greenhouse gas emissions by about 60 percent since 2007.

ECONOMIC INDICATORS

Sales of existing homes fell by 3.9 percent between August and September. While about 60 percent of all local markets saw sales fall, the national number was pulled lower by declines in Greater Vancouver, Calgary, the Greater Toronto Area, and Montreal. The actual (not seasonally adjusted) number of transactions in September came in 32.2 percent below September 2021 and about 12 percent below the pre-pandemic 10-year average for that month. (Canadian Real Estate Association)

The annualized rate of housing starts in September was at the highest since November 2021 at 299,589 units, up 11 percent from August. The rate of urban starts rose 12 percent to 276,142 units, though single-detached urban starts were flat at 59,593 units. (CMHC)

NOTED

The latest episode of our podcast series What’s In Store is now live! In this edition, we talk to Geneviève Gagnon, CEO of Groupe Gagnon, a flourishing chain of stores in Quebec. She talks about her trajectory from studying tax law to the multiple businesses she now manages and her passion for supporting causes such as palliative care. (Sign up now to get these Hardlines Podcasts. They are free!)

OVERHEARD…

“I think it’s important we don’t profit from the communities we serve in without giving back.”
—Rob Lawrie, of the Lawrie Group of Companies, who with his wife and business partner Joanne Lawrie told the story of their growth to a chain of seven Home Hardware stores in Nova Scotia. They presented at the latest Hardlines Conference, held last week in Niagara-on-the-Lake, Ont.

Registration is now open for the 2023 National Hardware Show, Jan. 31 to Feb. 2, 2023, at the Las Vegas Convention Center. The upcoming show shares access to four other trade shows: the NAHB International Builders’ Show (IBS), NKBA’s Kitchen & Bath Industry Show (KBIS), International Surface Event, and Las Vegas Market (Winter) show.

While NHS now has added horsepower behind it, many Canadians are still considering whether to make the trek to Sin City at the end of January. NHS was last held in April of this year and attracted very few Canadians, whether exhibitors or buyers. But as COVID restrictions are lifted and as air traffic is expected to improve in coming months, Canadians appear to be ready to get back to business in Las Vegas.

Unquestionably, the notion that retailers will send larger groups of their buyers down to attend multiple concurrent shows is a big draw for vendors. And buyers are putting the combined event on their calendars. “Yes, we are attending,” says Randy Martin, vice president of procurement at TIMBER MART. “Now that they are combining the three shows, including hardware, building materials, and kitchen and bath, we see a great opportunity. The plan is to have our procurement team in attendance.”

However, some vendors are skeptical of the show’s draw for Canadian buyers. Sam Moncada, president of the Canadian Home Products Trade Association (CHPTA), which represents hardware and housewares vendors, notes that a lot of retailers are waiting to decide whether to go. “A lot of vendors are concerned that retail organizations have been able to conduct business and launch new products without travelling. We’ll have to see if that will continue.”

While some vendors Hardlines spoke to will take a pass this year, many more are very positive about the prospects for the next show. However, not all of them will exhibit. “I do plan on attending the show,” says Kim Laurette, director of retail sales and Canadian marketing at A.O. Smith. She will not, however, exhibit. “I don’t normally attend IBS or Kitchen & Bath, so I look forward to walking those shows as well since it is all combined next year.”

Maxime Lebon, national sales manager for Belanger Laminates, is also interested in the opportunity to take in multiple shows. “We are planning to be at the National Hardware Show, KBIS, and the Builder Show as visitors. It’s good news that they have decided to combine all together.”

Richelieu Hardware is definitely going to be there, and an exhibitor at that. According to Larry Lucyshyn, VP for sales to U.S. retail markets, his company will actually exhibit at two shows. A retail booth at NHS will showcase its retail divisions—Richelieu, Onward, Reliable, Madico, Cedan, Nystrom, Mibro, and Task. The company will also have a presence at the Kitchen & Bath Show to present its industrial lines. “The needed sales and marketing team members from Canada and the U.S. will attend,” he adds.

Steve Finlay of Imperial Manufacturing was one of the few Canadian exhibitors at the April 2022 National Hardware Show. Now, he says, he’s looking forward to the next one. “I’m confident it will be a good event, because of the three shows in one. It will definitely bring the people in.”

Even though Imperial has some industrial lines as well as hardlines products, Finlay says he will confine his company’s presence to the hardware show only, at least this time. “But I’ll consider expanding to the Builders’ Show the following year.”

At the CHPTA, Moncada says that a month ago his members were pretty much split down the middle on whether they would go to NHS. And even if they do go down to Vegas in January, many vendors will travel light. “A lot of our manufacturers are planning to go down, not necessarily to exhibit, but to look around.”

But in recent weeks, Moncada has seen his members get more positive about travelling. “We are starting see and hear of more vendors heading down. The confidence level to participate in the event is starting to increase,” he says. A recent survey of members showed that 15.2 percent of them will exhibit, and another 37 percent will be there to walk the show. But more than a quarter of the member vendors said they won’t attend. Just over one-fifth remain undecided.

CHPTA will go ahead with an industry cocktail reception as it has done at NHS in years past. It used to be called Maple Leaf Night, but it’s being renamed Canada Night. Another big change is vendor accessibility to the event, which has historically been for CHPTA members only. “It will be a more casual event than in the past. And we’re going to open it up. It won’t be a member-only event now. You just have to buy a ticket to get in.”

While caution may be the watchword for many, the inclusion of other shows into NHS is considered a viable strategy, one that’s expected to see Canadian retailers send even more buyers than usual to Las Vegas. “In theory it’s a great opportunity to have the shows converge,” says Moncada. “I think it’s the right strategy.”

With integration of Ace, Peavey can focus on expansion of its corporate stores

Managing multiple banners keeps Doug Anderson very busy. He’s the president and CEO of Peavey Industries, which operates corporate stores under the Peavey Mart and MainStreet Hardware banners. Anderson also directs the wholesale and branding needs of a group of independent dealers that operate mainly under the Ace banner.

Ace is the newcomer—and the disrupter, in effect, that turned the Peavey into a wholesale distributor. But Anderson is investing in growth on all fronts, including new stores under the Peavey Mart banner. A store opened at the end of September in Bedford, N.S., marking the first location for the company east of Ontario. Why there? Anderson notes that various metrics, including demographics, were aligned for Peavey. “There was an opportunity, and we’re very opportunistic,” he says.

Another new store will open at the end of October on the other side of the country. This Salmon Arm, B.C., outlet will be the company’s 90th Peavey Mart location.

In fact, the idea of opportunity comes up more than once in conversation with Anderson. Even under the Ace banner, Peavey has made a point of acquiring and maintaining a few as corporate locations—when the opportunity presents itself.

The renewed focus on incremental expansion reflects the alignment of the company following several years of aggressive growth. That included the acquisition of 50-plus TSC stores, mainly in Ontario, in 2017 followed by the takeover of the Ace Canada licence in March 2020 from Lowe’s Canada. The early part of 2021 marked the completion of the changeover of the TSC stores to the Peavey Mart banner.

“The TSC changeover was good but there’s always work to do with redirection, etc. But we’re getting good at that.” Anderson says the lead-up to the rebranding of TSC was carefully plotted, as buying teams were combined and systems consolidated. “We had moved the stores to be more aligned, so by the time of the switch it was just a matter of putting up the new sign.”

Now, as Peavey Industries sees its corporate stores and its wholesale business working together more effectively, the focus is on the continued growth of Peavey Mart. “We aim to be a true national company.”

Castle’s new business development director anticipates another strong year

A new national director with an expanded dealer development team reflects the changes—and growth—occurring at Castle Building Centres Group.

Doug Keeling took over as the buying group’s director of business development on Sept. 1 from Bruce Holman, who has retired. Keeling oversees a team of eight people taking care of Castle’s 300-plus members, while connecting with prospects to keep adding to the group’s ranks. “We’re making changes for the growth we expect in the future,” says Keeling.

Coming out of COVID, the industry and the economy are confronting a lot of change, and change is always good for dealer recruitment, Keeling adds. As things have slowed down a bit, dealers are willing to take time to look at their own businesses more closely.

In addition, new ownership at rival groups such as Sexton Group and TORBSA adds to the sense of disruption. “We’re coming out of a couple of years that were crazy for all the groups, not just Castle. There have been big changes across various banners. That is causing some dealers to relook at the groups they’re with,” he says. “As Castle continues to grow, we are attracting attention.”

Part of that growth has meant splitting the Ontario territory, which has about 100 Castle dealers. The reps there are André Laurin for central and northeastern regions, and Lillian Diaz, business development manager for the central and southwestern parts of the province. Also, Brad Dixon has recently left his post as business development manager for British Columbia; Castle is actively looking for a replacement.

Despite the headwinds of rising interest rates and continued inflation, Keeling expects the momentum in the industry to continue. “This has been another record year for Castle, for both our new members and our existing dealers. And while some are skeptical about 2023, we expect the momentum, especially on the commercial side, to continue.”

At BMR Group, Jean-François Lemelin has been appointed assistant VP, sales. He will report to Martin Lecomte, VP, corporate store operations and dealer service. Lemelin has over 15 years of experience in the retail, hardware, and renovation industries. Most recently, he was VP of sales, marketing, and customer service at Boiseries Raymond. He is also a former sales manager for Jeld-Wen Canada.

DID YOU KNOW…?

… that top retail executives from Home Hardware, Lowe’s Canada, Sexton Group, Orgill, Federated Co-op, BMR Group, Castle, and Peavey are all attending the 26th annual Hardlines Conference in Niagara-on-the-Lake, Ont., Oct. 18 and 19? If you’re already registered, give yourself a mighty pat on the back because you are going to have a blast networking with everyone this year! If haven’t registered, avoid FOMO and mark your calendar for next year—Oct. 17 and 18, 2023, in Whistler, B.C.!

The Home Depot Canada’s nine stores in Atlantic Canada will donate $125,000 to the Canadian Red Cross for relief efforts following Hurricane Fiona. Each store will donate over $13,000 to show their support to local communities.

Kent Building Supplies and the town of Bay Roberts, N.L., signed a letter of intent that could see the retail giant become the first tenant in the town’s commercial park, SaltWire reports. The deal is conditional on the town’s finding either a second anchor tenant or multiple smaller tenants. Although the agreement was signed about two years ago, the town has only recently been publicizing it as part of its effort to recruit tenants, Bay Roberts economic development officer Ron Delaney told SaltWire.

The Canadian Tire show was back last month after a two-year hiatus during the pandemic. It was held in Toronto at the Metro Toronto Convention Centre. Along with hosting Canadian Tire’s preferred vendors, the show floor showcased the company’s 100th anniversary with black-and-white graphics and images of old flyers and storefront ads.

SUPPLIER NEWS

Orgill has announced plans to build a new 800,000-square-foot distribution centre in Tifton, Ga. It will replace Orgill’s current facility in the city, which covers 650,000 square feet. It opened in 1995 and is currently the oldest location in the company’s network. Along with the Tifton location, Orgill operates seven full-service distribution centres in the U.S. and one in London, Ont.

Taiga Building Products is donating $30,000 to the Canadian Red Cross in support of the hurricane Fiona recovery efforts in the Atlantic Region. “Many of our people and partners call the Atlantic region home,” CEO Russ Permann said in a release. “We hope that our support will help those that are close to us, and the broader community, recover from this storm.”

Richelieu Hardware reported Q3 sales of $472.9 million, an increase of 26.7 percent. In Canada, sales rose by 14.8 percent to $279.6 million. Sales to Canadian hardware retailers reached $51.6 million, up 11.2 percent. Net income increased by 19.6 percent to $46.4 million. The quarter saw Richelieu acquire Quincaillerie Deno, a Quebec distributor of specialty hardware products.

ECONOMIC INDICATORS

The value of building permits in Canada rose by 11.9 percent in August to $12.5 billion. Both the residential and non-residential sectors saw strong gains, with Ontario causing much of the increase. Residential permits for the month increased 12 percent to $8.4 billion nationally. Gains in Ontario offset losses posted in seven provinces. Construction intentions in the single-family homes component edged up 0.4 percent. (StatCan)

Lumber production decreased 16.9 percent from June to 3.74 million cubic metres in July. Production was down 10.2 percent from the previous July. Sawmills shipped 4.3 million cubic metres of lumber in July, down 5.5 percent from June and up 3.1 percent from July 2021. (StatCan)

Investment in U.S. construction fell by 0.7 percent, the largest drop since February 2021. August’s decline compounded the 0.6 decrease seen in July. In a Reuters poll, economists forecast that construction spending would edge down by 0.3 percent. Year-over-year, spending was up by 8.5 percent. (U.S. Commerce Dept.)

NOTED

The Hardlines Conference kicks off this evening at the Queen’s Landing hotel in Niagara-on-the-Lake, Ont., with the RONA Pub Night. We look forward to welcoming our delegates, who will arrive from every part of the country to network and learn. See you there!

OVERHEARD…

“Our priority during this time is the safety of our customers and our associates while we support them during this unprecedented time.”
—Sebastian Brand, district manager for Home Depot Canada in Atlantic Canada, on the efforts of its stores in that region to raise money for victims of Hurricane Fiona.