COLOGNE, Germany ― The International Hardware Fair planned in Cologne from March 1 to 4, 2020 has been postponed. Koelnmesse, the show’s organizer, is responding to the increasingly acute global situation around the recent occurrence of the coronavirus.

The show, ordinarily held every two years, drew 47,000 visitors in 2018 from 143 countries to visit 2,770 vendors. Show organizers are planning to remount the event from February 21 to 24, 2021 in addition to holding the show already scheduled for 2022.

As the virus spreads across Europe, travel there is becoming increasingly problematic. The concern began impacting specific companies, which started to withdraw from the show over the previous week. These include some German firms such as power tool maker Metabo, fastener company Fischer and packaging company Rose Plastic, which all cited concerns for their staff due to higher exposure risks.

German abrasives manufacturer Klingspor pulled out, saying, in a press release, “The reason for this decision is the potentially considerable health risks for employees and business partners in connection with the coronavirus SARS-CoV-2, which has been appearing worldwide since the beginning of the year, especially in view of the fact that the fair is expected to attract numerous exhibitors and visitors from regions affected by the virus.”

Considering these current developments and the high share of Asian exhibitors at the show itself, the management team at Koelnmesse were forced to reassess the situation.

Home Depot turns in solid year end, forecasts stronger growth in 2020

ATLANTA ― The world’s largest home improvement retailer saw sales dip slightly in the fourth quarter, but net sales for the year showed improvement over 2018.

Sales for the fourth quarter of fiscal 2019 were $25.8 billion, down 2.7 percent, due in part to an extra week of operations in the previous year compared to fiscal 2019. The extra week added about $1.7 billion of sales to the fourth quarter of fiscal 2018. Net earnings showed a healthy gain, however, reaching $2.5 billion, up 5.8 percent over Q4 2018.

Comparable sales for the fourth quarter increased 5.2 percent, with U.S. comps up 5.3 percent. The Canadian business reported positive comps in the quarter as well. Sales of “big-ticket items,” defined as products and services over $1,000, represent about 20 percent of Home Depot’s U.S. volume and those sales were up by double digits in the quarter. Big-ticket categories include appliances, vinyl plank flooring and Home Depot’s installation services business.

Online sales continued to be strong for the retailer. Excluding the extra week last year, online sales grew 20.8 percent in the quarter, and 21.4 percent for the year, all part of Home Depot’s interconnected retail strategy.

Sales for fiscal 2019 were $110.2 billion, up 1.9 percent over fiscal 2018. Net earnings reached $11.2 billion, up 1.1 percent. Comparable sales for fiscal 2019 increased 3.5 percent, and comps in the U.S. increased 3.8 percent.

Home Depot is now two years into a multi-year investment program, One Home Depot, during which time the retailer says it has grown sales by more $9 billion.

For 2020, the company anticipates total sales growth of 3.5 to four percent, with comp sales growth of between 3.5 and four percent. Home Depot also expects to open six new stores in fiscal 2020.

Lowe’s reports higher year-end profits despite U.S. online sales challenges

MOORESVILLE, N.C. — Lowe’s Cos. has reported net earnings of $509 million for the fourth quarter ended January 31. The results included pre-tax operating costs and charges of $185 million and represent a swing from the net loss of $824 million in the fourth quarter of 2018.

Those charges were from the company’s previously disclosed strategic review of its Canadian operations and closure of its Mexico business. The result of some closures in Canada and the complete exit from Mexico, where Lowe’s had 13 stores, resulted in charges related to inventory liquidation, accelerated depreciation and amortization, severance and other costs.

Sales for the fourth quarter reached $16 billion, up 2.4 percent from $15.6 billion in Q4 2018, and comparable sales increased 2.5 percent. Comp sales for the U.S. business increased 2.6 percent in the quarter. The business in Canada posted comp sales that were “slightly negative in local currency,” said Marvin Ellison, Lowe’s president and CEO, a call to analysts.

During the quarter, Lowe’s closed 28 stores in Canada, with another six due for closure by the end of February.

In fact, growth in the quarter came directly from the company’s domestic stores. “Our sales growth was driven almost entirely by our U.S. bricks-and-mortar stores, supported by our investments in technology, store environment and the pro business,” said Ellison.

For the year, Lowe’s saw net sales increase to $72.15 billion, up 1.2 percent from $71.31 billion in the prior year, and net income of $4.28 billion, up 85 percent from $2.31 billion.

Lowe’s guidance for 2020 includes total sales growth of 2.5 to three percent and comp sales growth of three to 3.5 percent.

Retail market share by province: who are the top players regionally?

SPECIAL REPORT ― Home improvement banners can vary in their market dominance according to the provinces they are in. And even the national brands can face different levels of market penetration and acceptance, based on their region.

In British Columbia, which itself makes up almost 12 percent of retail sales in this industry, Home Depot Canada is the market leader. It represents 22.4 percent of the B.C. market, followed by Lowe’s Canada through its various banners at 13.3 percent. Home Hardware and Canadian Tire are close behind with 12 percent each.

Alberta follows close behind British Columbia in terms of market share, also just shy of 12 percent. In this province, the leader is again Home Depot, with 22.4 percent of retail sales, followed by Lowe’s Canada with 16 percent. In Saskatchewan, the independents hold sway. The Sexton Group has 15.1 percent of the market, while Federated Co-operatives, based in Saskatoon, represents 14.8 percent. Home Hardware comes in third with 13.3 percent.

Manitoba sees a mix of corporate and independent stores battling for supremacy. Home Depot has 14.5 percent of the market, with Home Hardware at 13.8 percent. These are followed by Lowe’s Canada, which represents 11.1 percent of the market, while TIMBER MART is close behind with almost 10 percent.

Ontario is Canada’s largest market, representing more than one-third of all hardware and home improvement sales in the country. Home Depot has dominance there, as this province is its home base in Canada and the scene of the greatest expansion in its early years in this country. Canadian Tire and Home Hardware trail behind, both with slightly more than 16 percent of the market.

Quebec is an important market that accounts for more than one-fifth of home improvement sales in Canada. Lowe’s, through its acquisition of RONA, is the clear leader there. With 26 percent of the market, that’s well ahead of the volume of the next dealers, Canadian Tire and BMR Group, with 16 and 12 percent, respectively.

Things shift as we move east. Home Hardware holds dominance in New Brunswick with more than a quarter of the market, followed closely by Kent Building Supplies with almost 23 percent. Canadian Tire has 15 percent of the market and Castle is next with 10 percent. Home Hardware is well ahead in Nova Scotia, accounting for almost 30 percent of the market there. They’re followed by Canadian Tire with 16.3 percent and Kent with a little more than 13 percent. In Prince Edward Island, Kent has the lead with 31 percent, followed by Home Hardware with 24.2 percent, Home Depot with almost 14 percent and Castle with 11 percent.

Newfoundland and Labrador is another region dominated by independents: Home Hardware has 28.3 percent of the market there, followed by Castle with more than 22 percent.

(Source: the 2019 Hardlines Market Share Report, which breaks out the market shares for all retail banners in the industry by province. The full report is available here!)

MONTREAL ― With more than 1,000 dealers and vendors in attendance, TIMBER MART hosted its 10th annual national buying show earlier this month at the Palais des congrès in Montreal.

The show served as the backdrop for a number of new offerings from the buying group, including specials and displays on a wide range of plumbing, electrical, paint, tools, hardware, seasonal and household products.

CEO and President Bernie Owens was upbeat about the buying group’s fortunes this year. “It’s early in the year, but the year has started out strong for us,” he said. “We have new members we’ve welcomed who are at the show. There’s a lot of change and consolidation and it’s helping us.”

The new showroom, slightly more compact than in previous years, hosted more than 200 vendor booths in 60,000 square feet, including TIMBER MART’s “Store on the Floor,” which held merchandised displays of more than 2,000 SKUs of building materials and hardlines products.

The centre of the floor featured a number of services and programs from TIMBER MART, ranging from LBM distribution to marketing and banner support. The buying group also introduced a new proprietary cabinetry and vanity line and a growing assortment of building materials offered by its LBM distribution centres.

The show’s first evening kicked off with a national dealer meeting, which Owens calls “an opportunity to immerse our dealers and update them on how the group is doing,” followed by educational workshops. The evening concluded with a welcome reception. Owens notes that the latter was scheduled to last two hours, but it was so popular that “we had to shut it down after three.” On the second evening, members and vendors were honoured with a networking and recognition reception.

Owens observed that the industry has been strong during the past year across the country, with the exception of Alberta, where the economy continues to face pressure from factors like wildfire recovery and pipeline delays. “The pie has gotten smaller in Alberta, but there’s still the same number of players fighting for the pie.”

TIMBER MART’s buying show, Owens adds, is held in Central Canada partly because of the presence of established regional shows in the West and the Atlantic.

“Our membership is coast to coast. Without our show, many here wouldn’t have a show to go to,” says Owens. “It’s a show to add value for all members regardless of the region they’re in—to share best practices and new products.”

Home Depot Canada prepares for spring with hiring blitz

TORONTO — The Home Depot Canada is planning to hire more than 5,500 new associates across the country to support its busy spring season. All 182 stores are hiring for full- and part-time as well as seasonal positions such as staff for its garden centres, along with department supervisors, daytime and overnight workers, sales associates and cashiers.

“Our team is built on a set of core values shared by four generations of associates working in our stores,” Home Depot President Jeff Kinnaird said in a release. “We’re proud of our diversity and the individual talent, skills and experience which strengthens our customer service and reflects the 182 communities we live and work in.”

The home improvement industry faces a persistent challenge of attracting good candidates, especially among young job seekers. Kinnaird himself is considered an example of the kind of career trajectory Home Depot can offer. He started out as a sales associate at a Home Depot in Richmond, B.C., in 1996. He moved up through the ranks, eventually becoming vice president of merchandising. He has held the top job at Home Depot Canada since the beginning of 2016.

The company is letting individuals sign up by text (texting “Home Depot Jobs”, or in Quebec “HD Emplois,” to 97211), and they can apply online. In addition, the stores are hosting local job fairs, with more than 150 scheduled over the next couple of weeks. Overall, Home Depot intends to hire up to 80,000 people in the U.S. and Canada for the coming season.

CALGARY ― Another building materials distributor is expanding its presence on the Canadian scene. Dealers Choice was exhibiting at the recent WRLA Buying Show in Calgary. It’s a division of Beacon Building Products, a specialty wholesaler to roofing contractors. Based in Herndon, Va., Beacon has branches throughout Canada, as well. Beacon Building Products – Canada has its headquarters in Montreal.

A relative newcomer to Canada, Dealers Choice was exhibiting for only the second time at the show in Calgary. In the booth, its team was providing dealers with information on its products, which include residential and commercial roofing, vinyl and wood siding, insulation and accessories. It also provides logistical support, including a fleet of delivery trucks of various sizes and a dedicated credit card for its dealer customers. The company says it’s already working with RONA and Home Hardware dealers.

With nine DCs in British Columbia, Alberta, Saskatchewan and Quebec, Dealers Choice has plans to enter the Manitoba market next, and is focused on getting product to dealers, no matter how remote their location.

“We just came into this market to bring our strengths that we have in the U.S., to be able to assist these distant locations,” says Daved Benefield (shown above), the sales rep for Dealers Choice’s facility in Surrey, B.C.

TORONTO — Canadian Tire Corp. turned in strong results for 2019, with the Canadian Tire Retail business showing strong comps and year-over-year sales growth.

That uptick came despite a slow start to the year, which, according to Greg Hicks, president of Canadian Tire Retail, caused “quite a challenge as we looked ahead to our final two quarters.” He and other Canadian Tire executives spoke recently to analysts following the release of the company’s fourth-quarter and year-end results.

Annual revenue for the entire company was up 3.4 percent to $14.5 billion, while sales by Canadian Tire stores increased 4.5 percent, with comparable sales up 3.8 percent.

Sales continue to be pushed through both online and bricks-and-mortar channels. According to Canadian Tire’s EVP Retail, Allan MacDonald, e-commerce sales exceeded $500 million in 2019—up more than 20 percent in the fourth quarter alone.

And a lot of that had to do with the buy-in of the Canadian Tire associate dealers.

Hicks notes that the dealers are “very, very supportive” of the cross-channel initiatives, which have put a lot of emphasis on buy online, pick-up in-store strategies—whatever works best, he says, for the customer. “The dealer sees the benefit of providing the customer choice.” That BOPIS option is, he adds, “always the fastest and the cheapest option.”

To encourage that delivery option further, Hicks says the company will roll out lockers for online orders to hundreds of stores this year, after testing them through 2019. While bringing customers into the store for order pickup saves the retailer money, it also increases “dwell time” for customers. Once in the store, they are more inclined to buy other products as well.

But ship to home remains an important option, and Hicks notes that “Our ship-to-home business was up almost double in the [fourth] quarter.”

Charlie Hart has joined Ledvance as president and CEO. He comes over from Uponor Ltd., where he spent eight years as general manager, Canada. His background prior to that includes TTI Canada, Irwin Industrial Tools and Ipex. Hart replaces John Preville.

Barry Hill has been named Canadian sales manager for bio-based Natures Broom and Biochar Abatement products at Nature’s Broom Absorbent. The lines will be represented through Barry Hill Sales Associates, based in Truro, N.S.

DID YOU KNOW…

… Eisenwarenmesse, the International Hardware Fair in Cologne, Germany, is on from March 1 to 4? It’s one of the world’s largest trade shows for the hardware and home improvement industry. Hardlines will once again host a Canada Night International Reception on site at the show. It’s a great way for Canucks to gather and meet colleagues from around the world. (Click here for more info and to RSVP!)

RETAILER NEWS

MONTREAL — La Coop fédérée, parent company of BMR Group, is set to rename itself Sollio Groupe Coopératif at its annual general meeting next week, La Presse reports. Quebec’s National Assembly late last year cleared the way for the move, which makes the co-op’s agribusiness segment, dubbed Sollio Agriculture since 2018, its namesake division. La Coop fédérée most recently changed its name in 2005: prior to that it was known as Cooperative fédérée de Québec. In addition to Sollio Agriculture and BMR, it includes the Olymel brand of meat products.

BENTONVILLE, Ark. — Walmart reported year-end results last week, with total revenue reaching $524 billion, an increase of $9.6 billion or 1.9 percent. In Canada, net sales declined 0.5 percent while comp sales increased 0.6 percent. In the U.S., comp sales were up 2.8 percent. The retailer’s U.S. e-commerce sales grew 37 percent. International net sales increased 2.8 percent in constant currency, with strength reported in Mexico, China and India’s markets.

SUPPLIER NEWS

VANCOUVER — Acadian Timber Corp. reported sales of $100 million in 2019, more or less flat compared to $99.8 million in 2018. Net income for 2019 was $17.3 million compared to $26.3 million in the prior year, largely due to one-time costs related to the termination of the company’s evergreen management contract with Brookfield LP. As a result, Acadian no longer pays Brookfield management or performance fees, which totalled $3 million in 2018.

MISSISSAUGA, Ont. — American Standard will be the official supplier of kitchen and bath plumbing fixtures for multiple television series on Corus Entertainment’s HGTV Canada. The partnership includes the popular series Save My Reno, which returned for a new season on February 18, and the brand-new Family Home Overhaul, which features 14 of the network’s top contractors and designers and premieres April 26.

ECONOMIC CONDITIONS

Sales of existing Canadian homes declined by 2.9 percent in January. Transactions were down in a little more than half of all local markets, with the national result most impacted by a slowdown of more than 18 percent in B.C.’s Lower Mainland. Actual (not seasonally adjusted) sales activity was still up 11.5 percent compared to January 2019, marking the best sales for that month in 12 years. (Canadian Real Estate Association)

U.S. housing starts fell 3.6 percent in January to a seasonally adjusted annual rate of 1.567 million units, following three monthly increases. On a year-to-year basis, starts were up 21.4 percent. Meanwhile, building permits jumped by 9.2 percent to a rate of 1.551 million units in January, their highest level since March 2007. Both single- and multi-family dwellings contributed to the surge. (U.S. Commerce Dept.)

NOTED

The 2020 edition of DX3, Canada’s largest retail, marketing and technology event, will take place on March 10 and 11 at the Metro Toronto Convention Centre. Consisting of a retail summit and a marketing and innovation summit, DX3 will draw speakers tackling topics from digital marketing and artificial intelligence to video content and copywriting. Visitors can use the coupon code dx3showfloor for free access to the show floor. For registration info, click here.

OUT & ABOUT

Wow, it’s show time! Sigrid, Michelle and David are down at the Orgill Dealer Market this week to host Canada Night (for more info on this dealer-only event and to RSVP, click here!), while Michael is in Cologne, Germany for the International Hardware Fair—and to host our Canada Night International Reception there! (Click here for more info and to RSVP!)

MONCTON — A new 100,000-square-foot Kent Building Supplies store is being planned on a property owned by parent company J.D. Irving Ltd. The property will replace a truck terminal that currently sits on the site, CBC News reports.

According to a report presented to Moncton city council, the company is aiming to open the store by 2022. A second phase of the plan provides for an additional 150,000 square feet of retail space and 10,000 square feet of restaurants to be developed by 2025. The property is northwest of what is known as the Vision Lands, a 1,400-acre wooded lot which the city is looking to develop into a mid-rise, mixed-use residential and retail community.

This will be the 10th big box for Kent, a dominant retail chain in Atlantic Canada. The company owns both large-format and traditional-sized stores. But the return to building big boxes is relatively recent. Kent originally opened seven big boxes in the mid-’90s to head off potential expansion by then-newcomer Home Depot, which was busy expanding in central Ontario. Kent then switched its focus for several years to smaller markets and more traditional-sized home centres.

Then, in July 2014, Kent opened a 100,000-square-foot big box in Charlottetown, its first large-format store in Prince Edward Island and its first big box in almost two decades. In the summer of 2018, the company opened a new big box in the Halifax market at Dartmouth Crossing (shown here).

At the beginning of 2017, Central Supplies, a fixture in Nova Scotia since 1976, became part of Kent. That group includes one large-format store as well.

Following reorg, Sexton Group stays focused on needs of independents

WINNIPEG — A recent shuffle at the Sexton Group has resulted in a change in management, but not in the buying group’s mandate to grow and support independent dealers across the country.

Former Sexton Group President Steve Buckle has been appointed CEO of the Sexton family of companies, while Eric Palmer, formerly senior manager, purchasing, has been put in charge of the group as vice president and general manager. (See our last blazing issue for the full story on the latest changes at Sexton.―Editor)

One area that remains important to the group is growing its ranks. To that end, Tom Bell is being promoted to vice president of business development. In this role, he will continue to focus on the needs of the members, as well as recruitment activities. He now reports to Palmer.

Buckle stresses that the biggest part of Bell’s job is staying close to the needs of existing members. “Yes, recruitment is important. But working with our existing members is the lion’s share of the role.”

While it started as a Western group, it gradually expanded its reach, “and that’s led us to Ontario, where we’ve made some important inroads in recent years,” Buckle says.

One area where Sexton Group has made gains has been with ready-to-assemble and prefab house builders, which now account for 27 members. “We’d be the biggest buying group by far for those types of companies,” says Buckle. Working with these businesses and meeting the demands of that type of business has its own set of challenges, he adds.

“Getting used to these businesses is not the same as working with a traditional dealer. It requires more supply chain management to accommodate their tight building schedules.”

TORONTO ― Canadian Tire turned out healthy year-end results, including strong performance by Canadian Tire-bannered stores.

“We had an exceptionally strong Q4 that capped off a solid last half of 2019,” said Stephen Wetmore, president and CEO of Canadian Tire Corp. He gave a lot of credit to the company’s Triangle Rewards program, a branding strategy to attract customers across all channels, including online and bricks and mortar. “Customers are engaging with us more frequently, both in our stores and digitally, driving our top-line growth, as well as making us one of Canada’s largest e-commerce players.”

Fourth-quarter consolidated revenue for the entire company reached $4.3 billion, up 4.5 percent, and annual revenue was up 3.4 percent to $14.5 billion. While holiday season sales rebounded after a weaker showing in 2018, results were dampened somewhat by the petroleum business. Not including petroleum, Q4 sales were up 5.1 percent and up five percent for the year.

Wetmore also gave a nod to the retail business for its strong results. For the fourth quarter, Canadian Tire Retail (CTR) saw sales increase 6.6 percent, while comparable sales were up 4.8 percent. For the year, retail segment revenue increased by 3.1 percent. Excluding petroleum, retail segment revenue was up 4.8 percent. Sales by Canadian Tire stores increased 4.5 percent, while comparable sales increased 3.8 percent.

“Our ability to deliver remarkably consistent growth at CTR is due to our strong partnership with our associate dealers and their knowledge of our customers’ expectations in virtually every community in Canada.”

SPECIAL REPORT — There’s no such thing as too soon when it comes to succession planning. The earlier you start preparing for the inevitability of a transition of power, the smoother and easier that transition will go.

“The best time to start your succession planning is immediately,” says Dave Ryan, vice president and financial planner with PIB Financial. PIB, which is owned by Home Hardware, advises Home dealers across the country in all aspects of investment, wealth management and insurance.

The best plan, Ryan says, is to have a very profitable and attractive business. For PIB’s part, that means asking Home Hardware dealers if they’re taking advantage of all the programs the banner offers. That includes ensuring the store is merchandised properly and signage is up to date, indicators to an outsider that the business is being run well, regardless of their projected timeline for retirement.

Jon Irwin is TIMBER MART’s vice president of member services. Irwin says there are some specific steps for preparing a business for a handover, including setting up a team to help carry out the plan and developing a learning plan for your identified successor.

“The learning plan for a successor should have measurable goals, clear objectives, reasonable timelines, as well as specific people identified and held accountable for taking actions towards it,” says Irwin.

At Lowe’s Canada, Josée Desrosiers, the national director of business development for RONA and Ace dealers, says succession planning is something her team discusses in the early stages of a store joining either banner. Sadly, Desrosiers says, there’s no foolproof solution to that final question. But like Ryan, she agrees that if you’re asking yourself when the right time is to start planning—the answer is right away.

“There is no miracle solution for identifying a successor,” says Desrosiers. “Each situation is unique, and various succession scenarios may arise. To avoid being caught short, you need to think far in advance.”

(This article is excerpted from a larger feature in the next issue of our sister publication, Hardlines Home Improvement Quarterly magazine. HHIQ is mailed out four times a year to 11,000 dealers and store managers across the country. Click here for more info!)

Charlie Hart has joined Ledvance as president and CEO. He comes over from Uponor Ltd., where he spent eight years as general manager, Canada. His background prior to that includes TTI Canada, Irwin Industrial Tools and Ipex. Hart replaces John Preville.

Barry Hill has been named Canadian sales manager for bio-based Natures Broom and Biochar Abatement products at Nature’s Broom Absorbent. The lines will be represented through Barry Hill Sales Associates, based in Truro, N.S.

DID YOU KNOW…

… Eisenwarenmesse, the International Hardware Fair in Cologne, Germany, is on this year from March 1 to 4? It’s one of the world’s largest trade shows for the hardware and home improvement industry. Hardlines will once again host a Canada Night International Reception on site at the show. It’s a great way for Canucks to gather and meet colleagues from around the world! (Email Michael for more info and to RSVP!)

SUPPLIER NEWS

VANCOUVER — West Fraser Timber reported its Q4 sales totalled $1.29 billion. Its operating loss was $31 million, compared with a $54 million loss the previous quarter and earnings of $15 million for the comparable quarter of 2018. In the lumber segment, the company narrowed its loss to $23 million from $53 million in Q3. West Fraser’s panels business generated earnings of $8 million, down from $9 million in the previous quarter. The pulp and paper division’s loss widened to $12 million from $8 million in Q3.

MONTREAL — Intertape Polymer Group has reached a deal to acquire Nortech Packaging for approximately $36.5 million. The privately held, Chicago-based Nortech manufactures, assembles and services automated packaging machines under the Nortech Packaging and Tishma Technologies brands. The acquisition is expected to close during the present fiscal quarter.

BRISTOL, England — Bemis Co. posted earnings of $186 million for the second quarter, or $0.12 per share. Revenues for the quarter totalled $3.04 billion. Australian-based Amcor, which purchased Bemis last year, pointed to the merger as key to its success as it posted above-forecast earnings of $699 million for the second half of 2019. 

IN MEMORIAM

Steve Duplantis, long-time partner at Canadian Pro Marketing, has died. He is survived by his granddaughter Sierra. Duplantis was tragically predeceased by his son, celebrated pro golf caddy Steve Duplantis, Jr., who died in 2008 at the age of 35.

ECONOMIC CONDITIONS

The seasonally adjusted annual rate of housing starts was 213,224 units in January, an increase of 8.8 percent from 195,892 units in December. Urban starts, seasonally adjusted, increased by 9.8 percent in January to 202,407 units. Multiple urban starts increased by 13.6 percent to 155,140 units while single-detached urban starts decreased by 0.9 percent to 47,267 units. (CMHC)

The total value of building permits issued by Canadian municipalities increased 7.4 percent to $8.7 billion in December. Increases were reported in five provinces, led by Ontario, where permits rose 10.5 percent, and Quebec, which saw a 15.8 percent increase. The value of permits for multi-family dwellings was up 15.9 percent, mostly due to large projects in the Montreal and Vancouver areas. Conversely, the value of permits for single-family dwellings decreased 3.2 percent, with the largest decline in Ontario. (StatCan)

WINNIPEG — A series of changes has been made at the upper management levels of the Sexton Group, all of which reflect the company’s efforts to stay positioned for the changes ahead in the marketplace.

Brian Kusisto, formerly CEO, has assumed the role of chairman of the Sexton parent company, and Steve Buckle has taken over as CEO. He was previously president of the Sexton Group. 

Hardlines recently sat down with Buckle (shown here, left, with Brian Kusisto) to get his insights into the changes, and what they mean for the national buying group.

A significant passage for the company was the death in July 2019 of founder Ken Sexton. He had been chairman of the overall business, and Kusisto’s move into that role was a natural next step. But, says Buckle, the changes had been planned even before Sexton’s passing.

“We looked for a way to transition that was the least disruptive to the business and the members,” he says.

Buckle’s assumption of the CEO role puts him in charge of not just Sexton Group, but also other holdings that are related to that business, all created by Ken Sexton. Now, Buckle oversees the entire Sexton family of companies. These consist of Sexton Group Ltd., the buying group based in Winnipeg with 400 members across the country; Kenroc Building Materials, a gypsum specialty dealer serving contractors in Western Canada; Builders Choice, a wholesale distributor supplying materials to drywall specialists and lumber yards across Canada; and Sexton Transport, a North American trucking company.

Buckle has been with the Sexton Group for 14 years, taking over as general manager from Bob Mondy, who had run the group since Ken Sexton founded it in 1985. Buckle was named president in 2014.

Stepping in to manage the day-to-day operations of the Sexton Group is Eric Palmer. Formerly senior manager, purchasing, he has been named vice president and general manager and reports to Buckle.

Under Buckle’s leadership, the company had focused on three areas: obtaining the best pricing for members, working on their behalf to sort out issues with vendors and ensuring that rebates and payments back to members occur in a timely fashion.

With those fundamentals in place, he says the group went to market with “a solid business proposition” for dealers—and leaves a solid legacy for Palmer to step into.

Looking to the future of the group, Buckle admits, “We have to evolve.” That requires changes from both the dealers and the vendors. “On the vendor side, there’s lots of increased consolidation. Those companies—big and small—have to be able to deliver volume reliably,” he says.

“The ones that get that have a future.”

On the dealer side, there has to be a shift away from a group merely saying they’ll provide volume and then expecting a rebate. “Members have to be able to deliver on their volume commitments. You’ve got to pull together.”

That puts pressure on the group itself to deliver, he notes. “We have to celebrate those independents. But we must prove to them that there’s value in bringing their volume to us.”

SPECIAL REPORT — In February 1995, a lot of familiar companies were making news—just as they do today. The regular chronicling of those companies and this industry began with the first issue of Hardlines on February 13, 1995.

The first headline of the very first issue featured Castle Building Centres. The LBM buying group continues to thrive to this day, representing sales in excess of $2 billion from approximately 300 dealer-members across the country. Twenty-five years ago, Hardlines reported on the group’s partnership with Cotter Canada, a subsidiary of Cotter and Company in the U.S., to supply products to Castle members. Under the leadership of Pro Wylie, the newly hired general manager of the group, a deal was struck with Dan Cotter, chairman of the U.S. wholesaler.

Another company that made the news in the inaugural issue (and gave us the first of a decades-long legacy of typos, courtesy of the publication’s dyslexic editor) was Sodisco-Howden. Under the headline, “Howden-Sodisco [sic] finalizes its ownership,” terms of the latest financing for the struggling hardware wholesaler were laid out. Sodisco-Howden was later purchased by building materials distributor CanWel, which in turn sold it to TIMBER MART in 2011. The business was eventually sold to U.S. hardware wholesaler Orgill.

Other companies referenced in the first issue included Beaver Lumber (purchased by Home Hardware in 2000), Toronto-area chain Lumberking (now defunct), Price/Costco (renamed Costco) and erstwhile mass merchant Bi-Way.

At its inception, Hardlines was sent out by fax from a basement office in mid-town Toronto. Using a fax distribution software—at the time a state-of-the-art program—each send would take up to 26 hours to dial up the hundreds of fax numbers on the publication’s growing subscription list. Within a couple of years, the publication would make the move to email, becoming a pioneer in electronic content delivery.

WORLD HEADQUARTERS, Toronto ― At Hardlines Inc., we are proud to announce the appointment of our new Marketing and Events Manager. Michelle Porter, our former Office Manager, has taken on this new role, overseeing our promotional and marketing efforts. She will also manage our growing range of events, including the upcoming Orgill Canada Night in Orlando, Fla., and our annual Hardlines Conference, which marks its 25th anniversary this year.

Michelle has been with Hardlines since October 2017. Arriving just two weeks before that year’s Hardlines Conference, she hit the ground running. She quickly proved her ability to think creatively and work efficiently, immediately becoming an invaluable member of the team. She’s used her discerning eye and attention to detail to improve Hardlines’ website, streamline internal processes and generally whip the company into shape.

We’re delighted to watch Michelle grow into this new position and continue to take on a leadership role within the organization.

BOUCHERVILLE, Que. ― Amidst recent changes at head office (see lead story in our last issue. ―Editor), Lowe’s Canada is driving its business as usual at the merchandising level. That includes the release of the latest trends in home décor for the year ahead at its Lowe’s and RONA stores.

Under the direction of Cindy Jardim, style and trends director at Lowe’s Canada, the company has identified four décor themes for 2020. They are “Pure,” the merging of pastels and modern earth materials; “Wild,” which combines rustic wood grain and metals with feminine and natural hues; “Brave,” called “a perfect mix of traditional and modern”; and “Noble,” which introduces bohemian and geometric elements.

Colours and designs extend to everything from shelves and curtain rods to porcelain tiles, cabinets and even heavy appliances. The company is also putting a push on peel-and-stick wallpapers.

In every case, the styles of furniture and accessories are paired with paint colours from the Sico paint brand.

At Freud Canada, Silvano Marone has joined the sales team as senior account manager – retail. He will be focused on the major national accounts and the field strategy to support them. Marone comes over to Freud after several years at Bosch Canada, in the automotive and power tools divisions, and Newell Rubbermaid before that.

Trent Ogilvie, president of ROCKWOOL North America, has decided to retire after 25 years at the helm of the stone wool insulation manufacturing company. Rory Moss, currently managing director at ROCKWOOL Nordics, will step into the role of president of the North American business. He will relocate from Denmark to assume his new position effective April 1. 

DID YOU KNOW…

… that Hardlines offers several ways for you to stay up to date on the industry? Make sure you are subscribed to: our Daily News (free); monthly dealer newsletter (free); and our print magazine, Hardlines Home Improvement Quarterly (free to dealers)! For more information on all of our news, visit hardlines.news.

JERSEY CITY, N.J. — Several home improvement retailers made Canada’s 2020 Best Employers list. The Forbes survey is compiled by electronically surveying 8,000 Canadians working for businesses with more than 500 employees. Home Hardware came in at number 114, Lowe’s Canada made number 152, Lee Valley Tools was 172, Calgary Co-op made 190, Home Depot came in at 236 and Canadian Tire was 255.

SASKATOON — Federated Co-operatives Ltd.’s Co-op Community Spaces program is open for applications as it enters its sixth year. Launched in 2015 to help protect, beautify and improve spaces across Western Canada, it has provided $8.5 million to 115 projects, including parks, greenhouses and sports fields.

MILTON KEYNES, England — IKEA will close its Coventry store this summer, the company’s first closure of a major U.K. outlet. The retailer said the store has been making “consistent losses” since it opened in 2007, citing “the changing behaviour of customers in the area who prefer to shop in retail parks and online,” leading to fewer visits than expected.

SUMMERSIDE, P.E.I. — Callbecks Ltd., which owns a Home Hardware Building Centre in Prince Edward Island’s second-largest municipality, is expanding into the Charlottetown market. Its newly announced acquisition of Charlottetown Home Hardware is a joint venture with Charlottetown’s Metro Home Building Centre.

SAN FRANCISCO — The Home Depot has dropped its antitrust suit against DuPont de Nemours, Inc., suggesting the parties are prepared to settle. The suit alleged that DuPont and Millennium Inorganic Chemicals Inc. conspired with two other chemicals firms to fix the price of titanium dioxide, a paint ingredient.

SUPPLIER NEWS

MALVERN, Pa. — Saint-Gobain has announced that its acquisition of Continental Building Products has obtained approval from Continental’s shareholders, while the statutory waiting period for the merger has expired. Upon completion of the approximately $1.4 billion transaction, Saint-Gobain will acquire all the outstanding shares of Continental for $37 per share in cash.

BURLINGTON, Ont. — St-Laurent, a maker of dual-toned finished fibre cement siding products, has selected Nicholson and Cates Ltd. as its exclusive distributor in Ontario.

SAINT PAUL, Minn. — 3M Co. reported that profits plunged by 27 percent in the fourth quarter, taking a hit from restructuring and legal costs. Net income declined to $970 million from $1.35 billion a year ago. Sales rose by 2.1 percent to $8.1 billion.

QUEBEC CITY — Desjardins is now the majority shareholder of Reno-Assistance, a company that pairs clients with contractors for large-scale residential or commercial renovation projects from a pool of more than 1,000 pros. The financial giant is supporting Reno-Assistance’s plan to increase its footprint outside the Greater Montreal, Greater Toronto and Quebec City regions.

CLEVELAND — Sherwin-Williams Co. reported Q4 profits of $248.6 million, up from $101 million a year ago. Same-store sales in the U.S. and Canada rose by 4.6 percent. Total revenues increased by 1.2 percent to $4.11 billion, compared with $4.06 billion the previous Q4.

OUT & ABOUT

Our VP & Publisher David Chestnut, and our trusted field reporter Geoffrey McLarney, will be at the TIMBER MART National Buying Show at the Palais des congrès in Montreal this week. Got a scoop or a new product? Look for them on the show floor!

BOUCHERVILLE, Que. ― Anthony T. (Tony) Hurst has been appointed president, Lowe’s Canada. His placement is pending the finalization of authorization to work in Canada, a process which is expected to be completed this month.

Based in Boucherville, Que., Hurst will report to President and CEO Marvin Ellison at Lowe’s head office in Mooresville, N.C. He replaces Sylvain Prud’homme, who held the CEO title in addition to president of Lowe’s Canada until his departure in the fall of last year.

Tony Cioffi will continue as interim president until Hurst gets settled in, then resume his previous role as group financial officer and leader of the affiliated dealers, real estate and Dick’s Lumber businesses.

Hurst joined Lowe’s one year ago as division president for the West region. Then, in November 2019, he was appointed senior vice president of enterprise and strategy transformation. Once Hurst was in that role, the Canadian division began reporting to him. His background also includes time with J.C. Penney and Home Depot in the U.S.

“With more than 25 years of retail and home improvement experience, Tony Hurst is a knowledgeable and effective leader who was already working closely with the Canadian leadership team in his former role," said Ellison.

The confirmation of Hurst came with other staff changes in Boucherville, including the departure of Igor Halencak, who had headed up marketing and merchandising for Lowe’s Canada. A seven-year veteran of the company, Halencak had been in charge of its buyer teams. Speaking with Hardlines, he said, “I fully believe in the strategy plan for Lowe’s Canada and I wish the new team the very best going forward.”

Hurst’s working relationship with Ellison dates back to their days at The Home Depot. Ellison joined in 2002, while Hurst was working as a store manager in California, before moving to head office in Atlanta in 2009. When Ellison moved to J.C. Penney in 2014, Hurst followed six months later, working as senior vice president of stores and operations. Ellison became chairman and CEO of Lowe’s Cos. in 2018 and Hurst moved over at the beginning of 2019.

BOLTON, Ont. ― Bob Holmes, general manager of the TORBSA buying group, has confirmed that he will retire at the end of 2020.

The group, which started in 1966, consists of about two dozen members representing some 45 stores. With the exception of the group’s largest member, Crown Building Supplies in Surrey, B.C., all are located in Ontario. The majority of TORBSA dealers are commercial, or heavily contractor oriented. Together, they generated $525 million in sales in 2018 (Source: the incredible Hardlines Retail Report).

Holmes started with TORBSA in 1994, taking over from Ted Howes, who was with the group from the onset. “I was in equipment rentals for 10 years,” Holmes recalls. “I started at TORBSA as Ted’s right-hand man, until taking over six years later.”

Known for his enthusiasm for people and for the business, Holmes is also trained as a chef, something he pursued through his love of good, healthy food. He is also infamous for his “shaggy dog” jokes when emceeing group events like the members’ annual Christmas gala. And the home improvement industry is in the family: his brother Jim was at Builders Supply, a TORBSA member that was recently bought by Foundation Building Materials, a chain of commercial yards based in the U.S.

His group saw other defections last year, as well, including Rigney Building Supplies in Kingston, Ont. It was bought by WSB Titan, which is, in turn, owned by another U.S. chain, GMS. However, Holmes takes pride in the fact that these dealers were successful enough within TORBSA that they were suitable candidates for takeover, a succession strategy that many dealers would welcome.

Holmes offers some guidance for whoever will take over from him. The group will have to remain focused on new products and innovation, “to keep members ahead of the curve,” he says.

“I really think the whole focus of this job—and of the overall industry—is relationships. [The new person] has to have a good handle on that,” he adds. “The rest will take care of itself.”

DALLAS — In its ongoing effort to cater more effectively to contractors and builders, Home Depot has opened the first of a new type of distribution centre that can handle large, bulk products for direct shipment to pro customers.

Called a “flatbed distribution centre” (FDC), it’s designed to quickly load everything from concrete blocks and bags of concrete to an order of lumber or drywall for same- and next-day delivery.

The first FDC has been opened in Dallas, Texas. The 800,000-square-foot facility is one of several new types of delivery centres being developed by Home Depot as part of a $1.2 billion investment to build about 150 new facilities across the U.S. The aim is to be able to reach 90 percent of its U.S. customers quickly.

That goal includes reaching pros and contractors, which the FDCs are designed to do. The Dallas facility will deliver construction and building materials directly to those pro customers. Home Depot has reported in the past that professional customers represent only four percent of its customers, but account for 45 percent of overall sales.

“We expect to build 40 flatbed distribution centres in the 40 largest markets, so we can bring those products to customers on a same-day, next-day basis,” says Executive Vice President of Supply Chain and Product Development Mark Holifield. “Our flatbed distribution centres help us provide the tools and materials pros need for their jobs, where and when they need it.”

COLOGNE, Germany ― The unique depth and range of products provided by the exhibitors offers compelling reasons for vendors and buyers alike to attend Eisenwarenmesse, International Hardware Fair. The show, being held from March 1 to 4, also offers an event program for trade visitors visiting Cologne.

The show, held every two years in the German city of Cologne, drew 47,000 visitors in 2018 from 143 countries to visit 2,770 vendors. The event offers a forum to learn about current developments and trends internationally. It’s also an important platform for professional exchange within the industry.

Over the years, the show has expanded its mandate beyond new products. Today, it features innovations and trends through a series of special events and showcases. The DIY Boulevard gives exhibitors the opportunity to present their innovations in an authentic POS environment, with 62 participating companies from the construction, home and garden industries.

The EISENforum will once again offer an event program, which will include lectures, panels, meetings with start-up companies and an awards ceremony that recognizes the latest in new-product developments. All nominated products and concepts will be presented to the international trade audience on the first day of the show, during a networking party for delegates.

During the first two days of the fair, a Digital Summit will be held in co-operation with digital expert Michael Atug. The lecture program, on the opportunities and risks of e-commerce, as well as payment, multichannel and logistics, highlights the facets of digitalization and aims to promote the exchange between suppliers, retailers and service providers.

Canadian visitors will have other ways to network and connect with the international marketplace, as well. Hardlines will once again host a Canada Night International Reception onsite at the show. It’s a great way for Canucks to gather and meet colleagues from around the world. (Email Michael to RSVP for Canada Night!)

Cologne is a compelling destination for any buyers or retailers looking for the latest product trends or vendors looking to expand their markets. (The complete program of events and lectures at the International Hardware Fair can be found here.)

Igor Halencak, EVP merchandising and marketing at Lowe’s Canada, is no longer with Lowe’s Canada. A former senior merchandising VP at Sears Canada, Halencak joined Lowe’s Canada seven years ago as head of merchandising. Over that time, he held a series of increasingly senior positions, before being put in charge of the combined merchandising and marketing roles just over a year ago.

Kelley Scott has been promoted at Alexandria Moulding. Previously director of marketing, she has moved into the role of director of sales, Western Canada. Scott has been with Alexandria for 10 years.

Eric Cantin is now national sales director at EcoWater Systems, a manufacturer of residential water treatment systems. There, he will manage sales for its dealer network, wholesale distributor and retail channel. He was formerly at Honeywell, where he spent eight years as a national sales manager.

Freud Canada has added to its sales team with the appointment of Frank Lepore as national account manager for the Co-op Channel. He comes over from Karcher Canada. In his new role, Lepore will focus on LBM, key regional chains and the hardware channel. He replaces Luciano Iaboni, who retired at the end of 2019 after 20 years with Freud.

DID YOU KNOW…

… Eisenwarenmesse, the International Hardware Fair in Cologne, Germany, is on this year from March 1 to 4. It’s one of the world’s largest trade shows for the hardware and home improvement industry. Hardlines will once again host a Canada Night International Reception onsite at the show. It’s a great way for Canucks to gather and meet colleagues from around the world. (Email Michael for more info or to RSVP!)

RIVIÈRE-DU-LOUP, Que. — A new Canac location has cleared a significant administrative hurdle as this city’s council approved an easement related to a parcel of land within the Rivière-du-Loup Golf Club. Under an agreement between the two parties, the club is to transfer a parcel of land to Canac in exchange for a wetlands site where the hardware chain wants to build a new outlet. Canac will pay the club to symbolically transfer two of its fairways. The deed of easement is an administrative step toward receiving the necessary certificate of authorization from Quebec’s environment ministry for the project to proceed. 

BRENTWOOD, Tenn. ― Tractor Supply Co. reported that Q4 net sales increased 2.7 percent to $2.19 billion, from $2.13 billion in the fourth quarter of 2018. Comparable store sales increased 0.1 percent. Net income was $144.2 million, compared to net income of $136.9 million. Net sales for the year increased 5.6 percent to $8.35 billion from $7.91 billion in fiscal 2018, while net income was $562.4 million, up from $532.4 million. Comparable store sales for the year increased 2.7 percent.

CANORA, Sask. — The new owners of Home Hardware here are Graham and Sam Profit, who have taken the reins from Graham’s father, Kris. Sam has assumed primary responsibility for managing the store, which has been in the Profit family since 1994.

SUPPLIER NEWS

MONTREAL — Richelieu Hardware reported Q4 sales of $265 million, up $6.2 million or 2.4 percent from $258.8 million a year ago, including three percent resulting from acquisitions. In Canada, Richelieu recorded sales of $179 million, an increase of $4.1 million over the fourth quarter of 2018. Net earnings per share rose to $0.34 basic and diluted, compared with $0.32 for the previous fiscal year, an increase of 6.3 percent.

WINNIPEG — Barry Allen Marketing Ltd. is celebrating its 40th anniversary this year. The Winnipeg-based rep agency, led by President and Partner Barry Beznoski, represents more than a dozen lines across Western Canada, with the slogan, “Helping you sell what we sell.”

MALVERN, Pa. — DBMP LLC, an affiliate of CertainTeed LLC that holds the legacy asbestos liabilities of the former CertainTeed Corp., announced that it has filed for Chapter 11 relief in a U.S. Bankruptcy Court. DBMP’s asbestos liabilities relate primarily to various products manufactured and sold by CertainTeed Corp., which last manufactured products containing asbestos in 1992. At the time of the bankruptcy filing, DBMP had more than 60,000 claims, more than 32,000 of which are in active litigation.

MILWAUKEE, Wis. — Milwaukee Tools announced it will open a manufacturing plant in West Bend, Wis. Located near the company’s headquarters, the facility will manufacture new-to-market hand tools for professional customers. The company will break ground on the new plant in April, with an initial expected investment of about $26 million, and expects mass production to begin in early 2021.

ECONOMIC CONDITIONS

November retail sales rose 0.9 percent to $51.5 billion, largely offsetting the 1.1 percent decline in October. The increase was primarily attributable to higher sales at motor vehicle and parts dealers and at food and beverage stores, both of which were down in October. Sales at building materials and garden equipment and supplies dealers were up for the first time in the last five months, rising 2.1 percent. (StatCan)

Sales of existing U.S. homes jumped in December to their highest level in nearly two years, suggesting lower mortgage rates are benefiting the market. December’s sales rose 3.6 percent to a seasonally adjusted annual rate of 5.54 million units. Not since February 2018 has the pace risen so high. (National Association of Realtors)

OVERHEARD…

“We remain confident in the long-term potential of our Canadian business, and I know Tony is the right person to lead Lowe’s Canada into an exciting new chapter for our customers and associates across Canada.”
―Marvin Ellison, president and CEO of Lowe’s Cos., on the appointment of Tony Hurst as president of the retailer’s Canadian division.

CALGARY ― Dealers came from across the West to attend the WRLA Buying Show in Calgary last week. Timing for the show was good, as it was held just a week after the city experienced some of its coldest weather in more than a decade. This is also the last year the show will be held in this city.

But with temperatures last week hovering around a relatively balmy zero degrees, dealers travelled in from across the Prairies, and even as far afield as British Columbia and northwestern Ontario. Banners from across the West were out in full force, with all the major buying group head offices exhibiting as their members walked the aisles.

Dealers sporting Castle jackets were seen throughout the show, while Home Hardware and TIMBER MART stores were well represented, as well. Sexton Group, celebrating its 35th anniversary this year, was on hand to support its dealers, as were representatives from TORBSA and Delroc. Dealers from other groups, including Windsor Plywood, ILDC and some of the co-ops, were also in attendance.

Exhibiting vendors were largely positive about the show. Paul Faulkner, marketing and trade sales manager for Dural, a division of Multibond, called it “the best opportunity for suppliers to connect with their dealers.” 

Monte Christensen, owner of Mountain Bark Inc., is a regional supplier of cedar fence rails, mulch and chips. He’s been attending the show for eight years. “It’s not just about sales,” he says. “It’s about reconnecting with your customers. It’s a good way to see what’s going on in the industry.”

Shawn Hoagland represents Kinco Gloves out of Portland, Oregon. He came up to the show for the second year in a row and says the response from Canadian dealers to his products has been very positive. When he exhibited last year for the first time, he says the show was “beyond his expectations.” This year has been no different, he adds. “It’s been a good show. We’ll be here again.”

Liz Kovach, president of the Western Retail Lumber Association, which hosts the show, was pleased with the turnout, especially as the show will relocate next year. “We’re very excited. Since this is our last time in Calgary, we’re trying really hard to make it something special,” she said.

“And next year we’ll be moving to Winnipeg, so we’re very excited about that.”

RED DEER ― Peavey Industries has finalized its acquisition of TSC Stores.

Effective January 1, the Red Deer-based chain of farm and hardware stores has taken the final steps to integrate the TSC business, a process which began in July 2016. That’s when Peavey, whose stores range in size from 10,000 to 35,000 square feet and carry products in categories from hardware to farm and automotive, bought a controlling interest in TSC.

At the time, TSC had 51 mid-sized hardware stores that averaged 16,000 square feet in size. Aside from one store in Manitoba, all of its business was based in Ontario. Since most of Peavey’s stores were in Alberta and Saskatchewan, the takeover was a good fit, both in terms of retail positioning and geographic reach.

Initially, the two companies operated discretely. But over time, the buying teams were brought closer together. Then, just over a year ago, Darryl Jenkins, who headed up TSC, departed. Jenkins, an alumnus of Canadian Tire, ended up back there last summer, when he was installed as a senior VP of the retail division and managing director of Canadian Tire’s latest acquisition, Party City.

The integration of TSC means a simplified process for Peavy’s vendors, with all purchase orders, payments, custom clearing and shipping procedures now harmonized. But the company will continue to operate TSC as a separate banner, while Peavey continues with its Peavey Mart and Mainstreet Hardware store formats.

ST-JÉRÔME, Que. — The departure of Groupe Yves Gagnon’s chain of five stores from BMR Group has attracted considerable attention because the company’s founder, Yves Gagnon, had actually headed up BMR for more than 15 years. During that time, BMR member sales grew from about $200 million to nearly $1 billion. He retired from his role as head of BMR in 2014, after 20 percent of that group was acquired by La Coop fédérée. La Coop went on to purchase BMR in its entirety in February 2015.

Gagnon’s business got started in 1973, when he took over his family’s general store. Today, Groupe Yves Gagnon operates five stores in smaller communities in Quebec. Gagnon’s daughter, Geneviève Gagnon, is now CEO of the company, while her father continues on as president. But over the years, the Gagnon family’s operations have branched out in other directions. It has a truss and wall panel manufacturing division called Évolution Structures in Boisbrand, Que.

Geneviève Gagnon also owns Évolution Distribution, a wholesale distribution business based in St-Jérôme, Que. Besides acting as distributor for the Gagnon retail stores and the truss plant, it also serves Matériaux de construction Letourneau, a building centre company with two locations based in Sherbooke, Que.

The Évolution Distribution business has now joined Octo Purchasing Group to serve those independent retail customers.

The addition of Évolution Distribution to Octo fits well with that group’s existing membership. It consists of a mix of retail groups such as Peavey Industries in Red Deer, Preston Hardware in Ottawa and Canac in the Quebec City area. But the bulk of the group’s volume comes from industrial wholesalers such as M.I. Viau et fils in Mirabel, Que., Northeast Equipment in Dartmouth, N.S., and Montreal-based Guillevin International.

Yves Gagnon has a previous relationship with Octo. Under him, BMR was a member of Octo before joining the Independent Lumber Dealers Co-operative (ILDC), after it was purchased by La Coop.

TORONTO — Hudson’s Bay Co. is shuttering the last remaining Zellers stores, in Toronto and Ottawa, by the end of this month. The closure of the Toronto location on January 26 means Etobicoke’s Kipling-Queensway Mall will lose its anchor store. The store had already been largely emptied by customers lining up to take advantage of the deep discounts, with all items reduced by at least 80 percent.

A spokesperson for HBC said the company would look at transferring employees where feasible, while eligible workers will receive severance packages.

Zellers’ roots date back almost a century. The discount department store chain was founded in 1931 and expanded steadily over the following decades. It was purchased by Hudson’s Bay Company in 1978. The chain continued to play an important role in Canada’s retail landscape, only to fall on hard times toward the end of the century.

In 2011, when the giant U.S. retailer Target announced plans to enter Canada’s discount mass merchant space, Zellers’ days were numbered. HBC sold off a number of Zellers locations and sub-leased some to Target. But within a year, Zellers was virtually out of business.

The death knell for the final Zellers stores comes amidst big changes at Zellers’ parent company. Amidst widening losses, a majority shareholder group led by company Chairman Richard Baker is moving to take HBC private. A vote on the deal is expected in February.

The following leadership changes have been announced at the Sexton Group, effective February 1: Brian Kusisto, former CEO, will assume the role of chairman of the Sexton parent company. Stepping into the CEO role for the Sexton parent company is Steve Buckle, who had been president of the Sexton Group since 2014. At the same time, Eric Palmer will become the vice president and general manager of the Sexton Group, reporting to Buckle. Tom Bell is being promoted to vice president of business development. In this role, he will continue to focus on the needs of the members, as well as recruitment activities. He will report to Palmer.

Innovak has announced two promotions. Karl de Nie has been named VP sales and Alexandre Chrétien is now VP marketing.

DID YOU KNOW…

… that the Hardlines Retail Report is your single best marketing tool for understanding the size and growth of the retail home improvement industry in Canada? Who are the top players? What are their strategies? How much has the market grown year over year and which provinces are winning in market share? With 175 PowerPoint slides and dozens of charts and graphs, this report is a must-have for every marketer. Click here for more info!

EDMONTON — Twenty-three Lowe’s and RONA stores in Alberta have launched their annual Hair Massacure fundraising event in support of the Children’s Wish/Make-a-Wish Foundation of Canada and the Terry Fox Research Institute. Customers have the opportunity to purchase and personalize paper “Kali bears”, named for cancer survivor Kali McDonald, whose family founded Hair Massacure in 2002. On February 21, hundreds of people will descend on the West Edmonton Mall to shave their heads, many after dying their hair “Kali pink.” The Lowe’s network hopes to raise $100,000 this year.

HOFFMAN ESTATES, Ill. — Sears Holdings Corp. has agreed to a settlement in its suit against Transform Holdco, the Eddie Lampert controlled company that bought up the majority of Sears’ assets last summer. In the suit, Sears’ former owner contended that Transform still owed it more than $57 million. Transform, in turn, filed a complaint accusing Sears Holdings of delaying vendor payments and failing to deliver promised inventory. Under the settlement agreement, Transform Holdco will pay Sears Holdings $18.3 million, including about $13 million in cash.

SUPPLIER NEWS

TORONTO ― Payworks has joined with the Retail Council of Canada (RCC) to provide RCC members with convenient payroll solutions at special rates. The RCC preferred payroll pricing allows RCC members to take advantage of payroll, HR and time management solutions tailored to their needs. These services include direct deposit, year-end filing and support, records of employment, online employee self-service, as well as a designated CPA-trained client service representative.

ECONOMIC CONDITIONS

U.S. housing starts surged 16.9 percent in December to a seasonally adjusted annual rate of 1.608 million units, the highest since December 2006. The percentage gain was the greatest since October 2016. In a Reuters poll, economists forecast a SAAR of 1.375 million units. On a year-over-year basis, housing starts swelled by 40.8 percent. (U.S. Commerce Dept.)

Total investment in building construction in November edged up 0.1 percent from October to $15.5 billion. Investment in the non-residential sector rose 0.8 percent to $5.0 billion, while the residential sector decreased 0.2 percent to $10.6 billion. In the residential sector, investment in single-unit dwellings decreased two percent to $5.2 billion, while multi-unit dwellings increased 1.6 percent to $5.4 billion. The non-residential sector rose 0.8 percent to $5.0 billion in November. (StatCan)

OVERHEARD…

“There’s not a lot of people coming into our store to buy anything. Salt and snow shovels—that’s about it. Not good. It’s not good.”
—Sean Bartlett, working at the Hickey’s TIMBER MART in Conception Bay South, Nfld. He spoke to Hardlines mid-week, while a curfew was still in place in St. John’s, keeping cars off the streets as the city coped with the impact of receiving three feet of snow in 24 hours.

CHENEVILLE, Que. — Groupe Yves Gagnon, a chain of home centres in Quebec, has left BMR Group to go out on its own. The retailer has also announced that the distribution company that serves it has joined Octo Purchasing Group, another buying group that works behind the scenes to help with purchases for retail and wholesale companies in core categories such as plumbing and electrical. The move was effective January 1.

Groupe Yves Gagnon operates five stores in smaller communities in Quebec. It also has a truss and wall panel manufacturing division called Évolution Structures. Yves Gagnon established the retail business in 1973. Today, these businesses are managed by Gagnon’s daughter, CEO Geneviève Gagnon, while he serves as president of Groupe Yves Gagnon.

Geneviève Gagnon also owns Évolution Distribution, based in St-Jérôme, Que. This distributor, which supplies both Groupe Yves Gagnon and Évolution Structures as well as one other dealer, has officially joined Octo.

But Yves Gagnon is also the former president and CEO of BMR Group, well known as a charismatic leader who guided the growth of the buying group and wholesaler for a decade and a half. He retired from his role as head of BMR in 2014, after 20 percent of that group was acquired by La Coop fédérée. La Coop went on to purchase BMR in its entirety in February 2015.

According to Geneviève Gagnon, her company’s departure from BMR was in response to what she called differing goals. The move will enable her stores to better focus on their local communities and manage their involvement in those communities. “We left to be respectful to who we are and our DNA. We felt our two organizations were going in opposite directions. We felt we didn’t fit anymore with the model of the BMR banner.”

While BMR offers distribution, as well as retail support, including a banner and branding, Montreal-based Octo operates behind the scenes to aggregate purchases among its members.

Although the Gagnon stores represented significant volume for BMR, that group says this volume has been more than made up for with the addition of new stores over the past year. They include new members in Ontario, where BMR is actively expanding, as well as an investment in Lefebvre & Benoit, which sells to commercial contractors and builders.

MOORESVILLE, N.C. — Marvin Ellison, CEO of Lowe’s Cos. in the U.S., continues to push his company to find ways to improve its online presence in that country, especially in comparison to its Canadian division, which flourished under former VP of eCommerce and Omnichannel Tanbir Grover. (Grover moved at the end of 2019 to The Co-operators, an insurance company.)

In a presentation to analysts late last year, Ellison and his team admitted that online business—he called it “dot-com growth”—was essentially flat in the company’s third quarter. “If you think about the impact of dot-com to our business, it was basically a neutral impact. We grew dot-com by three percent for the [third] quarter; we grew U.S. sales by three percent, so there was really no benefit.”

The company is currently in the midst of a large-scale, multi-year investment in technology transformation. The latest move is a partnership with Google Cloud to enhance the retailer’s e-commerce, merchandising, supply chain management and pricing system. Lowe’s will spend at least $500 million annually through 2021 and hire up to 2,000 engineers to continue to build out its retail network across online and bricks-and-mortar formats.

Ellison admitted that his company’s online business was lagging behind other large traditional retailers that are doing business online—and he is correct. At The Home Depot, Lowe’s chief competitor, online sales have been growing consistently in double digits in recent years. In its third quarter, digital growth reached 28 percent. More than half of those sales were picked up in Home Depot stores.

In Canada, Lowe’s has enjoyed strong growth in online sales. Though the company won’t break out its online business here, efforts in recent years have been successful across all banners. In early 2017, Lowe’s Canada introduced a “Click and Collect” program for its Reno-Depot stores; its Ace stores in Canada were on board with the program by the end of that year. The following summer, e-commerce was up and running at more than 100 participating RONA dealer stores. In August 2019, Lowe’s Canada relaunched it website with a focus on mobile e-commerce.

In the U.S., online sales remain a priority. “We’re not there yet,” Ellison said, “but we know how to get there, and we’re trying to take the right steps to fix the root cause of the issue.”

COLOGNE, Germany — The International Hardware Fair, Eisenwarenmesse, is one of the world’s largest trade shows for the hardware and home improvement industry. Hardlines will be there this year, from March 1 to 4, along with a number of Canadians—buyers and vendors alike—looking for the hottest trends and products hitting the home improvement market.

The show, held every two years in the German city of Cologne, drew 47,000 visitors in 2018 from 143 countries to visit 2,770 vendors. That included Canadian buyers from Canadian Tire, Home Hardware, Home Depot and independents such as Patrick Morin. The Canadian vendors who made the journey found it to be worthwhile, as well, whether as exhibitors or simply walking the huge show.

And huge it is. The four-day show will fill 10 buildings, totalling almost two million square feet of space. Long recognized as the show to visit to glimpse the trends expected to hit North America in the next few years, Eisenwarenmesse puts a huge emphasis on innovation, including the latest merchandising and packaging, along with the latest technological advancements that are influencing the future of the home improvement industry.

Hardlines will play an active role in welcoming Canadians who head over to this year’s show. We will once again host a Canada Night International Reception. This event will be held in a German pub right on the show floor. In years past, Canada Night has been a great way for Canucks to gather and meet colleagues from other countries around the world.

(To learn more about the International Hardware Fair and to join us at Canada Night, get in touch with Michael McLarney here at the World Headquarters!)

PRINCE ALBERT, Sask. ― Independent home improvement dealers inevitably struggle with shrinkage, whether through theft, breakage or electronic and inventory screwups. And for many independents, investing in sophisticated equipment is something that has to be left to the big players.

One exception is Econo Lumber, the largest lumberyard in north-central Saskatchewan, with a 60,000-square-foot store, a 40,000-square-foot outdoor storage area, and a 26,400-square-foot drive-through warehouse. The Prince Albert-based company has an on-site technology specialist whose job includes keeping Econo aware of email hacks, phishing and “ensuring we have excellent software on our systems, so this doesn’t take place,” says Angelo Minier, Econo’s director of corporate finance.

Econo Lumber’s network of 25 high-resolution cameras provides video that, on a number of occasions, has resolved disputes with shoppers. Minier notes that a customer recently came into the store claiming that he hadn’t picked up the 2x4s he bought the previous day, even though the store’s paperwork showed otherwise.

“We looked at the camera footage and saw that he did, in fact, take the items.” Upon reviewing that footage, the customer “realized that he had ‘forgotten’ that he picked up [the lumber],” says Minier, who notes that video surveillance is also useful when accidents in the yard occur.

He says Econo Lumber has found that “human error”—such as shipping or loading mistakes—is the primary cause of shrinkage. Consequently, no customer gets loaded without proper paperwork. If there’s a discrepancy in the order’s unit count or billing, the customer needs to go back into the store to resolve the problem.

Throughout the year, Econo conducts ongoing inventory counts, going as far in some departments as to count actual quantities on hand to see if they coincide with what the store’s sales system indicates. If something is amiss, Econo does a thorough investigation that includes speaking with the employees who sold and loaded the merchandise.

Whether or not they can afford sophisticated technology or training programs, home improvement dealers are waking up to the reality that lacking a loss prevention strategy costs them a great deal in the long run. That strategy means finding solutions that meet both their needs and their budget.

(This article is excerpted from a larger feature in the next issue of our sister publication, Hardlines Home Improvement Quarterly magazine. HHIQ is mailed out four times a year to 11,000 dealers and store managers across the country. Click here for more info!)

At Castle Building Centres Group Ltd., Richard Hamel has been appointed business development manager for eastern Quebec and northern New Brunswick. Prior to joining Castle, he was in sales and business development at Roland Boulanger & Cie. He joins Robert Legault, who has been a business development manager for Castle in Quebec for almost 11 years.

Hudson’s Bay Co. has announced the appointment of Iain Nairn as president of its namesake banner. Nairn was previously CEO of international design and stationery firm kikkk.K. Nairn’s predecessor, Alison Coville, stepped down last February.

True Value has appointed Chris Kempa as its first chief commercial officer, reporting to CEO and President John Hartmann. Kempa was most recently group president, industrial, at office supplies wholesaler Essendant Inc.

DID YOU KNOW…

… that the 2019-2020 Hardlines Market Share Report breaks out the sales and store counts of every key home improvement banner by province? This invaluable marketing tool will help you identify sales and market opportunities and align your own forecasts with regional market breakouts. It’s now available in a special package with our Hardlines Retail Report, which provides valuable forecasts for the industry for 2019 and 2020, including analysis of the top players. (For more info, click here!)

MOORESVILLE, N.C. — Lowe’s Cos. and Google Cloud are expanding their partnership to modernize the home improvement retailer’s e-commerce, merchandising, supply chain management and pricing systems. As part of the initiative, Lowe’s is using Android devices and Google Cloud technology to enable employees to view and update pricing and inventory on the fly. The retailer has deployed 88,000 mobile devices to allow its associates to access real-time data without leaving the sales floor or interrupting a customer interaction.

BURLINGTON, Ont. — IKEA Canada has announced it will shutter its pick-up points across Ontario on January 29. The decision affects five locations and about 150 jobs. The last day to place orders for delivery to the pick-up points will be January 15. IKEA launched the Pick-up and Order Point pilot in 2015.

SUPPLIER NEWS

HORSHAM, Pa. — Benjamin Obdyke, Inc. has introduced its flagship product, HydroGap drainable housewrap, to the Ontario market. Designed for custom residential homebuilders and large volume production projects, HydroGap is available through Nicholson and Cates Ltd. beginning this month. 

ST. LOUIS — Energizer Holdings has finalized the sale of its European consumer battery division to Germany’s Varta AG. The companies reportedly reached a $401 million deal in May after Energizer’s January acquisition of Spectrum Brands’ battery business. In order to allay European Commission concerns about competition in the battery and portable lighting market, Energizer had pledged to divest Spectrum’s Varta-branded line in the region.

ECONOMIC CONDITIONS

Existing home sales edged down 0.9 percent in December, ending a streak of monthly gains that began last March. Higher sales were experienced in the Lower Mainland of British Columbia and in Calgary and Montreal, offsetting declines in the Greater Toronto Area and Ottawa. Actual (not seasonally adjusted) activity in December was up 22.7% compared to December 2018. The actual (not seasonally adjusted) national average sale price climbed 9.6 percent year over year. Activity ended the year about seven percent below the heights recorded in 2016 and 2017. (Canadian Real Estate Assoc.)

NOTED

The 8th Global DIY Summit will take place June 10 to 12 at the RAI Amsterdam Convention Centre. More than 1,100 delegates from 50 countries are expected to attend. Under the theme, “The New Normal: Adapting to a Rapidly Changing World”, the summit will feature speakers from Salesforce, Rakuten and Facebook. Topics will include the latest home improvement trends, corporate social responsibility and getting started in the massive China market. Visit the official website for more info.

OUT AND ABOUT

If you’re headed to Calgary for the WRLA Buying Show this week, be sure to say hello if you see David Chestnut and Michael McLarney on the floor or even pop over to our booth and have a chat with Sigrid Forberg about all things Hardlines!

BOLTON, Ont. ― Dealers are facing a mixed outlook for 2020, but for one buying group, some parts of the industry will maintain last year’s momentum, even if that momentum was modest at best.

The majority of TORBSA dealers are commercial, or heavily contractor-oriented, so their fortunes rely on housing starts more than traditional dealers. Bob Holmes, general manager of TORBSA, expects single-family housing starts to “struggle until the second quarter or even into the third quarter.” To make matters worse, says Holmes, “People are still not buying.”

However, he remains optimistic overall. “I expect it to be okay in 2020.”

Holmes recognizes that issues such as amalgamation among independents will only continue in the future. It’s being spurred by factors such as the increasing age of dealer-owners and their need for succession, which can be exacerbated by the lack of younger family members who are willing to take over the business.

His group has seen a couple of defections near the end of 2019. They included Rigney Building Supplies in Kingston, Ont., which was bought by WSB Titan, itself owned by U.S. dealer chain GMS. “However, I take pride in helping those businesses to be strong and profitable―and these are the ones being acquired.”

And while U.S. interests like GMS and Foundation Building Supplies expand their reach here, Holmes notes that domestic companies like BMR have deep pockets and are making moves to pick up dealers, as well.

Amidst all of these changes, Holmes still sees a role for the buying groups, and not just for rebates. Members have access to best practices and shared knowledge. For vendors, a buying group provides central billing and a ready conduit for new products. “I think the independent will always be around, but they will need the support of their larger group.”

CAMBRIDGE BAY, Nunavut — Depending on the mode of transport, freight costs can add significantly to the final price tag on products, especially special orders that demand quick turnaround. In fact, air freight is the most expensive form of distribution in Canada’s North.

Kitikmeot Supplies is a retailer that’s operated for 24 years in Cambridge Bay, a hamlet on Victoria Island in the Kitikmeot Region of Nunavut. According to the store’s general manager, Bill Killin, it’s the northernmost hardware store in Canada. Winter months are marked by 24-hour darkness and temperatures as low as -60 C. Those conditions are a far cry from southern Ontario, where he once worked for Home Hardware and Home Depot.

When Killin orders products freight on board from Yellowknife, which is 851 kilometres away, freight costs to fly those orders to Cambridge Bay average $3 per pound. (The store is about two kilometres from the local airport.) Killin says that freight costs are based on weight and volume, so he needs to be smart about having the right combination of light and heavy products in a given order to lower the freight costs and get maximum value at retail.

Kitikmeot Supplies—which gets 40% of its annual sales from government and institutional accounts, half of which are contractors—orders directly from manufacturers, as well from a specialty distributor in Edmonton, and through Igloo Building Supplies, also in Edmonton, and through Winnipeg-based Sexton Group.

NEW YORK — Executives at Lowe’s Cos. in the U.S. are looking for ways to simplify the array of businesses that operate under Lowe’s division in Canada. That included the intention to close another 34 locations here, most of them by the end of this month.

Saying that the Canadian business has “struggled”, the execs explained to analysts at the Morgan Stanley Global Consumer and Retail Conference in New York late last year how the investment north of the border is playing out and where the positives lie.

“As you can well imagine, just given the performance that we’ve articulated over the first three quarters of this year, the Canadian business from a top line perspective has struggled,” said David Denton, Lowe’s executive vice president and CEO. He added that the model for the Canadian business, which operates a variety of store formats, including wholesaling to dealer-owned outlets, is quite different from the U.S. one. The result, he says, is a business “that is performing from an operating profit perspective below the company average.”

President and CEO Marvin Ellison added that he is pleased with the execution at store level, however, noting that “we have great associates in Canada. We just gave them a very complex business model that inhibited their ability to serve customers well.”

Ellison laid out the relative complexity of the Canadian business with five banners, all with legacy systems and different back-end systems that hampered the initial integration process. “It made it very difficult to create synergies from a marketing, merchandising, sourcing perspective and even in IT systems infrastructure, so part of what we’re doing here, in addition to closing under-performing stores, is ensuring that we are just simplifying the business model so we can give the customers a great experience and give our associates a more simplified operational process to manage.”

Ellison expects that the decisions being made, including the pending store closures, “are going to put us in a really good position,” facilitating improvements for Lowe’s Canada that will bear out positively over the long term, something the executives at Lowe’s made clear they are committed to.

SPECIAL REPORT — Many retail segments have contracted in recent years, but dollar stores are on the rise. They compete with home improvement businesses in several categories, such as small hardware items, cleaning supplies and other consumables.

Neil Saunders, with data analytics company GlobalData, answered questions about why dollar stores represent a major growth segment for the NRHA’s magazine, Hardware Retailing.

Saunders calls dollar stores one of the top-growing segments in the U.S. market. “They’re outperforming retail market growth as a whole, growing at a faster clip than a lot of traditional segments.”

In the U.S., Dollar General leads the way, generating strong growth, now with more than 15,000 stores. “It’s an enormous operation, because you need that scale in order to make the low-margin business work,” Saunders says.

In Canada, Montreal-based Dollarama Inc. recently reported Q3 profits of $138.6 million, up from $132.1 million a year ago on higher sales. Sales of $947.6 million marked a surge from last year’s $864.3 million, while comparable store sales rose by a healthy 5.3%.

This tremendous growth is due to dollar stores carving out a niche as a convenient choice for picking up everyday products. “That has become especially important to value-conscious consumers following the worldwide recession of 2008,” Saunders notes.

“Dollar stores are very good options for them to get really good value for the money on consumables, household goods and food, as well as some hardware and home improvement products,” he adds.

Orgill has announced changes to its team of executive vice presidents. Randy Williams has been promoted to the role of EVP, distribution. Prior to this position, Williams served as Orgill’s general manager and senior vice president of distribution. John Sieggreen has been promoted to the role of EVP, retail and will also maintain his current role as president for Orgill’s Central Network Retail Group (CNRG). Greg Stine has been promoted to EVP, marketing and communications. Most recently, Stine headed up the marketing team for Tyndale Advisors. Brett Hammers continues in his role as EVP, sales and purchasing, while Eric Divelbiss will continue as EVP and CFO.

At AFA Forest Products, Angelo Campagna, previously division manager at the head office, has been named director of strategic development. Stepping into Campagna’s former role is Mark Henriques, previously sales manager at the Bolton, Ont., office. George McCart, previously director of AFA’s Eastern Allied division, is taking on the newly created role of director of marketing.

DID YOU KNOW…

… that Hardlines offers various ways for you to stay up to date on the industry? Make sure you are subscribed to: our Daily News (free); monthly dealer newsletter (free); and our print magazine, Hardlines Home Improvement Quarterly (free to dealers)! For more information on all of our news, visit hardlines.news. Take on the New Year fully equipped with all the information resources you need for your business to succeed!

TORONTO — A majority shareholder group led by Chairman Richard Baker has sweetened its offer to take Hudson’s Bay Co. private. The group is now offering $11 per share, compared with its original bid of $10.30. The increase has overcome the objections of minority shareholder Catalyst Capital Group, which considered the original offer to fall short of HBC’s value. A vote on the deal is expected for February and would require 75% of shareholder votes, as well as a simple majority of votes by minority shareholders.

MOORESVILLE, N.C. — Lowe’s Cos. is seeking at least 53,000 new employees ahead of the spring season. The company says it will welcome applicants to job fairs at each of its 1,700 U.S. stores over the next three months.

SUPPLIER NEWS

LAS VEGAS — The International Consumer Electronics Show (CES) took place last week. Once again, smart home technology was a hot category, from baby monitoring systems to a robot that tracks toilet paper supplies. Meanwhile, Amazon was showcasing Echo Auto, an adaptation of its digital home assistant for cars.

MONTREAL — AQMAT has opened nominations for its eighth Gala of Recognition, taking place March 7 at Montreal’s celebrated railway hotel, Fairmont Le Reine Elizabeth. The 16 award categories honour retailers (individuals and businesses) and suppliers who demonstrate exceptional talent, passion and hard work. Click here to submit a nomination.

ECONOMIC CONDITIONS

The seasonally adjusted annual rate of housing starts was 197,329 units in December, a decrease of 3% from 204,320 units in November. The SAAR of urban starts decreased by 4% in December to 185,934 units. Multiple urban starts decreased by 5% to 138,049 units in December, while single-detached urban starts increased by 1% to 47,885 units. (CMHC)

NOTED

Canadian Gen Z consumers were taking things into their own hands this holiday season, with 21% admitting to typically returning some of their holiday gifts. That’s nearly double the number of Boomers who reported returning gifts (11%). These results come from the 2019 FedEx Returns Economy Survey, a poll conducted on behalf of FedEx Canada, a subsidiary of FedEx Corp.

OVERHEARD…

“… We talked a lot about our Canadian business, and we’ve made some tough decisions with store closures and leadership changes and simplification of all the multiple banners and SKU rationalization. Those things are ongoing, but we feel good about the potential of the Canadian business. So, positives [and] negatives, but all-in-all, we feel like we’re on track and we feel confident that we have a good plan in place.”
―Marvin Ellison, president and CEO of Lowe’s Cos. He presented recently at the Morgan Stanley Global Consumer and Retail Conference.

SPECIAL REPORT — From personnel changes to banner expansions, 2019 was action-packed with news. In this first issue of 2020, Hardlines takes time to revisit the most-read stories of the past year.

Our readers as always responded with enthusiasm to our coverage of People on the Move. Home Hardware saw several major developments on that front, including President and CEO Kevin Macnab’s first full year in the post. Macnab sat down with Hardlines shortly after his first anniversary on the job and spoke about the company’s efforts to extend a consistent offering and store experience across the banner.

Meanwhile, in the summer, Home restructured its merchandising teams to establish clearly distinct chains of command for the hardware and LBM sides of the business. Several appointments here kept readers on the alert. Then, in September, the company promoted Rob Wallace from senior director to VP of marketing. And in December, Jessica Kuepfer was promoted to the post of communications director, which has her reporting directly to Wallace.

Personnel announcements from Lowe’s Canada also garnered high readership. In October, CEO Sylvain Prud’homme’s (shown here) surprise departure left the industry speculating about succession, as no immediate permanent replacement was named. Tony Cioffi took the reins as interim president. Then, in December, we reported that IT chief Tanbir Grover, just days after his well-received talk at the Hardlines Conference, had left his position as VP, eCommerce and omnichannel. He moves to the insurance sector as VP digital at The Co-operators.

Staffing changes at Orgill caught readers’ attention as well. In December, the distributor reassigned CEO responsibilities from Chairman Ron Beal to President Boyden Moore (see follow-up story in this issue―Editor). Orgill had already announced in June that it was adding a 780,000-square-foot fulfillment centre in Rome, N.Y., to its network. The warehouse was designed to take some of the pressure off the company’s West Virginia facility to better service Orgill’s expanding Northeastern U.S. customer base.

Corporate expansions and acquisitions resonated with Hardlines readers in 2019. The year saw BMR Group gearing up to expand its interests outside Quebec and pursue the contractor market more aggressively. In a bid to assert itself as a truly national player, the group continued to add dealers in Ontario.

At the same time, BMR settled into its new multi-banner strategy. The BMR Pro banner, geared to a contractor clientele, opened its first store in Madawaska Township, Ont., early in the year, which was joined by the first Quebec Pro store (in Trois-Rivières) in September. In July, the company penetrated the high-rise construction market with a stake in Laval’s Lefebvre & Benoit. Meanwhile, the La Shop urban proximity concept got its second location, in the town of Mount Royal, Que., joining the flagship store in Montreal’s Griffintown.

One acquisition that ventured outside the industry’s confines was Canadian Tire’s takeover of U.S.-based Party City. That deal attracted a lot of attention from our readers―and marked the next level for CTC’s leverage of its Triangle rewards program data and its outreach to a younger market.

Similarly, stories about movement among buying groups were among the hottest in our 2020 issues. Castle Building Centres attracted attention when it welcomed Winnipeg’s The Lumber Hub in April, as well as dealers in Ontario in February and September. TIMBER MART expanded its ranks, capping off the year with the addition of three eastern Ontario dealers.

(Stay tuned during 2020 as we continue to bring you all the news you need to know from across Canada’s home improvement industry!)

ST. JACOBS, Ont. — A letter has been issued to Home Hardware vendors advising them of the implementation of a deduction off all existing contracts commencing January 1. The amount of the rebate is 1.5% and it’s just the latest move by a company that is rapidly evolving in the face of a tough competitive landscape.

The letter to hardware vendors was signed by Joel Marks, vice-president, merchandise hardlines, while Vice President, Merchandise LBM Marianne Thompson’s name appears at the bottom of the letter sent to building materials suppliers.

According to the letter, the rebate, or “Growth Investment Initiative”, will be used entirely to invest in infrastructure, e-commerce and marketing. The letter comes with an agreement to be signed by the vendor. Home Hardware will assume compliance from companies that do not reply.

Reaction by vendors to the letter has ranged from acceptance to exasperation. However, the overriding response has been an acknowledgement that Home Hardware is just adopting competitive practices already being used by some of its competitors.

“It is an exciting time at Home Hardware. We are growing and building on the best of the past towards a bright future for everyone—dealer-owners, our employees and our business partners,” Marks and Thompson said in a statement sent to Hardlines.

“We know that our future success lies in investing in our business today—which is why we recently shared a letter with our supplier partners informing them that Home is investing over $100 million over a two-year period in areas that will enable us to continue to deliver the results and success that our suppliers have come to expect as a valued partner of Home Hardware.”

The deduction, Marks and Thompson noted, “will be invested in new growth for both parties.” The growth plan includes a focus on supply chain efficiencies, stronger POS data insights, online investments and improved marketing programs as the company continues its reinvention as an integrated retailer, rather than a wholesaler.

“We look forward to growing together with our supplier partners,” Marks and Thompson concluded.

MONTREAL ― Richelieu Hardware has added another strong Canadian company to its roster with the acquisition of The MIBRO Group.

MIBRO is a supplier of hardware, hand tools and power tool accessories. And while its products are carried by most majors in Canada and the U.S., it is also known for its private-label offerings in these lines. In addition, it has rope and chain divisions under King Chain and King Cord, and sells the Wolfcraft brand, a renowned German manufacturer of specialty woodworking tools, for North America.

MIBRO joins Richelieu’s existing lineup of retail brands, Onward, Reliable, Madico, Feltac, Cedan and Nystrom. Richelieu offers more than 110,000 SKUs and boasts that it sells to more than 80,000 customers in North America through 78 facilities, including 42 DCs in Canada. Company sales exceeded $1 billion in 2018.

The addition of MIBRO “will really reinforce the enterprise offering for hardware retailers,” says Richelieu President and CEO Richard Lord (shown here). He notes that 70% of MIBRO’s business is south of the border. “This will really reinforce our presence in the U.S. for the hardware retailers,” Lord adds.

MIBRO’s offices and warehouse in Scarborough, in Toronto’s east end, will remain in place, with management and operations remaining intact. Larry Lucyshyn will continue as general manager of MIBRO. That company’s sales team will be added to Richelieu’s to better serve dealers across the country and in the U.S. MIBRO also has a warehouse in Buffalo, which will also be part of Richelieu’s expansion plans for retailers in the U.S.

MEMPHIS ― Orgill has announced changes to the roles of its top-level executive team. Effective January 1, President Boyden Moore has added the position of CEO to his current responsibilities. Ron Beal, who had been both CEO and chairman, will remain in the latter post, with Byrne Whitehead continuing as vice-chairman.

“Ron and Byrne have led Orgill through our most dynamic growth, from a small regional distributor to the fastest growing, most successful distributor in the industry,” said Moore. “And while they are stepping away from their day-to-day management duties, we are pleased to have their continued guidance and support for years to come.”

Moore took over as president last year after serving as general manager of retail and president of Orgill subsidiary Tyndale Advisors. At the same time, Orgill also announced the retirements of two long-time team members, Grady Gennings and Mike Ferrell, at the end of 2019. Gennings led Orgill’s corporate accounts team and has been with the company for 31 years, while Ferrell managed Orgill’s LBM category and has been with Orgill for 26 years.

Paul Wybrow has joined Liteline Corp. as Ontario sales manager. Wybrow brings more than 30 years of experience in the lighting industry, ranging from inside sales to manufacturer sales roles.

DID YOU KNOW…

… that 2020 marks the 25th anniversary of Hardlines? That’s right! It all started in 1995 with a fax newsletter to the industry. We’ll be celebrating all year in lots of fun ways, so stay tuned!

BURLINGTON, Ont. ― IKEA Canada has recently announced it will begin opening smaller urban stores in Canada, starting in Toronto, according to the Globe & Mail. The retailer has an eye to following up with locations in other urban centres like Montreal and Vancouver. Two formats are being tested: one in the range of 50,000 square feet, offering a similar assortment of products as IKEA’s big boxes with delivery to home or pick-up points in lieu of an on-site warehouse. A smaller format, closer to 5,000 square feet, would offer a limited inventory based on neighbourhood needs.

BOUCHERVILLE, Que. — Lowe’s and RONA stores united to collect new toys during Lowe’s Canada’s annual Toy Drive, held from November 18 to December 15. For the first time since the campaign was launched in 2010, 35 RONA stores joined forces with Lowe’s-bannered stores and the Salvation Army to collect toys for under-privileged children in Ontario, Manitoba, Saskatchewan, Alberta and British Columbia.

HOFFMAN ESTATES, Ill. — Sears Holdings has sold its DieHard brand of car batteries to Advance Auto Parts in a $200 million deal. Similar to the terms of its sale of the Craftsman brand to Stanley Black & Decker, Sears retains certain rights to DieHard, which it created in 1967. It will continue to carry the line in its stores and can still launch its own DieHard products, as long as they aren’t auto related, such as its DieHard boots.

MOORESVILLE, N.C. — Lowe’s Cos. is teaming up with Yardi, a provider of real estate management software, to allow users to purchase inventory from LowesForPros.com. Beginning in January, Yardi users can log in and select Lowe’s as their vendor, adding items to their cart directly from Lowe’s pro website. 

SUPPLIER NEWS

WARWICK, Que. — Roland Boulanger & Cie ltée filed for bankruptcy in November 2019, according to the documents from the Office of the Superintendent of Bankruptcy. The wood mouldings manufacturer saw its sales fall 30% after RONA was acquired by Lowe’s and turned to other suppliers. It initially closed its doors as a temporary measure, faced with a lack of funds and dogged by litigation with banks over its recovery plan.

VANCOUVER ― Minority shareholders in Canfor have voted down a bid by Jim Pattison to take the forestry firm private. The B.C. magnate made a proposal in August to purchase the 49.1% of the company not already owned by his Great Pacific Capital Corp. for a cash price of $16 per share cash, or $983.8 million.

ECONOMIC CONDITIONS

Retail sales decreased 1.2% to $50.9 billion in October 2019. A 3.1% drop in LBM and garden equipment sales, along with lower motor vehicle sales, contributed to the decline. After removing the effects of price changes, retail sales in volume terms decreased 1.4%. (StatCan)

Sales of existing Canadian homes inched up by 0.6% in November 2019, the ninth straight monthly gain. Higher sales across much of British Columbia and in the Greater Toronto Area offset a decline in activity in Calgary. Year-over-year actual (not seasonally adjusted) activity was up 11.3% in November. (Canadian Real Estate Assoc.)

U.S. housing starts rose by 3.2% to a seasonally adjusted annual rate of 1.365 million units in November 2019. Single-family construction reached a 10-month high, while multi-family starts rose for a second consecutive month. (U.S. Commerce Dept.)

NOTED

Ten months into 2019, Canadian retail sales were just 1.5% above 2018 values, not seasonally adjusted, notes retail consultant Ed Strapagiel. “At this rate,” he adds, “2019 will very likely clock in as a 10-year low for retail sales growth.” With the population growing at a rate of about 1.4% per annum and inflation near 2.1%, retail sales would have to grow by about 3.5% “just to keep pace.”

BOUCHERVILLE, Que. —The top IT and e-commerce executive at Lowe’s Canada departed from the giant home improvement retailer earlier this month.

Tanbir Grover, vice-president, e-commerce and omnichannel, left the company for a new role as VP digital at The Co-operators, a Canadian insurance co-operative that provides auto, home, life, farm and business insurance. Grover starts there in January.

He joined Lowe’s Canada in the summer of 2012 to establish and lead the Lowes.ca business. Starting in 2016, he assumed responsibility for both rona.ca and renodepot.com.

He headed up an IT team in Toronto, which remains intact following his departure. Grover’s replacement was selected from within the company and is located at the Lowe’s Canada head office in Boucherville, Que.

Even as Lowe’s in the U.S. grapples with sluggish e-commerce sales, Lowes.ca has made countless inroads and innovations to establish itself as an online player. In early 2017, Lowe’s Canada introduced a “Click and Collect” program for its Reno-Depot stores across Canada. By the end of that year, all Ace stores in Canada could make the online offering available to its customers, as well. The following summer, e-commerce was up and running at more than 100 participating RONA dealer stores.

In fact, the contrast between the online offerings of Lowe’s north and south of the border was highlighted during Black Friday in 2018. The U.S. site crashed and was “down for maintenance” on one of the busiest days of the year in U.S. retail. The Canadian Lowes.ca site was unaffected by any disruptions.

With a strong legacy behind him, Grover graciously wound down his stint at Lowe’s Canada by presenting at the Hardlines Conference on November 14, just days before his departure was announced.

COLOGNE ― The International Hardware Fair, Eisenwarenmesse, will once again bring the industry together in Cologne, Germany, at the beginning of March 2020. Innovations in the categories of tools, industrial supplies, fasteners and home improvement will be on display.

As is the tradition, the fair’s organizers reach out to exhibitors ahead of the show to get a feel for the emerging trends to watch out for during the March event and beyond.

Next year, digital technology such as smart home products will be a hot category. Contactless opening systems for doors and windows are making their way into this segment, with one vendor exhibiting a system that recognizes the transponder in a key fob from up to one metre away. If the person is an authorized user, a spot of light appears on the floor in front of the door, which the user need only move their foot over to activate the technology.

Technology will also impact offerings in measurement devices, which will be able to transfer data directly to a computer so that users can evaluate it without specialized programming knowledge.

In the area of grinding technology, new production techniques make it possible for increasingly thinner cutting discs to have more abrasive grit.

When it comes to interiors, experts predict that the coming year will bring a trend reversal as warm colours and pastels in turquoise, grey and aqua take centre stage. At the same time, stronger contrasts and vibrant colours like red and orange will also be making a statement in the home next year. For floor coverings, the trend toward more environmentally friendly and sustainable practices continues.

The International Hardware Fair takes place at the Koelnmesse halls from March 1 to 4, 2020. ((Interested in attending this show? Please contact me directly for more info. Hardlines will be on site as always at this banner event for the global hardware industry, with our own Canada Night Pub Night. ―Your socially engaged Editor!)

ATLANTA ― Home Depot has unveiled a new tagline to capture its evolving vision for a seamless customer experience. “How doers get more done” is meant to reflect the DIY can-do spirit of its customers.

“Home Depot customers are doers,” the company said in a release. “They like to get their hands dirty, test new skills and build stuff.” The company has relied on catchy slogans in the past. Most recently, it used the tag line, “More saving. More doing”, which had been in place since 2009. Prior to that, the slogan “You can do it. We can help.” was rolled out in 2003.

Besides providing an empowering mantra for its customers, the new slogan reflects Home Depot’s own progress on its “One Home Depot” strategy. Launched in 2017, the plan has focused on streamlining the shopping experience across its store network and online channel. That has included investments in store enhancements, new e-commerce capabilities and improved delivery options to customers.

“One Home Depot is a full realization of the inter-connected frictionless shopping experience that we started talking about several years ago,” Craig Menear, chairman, president and CEO of Home Depot, told analysts recently. “It enables our customers to seamlessly blend the digital and the physical world. Every initiative in our investment strategy was formulated using a customer-back approach that will drive results, not just over the next several years but for the long term.”

SPECIAL REPORT — Homeowners are increasingly shopping online for home improvement products, according to recent research from the Home Improvement Research Institute (HIRI), in conjunction with The NPD Group.

About 33% of homeowners HIRI surveyed had bought home improvement products online within the past year, and half of the respondents plan to buy related items online in the next year. In addition, 44% say they are shopping online more frequently for home improvement products than they were a year ago.

This data shows “an upward trajectory in consumer acceptance” of online shopping for home products, according to HIRI.

Average in-store spending still remains higher than online spending, but the study suggests that might be because homeowners are more likely to buy large items, such as lumber and major appliances, at stores.

You can learn more about HIRI and access market sizing and category data by joining HIRI at HIRI.org.

At Home Hardware Stores Ltd., Jessica Kuepfer has been promoted to director, communications. In that role she is responsible for the strategic development and deployment of Home Hardware’s marketing communications plan, reporting directly to Marketing VP Rob Wallace.

Joe Jacklin has joined the marketing team at Regal ideas. In the newly created role of director of marketing and contractor development, Jacklin will be responsible for contractor acquisition, development, training and loyalty within Regal’s newly launched Deck Stars program. An industry veteran of nearly 30 years, Jacklin brings a wealth of marketing expertise, notably launching the successful Tough as Nails Contractor Tradeshows and Top Notch Rewards programs at Home Hardware Stores.

DID YOU KNOW…

… that Hardlines offers various ways for you to stay up to date on the industry? Make sure you are subscribed to: our Daily News (free); monthly dealer newsletter (free); and our print magazine, Hardlines Home Improvement Quarterly (free to dealers)! For more information on all of our news, visit hardlines.news. Be sure you’re headed into 2020 fully equipped with all the information resources you need to succeed!

VAUGHAN, Ont. ― MW Miller in Eganville, Ont., is the third Ontario dealer to sign on with the TIMBER MART buying group during this quarter. Established in 1960, the building supply business is owned by Dean Felhaber. It operates out of a property in the Ottawa Valley that includes six storage buildings and a 6,000-square-foot retail space. The other recent signings by TIMBER MART were Morin Bros. in Ottawa and Cornerstone Building Supplies in Kingston.

BOUCHERVILLE, Que. ― The TeBrinke family, owners of Ace Agassiz Builders’ Ltd., inaugurated their new building in Agassiz, B.C., just a kilometre away from the previous location. An official grand opening is planned for the spring.

BOUCHERVILLE, Que. ― BMR Group launched its second annual Holiday Operation late last month, supplying Christmas trees to organizations that work with those in need. BMR dealers from across Quebec opted to join head office staff to donate and decorate trees. In a single day, more than 300 trees were distributed to 77 institutions.

ATLANTA ― The Home Depot has reaffirmed its guidance for this year, with expected total sales growth of about 1.8% and comparable sales growth of 3.5%. For 2020, it expects total sales growth of about 3.5% to 4% and comp sales of 3.5% to 4%.

IN MEMORIAM

Peter Kohler, founder of Kohltech Windows and Entrance Systems, died in his sleep on December 2 at his winter home in Florida. He was 77 years old. He founded Kohler Windows, now Kohltech Windows and Entrance Systems, almost 40 years ago, and retired in 2010 after selling the company to his management team.

SUPPLIER NEWS

MILTON, Ont. — Wool insulation maker ROCKWOOL has expanded its distribution agreement with AFA Forest Products. AFA will now distribute ROCKWOOL products in Quebec and Atlantic Canada. This is in addition to AFA’s representation of ROCKWOOL in Western Canada and Ontario, an arrangement that has existed for six years. The deal will take effect March 1, 2020. Until then, Goodfellow will remain the ROCKWOOL distributor in Quebec and Atlantic Canada.

SADDLE BROOK, N.J. ― Arrow Fastener Company’s glue guns, nailers and staple guns are being used in season two of the NBC crafting competition series Making It, hosted by Amy Poehler and Nick Offerman. In the competition, eight talented “Makers” from across the U.S. are given a variety of handmade projects with the hopes of impressing the hosts and expert judges.

MONTREAL ― The Canadian Hardware and Housewares Manufacturers Association held its annual Industry Cocktail late last month at the Casino de Montréal. The Bar Dame de Cœur provided an intimate setting surrounded by the bustle of the casino floor for members and friends to meet informally and share fine food and beverages.

DELTA, B.C. ― Regal ideas helped create some of the winning entries at the 10th Annual North American Deck and Railing Association National Deck Competition, held in Louisville, Ky. Recognized with first place, Regal ideas also placed in three other categories.

ECONOMIC CONDITIONS

The seasonally adjusted annual rate of housing starts was 201,318 units in November, a slight increase of 0.3% from October. The SAAR of urban starts increased by 0.4% to 188,559 units. Multiple urban starts increased by 2.3% to 141,753 units in November while single-detached urban starts decreased by 5.1% to 46,806 units. (CMHC)

The value of building permits decreased 1.5% to $8.3 billion in October. The total value of residential permits fell below $5 billion in October for the first time since March 2019. The value of permits declined by 2.9% for single-family and 3.4% for multi-family dwellings. (StatCan)

NOTED

Canadians find greater value in their loyalty reward programs than the rest of the world and are far less likely to give them away to a charity, according to a new report by KPMG International. Only about a third of Canadians prefer to donate their loyalty rewards to a good cause rather than redeem them personally, compared to 52% globally.