QUEBEC CITY — During the recent BMR dealer show held in Quebec City, Hardlines sat down with Martin Ménard, BMR’s VP of hardware and imports, to discuss the company’s expansion efforts, both within its home province and beyond.

At a time when the subject of banner conversions is in the air throughout Quebec, Ménard is philosophical. It’s a “long process to convert a store,” he says. While the co-op is always open to new recruits, “there’s no point for us to gain a store in a market where we have [an existing] store.” That means that growth will be focused outside of Quebec, particularly in the Ontario market.

So far this year, BMR has managed to sign three dealers in Ontario, including most recently Richmond Building Centre in Ottawa (shown here), under owner Doug Kazda. The first, at the beginning of this year, was Griffith Building Supply in Griffith, owned by John Lacourse and Derek McGrimmon. That store also ended up becoming the first BMR dealer to adopt the Pro banner, catering to the pro market. Just a month later, BMR hired Jason Hamburger to the newly created position of business development manager, Ontario, reinforcing the company’s commitment to that market. Then, in July, BMR announced the signing of Feldman Lumber, a family-owned business headed by Lorne Feldman, in Timmins.

The flexibility of its banners goes a long way to tailoring the BMR offer for potential dealers. “It’s a matter of making sure the product mix is tweaked to the local community,” says Ménard. “What will sell in Lac-Saint-Jean might not sell in Montreal.”

With its deep roots in Quebec’s regions, he explains, BMR has no choice but to be flexible to meet their varied needs. “That’s what BMR is all about.”

VAUGHAN, Ont. — TIMBER MART has added Morin Bros. Building Supplies Inc. to its membership. Located in Ottawa, Morin Bros. will join effective January 1, tapping into the buying power of the country’s second-largest stand-alone buying group.

It’s the second sign-up that TIMBER MART has announced in as many weeks. Cornerstone Building Supplies in Kingston, Ont., is yet another independent retailer to join the buying group. While Morin Bros. has been in existence for almost 34 years, Cornerstone was opened in September of last year by owner Mason Laframboise.

Cornerstone has 7,500 square feet of retail space on top of a warehouse and yard and serves a clientele that ranges from contractors and DIYers to architects and interior designers. “Mason and his team are energetic entrepreneurs who have a bright future ahead of them in the building-material industry,” says Ian Cook, TIMBER MART’s regional director of member services for Ontario. “They’ll benefit greatly from our marketing support as well as our building-material and hardware buying programs.”

Morin Brothers, an important player in the Ottawa market, helps round out TIMBER MART’s growing commercial side of its membership, which consists of dealers who are focused more on building, OEM and institutional customers. With their trade focus, many do not even carry the TIMBER MART banner or make use of many of the DIY-focused services such as flyers.

Founded in 1986, Morin Brothers employs a team of 60 full-time staff and offers a wide product assortment that includes gypsum, light steel framing, insulation, acoustical and speciality ceilings, doors and frames, wall coatings and hardware. It operates on a property that stretches across 3.9 acres and includes 33,500 square feet of warehouse space and 7,300 square feet of retail space and offices.

The signing also provides Morin with a Canadian-made option. “A number of American-based businesses are buying into our Canadian market share and we felt we needed to join forces with TIMBER MART to be better recognized by manufacturers and truly compete,” says Gérald Morin, a co-owner of Morin Bros. Building Supplies. “We look forward to benefitting from the group’s buying power and their many other services that will sustain our rapid growth in Ontario and amidst fierce U.S. competition.”

VAUGHAN, Ont. ― Following a flurry of changes, WSB Titan is preparing for its next steps as two senior members of the national drywall, steel framing and insulation supplier network move into retirement.

Doug Skrepnek (shown here), president of WSB Titan and president of the Canadian division of parent company GMS Building Supplies, had been actively building Titan’s presence in Canada when it got a takeover offer of its own last year.

GMS, a giant commercial drywall operation out of the U.S., acquired WSB Titan in June 2018 for US$627 million ($800 million). But WSB Titan had already been making acquisitions of its own prior to the GMS takeover. That included the takeover in 2015 of Slegg Building Materials, with a dozen locations on Vancouver Island, and BC Ceilings in the Lower Mainland and Alberta.

Now Skrepnek says he’s stepping back to assume a consulting role at WSB Titan. Travis Hendron, currently EVP of Watson, will take over Skrepnek’s role beginning in January. Hendron, a VP with GMS in the U.S., formerly headed up that company’s mergers and acquisitions group. He came up to Canada from Atlanta this past June. Skrepnek’s son Evan has stepped in as VP of Watson.

Another arm of WSB Titan, Shoemaker Drywall Supplies in Alberta, is also going through some succession changes. Ryan Shoemaker has been stepping back in recent months as Greg Holunga, formerly VP of sales, has moved into the leadership role there. His title is now president of Shoemaker Drywall and WSB Titan for the Lower Mainland.

SPECIAL REPORT ― Walmart and Target are both using artificial intelligence to streamline their operations, but how each company is making use of retail robots underscores the possibilities and pitfalls of in-store robotic technology, an article from CNN reveals.

Walmart is investing heavily in artificial intelligence in its stores. The company will add self-driving robots to scrub the floors of more than 1,860 of its individual stores by February. Additionally, it will deploy robots to scan shelves at 350 stores and use AI to scan deliveries and sort them by department onto conveyor belts at 1,700 stores.

The CNN article says that operating numerous large brick-and-mortar locations is expensive for Walmart, especially as more customers shop online. By adding more AI to their stores, Walmart hopes to increase worker productivity and control costs.

Walmart says these “smart assistants” will reduce the amount of time associates spend on “repeatable, predictable and manual” tasks so they can offer more direct customer assistance to shoppers.

On the other hand, U.S. mass merchant Target has a markedly different vision for the role of AI in its operations. The company has added self-checkout and automatic cash-counting machines to hundreds of stores in recent years, CNN says, but according to CEO Brian Cornell, the company won’t be adding AI to its 1,850 sales floors.

“You won’t see robots in Target stores anytime soon,” Cornell says. “We really think, even in today’s environment, where people are talking about AI and robotics and different elements of technology, the human touch still really matters.”

John Mombourquette has been promoted to district manager for Orgill Canada. Reporting to Erik Schlaud, VP of Sales-Canada, Mombourquette will manage the sales teams in Ontario, Nova Scotia, New Brunswick and Prince Edward Island. He was formerly a business development manager with Orgill.

DID YOU KNOW…

… that you can read our sister publication, Hardlines Home Improvement Quarterly, online? This magazine gets mailed to 11,000 dealers and managers across the country four times a year. But you can access back issues of HHIQ anytime on our website—and they go all the way back to 2013. Check them out here!

BOUCHERVILLE, Que. ― RONA dealer-owners Russ and Tess Jones recently celebrated the grand opening of a new concept for RONA, their new RONA Appliance & Design Showroom by Coast Builders in Gibsons, B.C. The Joneses, who own two other B.C. RONA stores in Madeira Park and Sechelt, acquired the 5,000-square-foot Gibsons Sears store in 2017. The owners connected three shipping containers to the store, creating a space for seasonal, patio and outdoor power equipment products. 

SASKATOON ― Federated Co-operatives Ltd. blamed Calgary Co-op’s decision to switch grocery suppliers for forcing its hand into closing its Calgary warehouse. In a statement, Federated Co-op VP Vic Huard blasted Calgary Co-op’s switch to competitor Save-on-Foods as an “avoidable development” that will add to the city’s economic pressures. Calgary Co-op, he added, will now lose millions of dollars of annual profit sharing, while FCL will be deprived of about $400 million in annual revenue.

BRAMPTON, Ont. ― Loblaw Cos. Ltd. has launched a “curated marketplace” online, featuring brands and products not previously available through its retail banners, in a move to eat into Amazon’s Canadian market share. Building on the existing PC Express platform, which offers buy online, pick up in-store and home delivery options, the new marketplace is open to customers of the Loblaws, Real Canadian Super Store and Atlantic Super Store banners, but is not yet offered in Quebec.

TORONTO ― Hudson’s Bay Co. Chairman Richard Baker has warned minority shareholders that his $1.1 billion bid to take the company private is their best bet, as shares fell last week to a five-month low. Shareholders vote on the $10.30-per-share bid on December 17. Baker has secured the backing of the board of directors and shareholders controlling about 57% of the company’s equity. Outspoken dissidents, however, include Catalyst Capital Group and Sandpiper Group.

SUPPLIER NEWS

VANCOUVER ― CanWel Building Materials Group says the Toronto Stock Exchange has accepted its notice of intention to proceed with a normal course issuer bid. The forestry firm intends to purchase for cancellation up to 5,995,340 of its common shares, but no purchases are guaranteed. Any shares CanWel does buy back will be at the market rate at the time of the transaction.

NEW BRITAIN, Conn. ― Stanley Black & Decker is moving to train workers to collaborate with artificial intelligence. According to Pradheepa Raman, chief talent innovation officer for the tool maker, Stanley Black & Decker is committed to overcoming a skills deficit by training 10 million factory workers, or “makers” in company parlance, by 2030. As part of that training push, machine engineers and operators will learn how to work alongside automated devices.

ECONOMIC CONDITIONS

Sales of existing U.S. homes in August rose unexpectedly to their highest level in nearly a year and a half. Home resales increased by 1.3% to a seasonally adjusted annual rate of 5.49 million units in the second consecutive month of gains. (National Association of Realtors)

NOTED

The latest StatCan data show Canadian retail sales growth “stumbling along slowly” according to analyst Ed Strapagiel. Although sales have edged up slightly recently, the three- and 12-month trends remain lacklustre. LBM and garden equipment, however, were a bright spot, with building material and garden equipment and supplies merchants up 5.4% in Q3—a significant recovery from the 0.9% gain for the first half of the year.

OVERHEARD…

“Do you know, in our entire history, we have not closed one store?”
―Fred Pennell, vice president merchandising operations at Princess Auto. He spoke at the recent Hardlines Conference near Toronto.

OUT & ABOUT

Watch for David Chestnut and Michael McLarney at the Buildings Show and Construct Canada this week at the Metro Toronto Convention Centre.

BOUCHERVILLE, Que. — Lowe’s Canada made the news last week with its announcement that it will shutter 34 stores across the country.

Most of the closings will be effective January 31, 2020, with some, including three in Nova Scotia, to take place mid-February. The move follows what the company called in a release “a detailed strategic review of its operations to improve performance and better position itself for the future.” The closings include Lowe’s and RONA stores across the country, plus a Reno-Depot in Trois- Rivières, Que.

Lowe’s Canada will also undertake a process to simplify multiple store banners, “to drive efficiency and reduce operational complexity.” However, it insists that it will continue to support its core banners. “We are taking decisive action to build a healthy business which will provide us with the flexibility to reinvest in our future growth. This includes having a clear strategy for our banners, built on the strength of our Lowe’s, RONA and Reno-Depot brands,” said Tony Cioffi, interim president of Lowe’s Canada.

He added that the strategy will include supporting the affiliated dealers.

Further changes will continue at the Boucherville head office, as well. These include reorganizing the retailer’s support structure by reducing the corporate workforce across the country. It will also include rationalizing product assortments with the possibility of inventory liquidation, as well as accelerated depreciation and amortization and severance as the staff is reduced.

“We’re also reorganizing our corporate support structure across Canada to more efficiently serve our stores and we plan to migrate Canada to the U.S. IT platform to eliminate efficiencies and unnecessary technology duplication,” said Ellison on a call to analysts following the release of the third-quarter results.

Lowe’s third-quarter results, released at the same time as the announcement of the Canadian store closings, included $53 million of non-cash pre-tax charges resulting from the company initiating a strategic review of its Canadian operations during that quarter. As a result of the continued Canadian restructuring, Lowe’s expects to incur additional pre-tax operating costs and charges of $175 million to $225 million in the fourth quarter.

(Click here to see a full list of the Lowe’s Canada stores that will be closed.)

KING CITY, Ont. ― At the 24th annual Hardlines Conference, held earlier this month in King City, Ont., speakers addressed topics ranging from social media marketing to employee retention and brand differentiation. With the theme, “It’s all about the experience”, the two-day event explored ways that retailers can maximize their offerings and expertise, both in-store and online.

Tanbir Grover, eCommerce and omnichannel VP at Lowe’s Canada, talked about making bricks-and-mortar retail spaces and online sales work in tandem. “The online channel represents an opportunity to be successful beyond your four walls,” he said. “For all of us who are battling Amazon, the biggest advantage we have is our physical space.

Joe Franquinha shared the experience of Crest Hardware in Brooklyn, N.Y., which his father Manny founded in 1962. He commented that friendly staff are not enough if they don’t know their merchandise. “Beyond making sure your staff are attentive and friendly, ensuring sales associates have the product knowledge is the other piece of the puzzle,” he said.

Fred Pennell of Princess Auto spoke passionately about the importance of removing barriers to customer satisfaction. He took aim at the “asterisk” in a flyer or coupon that adds extra stipulations and needless friction to the shopping experience, as is often the case when it comes to discounts and return policies. At Princess Auto, Pennell said, employees aren’t hamstrung by policies that restrict them from meeting customers’ needs: “They can make a decision on the floor.”

The strategy is necessary, he says, to ensure both customer loyalty and staff morale. Transparency, too, is key to the culture at Princess Auto. “We share everything,” Pennell told the delegates. “Everyone in the company knows the sales numbers. We bring out our vendors and tell them. We don’t hold that back.” The result, he added, is a turnover rate half the Canadian retail average.

The conference ended on a high note with a presentation by John Hartmann, president and CEO of True Value Company. Under Hartmann, the U.S. retailer recently overhauled its ownership structure from a pure co-op to a hybrid wholesaler model which dropped the membership requirement. The question in the minds of dealers, said Hartmann, was, “Why can’t I have access to my equity in the company?” Previously, he explained, those assets were “trapped until an individual chose to leave the organization.”

True Value therefore “opened up a new chapter in the history of the company,” Hartmann said, by releasing equity to dealers. “We believed that a good portion of that money would be reinvested in the local business and it has been great to see just that.”

The Hardlines Conference offered two days of learning and networking, with insights and examples of a well-curated retail experience. This year’s event drew more than 150 people from across Canada and beyond.

MOORESVILLE, N.C. — Lowe’s Cos. has reported sales for the third quarter of $17.4 billion and a consolidated comparable sales increase of 2.2%. Comp sales for the U.S. home improvement business increased 3%. Net earnings reached $1 billion, up from $629 million in the third quarter of 2018. The period included non-cash pre-tax charges of $53 million related to the performance of the Canadian business, whose stores experienced negative comps.

Despite concerns about Lowe’s Canada (see our top story—your ever-helpful Editor), the parent company turned in strong results, driven by stronger markets south of the border. Earnings reached $1.41 per share, up 35.6% from the same period last year. (Hardlines estimates that the Canadian business from all its stores here represents about 9% of Lowe’s total sales.)

Lowe’s also reaffirmed its support of the business in Canada. “We are committed to the Canadian market and are taking decisive action to improve the performance and profitability of our Canadian operations,” said Marvin Ellison, president and CEO of Lowe’s Cos.

Lowe’s upped its forecast for fiscal 2019, with expected earnings in the range of $5.63 to $5.70 per share, up from $5.45 to $5.65 per share. It still expects comparable sales growth of around 3%.

BURLINGTON, Ont. — IKEA Canada has developed a new city centre market approach in Toronto as it seeks to become more accessible to customers in urban areas.

“We continue to see positive growth in the Canadian market, all while innovating and developing our business for the future,” said Michael Ward, CEO and chief sustainability officer for IKEA Canada. “We want IKEA to be there for our customers, whenever and however they choose to meet us.”

Over the past year, IKEA has opened city centre locations in major cities, including New York, Paris, Moscow and London. Toronto is the first market in Canada to see this new city centre approach.

The city centre model involves becoming more accessible through new locations in the urban core and enhancing IKEA’s digital presence. The final details and locations around Toronto are still to be determined.  

The city centre concept is aimed at a growing demand for convenience and will complement existing stores in the market. “As one of the fastest growing and most diverse cities in North America, Toronto is a natural first choice for us to target growth in the city,” said Ward.

Over the past year, IKEA Canada has added to its fulfilment network with new customer distribution centres in Richmond, B.C., and Kleinburg, Ont.

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. 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!)

VAUGHAN, Ont. ― TIMBER MART has announced that Cornerstone Building Supplies of Kingston, Ont., is the newest independent retailer to join the buying group. Cornerstone Building Supplies opened in September of last year. It has 7,500 square feet of retail space on top of a warehouse and yard and serves a clientele that ranges from contractors and DIYers to architects and interior designers.

MOOSONEE, Ont. — The Mushkegowuk Development Corporation (MDC) in Moose Factory, Ont., owned by First Nations members of the Mushkegowuk Council, has purchased MDC Supply GP, which operates as Great North Builders. Great North primarily served the First Nations of the James Bay area for 40 years, until founder Jack Hood retired and closed the business at the end of 2018. MDC will manage the store, which is in Moosonee, Ont., and is a member of Castle. It’s expected to reopen in early 2020.

ATLANTA — The Home Depot reported third-quarter sales of $27.2 billion, an increase of 3.5%, over 2018. Comparable sales were positive 3.6%, with comp sales in the U.S. positive 3.8%. That includes positive comps being reported from Home Depot Canada. Net earnings for the third quarter dipped to $2.8 billion from $2.9 billion. Craig Menear, chairman, CEO and president of Home Depot, admitted that “sales were below our expectations.” The company has downgraded its 2019 forecasts, with sales expected to grow by about 1.8% and comp sales to increase roughly 3.5%.

SYDNEY, N.S. — Santa Claus is coming, by helicopter no less, to Cape Breton Island. He and his elf were to have landed at the local Royal Canadian Legion branch, courtesy of a local TIMBER MART dealer. According to Saltwire.com, Art Mullins of Woodland Timber Mart in Glace Bay is paying for the helicopter.

BOUCHERVILLE, Que. —The RONA Viger-Leblanc store in Laval, Que., has been renovated and reopened. The store, owned by Serge Viger and Manon Leblanc, has been affiliated with the RONA banner for 45 years. It underwent a complete transformation, with an investment of nearly $400,000, that included renovating the sales floor to add 3,000 products and completely redesigning the store’s racking.

SUPPLIER NEWS

PARIS ― Saint-Gobain has reached a $1.4 billion agreement to purchase U.S.-based drywall maker Continental Building Products Inc. The deal will see Saint-Gobain pay $37 per share in cash. Continental’s gypsum wallboard production will be folded into a Saint-Gobain unit to be newly created. Saint-Gobain aims to streamline some $50 million in costs through the transaction.

IRVINE, Calif. ― Budget Blinds franchisees throughout Canada will sell the Hunter Douglas line of window coverings under the terms of a deal between the two firms. Beginning earlier this month, Budget Blinds’ 74 franchisees in Canada became eligible to join the Hunter Douglas Aligned Dealer Program and add the brand to their consultation and installation service.

MIDDLETON, Wis. ― Spectrum Brands Holdings reported that its Q4 sales rose 1.9% to $993 million, from $974.4 million for the comparable quarter in 2018. However, the company’s net loss was $122.6 million, or $2.51 per diluted share, compared with a net loss of $116.2 million ($2.51) a year ago. In the hardware and home improvement segment, sales edged up 1.1% to $364.9 million, with gains in residential security partially offset by decreases in builders’ hardware and plumbing sales.

ECONOMIC CONDITIONS

Sales of existing Canadian homes were unchanged in October. Activity is now almost 20% above the six-year low reached in February 2019 but remains 7% below heights reached in 2016 and 2017. Higher sales in Greater Vancouver and the Fraser Valley, as well as Ottawa, offset a decline in activity in the Greater Toronto Area and Hamilton-Burlington. Actual (not seasonally adjusted) activity rose 12.9% year-over-year. (Canadian Real Estate Association)

U.S. homebuilding was on the rebound in October, with housing starts on the rise and permits hitting a 12-year high. Housing starts rose 3.8% to a seasonally adjusted annual rate of 1.314 million units as single-family construction increased for the fifth consecutive month. The value of building permits rose by 3.2% to its highest level since August 2007, largely on the strength of the single-family segment. (U.S. Commerce Department)

U.S. retail sales recovered by more than expected in October. After declining by 0.3% in September, the value of sales rose by the same percentage in October. Excluding the automotive and petroleum categories, retail sales edged up by 0.1%. (U.S. Commerce Department)

NOTED

Online seller Alibaba says its Singles Day event generated some $13 billion in sales within its first hour alone—nearly double the estimated haul of Amazon’s Prime Day in July. The first-hour sales represent a 32% increase from last year’s Singles Day, an annual event aimed at single young people.

KING CITY, Ont. — Suppliers and retailers from across Canada gathered last week to honour the retail home improvement industry’s best hardware and building supply retailers. The occasion was the 2019 Outstanding Retailer Awards Gala Dinner, which marked the end of day one of the 24th Annual Hardlines Conference at the Kingbridge Centre in King City, Ont.

Delegates at the Hardlines Conference joined leaders from the retail chains, co-ops and buying groups at the Gala Dinner to honour their members and fellow retailers. Dealers from across the country were celebrated in eight categories covering the range of hardware and home improvement retailing formats, including a brand-new category that recognizes the entrepreneurial spirit that is at the core of this industry.

This year’s winners are:

• Best Hardware Store, any size – Windsor Home Hardware in Windsor, N.S., Jeff Redden, Owner;
• Best Building Supply or Home Centre under 15,000 square feet – Norquay Co-operative Association Ltd. in Norquay, Sask., Justin Petelski, Manager;
• Best Building Supply or Home Centre over 15,000 square feet – Cobourg Home Hardware Building Centre in Cobourg, Ont., Brad and Alana O’Neill, Owners;
• Best Contractor Specialist – Wolf Creek Building Supplies in Lacombe, Alta., John deRegt, Owner;
• Best Large Surface Retailer – Lowe’s Crowfoot Calgary in Calgary, Alta., Ahsan Rana, Manager;
• Best Young Retailer – Rebecca Wichers-Schreur, Vice President – HR & Administrative Services, Wood Works of Renfrew in Renfrew, Ont.;
• Marc Robichaud Community Leader – RONA L’entrepôt Plateau in Gatineau, Que., Christian Leduc, Manager;
• Independent Spirit – Ace Victory Building Centre in Mackenzie, B.C., Sylvain and Marilyne Laferriere, Owners.

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

“As with every industry, there are companies that stand out and individuals who make a difference. We are proud to be able to showcase the excellence in this industry through these awards,” said Michael McLarney, President of Hardlines Inc., which presents the awards.

Launched in 1992, the Hardlines Outstanding Retailer Awards are the industry’s only national awards program dedicated to celebrating the achievements of hardware and building supply dealers in Canada. In its 27-year history, the program has honoured more than 160 retailers.

KING CITY, Ont. ― Dealers and vendors from across Canada converged on the Kingbridge Conference Centre & Hotel in King City last week for the 24th Annual Hardlines Conference. Under the theme, “It’s all about the experience”, this year’s conference drew an outstanding lineup of speakers from both within and outside the industry.

Valentina and Angela of Toronto’s The Store on Queen (TSOQ) got the ball rolling on the first morning, sharing tips on how to stay competitive by making the customer’s experience stand out. “We, at the end of the day, are selling affordable ladies’ clothing, which any number of stores in Toronto can do,” they reminded participants. “What we do is something completely different with our in-store experience, online presence and, of course, our story.” Their talk included tips on how to harness the power of social media to drive marketing on a $0 budget.

Claudie Gervais of BMR Group addressed the company’s move to a multi-banner strategy. “Now we have banners that reflect our customers, but also our dealers,” she said.

Looking at the big picture, Peter Norman of Altus Group spoke candidly and accessibly about the broad trends of the economy, while Michael McLarney of Hardlines addressed the state of the industry, with a focus on customer experience and retail specialization.

On the dealer side, Home Hardware Chairman of the Board and independent dealer Christine Hand spoke to her own experience using her family’s cross-generational expertise to gain a digital edge.

The conference continued the second day with Joe Franquinha from Crest Hardware, who spoke about how his business re-evaluated its practices to contend with online giants. Paula Courtney of WisePlum and Canadian Tire’s Shawn Stewart shared the stage for a frank exchange about consumer habits. Capping off the event were Fred Pennell of Princess Auto, who shared some of the secrets of his company’s success in expanding and updating, and True Value CEO John Hartmann on the banner’s new equity structure and how it allows retailers to invest in their businesses.

Outside of the conference room, Pub Night sponsored by RONA and an Industry Cocktail Reception put on by Home Hardware kept the fun and networking opportunities going. Next year will mark Hardlines’ 25th Annual Hardlines Conference and it’s sure to be the best edition yet! Watch this space for the details to be announced.

QUEBEC CITY — Under the theme “Close-Knit and Connected”, the 2019 BMR Group trade show gathered some 2,000 visitors, including 275 dealers at Quebec City’s Centre des congrès. Several new features distinguished this year’s event.

At the entrance to the hall, an “Innovation Centre” was set up to bounce around the most original business ideas, and a recruitment station featured BMR’s latest video campaign aimed at attracting new employees. At a time when many Quebec firms are facing personnel shortages, the campaign portrays working for BMR as an appealing choice.

New categories were also in the spotlight—some products literally so, mounted on luminous stands. New lighting and cleaning products were on view, but one of the strongest trends at the show was smart home accessories. “We’re putting a lot of emphasis on the connected products,” said Martin Ménard, BMR’s VP of hardware and imports.

Private-label products were also on display, as BMR positions itself to consolidate a dozen house brands into about one third of that number. In the area of cleaning products, Ménard explains, “mostly it was with private labels before. We’ve been switching to national brands and that strategy has paid off.”

OTTAWA ― Shopify’s subscribed merchants have surpassed the one-million mark, and analysts are remarking on the pace of the e-commerce platform’s growth. It already passed eBay this year as the number-two e-retailer on the stock market, just after Amazon.

New York University’s Scott Galloway, in a YouTube video commentary, favourably contrasted Shopify’s low profile with the prominence of Amazon’s branding. “Amazon sits on top of a data set and leverages these data and learnings to buttress its own private-label brands and always—always—its own brand is put forward,” he says, while in contrast Shopify is “the perfect partner for brands looking to build their own business.”

Hana Abaza, marketing director for Shopify Plus, plays down the hype. “I mean listen, I’ve seen all of the comments around that,” she says. “I think what Shopify does and the problems we try and solve is really guided by what’s in the best interest of our merchants.”

Still, analysts took note when Shopify announced in June it would build a fulfillment network to deliver orders within two days, considering it a possible sign the company intends to become more competitive with Amazon’s Prime services.

After 27 years in the industry, Ted Whitehouse is retiring from his role as director of business development with Century Aluminum Railings. He was instrumental in introducing some of the first component-style aluminum railing programs at the dealer and distribution level in the early ’90s. Century is a manufacturer and distributor of DIY and contractor-grade aluminum railings, with national distribution in Canada and the U.S.

DID YOU KNOW…

…that Hardlines Classifieds provide a targeted, cost-effective way to find your next hire? Our Classifieds reach thousands of strong candidates in sales and marketing management in the hardware and home improvement industry. Contact Michelle Porter at the Hardlines World Headquarters for a free quote!

VAUGHAN, Ont. — TIMBER MART’s commercial members from across Canada visited the Juno Beach Centre in Courseulles-sur-Mer, Normandy, France, in September to honour the Canadian soldiers who lost their lives during the Second World War. The group toured the site where more than 14,000 Canadian troops landed on D-Day (June 6, 1944) to liberate France. To commemorate their visit, the group made a donation to the centre, while unveiling plans for a commemorative brick to be placed on the beach at the centre’s memorial kiosks in the spring.

BOUCHERVILLE, Que. ― Lowe’s Canada has announced that dealer-owners Andrew Zacharias and Andrew Neustaeter recently celebrated a grand opening for their RONA La Crete Building Centre. The Alberta store has been displaying the RONA banner since January as renovations took place to triple the size of the sales floor and accommodate hundreds of new products.

BOUCHERVILLE, Que. ― Lowe’s Canada has partnered with Metabo HPT, formerly known as Hitachi, to offer tools equipped with MultiVolt, a power tool platform that can switch from a corded to a cordless power source. The Hitachi brand got changed to Metabo following some corporate shuffling. Hitachi’s power tool division, Hitachi Koki, bought German power tool company Metabo in 2016. Then, Hitachi sold off Hitachi Koki to an American holding company, KKR, which decided to replace the Hitachi brand with Metabo HPT.

MONTREAL ― Amazon is set to open a distribution centre in Montreal’s Lachine area, the e-retail giant has announced. The packing and shipping facility will create 300 new jobs, according to Amazon, and will be operational in time for the holiday season. Amazon has similar warehouses in British Columbia, Alberta and Ontario.

SUPPLIER NEWS

MONTREAL ― Desjardins Capital has acquired majority stakes in three flagship manufacturers in a bid to keep them under Quebec ownership. Équipement Boni in Saint-Bruno, and Montreal’s Etalex and FormaFil are consolidating under the auspices of SJM Group, a new entity specializing in commercial fixtures and heavy-duty storage systems. It will partner with Desjardins Canada in what the latter’s chief operating officer, Luc Ménard, touts as a ground-breaking arrangement.

VANCOUVER ― CanWel Building Materials said its Q3 revenues increased by 6.6% to $373.2 million, compared to $350.2 million in the same period in 2018. Net earnings declined to $6.4 million from $8.5 million in Q3 of 2018. Sales for the distribution segment rose by $24.5 million or 7.3%, largely due to the inclusion of the results from the Lignum acquisition in 2019 and the company’s 2018 acquisitions.

LIVONIA, Mich. ― Masco Corp. reported Q3 earnings of $0.68 per share. Sales rose by 2% to $1.95 billion. Operating profit for the quarter increased by 10% to $316 million; adjusted operating profit was up 8% to $326 million.

ECONOMIC CONDITIONS

Housing starts were at a seasonally adjusted annual rate of 201,973 units in October, down 8.7% from 221,135 units in September. Urban starts decreased by 9% to a SAAR of 189,304 units. Multiple urban starts decreased by 12.5% to 139,518 units in October, while single-detached urban starts increased by 2.4% to 49,786 units. Rural starts were estimated at a SAAR of 12,669 units. (CMHC)

The total value of building permits decreased 6.5% to $8.3 billion in September, largely due to declines in the residential sector. Gains were reported in four provinces, with the largest increase in Alberta (+7.2% to $1.0 billion). The largest decline was in Quebec, mostly due to a drop in multi-family permits, which fell 12.1% to $2.9 billion. The value of single-family permits decreased 8.7% to $2.2 billion, which was largely due to a $196 million decrease in Ontario. Commercial permits rose 6.1% to $2 billion in September. (StatCan)

NOTED

According to a Cornerstone Capital Group study, between six and 7.5 million existing retail jobs could be replaced by some form of automation over the next decade.

QUEBEC CITY ― At its latest trade show, held last week in Quebec City, BMR Group unveiled a new service offering for its dealers. Called the IMAGINE Program, it was developed by Laval-based merchandising and detailing company RDTS to optimize marketing, sales and store traffic. In its ongoing efforts to improve the customer experience, BMR will begin implementing the merchandising program beginning January 2020.

“We are really pleased to present this brand-new program to our dealers, which, in addition to offering more tools for powerful merchandising, is free of charge for them,” says Martin Ménard, BMR’s vice-president hardware and imports.

The program will be applied initially to the following departments: hardware, plumbing, electrical and paint. BMR plans to deploy the IMAGINE program to other departments in 2021. Vendors will contribute to the cost of executing the service.

BMR expects the program to deliver on a number of levels. One aim is to improve dealer loyalty to the BMR banner, while improving customer service. IMAGINE will also be used to standardize offerings in the stores across the BMR network, while increasing the visibility and availability of products through both national and regional planograms.

“This initiative reiterates our commitment to provide impeccable in-store service while continuing to help and support our dealers in their development,” Ménard adds. “We firmly believe that IMAGINE is a winning choice for both our vendors and the members of our network.”

VAUGHAN, Ont. — WSB Titan has announced that its Watson Building Supplies division has purchased Rigney Building Supplies in Kingston, Ont. It will become Watson’s seventh location in Ontario.

Previous owners Claudio and Nadia Saccon will stay on to manage the location, along with their team of 23 employees. They will report to General Manager Chuck Quick. In addition, Rigney’s purchasing arrangements will now be handled through Watson Building Supplies.

In a letter to suppliers, the principals at Watson stated, “This purchase is an important strategic component of our long-term growth strategy and we are thrilled with the opportunity to work with the many valued employees and customers of Rigney for many years to come.” The letter was signed by Doug Skrepnek, president of GMS Canada and head of Watson Building Supplies; Doug’s son Evan Skrepnek, who has stepped in as VP of Watson Building Supplies; and Travis Hendren, EVP of WSB Titan and a VP with parent company Gypsum Management & Supply, Inc. (GMS) in the U.S.

“Rigney is a great acquisition with the same type of culture that we’ve enjoyed at Watson for so many years,” says Doug Skrepnek. “And it rounds out our geographic footprint in Ontario.” The company has six other locations in the province.

WSB Titan, which is headquartered in Vaughan, Ont., just north of Toronto, serves residential, commercial and institutional markets with wallboard, insulation, lumber, roofing, steel framing and other complementary building products. Purchased in 2018 by GMS, its roots are a partnership of Watson Building Supplies in Vaughan, Shoemaker Drywall Supplies, based in Alberta, and Le Groupe Beauchesne in Quebec. (Beauchesne is not part of the GMS takeover. However, it remains a shareholder in Titan.)

MONTREAL ― At last month’s RONA-Ace Canada Buying Show in Montreal, Ace dealers were out in full force, riding the high of another year of growth.

At a time when many big boxes are feeling the pinch from e-retailers like Amazon, Ace has its constituency locked down. “For a lot of communities, Amazon can’t get to them,” says Nelson Lemos, director, dealer sales and relationship. “[Ace is] their only way.”

Not that Ace is neglecting the online channel itself. On the contrary, buy online, pick up in store (BOPIS) orders are key drivers of traffic both in store and on social media, while special orders also allow dealers to make the most out of the floor space.

Appliances are a growing category, says Lemos, with some 30 dealers currently looking to incorporate them into their offerings. By fulfilling online orders in store, dealers can tap into the market for appliances without needing to carry a large number of bulky items.

Meanwhile, Ace is putting Lowe’s Canada’s resources to work for dealers. “We’re focused on the dealer, ensuring they’re profitable and building traffic,” says Marketing Director Richard Hill, citing an improved flyer program and Ace’s commitment to “leveraging data from the relationship with Lowe’s.”

In the course of the gala at the end of the show’s first day, Ace Canada had its own Builders of Success categories alongside RONA’s. Ace Victory Building Supplies of Mackenzie, B.C., took the Community category. Ace Leader in Leader, Sask., was recognized as the Up and Comer, while Ace Building Centre Vanderhoof, in Vanderhoof, B.C., won for Lifetime Achievement.

The Vanderhoof store is “an example of a dealer that’s really pushing the envelope and serving its community,” says Lemos. It has one of the most extensive selections of appliances of any Ace Canada dealer, in a showroom that also includes kitchen and lighting categories.

Thirteen dealers were honoured for their advances in e-commerce in another indication of the growing importance of Ace’s digital platform. “Not only do they have great sales online, but they’ve also done a great job of promoting the Ace brand and leveraging social media,” Lemos adds.

NATIONAL REPORT ― Buying group leaders from across the country are watching current business conditions in anticipation of the direction of the industry—and the future for their members.

Bob Holmes is general manager of TORBSA, the Bolton, Ont.-based buying group. His observations include keeping a close watch on the political scene on both sides of the border to anticipate what will happen with issues such as tariffs.

“I think the tariffs certainly haven’t helped and, in some cases, we were talking to one manufacturer yesterday who told me that his business was off 20% all because of tariffs. So it does create an issue and it does slow things down and I think we’re going to continue to see that until we understand who the next President of the United States is going to be next year.”

Steve Buckle, president of Winnipeg-based Sexton Group, shares Holmes’s concerns about tariffs. “The overall economy globally and particularly the unpredictable application of trade tariffs are dampening Canadian economic prospects. This uncertainty carries forward into key product lines such as wood and steel-based products, where prices are proving challenging to forecast.”

Holmes is also concerned about margins. “Business across the country in some commodity products is off anywhere from 20% to 25%. And we don’t see that making up any sort of ground over the balance of the year.” He wonders whether his dealers are going to make up any of the difference that’s been lost already this year.

At BMR Group, based in Boucherville, Que., CEO Pascal Houle is keeping his eye on the growth of online selling. “Not surprisingly, e-commerce remains a ‘must’ within the retail industry,” he notes. “BMR will continue to evolve, improving substantially its online selection for hardware and building materials. We will also move toward our digital shift, which will help us acquire new technologies to enhance our daily operation management.”

The easing of mortgage rules should help housing starts in 2020, says Bernie Owens, president and CEO of TIMBER MART, even though predictions for next year anticipate a further decline in housing starts.

Looking for opportunities, Buckle at Sexton says his members will look for ways to tap into smaller home building as multi-unit housing―condos and townhouses―replace single-family dwellings. And more importantly, he’s watching the shift to renovation spending. “There is a great opportunity to capitalize on the booming renovation market.”

Owens at TIMBER MART agrees. “The resale and renovation markets should benefit, and we believe this will continue to be a viable business opportunity for the independent.”

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

Henkel has announced that CEO Hans Van Bylen will leave his position “for personal reasons” at year’s end, with CFO Carsten Knobel taking the reins on January 1. Knobel joined the company in 1995 as assistant to the management board.

SFA Saniflo has announced the appointment of Teresa Cardona as new marketing and communications manager for North America, effective November 1. In her new role, Cardona, previously marketing and social media manager at Aramark, will lead Saniflo North America’s marketing and communications team from its New Jersey head office.

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. 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!)

TORONTO ― Canadian Tire Corp. has released its third-quarter results for the period ended September 28. Consolidated retail sales increased $39 million, or 1.0%, in the third quarter. Excluding Petroleum, consolidated retail sales were up 2.7% over the same period last year. Consolidated revenue increased $5.4 million, or 0.1%; excluding Petroleum, it was up 1.7%. For the retail segment, revenue decreased $13.6 million, or 0.4%. Excluding Petroleum, retail segment revenue increased 1.2%. Canadian Tire Retail sales increased 2.7% and comparable sales were up 2.4%.

MOORESVILLE, N.C. ― Lowe’s Cos. said it will phase out rugs and carpets containing PFAS chemicals, which have been associated with cancer risk in some studies. A spokeswoman for the company told the Associated Press the transition away from the products began a year ago. Home Depot announced in September that it would remove products containing PFAS chemicals by year’s end.

ST. JACOBS, Ont. ― Quincaillerie Gérard Raymond Home Hardware, which has served Pierrefonds and Montreal’s West Island for more than 60 years, has opened a second location. Located in L’Île-Perrot, the new store boasts an 8,000-square-foot retail space. “We are very proud to extend the offer of our services and vast selection of Home Hardware products to the community of L’Île-Perrot,” said dealer-owner Claude Lavoie. Quincaillerie Gérard Raymond joined the Home Hardware banner in 2015.

BURLINGTON, Ont. — IKEA Canada had sales of $2.53 billion for the fiscal year ending August 31, an increase of 6.1% over the previous year. The home furnishings retailer also reported strong digital engagement, with 117.2 million visits to IKEA.ca, representing a 12% lift that contributed to IKEA Canada’s e-commerce sales for the year of $261.2 million.

SUPPLIER NEWS

MADISON, Wis. — Spectrum Brands has sold its four-storey head office to Harbor Group International, a private real estate investment firm. The property, built in 2013 and renovated in 2017, spans 252,122 rentable square feet. It is 100% net leased to Spectrum Brands through 2034.

VANCOUVER ― Acadian Timber Corp. generated sales of $25.4 million in the third quarter, compared to $26.6 million in the prior-year period. Operating costs and expenses were $20.6 million during the third quarter, compared to $21.2 million in 2018. The net loss of $10.9 million, or $0.65 per share, was $16.8 million below the previous third quarter’s income of $5.9 million, or $0.36 per share.

LANCASTER, Pa. ― Armstrong World Industries has reached an agreement to purchase MRK Industries, a manufacturer of specialty metal ceilings and walls with annual revenues of approximately $14 million. That transaction is expected to close in the fourth quarter.

NOTED

Nearly half of Americans (45%) have used cellphones while inside a bricks-and-mortar store to find online reviews of a product or to find better prices. That’s just one of the findings of a recent survey of U.S. adults by Pew Research.

OVERHEARD…

“Our business is performing well and as one of Canada’s largest e-commerce retailers, having generated more than $500 million in sales in the last 12 months, we are exceptionally well-positioned as we head into our customers’ biggest spending season.”
―Stephen Wetmore, president and CEO of Canadian Tire Corp., on the company’s third-quarter results.

OUT & ABOUT

Team Hardlines is heading to the 24th annual Hardlines Conference this week. We kick off with the RONA Pub Night at 7:00 p.m. tomorrow night at the Kingbridge Centre in King City, Ont. We hope to see you there!

BOUCHERVILLE, Que. — Lowe’s Canada has brought its store detailing services in-house with the development of a new team, called the Merchandising Service Team (MST). The program originated with Lowe’s Canada’s U.S. parent, which introduced MST there at the beginning of 2019.

MST teams are composed of between five and seven store associates whose role is exclusively focused on merchandising tasks at Lowe’s-bannered stores.

They’re responsible for executing resets, but they’re also expected to “snake through the store” to carry out bay servicing. That includes ensuring planograms are properly executed and that labels are all accurate. The MST team must maintain product displays, readjust elevations and reposition products, while providing feedback on merchandising strategies.

According to Anne-Sophie Konrad, senior director, field merchandising for Lowe’s Canada, the goal is “to ensure a steady pace in maintaining merchandising programs in our stores so that they are ‘grand opening ready’ at all times and that customer experience is always at its best.”

The program for the Lowe’s-bannered stores is not the first time the company has relied on designated teams for this service, however, they were for its RONA and Reno-Depot banners only, not for Lowe’s stores. It most recently used Match Merchandising Group. Prior to that, the service had been executed by Montreal-based RDTS through its Imagine program.

So how is MST different from what was in place before? Konrad points out two main distinctions. First, she says, the new system takes pressure off employees and allows them to focus on their regular tasks. “The new MST staff report to the merchandising business unit and is 100% dedicated to merchandising tasks.” This, she adds, will further allow the resets to be more consistent from store to store.

“The second difference relates to our vendors, who benefit from the fact that our MST staff cater to all our bays and products,” Konrad says. “As a matter of fact, the program results in improved merchandising quality throughout our stores, so our stores are more attractive and the overall customer experience is enhanced.”

She adds that vendors will further benefit because Lowe’s Canada expects to be more efficient when executing merchandising projects, such as seasonal rotations.

How has the program measured up so far? Konrad is positive about the initial progress. “I must say that we are very pleased with the results to date. Our stores look better, but we are also increasing our speed to market, which is positive for us, for our vendors and for our customers.”

WORLD HEADQUARTERS, Toronto — The Hardlines Conference will boast a range of presentations about data, what it means and how to apply it to your business.

Paula Courtney is the president of Wiseplum, a user-friendly customer experience insights platform for retailers. She will talk about customer loyalty in the home improvement sector. Paula will share the findings of a 14-month-long study of Canadian consumers who had recently shopped at a home improvement retailer. She’ll be joined onstage by Shawn Stewart, VP loyalty and customer insights at Canadian Tire. In this session, you will learn about how much a home improvement retailer’s revenue is at risk, which problems are the most costly―and ways to recapture customer loyalty.

Peter Norman, vice president and chief economist, Altus Group, will give delegates valuable insight into the economy, housing markets and construction for the year ahead. A regular at the Hardlines Conference, Peter will offer a lively session exploring the outlook for housing starts, renovation spending and other construction activity. Along the way, Peter will also examine what’s new in the economies across the country and what issues are most likely to affect markets in 2020.

Another regular at the Hardlines Conference is Dan Tratensek, executive vice president of the North American Retail Hardware Association and publisher of Hardware Retailing magazine. Tratensek currently oversees NRHA’s research, communications, marketing and training program development. He will share the latest NRHA research on dealer trends and challenges.

Paul Sorrentino of Financeit will address what Financeit sees as the future of the home services business in retail. With a focus on the U.S. market and how U.S. retailers are leading the pack in installation services by connecting manufacturers with dealers and contractors, he’ll share his insights on the trends and patterns he’s identified within the growing do-it-for-me marketplace. And he’ll address some of the key challenges he sees retailers going through when they try to manage these services in-house.

The data stream at the 24th annual Hardlines Conference will round out presentations by retail leaders from across North America.

As Canada’s only truly national event bringing the entire hardware and home improvement industry together, the Hardlines Conference offers an incredible opportunity for delegates to meet in a professional yet casual setting. It will be held November 13 to 14 at the Kingbridge Centre, in King City, Ont., not far from the Toronto International Airport.

(Click here now for a list of all our speakers and to register for the conference!)

INTERNATIONAL REPORT ― The market worldwide for retail home improvement sales reached €594 billion ($861.7 billion) in 2018, and despite its relatively small population, Canada managed to rank number three overall. According to a new report produced jointly by the European Federation of DIY Manufacturers and the Global Home Improvement Network, the market worldwide grew by 1.1% from the previous year, but it lags behind global GDP, which grew by 2.5% last year.

It also falls short of growth in the Canadian market. The retail home improvement industry here grew by 3.8% in 2018 (according the latest annual Hardlines Retail Report.—your ever-helpful Editor). While not a banner year for Canada, its growth nevertheless managed to exceed the performance of many overseas markets.

That may also have something to do with why Canada, with the 10th-largest economy in the world (behind Italy and Brazil) ranks as the third-largest market in the world for home improvement sales―behind the U.S. and Germany.

In fact, 58% of worldwide home improvement sales are generated in North America, says the report, accounting for €343 billion ($497.6 billion). By comparison, the second-largest market is Europe. With overall sales of €173 billion ($251 billion), it comprises 29% of the market worldwide. The Asian-Pacific market represents the third-largest market, at €57 billion ($82.7 billion), followed by Latin America and Africa.

North America and Europe together represent approximately 87% of this market, a combined €516 billion ($757 billion). Approximately 81% of the Global DIY market, some €482 billion ($707 billion), is concentrated in only eight countries: the U.S., Germany, Canada, Japan, U.K., France, Australia and Italy.

(To learn more about this report and to order it for yourself, please contact our good friends at the Global Home Improvement Network.)

TORONTO — Acquiring well-known consumer brands has been an ongoing part of Canadian Tire’s growth strategy since the fall of 2016, and the company expects it to continue its importance in the future.

The latest acquisition, of Party City, exemplifies the retailer’s continued momentum in expanding its consumer brands portfolio in Canada and abroad. While Canadian Tire’s comps overall in the third quarter fell just shy of 2%, sales by its proprietary consumer brands in Canada were up 7%.

Today, Canadian Tire has 16 consumer brands, each with annual revenue more than $100 million. These include Helly Hansen and Party City, which adds not only a brand, but also 65 retail locations across Canada, and puts the company firmly in the home celebration category.

“And just like Party City, we said we will continue to build or acquire brands to strengthen our position in key categories or create new opportunities for growth,” said Allan MacDonald, Canadian Tire’s executive vice president, retail.

Those opportunities extend to sporting goods. CTR has acquired four bicycle brands: Raleigh, Diamondback, Redline and IZIP. In 2018, the company sold more than 600,000 bicycles; it will continue to use house brands to drive dominance in this and other select categories.

“We’ve learned a lot,” said MacDonald. “We’ve got a good feel for where we have opportunities to shore up some categories with iconic brands and where we have some opportunities to drive growth.”

Geneviève Fortin has joined garage-door technology company Garaga as communications advisor. Before joining Garaga, she was content editor for Contrast Lighting. Fortin replaces Jean-François Morin, who has retired.

DID YOU KNOW…

… that space is filling up fast for the 24th annual Hardlines Conference? Maybe it’s the incredible lineup of speakers. Or perhaps it’s the amazing venue, the Kingbridge Centre. Whatever the reason, people want to network and do business and share and learn. Don’t miss out! November 13 and 14 at the Kingbridge Centre, not far from the Toronto International Airport. Click here for more info!

HOFFMAN ESTATES, Ill. ― Sears parent Transform Holdco is taking advice from investment bankers on potential sales of its assets such as DieHard, sources have told the Wall Street Journal. The holding company, a creation of Eddie Lampert, is trying to turn around the fortunes of Sears and Kmart, which it bought out of bankruptcy at the beginning of this year. The DieHard brand was exclusive to Sears until a 2017 agreement made its products available on Amazon.

MOORESVILLE, N.C. ― Lowe’s Cos. has opened its first Lowe’s Outlet store, offering discounts on appliances with superficial blemishes. The former Orchard Supply Hardware location in Monrovia, Calif., is about one-third the size of an average Lowe’s store. The merchandise is not used, but rather it is scratched or dented.

BRENTWOOD, Tenn. ― Tractor Supply Co. reported that its Q3 net income came to $122.1 million, up 4.6% from $116.8 million a year ago. Diluted earnings per share increased 7.4% to $1.02 from $0.95. Net sales for the quarter increased 5.4% to $1.98 billion, compared to $1.88 billion in Q3 of 2018. Comparable store sales rose by 2.9%, as compared to an increase of 5.1% in the prior year’s third quarter.

SUPPLIER NEWS

ST. PAUL, Minn. ― Third-quarter revenues for 3M Co. fell, hit by weakness in the Chinese market and in certain key industries. In total, revenues fell to $7.99 billion from $8.15 billion a year ago. Sales rose by 0.8% in the U.S. and by 0.6% in the Latin America-Canada region.

MACKENZIE, B.C. ― The indefinite closure of the Canfor mill in this B.C. town is having a ripple effect on industry in the area, CBC News reports. East Fraser Fibre Mill relied on Canfor’s mill for surplus trim blocks and is now squeezed for raw materials. “We were running three shifts, then it got down to two shifts and now down to one. We’re trying to keep our people employed,” owner Pat Glazier told the CBC.

CLEVELAND ― Net income for Sherwin-Williams Co. came to $576.4 million in Q3. The paint manufacturer reported profits of $6.16 per share, or $6.65 per share when adjusted for one-time gains and costs. Revenues reached $4.87 billion.

LANCASTER, Pa. ― Armstrong World Industries reported Q3 earnings of $1.38 per share. For the comparable period of 2018, earnings were just $1.11 per share. Operating income soared to $113.3 million from $81.3 million a year ago. Sales rose by 6.4% to $277.1 million, compared with $260.5 million in Q3 of last year.

NOTED

“Current trends imply things are going to get worse before they get better. At current rates, retail sales growth in 2019 could end up at around 1.3% or 1.4%, which would make it the worst year since 2009 and the so-called Great Recession.”
—Retail consultant Ed Strapagiel, referring to StatCan’s latest retail figures. Two-thirds into the year, year-to-date sales are only 1.8% above the levels from a year ago.

OUT & ABOUT

Our Quebec field reporter, Geoffrey McLarney, will be at the BMR show in Quebec City on Thursday. If you’ve got a scoop or a new product, be sure to tell him. Or just say “hi”!

MONTREAL ― About 300 dealers and 330 suppliers descended on Montreal’s Palais des congrès on October 17 and 18 for the RONA and Ace Canada Buying Show. Dealers took part in training seminars covering topics from merchandising to loss prevention and celebrated their colleagues’ achievements at the annual gala dinner.

This year’s edition continued the show’s trend of expanding the seasonal segment, which seems to occupy a larger surface of the floor each year. New this year was a grilling demo station where dealers got to sample barbecue treats prepared from recipes by award-winning Quebecois chefs.

Getting the best bargains for dealers was once again a key focus of the show. Close to the perennial Deal Zone, cubicles were set up this year for negotiations with lumber traders. In response to dealer feedback, show specials were publicized in advance of the event, extending the opportunity to plan purchases.

Among other changes to the show’s layout, the lighting and flooring sections were strategically placed next to one another. The “cloud” of lighting fixtures descending from the ceiling was a welcome oasis as Montreal was pounded by 24 hours of heavy rains during the show.

The Well Made Here team was on site to boost awareness of Canadian-made products. Also new this year was a booth representing the Fondation Charles-Bruneau. Lowe’s Canada’s established support on the corporate end for this pediatric cancer charity has been complemented in recent years by increasing involvement by dealers.

At the end of the show’s first day, a gala celebration honoured outstanding performance among dealers. RONA Ferronnerie Houle (Saint-Jean-sur-Richelieu, Que.), RONA Sonnenburg Hardware (Massey, Ont.) and RONA J. Anctil (Saint-Denis-de-Brompton, Que.) were recognized as RONA Builders of Success. On the Ace Canada side, the laureates were Ace Victory Building Supplies (Mackenzie, B.C.), Ace Leader (Leader, Sask.) and Ace Building Centre Vanderhoof (Vanderhoof, B.C.).

“We are lucky to count on a network of dedicated affiliated dealers who dare to push ahead and spare no effort to achieve their goals,” Lowe’s Canada Interim President Tony Cioffi said.

SAINT JOHN, N.B.― Fairstone Financial Inc. has signed an agreement to provide point-of-sale financing for all retail purchases at all Kent Building Supplies stores.

Fairstone is a Canadian non-bank lender for near-prime borrowers, with more than $3 billion in assets on a consolidated basis. The company has two key business lines: lending directly to consumers through its branch network and online; and financing consumer retail and car purchases through retailers and dealerships. Headquartered in Montreal, Fairstone is privately held by an investor group led by funds managed by affiliates of J.C. Flowers & Co. LLC and Värde Partners.

“We’re pleased to be working with Fairstone to provide a simple, digital financing solution that gets our customers a step closer to realizing their home renovation and building goals,” said Mike Simms, general manager for Kent and VP of J.D. Irving’s retail division.

As part of its retail POS financing offering, Fairstone is also providing Kent with an automated, mobile and digital financing platform designed to shrink customer financing approval times to a matter of minutes.

The company touts its system as a time saver for customers that will be easy to integrate into existing retail practices. Kent has 49 stores across Atlantic Canada in a variety of formats, ranging from traditional lumberyards to DIY-friendly big boxes. Kent is part of the holdings of Saint John, N.B.-based J.D. Irving Ltd.

“We’re pleased to work with Kent to provide a positive financing experience for their customers and a simple, easy-to-manage solution for their in-store associates,” said Serges Bériault, Fairstone’s senior VP of indirect lending.

SPECIAL REPORT — For buyers at some of Canada’s top retailers, a product’s origin is an important consideration. For Home Hardware Stores Ltd., it’s been a part of the company’s overall strategy since it was founded. With a number of private label and proprietary brands that are Canadian-owned and -made, including its Beauti-Tone paint line and CIL fertilizer, the company proudly promotes its homegrown products.

“For Home Hardware, our Canadian identity is imprinted into virtually every practice,” says Joel Marks, vice-president, merchandise hardlines for Home Hardware. “When customers have access to high quality, competitively priced, Canadian-made products, it is a win-win situation.”

At BMR Group, Charles Grégoire-Béliveau, director of purchasing (hardware and retail), says about 75 percent of the company’s vendors employ Canadians, meaning their products are either manufactured in Canada or they have head offices or service centres here.

He adds that part of encouraging local domestic suppliers translates into giving work to its own customers. “The vendors we work with, at the end of the day, many of their employees are our customers,” says Grégoire-Béliveau. “Our stores are deeply rooted in their regions, so it makes sense for us to support local vendors, when we can.”

At Lowe’s Canada headquarters, its buyers make those decisions with a straightforward goal in mind. “Our product selection process starts with what Canadians want and need, and we adapt our merchandising strategy accordingly,” says Igor Halencak, the company’s executive vice-president, merchandising and marketing. “Our goal is simple: to get the products Canadians want at the right time and price.”

Halencak adds that when those criteria are met, Lowe’s Canada will always encourage domestic suppliers.

A major point of emphasis for all these buyers is ensuring the quality of the products their companies bring to market. Marks says Home Hardware has noticed that social and environmental concerns have become increasingly important for its customers. He’s found that many Canadians will pay a premium for local or Canadian-made products.

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

WABUSH, N.L. ― Stagg & Templeman Construction is a building supply retail store in Wabush, in Labrador. The 5,500-square-foot outlet, which sits on 3.5 acres with an 11,000-square-foot warehouse, serves a Labrador West community of about 14,000 people.

The store operates within a mining economy that owner Mike Stagg says is a “mixed bag,” as his annual sales swing with the economy’s ebb and flow. He relies on three common carriers to receive products because trucking companies aren’t always reliable due to driver shortages, and their dispatching puts the mines and food delivery first.

Northern dealers like Stagg would have a difficult time surviving without their buying groups to lean on as reliable product sources. He views his affiliation with TIMBER MART as a “huge advantage” in terms of working with trucking companies for deliveries and backhauls. And besides the challenges of working with available delivery options, Stagg has to contend with the extremes of weather. His store receives between one and four trailers per week, depending on the time of the year.

“Mike Stagg is successful is because he’s figured out the logistics game,” says John Morrissey, vice president of distribution and trading for TIMBER MART.

Annette Verschuren is among those who will receive honorary doctorates at Concordia University’s fall convocation. The citation for the degree invokes the Cape Breton native’s “vision and leadership in the business sector”, which includes her 15 years as president of The Home Depot Canada, from 1996 to 2011. Verschuren, who is already an Officer of the Order of Canada and a CHHMA Industry Hall of Famer, will address Concordia’s John Molson School of Business in November.

…that space is filling up fast for the 24th annual Hardlines Conference? And, no, we’re not just saying that to get your attention! The Kingbridge Centre is an amazing venue, but has limited space, so we urge you to buy your ticket now. In fact, the hotel is already booked up, but don’t worry, you can still get a room 15 minutes down the road at the Aloft Vaughan Mills. To be part of this incredible event, please click here.

VALLEYFIELD, Que. ― Éric and Stéphane Bailey, the co-owners of Matériaux Pont-Masson, celebrated last week the grand opening of their seventh RONA location, in Ste-Clotilde-de-Chateauguay, Que. The new store will serve as Matériaux Pont-Masson’s distribution centre.

TORONTO ― The winners of eBay Canada’s 2019 Entrepreneur of the Year awards were unveiled last week, including Nan Xu of Investments Hardware Ltd. Xu joined the Woodbridge, Ont., family-owned business in 2014 and quickly set about redesigning and expanding involvement in the eBay store to tap into export growth. Today, IHL operates in a 160,000-square-foot warehouse complemented by a 4,000-square-foot showroom for local clientele.

BOUCHERVILLE, Que. — Lowe’s Canada will cut 60 accounting jobs in Boucherville, in an effort to reduce costs. Instead, the Canadian business will rely on Lowe’s shared services out of the Lowe’s head office in Mooresville, N.C. "As the Canadian division of a global company, we have made the decision to leverage Lowe’s accounting shared services," said a spokesperson from Lowe’s Canada. Impacted employees have been notified and will be helped to transition during the first half of 2020.

TORONTO ― The Ontario Court of Appeal has rejected a bid by Walmart Canada and The Home Depot Canada to appeal the terms of the settlement in a class action against Visa and Mastercard. The original case turned on allegations of price-fixing between Visa, Mastercard and 10 issuing banks. The Superior Court last year approved a settlement, over the two retailers’ objections, in which both credit card companies agreed to pay almost $10 million without admitting liability.

MONTREAL ― Outstanding dealers and suppliers were at the centre of the gala held at the recent RONA and Ace Canada buying show. A full list of those recognized in the RONA and Ace Canada Builder of Success categories and their respective sub-categories, along with affiliates marking milestone anniversaries and Ace eCommerce Award winners, can be found on the Lowe’s Canada website.

SUPPLIER NEWS

VANCOUVER ― West Fraser Timber Co. reported a loss of $45 million or $0.65 per share for the third quarter, with higher production in the U.S. South outweighed by cuts to output in Canada. A year ago, the company had posted profits of $238 million, or $3.25 per share. Sales of $1.19 billion were down from $1.65 billion the previous third quarter.

AMSTERDAM — Signify, the Dutch lighting company (formerly Philips Lighting), has acquired Cooper Lighting from Eaton Corp. The acquisition is intended to give Signify a stronger foothold in the North American market. The deal is expected to close in the first quarter of 2020.

CHICAGO ― Grainger had third-quarter sales of $2.9 billion, up 4% over the 2018 third quarter. Gross profit reached $1.1 billion, up 2%. Operating earnings reached $338 million, up 78%, while adjusted net earnings of $233 million were down 3%.

ECONOMIC CONDITIONS

Investment in building construction increased 1.4% in August to $15.5 billion, with gains in both the residential and non-residential sectors. Investment in residential building construction was up 1.8% to $10.6 billion. The multi-unit component edged up 0.4% to $5.3 billion, led by Ontario. Investment in single-unit construction increased 3.2% to $5.4 billion, slightly exceeding multi-unit residential investment. This was partly due to gains in Ontario and Alberta. (StatCan)

Sales in the retail trade sector edged down 0.1% in August to $51.5 billion. Sales were down in six sub-sectors. After increasing 5% in June, sales edged down by 0.5% at building material and garden equipment and supplies dealers, the second consecutive monthly decrease. They nevertheless remained above the level observed in May. (StatCan)

Sales of existing U.S. homes fell 2.2% in September, amidst an ongoing supply shortage. It follows on two consecutive monthly gains. (National Association of Realtors)

NOTED

Habitat ReStore has a new website with a brand-new look and more information about products. Inventory can now be updated daily in real time as new stock arrives. (Habitat ReStores are the charity of choice for the Hardlines Conference, coming up November 13 and 14.)

WORLD HQ, Toronto — Big brands will stand out at this year’s Hardlines Conference, with speakers from some of North America’s leading home improvement chains.

Fred Pennell joined Princess Auto in March 2016 as vice president of its merchandising operations. Headquartered in Winnipeg, Princess Auto is a true Canadian success story—a family-owned company with 46 stores and growing from coast to coast.

Tanbir Grover is Lowe’s Canada’s Vice-President, eCommerce and Omnichannel. A few years ago, Lowe’s Canada embarked on an ambitious journey that would bring its entire Canadian retail network and multiple banners to the next level in its digital strategy. Tanbir will describe this digital transformation, its execution within a unique context and how the company seeks to provide a frictionless shopping experience.

John Hartmann, President, CEO & Executive Director of True Value Company, will address how returning the majority of its members’ equity has offered True Value retailers the opportunity to invest in their business as they know best and how a new company structure has enabled True Value to accelerate strategic investments without cutting into retailers’ profits.

Claudie Gervais is the Marketing Director – Promotional Strategy and Business Intelligence for BMR Group. In 2017, BMR launched a major project: the segmentation of its banners. These banners have been customized to reflect the reality of each dealer, their specific expertise and their own differentiation. Claudie will outline how BMR created these three new store concepts, which are designed to suit the needs of Canadians and members of its diverse dealer network.

As Canada’s only truly national event bringing the entire hardware and home improvement industry together, the Hardlines Conference offers an incredible opportunity for delegates to meet industry colleagues and customers in a professional yet casual setting. It will be held November 13 to 14 at the Kingbridge Centre, an incredible corporate retreat that will be a perfect backdrop to this year’s Hardlines Conference, which is “all about the experience”.

(Click here now for a list of all our speakers and to register for the conference!)

ST. JACOBS, Ont. ― New rules are being put in place to tighten—and strengthen—the relationship between Home Hardware and its vendor base. Much of this new reality was laid out during the company’s latest dealer market, held last month.

Under President and CEO Kevin Macnab, the changes planned for the company aren’t restricted to vendors. Home Hardware is also looking to strengthen its connection with its dealers, ensuring they all conform to the metrics that define the Home Hardware brand.

Even as he undertakes these changes, Macnab faces the need to stay true to a corporate culture that is deep and runs right back to the vision of Home Hardware’s co-founder, Walter Hachborn. Although Hachborn retired in 1988, he retained the title of president until 2010 and remained a familiar face at the company’s dealer markets almost until his death in 2016. Macnab took over as the fourth CEO in the company’s history in October 2018.

So keeping the dealers privy to innovations, as provided through partnerships with those vendors, will be key to setting the retailer apart, while remaining true to the company’s vision and sense of culture, says Macnab.

Innovations can become a brand, he told Hardlines, so the company won’t turn away from exclusivity with vendors to provide new products that can tie each store in more closely with its market. “Our strength is our dealer-owners in our local communities.”

That means providing consistent programs to the dealers that they will adopt consistently, to create differentiation for them. “We are committed to make talent and culture a competitive advantage.”

Macnab says he’s pleased with the progress so far. “But we’ve got a lot of work ahead of us,” he adds. As for getting dealers to buy into the changes, the process requires staying close with them and educating them about the direction of Home Hardware. He notes that dealers are keen for the new direction. “We’re getting strong dealer support.”

OTTAWA ― After a three-year battle, Home Depot Canada has finally complied with a court order issued on behalf of Canada Revenue Agency to disclose the retailer’s list of customers using its commercial credit card program. In an effort to crack down on the underground economy, the CRA is targeting contractors to determine who is being paid under the table.

Home Depot Canada is the last holdout among home improvement retailers that were instructed to comply. The campaign started three years ago, and in August 2017, RONA was a holdout, as well, taking its fight to the Supreme Court to resist the CRA’s demand for a list of its commercial clients.

The Canada Revenue Agency wants to verify that purchases made by contractors from various home improvement dealers match their tax declarations. Other retailers, including BMR and Patrick Morin, agreed to provide similar lists early on.

According to a report by StatCan, the underground economy in Canada was estimated at $51.6 billion in 2016, or 2.5% of GDP. In 2016, three industries together accounted for more than half of underground economic activity: residential construction (26.6%), retail trade (13.5%) and undeclared tips among workers in accommodation and food services (12.1%).

In the past, federal tax credits played an important role in eliminating some of the underground economy. Following the worldwide recession a decade ago, the feds instituted a tax credit for home repairs and renovations. Homeowners could get back 15% of eligible expenditures on home renovations between $1,000 and $10,000 made during the 2009 tax year.

With the federal election looming, one candidate, Conservative Party Leader Andrew Scheer, has included a renovation tax credit in his platform. His proposed Green Home Renovation Tax Credit is a two-year program to encourage homeowners to renovate their homes in ways that lower their power bills and reduce greenhouse gas emissions.

TORONTO — The sale of Party City’s Canadian retail business to Canadian Tire Corp. has been finalized, the companies announced at the beginning of the month. And it marks Canadian Tire’s serious entry into a new niche that targets birthdays, anniversaries and other life events at a personal level.

In addition to taking over the 65 retail stores, Canadian Tire will make a selection of Party City offerings available through its namesake banner both online and in-store—either through dedicated aisles or a store-within-a-store format.

The addition of Party City also complements Canadian Tire’s seasonal offerings with its established specialty in “micro-seasonal” categories—significant life celebrations that can occur throughout the year. EVP Allan MacDonald told analysts in August that the party supplies market in Canada is worth nearly $2 billion and “it’s actually quite fragmented.” In closing the transaction, he said, “we’ll consolidate two significant players and immediately become the number-one party supply retailer in Canada.”

Under the terms of the $174 million all-cash transaction, Canadian Tire gains all 65 of Party City’s retail stores, while Party City Holdco will use the proceeds to offset debt. At the same time, the companies reached a wholesale supply agreement which will see Amscan Inc., Party City’s wholesale business, furnish Canadian Tire with consumer products for at least 10 years.

The deal was a watershed for Canadian Tire’s Triangle Rewards program as the company seeks to make the most of its Triangle data while unifying its banners. “We’ve been looking at the party supply category for a while now and we’ve been putting our data to work,” MacDonald told analysts, adding, “Party City customers skew younger and spend 60% more at Canadian Tire than our average Triangle Rewards member each year.”

BOUCHERVILLE, Que. — After months of speculation and rumour, Sylvain Prud’homme, president and CEO of Lowe’s Canada, departed on October 7. The announcement was officially positioned as his retirement from the company. However, no immediate successor was in the wings, and, pending his permanent replacement, Tony Cioffi, executive vice-president, finance, real estate and dealers, is acting as interim president.

“After more than 35 years in the retail industry in roles that have taken me across the country, including six years with Lowe’s Canada, it is with mixed feelings that I am announcing my retirement,” Prud’homme said in a statement. “We have accomplished a lot over the last several years, and I feel that the time is right for me to spend more time with my wife and family and hand over the reins of the company. I feel blessed to have had this opportunity and thank all Lowe’s Canada associates for their hard work for the organization.”

Prud’homme joined Lowe’s Canada in June of 2013, following the sale of RONA to Lowe’s Cos., in Mooresville, N.C. His background includes a senior VP position at Walmart Canada, followed by executive positions at Sobeys, including president of the grocery retailer’s Western operations, then an EVP role at Loblaw. At Lowe’s, Prud’homme was also given the added title of president of Lowe’s International in 2017.

Prud’homme’s exit is expected by many close to the company to be just the beginning of more changes. In fact, just three days after he left, EVP of Operations Guy Baumier was let go.

With the company in flux, the industry is waiting to see who will replace Prud’homme in the top job for Canada and speculation abounds. One person who will not be replacing him is Lyne Castonguay. With executive degrees from Harvard, Castonguay is a veteran of Home Depot in the U.S. and more recently part of Sobeys under ex-Canadian Tire head Michael Medline.

Her possible appointment was a rumour that got a lot of traction among some head offices in the industry, and then found its way into the Quebec media.

In an email message that came to the attention of Hardlines, she politely insists that she is not in line for the job. “I would like to thank everyone for their support, notes and votes of confidence in the French-Canadian media. However, I will not be the next CEO of Lowe’s Canada.”

WORLD HQ, Toronto — What can you expect at the 24th annual Hardlines Conference? The answer is simple: retail experts. Under this year’s theme, “It’s all about the experience”, the Hardlines Conference will have all the experts in one room for two days to help you break it down.

From November 13 to 14, in a unique corporate retreat not far from Toronto International Airport, you can expect a carefully curated lineup of exceptional entrepreneurs, including a number of store owners. Each has a unique story of how their businesses came to be and how they evolved over the years to become successful retailers in competitive markets.

Christine Hand (shown here) will be the keynote for our very special “Profiles in Leadership” segment. Hand has been chair of the board at Home Hardware Stores Ltd. since April 2012. She has also operated Handyman Home Hardware in Conception Bay South, Nfld., since 1988 and took ownership in 1992. Christine will reflect on her personal experience in the industry.

Vava & Angela are the owners of The Store on Queen (TSOQ), a unique clothing store in downtown Toronto. With their larger-than-life personalities, they have cultivated an avid online following. The duo will share their journey of how they built a successful retail business with a vibrant and active online presence. They’ll offer concrete tips on how to work Instagram into your business plan, and what to do even when you have a minimal marketing budget.

Joe Franquinha, owner of Crest Hardware & Urban Garden Center, has long tied the success of his family business to the old-fashioned principles of quality service and products. But the emergence of online retail giants has forced Joe to re-evaluate his store’s longstanding retail practices. Join him as he shares his keys to curating a modern-day retail experience that keeps customers engaged and coming back for more, despite the competition.

As Canada’s only truly national event bringing the entire hardware and home improvement industry together, the Hardlines Conference offers an incredible opportunity for delegates to meet industry colleagues and customers in a professional yet casual setting. It will be held November 13 to 14 at the Kingbridge Centre, an incredible corporate retreat that will be a perfect backdrop to this year’s Hardlines Conference.

(Click here now for a list of all our speakers and to register for the conference!)

TORONTO ― Anybody searching the CBC website last week looking for a report on the latest debate among federal candidates would have seen another leader’s face: Greg Hicks, president of Canadian Tire Retail.

Hicks appeared in a paid advertising blurb that said, simply: “Meet Greg Hicks. See what it takes to get your product on store shelves.” Clicking on the ad led to an advertising feature promoting Canadian Tire’s involvement in upcoming segments of Dragons’ Den, the popular TV show that gives entrepreneurs and start-ups a shot at pitching their business idea to a panel of investors.

Amidst photos of Hicks engaging with technology and colleagues, the ad says, “Canadian Tire is always hunting for the latest innovative ways to help Canadians with the jobs and joys of life in Canada, so partnering with Dragons’ Den is the perfect way to get an inside look at some of the hottest undiscovered products from Canadian entrepreneurs and bring them to Canadian Tire customers across the country.”

In the ad, Canadian Tire explains that the listing process typically takes a year, requiring the potential new vendor to meet the retailer’s criteria and undergo considerable scrutiny, including rigorous quality assurance testing.

And a new product may end up supplanting an existing line or program. “Putting a new product on the shelf often means another product has to come off, which takes plenty of planning and co-ordination—especially when you have 503 stores across the country,” the ad goes on to explain.

The race for new products is always on among home improvement retailers. In fact, according to Bill Wilson, former Retail Advisor for NRHA Canada, as much as 20% of a store’s SKUs should be new products each year. Based on that, the pressure for innovation is ongoing. So Canadian Tire has found an innovative way to promote its search, while providing a “feel-good” twist that promotes its innovative side along with a focus on Canadian products.

WORLD HQ, Toronto — While 2018 had weaker growth than the previous year, it still grew by more than expected, and the forecast for 2019 remains cautiously optimistic, despite another slow start to the year. These are just some of the findings in the 2019-2020 Retail Report, now available from Hardlines.

According to the report, the industry is expected to benefit from a stabilization of the real estate market, as interest rates remain low and the industry adapts to tougher mortgage rules. These factors will help drive the all-important renovation and repair markets, both factors which outweigh new housing as a driver for retail sales in this sector.

The report includes the results of a dealer survey conducted by Hardlines, which revealed widespread concern that sales would not rise enough through the remainder of the current year to generate positive sales growth. This concern was shared by dealers across the country.
Looking further out, the industry is forecast to regain some momentum in 2020 and 2021, with real growth being realized as commodity prices stabilize, and sales volumes recover.

This year’s Hardlines Retail Report analyzes how much the industry grew last year and identifies the best-performing provinces. The report also tracks the growth of the big box format in Canada, and how it compares to other key formats, namely hardware stores, building centres and Canadian Tire stores.

Designed to help retailers and suppliers alike to develop their business plans for the year ahead, this year’s report provides valuable industry forecasts 2019 and 2020, including analysis of the strategies and performance of home improvement retailing’s top players—Home Depot Canada, Lowe’s Canada, Home Hardware Stores Ltd. and Canadian Tire Retail.

The 2019-2020 Hardlines Retail Report fills 171 PowerPoint slides and is packed with dozens of charts, graphs and photographs.

(For more information about the 2019-2020 Hardlines Retail Report, including special pricing for it and the Hardlines Market Share Report, please click here.)

Jeld-Wen of Canada has appointed Jean-Francois Lemelin as provincial sales manager for Quebec. A Université de Montréal graduate, Lemelin got his start in the industry in 2007 as a local marketing manager at RONA and was most recently the development director of installation and project sales with Lowe’s Canada.

Exchange-a-Blade has announced that SeeSaw Marketing’s Rick Forbes is retiring after more than 40 years as an EAB distributor. Brent Ewen, who has worked with Forbes and most of his customer base for the past decade, and Marty Donaldson have joined EAB as territory managers for Greater Vancouver. EAB will distribute the products and be the new supplier for Southern B.C.

Dany L’Heureux has joined Stelpro, a company based in Saint-Bruno-de-Montarville, Que., that makes home electronics for climate control, as national sales director. His background includes extensive agency experience in this industry and at tool maker Innovak. Most recently, he was category manager at Lowe’s Canada for tools.

…that Princess Auto, Lowe’s Canada, Canadian Tire, Home Hardware and True Value are just some of the companies presenting at the 24th annual Hardlines Conference? It’s being held November 13 and 14 at the Kingbridge Centre, not far from Toronto International Airport. But space is limited, so we recommend you register as soon as you can. Just click here!

CHICAGO ― Thousands of independent home improvement retailers gathered in Chicago recently to celebrate True Value’s 2019 Fall Reunion. True Value President and CEO John Hartmann talked to member-dealers about True Value’s ongoing investments in modernizing its supply chain. In particular, the company developed a new regional distribution centre in Wilkes Barre, Penn., and has doubled the size of its sales force and streamlined its digital marketing programs. (John Hartmann will present at this year’s Hardlines Conference, November 13 to 14. Click here for more info!)

ISSAQUAH, Wash. — Costco Wholesale Corp. reported Q4 net earnings of $1.1 billion or $2.47 per share. Excluding one-time costs, however, earnings came to $2.69 per share. Overall, revenues totalled $47.5 billion. Same-store sales in the U.S., excluding gas, logged a smaller-than-expected 5.2% increase. For the fiscal year, profits were $3.66 billion ($8.26 per share) and total revenues were $152.7 billion.

TORONTO — The Retail Council of Canada has issued an open letter to Ontario Environment Minister Jeff Yurek calling for a co-ordinated provincial action on single-use plastics. With more and more municipalities crafting policies in response to consumer concerns, the council fears a “patchwork of plastic bag by-laws” will create bureaucratic hurdles for its members, who are “steadfastly committed to reducing the environmental impact of their operations.”

SUPPLIER NEWS

MONTREAL — Richelieu Hardware reported that sales increased by 3.4% to $269.2 million in Q3. Net earnings grew by 1.1% and net earnings attributable to shareholders rose by 1.3% to $18.6 million. On a per-share basis, net earnings increased by 3.1% to $0.33, compared to $0.32 a year ago. In Canada, Richelieu recorded sales of $179.9 million, an increase of $1.2 million or 0.7% over Q3 of 2018, including 4.7% from acquisitions.

RICHMOND, B.C. — King Marketing has been appointed as sales agency for Signify Canada, representing brands such as Philips and Philips Hue to independent dealer accounts across Canada.

BARRIE, Ont. — Barbecue maker Napoleon held a job fair last week in Barrie, aiming to fill more than 50 contract positions in assembly and 30 full-time salaried posts. The latter include marketing, quality assurance, research and development, sales, human resources and customer service roles. The manufacturer of grills, fireplaces and HVAC systems is Barrie’s largest employer.

ECONOMIC CONDITIONS

The seasonally adjusted annual rate of housing starts was 221,202 units in September, down 2.5% from 226,871 units in August. The SAAR of urban starts decreased by 2.4% in September to 208,503 units. Multiple urban starts edged down by 0.2% to 159,742 units in September while single-detached urban starts fell by 9.2% to 48,761 units. Rural starts were estimated at a SAAR of 12,699 units. (CMHC)

The value of building permits issued by Canadian municipalities rose 6.1% to $9.0 billion in August, largely because of increases in multi-family and industrial permits. Gains were reported in seven provinces, with more than one-third of the national increase in Quebec. The value of permits for single-family dwellings rose 3.2% to $2.4 billion nationally, led by Ontario. (StatCan)

NOTED

Hardlines has a free Daily News service to keep you up to date on the latest home improvement news and customer trends from across the country. To subscribe to our free Daily News service, just click here!

OVERHEARD…

“We have tremendous respect and admiration for Canadian entrepreneurs and look forward to the opportunity to work with more of them in the future.”
―Greg Hicks, president of Canadian Tire Retail, in a paid advertising spot that appeared last week on CBC.ca, as part of Canadian Tire’s latest effort to attract new vendors.

OUT & ABOUT

David Chestnut from our Toronto Office, and Geoffrey McLarney from our Montreal Bureau, will be at the RONA/Ace show this Thursday. Be sure and say “hi” to them if you’re going to be at that event—especially if you’ve got a new product or a scoop!

ST. JACOBS, Ont. — Home Hardware’s president and CEO, Kevin Macnab, has been in place for a year now, and his reorganization of the company has affected every corner of the business.

Those changes have included a wholesale overhaul of the company’s buying teams, with new faces on board, and existing buyers taking on new portfolios. But behind the scenes, changes are unfolding that will impact Home Hardware’s vendor base.

For example, tougher guidelines are being put in place for vendors. On one hand, these threaten to undermine Home Hardware’s reputation as the “good guys”, but they also bring the company more in line with standards imposed by other home improvement retailers and aim to make it more competitive.

Vendors now face fines for incomplete orders, while Home is looking to rationalize overlapping or duplicate SKUs, especially among suppliers who do less than $50,000 with the company or are listed in fewer than 50 stores. This, Macnab admits, may mean fewer vendors and fewer products for Home Hardware over time.

There’s been much talk around head office about changing Home Hardware’s focus from that of a wholesaler to one of a retailer. That refers to being more attentive to the perceptions of the end consumer, “whether it’s a pro, DIY or furniture shopper,” to see the company “from a consumer lens,” Macnab says. “It’s a different focus.”

It does not mean ignoring the reality of Home Hardware’s role as a wholesaler, but with a look at the end user. And meetings with suppliers have challenged them to review assortments, marketing programs and data, using it in different ways.

“It’s about building a business with our supplier partners,” Macnab explains. “That means adding programs rather than just products, while relying on vendors that goes beyond just dollars. Which vendors want to lean in with us?”

Macnab expects the process to result in a reduction of vendors, and more reliance on the ones who remain. “We’re about growth—and vendors will have more clearly defined expectations of their roles.” These will include those fines for incomplete orders. He says the goal is to strengthen relationships with vendors, but part of that is expecting vendors to live by their commitments.

BOLTON, Ont. — TORBSA Ltd., the Ontario-based buying group for building centres and commercial yards, has named its board of directors for the year ahead.

Greg Drouillard of Target Building Materials in Windsor, Ont., has been elected as president. Drouillard is well known for his involvement in the Lumber and Building Materials Association of Ontario and was honoured with the LBMAO’s Lifetime Industry Achievement Award in 2017—the same year his company celebrated its 50th anniversary.

Drouillard is also known for his protracted battle with Target Corp. in the U.S., when the mass merchant retailer made its foray into Canada beginning in 2013. It challenged Drouillard’s half-century ownership of the Target name in Canada, which proved to be a fruitless pursuit for the U.S. retail giant, but a costly one for Drouillard. He is also very involved in STAFDA, the Specialty Tools and Fasteners Distributors Association.

TORBSA, whose dealers are largely commercial yards, has most of its members in southern and central Ontario, with the exception of Crown Building Supplies in Surrey, B.C.

The board of directors is now composed of (from left to right): Past President Gerald Morin, Morin Bros. Building Supplies, Ottawa; Greg Drouillard; Dante DiGiovanni, VP operations, Blair Building Materials, Maple; Blaine Carter, VP, Woollatt Building Supply, London; Len Hewson, treasurer, Hewson Brothers Supply, Brantford; and Steve Guglietti, secretary, Pro Con Building Supplies, Brampton.

VAUGHAN, Ont. — TIMBER MART has added a new hardware buyer after a careful search that took almost a year to complete. Shawn Ettinger, a veteran of Home Depot Canada has joined the buying group’s procurement team, responsible for reviewing, analyzing and selecting hardlines products and vendors, including tools, décor, plumbing, imported goods, electrical, builder’s hardware and seasonal products.

According to TIMBER MART President and CEO Bernie Owens, the hire came from the retirement two years earlier of the group’s manager of vendor programs, Rod Purchase. Purchase was a long-time member of TIMBER MART’s team in Atlantic Canada. He had joined with TIMBER MART following the consolidation of the A.W.A.R.D. buying group into TIMBER MART in 2005.

Owens says the role will be pivotal to negotiations within the Spancan buying group. That organization, owned by Independent Lumber Dealers Co-operative, Federated Co-operatives and TIMBER MART, negotiates hardware deals with vendors, “and we need a team in place,” he notes, “that could deal effectively with Spancan’s 240 preferred vendors. It was just making sure we had the right individual,” he says of Ettinger’s hire.

Ettinger brings more than 30 years of experience to the job. Most recently, he was VP for new product development, innovation, marketing and sales strategy at Conros Corp. He spent a decade at Home Depot Canada as national senior product merchant – kitchen, appliances, bath and flooring.

MISSION, B.C. —Fraser Valley Building Supplies (FVBS) continues to expand in British Columbia, moving beyond its local markets in the province’s Lower Mainland.

Ray Cyr, president of FVBS, has taken over two stores in the West Kootenays. The company acquired the Maglio Building Centres earlier this year and converted the Nelson and Trail, B.C., stores, to the RONA banner.

To mark the grand opening of both stores under the RONA banner, Fraser Valley Building Supplies held board cutting ceremonies late last month. “We are looking forward to welcoming customers in their new RONA stores so they can discover our enhanced offering, which includes a selection of appliances and the iconic Craftsman brand,” Cyr said.

Together, the RONA Trail and RONA Nelson stores feature approximately 35,000 square feet of retail sales area as well as five acres of lumberyard, with some 30,000 products on offer in store and online.

The expansion efforts have been part of a trend for Cyr. In 2016, FVBS acquired Wilway Lumber Sales in Abbotsford. In June 2018, the company expanded its RONA store in Hope, B.C., which it acquired a year earlier, to a larger location. Then in May of this year, the Fraser Valley store in Abbotsford, B.C., took on the Ace Canada banner. The store features a 10,000-square-foot retail sales area and a four-acre drive-through lumber yard.

ST. JACOBS, Ont. — There was something different about the latest Home Hardware Market, which concluded last week at the company’s head office and warehouse in St. Jacobs, Ont. Under the theme Share the Vision, the event kicked off with a presentation by HGTV’s Scott McGillivray on renovations and return on investments. Beauti-Tone’s 2020 paint colour of the year was also unveiled during the market (it’s called “Honey I’m Home”).

The differences were evident upon walking into the market itself. These included more emphasis on housewares, careful presentation of private labels according to programs rather than just products, more thoughtful grouping of Home’s various services to its dealers and a first-ever marketing strategy meeting for Home’s LBM dealers.

Additionally, there was a buzz that was generated around the show floor. That buzz was largely positive—and reflected the overall acceptance of the changes occurring.

That’s a big change from the initial stages of the transition within the company, which began under former CEO Terry Davis. Davis made the company’s first big executive hire from outside Home Hardware when he appointed Rick McNabb to the position of VP marketing and sales.

As changes were generated from a marketing direction, acceptance was often reluctant, even as the need for change was understood. At the Fall Market exactly one year ago, the notion of change was also prevalent. But many people, both dealers and head office staff alike, kept saying “change is good” as though trying to process the transition and anticipate a positive outcome.

Now, the momentum of change is apparent everywhere, but this time it starts at the top, with a focus on operations rather than marketing. Home Hardware’s president and CEO, Kevin Macnab, has been in place for almost a year now, and his reorganization of the company has affected every corner of the business.

Those changes have included a wholesale overhaul of the company’s buying teams, with new faces on board, and existing buyers taking on new portfolios. Reactions of vendors to new expectations from the company’s overhauled buying teams have been largely positive, if somewhat tentative. And dealers were much more accepting of the transitions occurring under Macnab’s leadership.

This acceptance translated into an upbeat market that found dealers and vendors alike generally energized by the changes that have already taken place and the ones to come.

(We’ll feature an exclusive interview with Home Hardware CEO Kevin Macnab in next week’s blazing edition of Hardlines!)

WORLD HEADQUARTERS, Toronto ― The 24th annual Hardlines Conference is fast approaching, with a lineup of speakers that will make it a must-attend for home improvement owners, managers and executives in Canada.

This year’s event will feature some of the industry’s top thought leaders, including two executives from Canadian Tire, the top merchant from Princess Auto, the marketing director from BMR Group and the chair of Home Hardware Stores Ltd. (Conference update: please note that the CEO of Staples Canada Canada will no longer be able to present at this year’s conference.)

This year’s conference has been organized around the theme, “It’s All About the Experience” to guide the presentations—and the destination of the conference itself is a world-class meeting facility just a short drive from Toronto’s Pearson International Airport. It will be held November 13 to 14 at the Kingbridge Centre in King City, Ont.

We’re excited to share some insights into a few of the presentations you can look forward to at this year’s conference.

Headquartered in Winnipeg, Princess Auto is a family-owned, Canadian company with 46 stores coast to coast. Fred Pennell, vice president merchandising operations, will share what makes this hardlines retailer such a unique company, with a loyal customer base that is expanding across the country.

Paula Courtney is a retail strategist, trusted by retail leaders around the world to help them refine and create a superior customer experience. She is the product founder and chief strategist at WisePlum, a software as a service-based research tool designed to measure specific customer insights. Paula will be joined on stage by two senior executives from Canadian Tire: Shawn Stewart, VP Loyalty and Customer Insights and Erin McFeetors, VP Store Operations, in a panel discussion.

Claudie Gervais, marketing director–promotional strategy and business intelligence at BMR Group will share insights into BMR’s strategy to be a truly national player. That includes boutique banner concepts, a world-class urban store concept—and aggressive expansion into the Ontario market.

Joe Franquinha owns Crest Hardware in Brooklyn, N.Y. By providing only the best customer service and top-notch products for his customers, he makes shopping at Crest a true New York experience, with a staff that makes you feel right at home. 

A few years ago, Lowe’s Canada embarked on an ambitious journey that would bring its entire Canadian retail network and multiple banners to the next level of digital. Tanbir Grover, vice-president, e-commerce and omnichannel, will describe the why and how of Lowe’s Canada’s digital transformation, its execution within a unique context, and how the company seeks to provide the frictionless shopping experience that customers want and expect today.

As Canada’s only truly national event bringing the entire hardware and home improvement industry together, the Hardlines Conference offers an incredible opportunity for delegates to meet industry colleagues and customers in a professional yet casual setting. It will be held November 13 to 14 at the Kingbridge Centre, an incredible corporate retreat that will be a perfect backdrop to this year’s Hardlines Conference, which is “all about the experience”.

(Click here now for a list of all our speakers and to register for the conference!)

QUEBEC CITY — Canac has acquired a one-million-square-foot property adjacent to its Drummondville distribution centre, just days before it wraps up work on an expansion that will double its previous size.

The current second phase of the expansion takes the facility from 350,000 to 560,000 square feet. Representing a $15 million investment, it has allowed the creation of about 40 new jobs.

Details of the coming phase three are still to be released, but President Jean Laberge says it will create even more jobs and involve advances in automation. The distribution centre was originally built in 2015 at a cost of $30 million.

The expansion of Canac’s back-end support keeps in step with the company’s expansion of its retail footprint. Back in May, it opened its 27th store, in Thetford Mines, Que. The 39,000-square-foot building, with its 30,000-square-foot lumber yard, represented a $6 million investment and the addition of 90 local jobs. And Canac has acquired its 28th location, in Shawinigan, Que., which is scheduled to open in November.

Laberge is also setting his sights beyond Canac’s home province of Quebec. The eastern Ontario town of Hawkesbury will be the site of the first Ontario store for the retailer.

CHICAGO ― Canadian suppliers looking to expand their online business now have one more reason to attend the fourth annual Home Improvement eRetailer Summit, November 6 to 8 in Chicago. The event provides networking, education and one-to-one meetings for retailers, manufacturers, distributors and industry professionals who are interested in how to optimize the internet as a distribution channel.

Here, the Summit’s founder, Sonya Ruff Jarvis, spoke with us about some of the major takeaways attendees can expect from this event:

Vendors often feel challenged to get products to market cost-effectively when it comes to selling online. Any tips?

Drop shipment options shouldn’t frighten suppliers. The summit has had manufacturers like Honey Can Do speak about how drop shipping can be profitable. Our event in November will have Rakuten Super Logistics discuss how implementing the right fulfillment logistics can help suppliers be more competitive.

It is sometimes a misperception among dealers and suppliers that it’s harder to control prices when selling online. It’s not impossible, but it takes strategy, monitoring and policies. Many of the Summit’s attendees are doing just that, and they’ve been willing to share their experiences.

Where do you think the industry needs to improve in order to be more fully engaged in e-commerce?

Companies need to make a commitment to fully integrate online retail into their business models versus conducting e-commerce as an afterthought or, worse, a separate enterprise. Fifty-six percent of online shoppers still prefer the bricks-and-mortar shopping experience over online. So, the more successful retailers are taking a holistic approach that doesn’t leave customers or dollars on the table.

Any predictions about where e-commerce might be headed in the future?

Getting the logistics right is huge in order to build a profitable and sustainable online retail business. As we progress down this road, I believe that logistics and fulfillment will become more refined. You will see companies with these capabilities launch programs and services that make it easier and more efficient for dealers and suppliers to compete. Plus, software platforms will offer even more plug-ins and simpler-to-use options to enhance their value add. 

(The fourth annual Home Improvement eRetailer Summit will be held November 6 to 8 in Chicago.)

…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. 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. Each report is available in either PDF or PowerPoint format, and at a special rate for Hardlines Subscribers. (For more info, click here!)

BOUCHERVILLE, Que. ― A dealer with two stores in Ontario has adopted the RONA banner. Mike Crow Sr., who has owned a building centre in Rodney, Ont., since 2004, bought a second location in 2016, in nearby Springfield. Now, he’s made the move to become a RONA affiliated dealer. Together, the RONA Rodney and RONA Springfield stores employ 45 people. They feature more than 10,000 square feet of retail sales space and, combined, their drive-through lumber yards, total more than eight acres and carry some 10,000 products.

SAINT-PAUL, Que. — Centres de la rénovation Patrick Morin celebrated the grand reopening of its Sainte-Marcelline store after a major fire in January. Company founder Patrick Morin himself cut the ceremonial 2×4, marking the culmination of a $3.5 million investment. The store now boasts a larger retail space of 12,000 square feet.

TORONTO — Hit entrepreneurial reality show Dragons’ Den is returning to CBC for its 14th season. This year, Canadian Tire and Desjardins Group are new sponsors. They join existing show partner BDC.

TORONTO — Hudson’s Bay Co. has announced that its Dutch division will wind down by year’s end. HBC Netherlands BV’s 15 retail stores, e-commerce site and suburban Amsterdam head office. The business is a joint venture between HBC and SIGNA Retail Holdings. Under the terms of HBC’s agreement with SIGNA, the historic Canadian firm is slated to assume control of Hudson’s Bay Netherlands when the transaction closes, which is expected to take place later in the fall.

IN MEMORIAM

We were saddened to learn of the passing of John Williams, retail consultant and founder of J.C. Williams Group. A brilliant thinker who remained active until the end, John was also a presenter at the Hardlines Conference twice over the years. He will be missed.

ECONOMIC CONDITIONS

Total investment in building construction increased 0.5% in July to $15.2 billion, with slight gains in both the residential and non-residential sectors. The multi-unit residential component was down 1.6% to $5.2 billion, due mainly to decreases in British Columbia and Saskatchewan. Investment in single-unit construction was up 2.9% to $5.2 billion, driven by Ontario and Nova Scotia. This increase more than offset the decline in investment in multi-unit construction. Non-residential investment remained largely unchanged. (StatCan)

Retail sales advanced for the first time in three months, increasing 0.4% in July to $51.5 billion. Higher sales were reported in six of 11 subsectors, representing 71% of retail trade. Sales at building materials and garden equipment and supplies dealers decreased 3.2% after increasing 5% in June, while remaining above the level observed in May. After removing the effects of price changes, retail sales in volume terms were essentially unchanged in July. (StatCan)

August saw a surprise spike in sales of existing U.S. homes, which rose by 1.3% to a seasonally adjusted annual rate of 5.49 million units. This second consecutive monthly gain puts home resales at their highest level in 17 months. Economists polled by Reuters had expected sales to edge down by 0.4%. Meanwhile, July’s rate of 5.42 million units was left unrevised. (National Association of Realtors)

U.S. homebuilding in August reached its highest level of activity since 2007, an indication that the housing market is responding positively to lower mortgage rates. Housing starts for the month soared by 12.3% to a seasonally adjusted annual rate of 1.364 million units, with construction of both single- and multi-family dwellings picking up speed. July’s estimate was revised upward to a rate of 1.215 million units, a more modest decline than the initially reported 1.191 million units. Year-over year, housing starts were up 6.6%. (U.S. Commerce Department)

NOTED

The Liberal and Conservative parties have each extended a hand to homeowners, promising to make it more affordable to renovate homes with the goal of increased energy efficiency. Justin Trudeau told supporters in B.C. that, if returned to power, his government would retrofit 1.5 million homes over five years through the Canada Mortgage and Housing Corp. Speaking in Quebec, Andrew Scheer restated the Conservative Party’s proposal for a two-year income-tax credit of 20% for upgrades to home energy efficiency.