July 10, 2017 Volume

xxiii, #28

“You may not control all the events that happen to you, but you can decide not to be reduced by them.”
—Maya Angelou (American poet, essayist, and civil rights activist, 1928-2014)

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The big get bigger: Industry’s Top Four keep consolidating the market

WORLD HEADQUARTERS, Toronto ― Canada’s retail home improvement market grew at a healthy pace in 2016, up 2.9% over the previous year, thanks to Canada’s red hot housing market, low interest rates, and ageing housing stock—all factors driving renovation sales. And that momentum is forecast to continue in 2017 and 2018, according to the latest Hardlines Retail Report.

However, while the future looks stable for this industry throughout most of the country, all is not entirely rosy for Canada’s hardware stores and building supply dealers.

Tough competition that includes some of the country’s largest retailers, including Lowe’s and Home Depot, as well as the challenge of selling products that need careful explanation about how to use or install them, give the retail home improvement industry challenges and opportunities all its own.

The toughest competition from within is coming from the industry’s largest players. According to the Hardlines Retail Report, Home Depot Canada, which is number one with sales of almost $8 billion, must contend with its biggest rival from south of the border, Lowe’s, which purchased RONA inc. last year and has been expanding aggressively.

In fact, thanks to this growth by Lowe’s Canada, along with solid same-store sales gains by Home Depot Canada, the market share of these big box retailers is now at a record high, accounting for more than one-quarter of all sales in the sector.

Along with Home Depot Canada and Lowe’s Canada, two other retail groups, Home Hardware Stores Ltd. and Canadian Tire Retail, make up well over half of all sales by hardware stores and building supply dealers in Canada. These “Top Four” retailers collectively grew their sales at a rate that was almost double the industry average last year, driving more consolidation at the top and ensuring that the big players in this industry continued to get bigger in 2016.

(With 200 PowerPoint slides, dozens of charts and graphs, and in-depth analysis available only from HARDLINES, this study provides full details of the size and growth of the Canadian retail home improvement market. Click here for more info and to order this amazing report now!)

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Jim Caldwell departs Lowe’s Canada, Reno-Depot’s Guy Beaumier steps in

BOUCHERVILLE, Que. ― Jim Caldwell, executive vice president of the Lowe’s big box business for Lowe’s Canada, has left the company. In his place, Lowe’s Canada has appointed Guy Beaumier, executive vice-president for the retailer’s Reno-Depot and Pro businesses, as interim head of the Lowe’s banner.

A spokesperson for Lowe’s Canada, Valérie Gonzalo, stressed the contribution Caldwell made to the company during his tenure there. A big part of his mandate was the conversion of certain RONA big box stores to the Lowe’s banner. The first such opening was the Namao store in Edmonton. “We’re very happy with the results there since it opened,” Gonzalo said. “It’s one of his latest achievements.”

Caldwell had been hired almost exactly a year ago, on June 20, 2016. Before joining Lowe’s Canada, he was president of the Brick Group, Canada’s largest furniture retailer. Prior to the Brick, Caldwell had spent 27 years at Wal-Mart in Canada.

Stepping in to replace Caldwell, Beaumier’s expertise is not limited to the RONA side of the business. He has also served as VP, operations at Lowe’s Canada. His background before that was from the grocery side, with stints at both Loblaw and Sobeys. According to the email from Lowe’s, he’s “the right candidate to assume this interim role as we enter a new phase in growing our big box segment.”

The statement went on to reaffirm Lowe’s Canada’s commitment to its other retail formats. “Lowe’s Canada continues to be firmly committed to its multi-business unit and banner strategy in Canada. We are convinced that it provides us with a unique competitive advantage, allowing us to deliver on our long-range growth plan and realize our mission to become Canada’s number-one choice in home improvement.”

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Cologne’s hardware and garden trade fairs: a great opportunity for North Americans

SPECIAL REPORT — For vendors and retailers seeking new products and new merchandising ideas, it’s hard to beat the energy and diversity of the industry trade fairs mounted by Koelnmesse. That organization owns and operates two significant shows for the home improvement industry: spoga+gafa, the lawn and garden show September 3 to 5; and the International Hardware Fair, being held next spring from March 4 to 7.

While these shows attract people from throughout Europe and Asia (spoga+gafa will host 2,039 exhibitors and 39,000 delegates from 59 countries), North Americans are less likely to make the trek across the pond to attend. That’s a shame, because these events are true forums for innovation.

For example, at the lawn and garden show, you can expect the largest display of barbecues in the world, says Stefan Lohrberg, the new project manager for spoga+gafa. Weber alone takes up almost 1,100 square feet of space. An entire hall at the fair is devoted to outdoor furniture, and another is strictly for barbecue accessories—yes, an entire hall for barbecue accessories. Other categories highlighted include sports and games, camping and leisure, and live goods.

“It’s one of our fastest growing shows,” he adds. And it attracts big players from all over the world, including Walmart, OBI, and Costco.

Innovation is also the watchword at the International Hardware Fair. Next year’s show will feature lots of content and learning, much of it generated through a stage in the middle of the show floor. Speakers will feature leading e-commerce sellers including Google, Ali Baba, eBay, Google, and Amazon.

Canadians are encouraged to look farther afield for innovations and new product ideas of their own. These shows offer an effective solution. (For more information about spoga+gafa, click here. To learn more about the International Hardware Fair, click here.)

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Canadian Tire expands customer product testing to enhance online reviews

TORONTO — A recent survey commissioned by Canadian Tire shows that online ratings and reviews influence 80% of Canadians’ purchasing decisions, and the same percentage are looking for truthful product reviews written by real people.

Online product reviews from real customers and users are perceived to be more truthful, creating confidence in the reviews. The survey, conducted by Innovative Research Group and Heartbeat Analytics in late April, also shows that more than three-quarters wish Canadian retailers would be more proactive in ensuring that product reviews, ratings, and testimonials about their products are authentic and truthful.

This research supports a big investment by Canadian Tire in its “Tested for Life in Canada” program, which uses a sample of customers across the country to try out new products at home and give feedback on them. The feedback provided by users creates a pool of online product reviews that enhances the legitimacy of the products themselves.

The company has recently expanded the reach of the testing program, which uses a panel of 15,000 Canadians coast to coast. By the end of this year, the number of products put out for testing will reach 7,000.

Canadian Tire claims that "Tested for Life in Canada" is the country’s largest consumer testing group. Users evaluate products for ease of use, functionality, and durability and assign a star rating out of five. A product is awarded a badge when it is assigned four or more stars by at least eight testers.

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July 3, 2017 Volume

xxiii, #27

“There was a time in this fair land when the railroad did not run, when the wild majestic mountains stood alone against the sun.”
—Gordon Lightfoot (Canadian folk singer and songwriter, 1938- , from “The Railroad Trilogy”)

"I drew a map of Canada, Oh Canada.”
—Joni Mitchell, (Canadian folk singer and songwriter, 1941- , from “I could Drink a Case of You”)

“Raise a little hell, raise a little hell, raise a little hell.”
—Ramon Mcguire & Brian Smith (of the band Trooper, from, you guessed it, “Raise a Little Hell”)

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Home Improvement eRetailer Summit: tools for our industry to succeed online

TRUMBULL, Conn. — As more and more big retailers focus on e-commerce, a stark disparity is emerging between the big players that are leading the way and smaller retailers or dealer-owned groups. Many are struggling to catch up—or aren’t even in the game.

The second annual Home Improvement eRetailer Summit is committed to closing that gap. The event, September 13 to 15, 2017, at the Rosen Shingle Creek in Orlando, Fla., will feature a powerful conference series and valuable networking among vendors and leading e-commerce retailers.

The purpose is simple: to help the hardware and tools, home decor, paint, housewares, lawn and garden, outdoor living, and flooring sectors develop winning e-commerce strategies. This year’s event has expanded its category reach to include the full range of home products, including housewares and kitchenwares, outdoor living, furniture, and large appliances.

The highlight of this year’s eRetailer Summit is an “e-commerce boot camp” for retailers and vendors to learn best practices from leaders in the online selling marketplace. Keynotes will include both leading digital experts and front-line sellers. The conference will be capped by a presentation by Alyssa Steele, Divisional Merchandise Manager-Home and Garden for eBay. 

The other presenters include: Steve Greenspon, CEO of Honey-Can-Do International; Al Meyers, of the world-renowned retail consultancy Kalypso; and Elizabeth Ragone, SVP, Direct to Consumer for Lenox. A logistics Q&A will examine the demands being put on the delivery aspect of online sales, featuring Bob Careless, sales manager for the Home and Outdoor Division of D&H Distributing, a leading technology distributor of IT and electronics.

“We are thrilled to expand the scope of the second annual Home Improvement eRetailer Summit,” said Sonya Ruff Jarvis, managing member, Jarvis Consultants and the event’s founder, who has partnered with HARDLINES to produce this event. “We want to make sure retailers and vendors alike are on top of the trends affecting all these important categories.”

Retailers looking to understand the e-commerce space and vendors who wish to make real connections with leading eRetail decision makers will find this ground-breaking forum a way to meet, share ideas, and develop concrete strategies for growing online sales.

(This event has been tailor-made for hardware and home improvement retailers and suppliers of every size. If you want to close the gap in your understanding of eRetailing, you should not miss this one! For more information, please contact our Publisher, Beverly Allen.)

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Home Hardware launches campaign built around project selling for millennials

ST. JACOBS, Ont. — Driven by a new, hip downtown ad agency, Home Hardware has launched a brand campaign to Canadian consumers that focuses on a younger demographic—and the support they’ll need to repair and renovate their homes.

The new campaign underscores the relaunch of Home’s own brand to reach out to millennial Canadians, who are now actively involved in starting their own families and establishing homes of their own. The cornerstone of the campaign is a 60-second video that shows a young couple turning a fixer-upper into their first home. The video ends with the line: “Do it yourself doesn’t mean do it alone. Here’s How.” The campaign will be supported through social and digital channels, as well as television.

The campaign takes a project-focused approach to show how Home Hardware is serving the needs of Canadian communities.

“DIY can sound intimidating. Especially to a younger generation of buyers who might be getting into their first apartment or house. We know that they want to get their hands dirty as they fix up their space, but they aren’t quite sure how to do it,” says Angus Tucker, executive creative director of john st., the company that won the business back in September.

The campaign concept, complete with the new company tagline, “Here’s How,” was shared with Home Hardware’s dealer network at the 2017 spring market in April.

“There is real momentum behind this new work with our dealer network,” says Rob Wallace, director, marketing at Home Hardware. “They love the more contemporary positioning of the brand and they feel that ‘Here’s How’ really describes the role that they can play with our customers.”

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Lowe’s completes acquisition of MRO supply company

MOORESVILLE, N.C. — Lowe’s Cos. has completed the acquisition of Maintenance Supply Headquarters, a distributor of maintenance, repair, and operations products to the multi-family housing industry, for a total value of $512 million. The deal was first announced in mid-May.

Based in Houston, Maintenance Supply Headquarters operates 13 distribution centres serving customers primarily in the western, southeastern, and south central U.S., with a portfolio of more than 5,300 products. The acquisition is part of Lowe’s outreach strategy to pro customers who service the MRO field. It follows the purchase in November 2016 of Central Wholesalers, a distributor in the Mid-Atlantic.

And the acquisitions mirror similar moves in the U.S. by Lowe’s rival, Home Depot.

“Together, Maintenance Supply Headquarters and Central Wholesalers expand Lowe’s ability to serve the highly attractive and growing multi-family housing industry while strengthening our foundation for future growth with enhanced product and service offerings,” said Michael Tummillo, senior vice president of Lowe’s pro sales. “With this latest transaction, we look forward to delivering even more value for our pro customers.”

These “large-spend pros” are a target for Home Depot, as well. In the U.S., particularly, contractors spend more year over year than the average DIY customer. Home Depot acquired Florida-based Interline Brands in 2015, another company that sells to the MRO segment.

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With tariffs about to be imposed, feds vow to fight softwood duties

OTTAWA — The Trudeau government has promised to defend Canada’s softwood lumber industry in the wake of new anti-dumping duties announced by the U.S. Commerce Department. The preliminary tariffs add an average of 6.87% to the current countervailing duties of 19.88%. Announced in April, the latter are set to expire on August 27, with the two rates overlapping until then for a total average of about 27%.

U.S. Commerce Secretary Wilbur Ross also announced a preliminary decision to ultimately exclude softwood from three out of four Atlantic provinces from the duties. At the behest of U.S. lumber lobbyists, Nova Scotia, Prince Edward Island, and Newfoundland & Labrador—but not New Brunswick—could be exempted from final duties, though the U.S. government will continue to collect them pending a final ruling.

Lumber in the three provinces named as potential exceptions is largely harvested from privately-owned land, in line with U.S. industry practice, but in contrast to most Canadian provinces where most wood comes from Crown land at advantageous “stumpage fee” rates. New Brunswick, which borders on Maine and is a major lumber producer, was not cited in the preliminary exemption despite having dispatched a special envoy to the U.S. in May to broker a favourable deal.

Softwood lumber has, since the early 1980s, been a perennial sore spot for the U.S., which considers Canadian product unfairly subsidized. Its four previous attempts to impose duties have all been reversed or overturned by international rulings. Natural Resources Minister Jim Carr and Foreign Affairs Minister Chrystia Freeland teamed up to denounce the “unfair and punitive anti-dumping duties.”

In their statement, they pledged to “vigorously defend Canada’s softwood lumber industry, including through litigation, and we expect to prevail as we have in the past.” At the same time, they added that they are “confident that a negotiated settlement is both possible and in the best interests of our two countries.”

Prime Minister Justin Trudeau assured reporters earlier last week that the two countries are “working towards a deal,” but pulling back from NAFTA remains a policy plank for the Trump administration, with renegotiations expected later in the summer.

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June 26, 2017 Volume

xxiii, #26

“Great things are done when men and mountains meet.”
―William Blake (English poet, painter, and engraver, 1757-1827)

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BMR’s renovation of Potvin & Bouchard store part of a wider initiative

CHICOUTIMI, Que. — Potvin & Bouchard inaugurated its new store in Chicoutimi last week. The $3.1 million investment involved a complete renovation of the 50,000-square-foot store. The chain, which is part of Groupe BMR, is celebrating its 85th anniversary this year.

The work included the construction of a brand new and more modern facade, the installation of wood structures inside the store, and a completely new layout of the store’s departments, all designed to create a more intuitive shopping experience.

The goal of this renovation project was to improve customer experience in store. It’s part of a large-scale project to improve store design and customer service for all 15 Groupe BMR’s corporate stores. The group has already renovated Beloeil at a cost of $1 million, and put $2.5 million into a reno of its outlet in Chambly. With Chicoutimi now fully renovated, BMR plans to invest next in the Potvin & Bouchard store in La Baie.

“I am very proud of the end result of this major transformation project! And more so, I am immensely proud of the Potvin & Bouchard stores that are not only celebrating 85 years of business, but also positioning themselves for the next 10 years by building stores that stand out from the competition,” said Potvin & Bouchard’s managing director, Michel Leclerc.

BMR owns a total of four stores under the Potvin & Bouchard banner, with estimated sales of almost $50 million (source: the 2017 Who’s Who Directory —your helpful Editor). The new look expands the range of products available to Potvin & Bouchard’s base of residential and commercial contractors.

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First RONA conversion to the Lowe’s banner opens in Edmonton

BOUCHERVILLE, Que. — Lowe’s Canada opened the first of its new model stores last week, in Edmonton. The new Edmonton North Lowe’s was converted from a former RONA Home and Garden, and combines features from Lowe’s and RONA’s offerings, to create a new model of Lowe’s stores in Canada.

With DNA from both RONA and Lowe’s, the new store features a more locally oriented product offering than Lowe’s has typically carried in the past. In addition, trademark Lowe’s categories, including appliances and outdoor furniture, will figure prominently in this new store.

Other aspects of a traditional Lowe’s store include its private labels, brands such as John Deere, Husqvarna, and Cub Cadet, and a broader selection of fashion plumbing products such as tubs, showers, toilets, vanities, sinks, and faucets with the introduction of brands such as Kohler and Grohe. The store’s flooring section was expanded beyond what it had before, as well.

The conversion involved 16 weeks of construction, departmental sequencing of new racking and re-merchandising, branding, and IT conversion. The second store to undergo the switch to Lowe’s will be the Langford RONA Home and Garden store in Victoria. That renovation began early in June.

The company has also announced the opening in early 2018 of a Lowe’s store in Winnipeg.

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Home Hardware’s growth strategy: new members and larger store footprints

ST. JACOBS, Ont. — Home Hardware has been pushing growth by seeking new members and supporting existing dealer-owners looking to expand. “Our growth strategy is multi-pronged and focuses on banner conversions, store expansions, market consolidations, greenfield opportunities, and store acquisition,” says Dunc Wilson, national director of business development.
 
Home Hardware often helps to support expansion by purchasing the land for new sites and leasing it back to the dealer-owner. As CEO Terry Davis explained to HARDLINES last year, the co-op has “a big annual capital fund to help dealers grow their business.”

Home Hardware also has a history of buying retailers outright. Its first serious real estate acquisition was the 55 home centres of Calgary-based Crown Stores, which Home Hardware bought in 1988. The 2000 takeover of Beaver Lumber added another 90-plus properties to Home’s portfolio.

In recent years, however, the focus has been on individual members’ operations to help their growth. Several store expansions or amalgamations have been announced in recent days. The grand opening of Morris Home Hardware (shown here), in the Manitoba town of the same name, brings together three buildings purchased in 2015 under a single footprint, expanded from 6,000 to 10,000 square feet. In Mackenzie, B.C., Mackenzie Home Hardware Building Centre and Hagen’s Home Hardware have joined forces in a single location with a 15,000-square-foot expansion.

Other stores are expanding on their own. Eskimo Point Lumber Supply Airport Services in Arviat, Nunavut, which joined the banner earlier this month, is in the market for a new and larger space. Roberge et Fils, in La Sarre, Que., which joined in May, is pursuing an expansion from 12,000 square feet to 14,500.

In the Muskoka region of Central Ontario, Parry Sound Home Hardware just celebrated a 50% expansion of its retail space. South of Quebec City, Groupe Brochu, which already owns two RONA-affiliated hardware stores and a farming supply store, purchased two Home Hardware stores, which it will continue to operate under the latter banner.

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As fortunes tumble, Sears Canada obtains bankruptcy protection

TORONTO — Sears Canada has been granted bankruptcy protection by the Ontario Supreme Court under the Companies’ Creditors Arrangement Act. Among other things, the Initial Order provides for a stay of proceedings in favour of the Sears Canada Group for an initial period of 30 days, subject to extension thereafter as the Court deems appropriate, and the appointment of FTI Consulting Canada Inc. as monitor in the CCAA proceedings.

The Initial Order also authorizes the Sears Canada Group to obtain debtor-in-possession financing of $450 million to provide the retailer with sufficient liquidity to maintain business operations throughout the CCAA proceedings.

The announcement comes as the giant retailer’s shares continued their freefall last week, falling by more than 20% following a report by Bloomberg of the company’s pending filing. Sears Canada says it “will work to complete its restructuring in a timely fashion and hopes to exit CCAA protection as soon as possible in 2017, better positioned to capitalize on the opportunities that exist in the Canadian retail marketplace.”

However, earlier this month, Sears Canada voiced “significant doubt” about its ability to pay its bills and keep operating after a shortfall in the financing it could line up. According to the Bloomberg report, it hired BMO Capital Markets to explore options—including a possible sale.

Sears Canada was spun off from its parent, Sears Holdings in the U.S., in 2012. However, that company, owned by billionaire Eddie Lampert, still retains a 12% stake in Sears Canada, while Lampert personally owns about 45% of the Canadian operation. The company is reportedly considering seeking court protection from creditors and could be sold off outright or pieced out.

In the meantime, according to the Toronto Star, Sears Canada is working to mitigate the bad news, reassuring shoppers that shelves will stay stocked and online orders will be shipped.

Sears Canada has 94 department stores, 23 Sears Home stores, and 10 outlets, with sales in 2016 of $3.42 billion. However, the company reported a first-quarter net loss of $144.4 million on revenue that declined by 15.2% to $505.5 million. It’s been bleeding red ink since 2014.

Despite the poor results in the first quarter, same-store sales for the period were actually up 2.9%. The company says it has invested heavily in upgrading a number of its anchor department stores in malls around the Greater Toronto Area in recent months. In addition, it rebuilt its front and back-end technology platform, redefined its brand positioning, revamped its product assortment, and upgraded its customer experience and service standards.

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June 19, 2017 Volume

xxiii, #25

“You miss 100% of the shots you don’t take.”
―Wayne Gretzky (aka “the Great One”, Canadian former professional hockey player and former head coach, 1961- )

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Kenroc at 50: there for the birth of the drywall industry

REGINA — In the mid-1960s, a dramatic change occurred in the way houses were being built in North America. The time-honoured and specialized skill of the wall plasterer was being replaced by pre-fab plaster made of crushed gypsum. Drywall was rapidly becoming the norm, but it was prone to breakage, making it difficult to handle and ship.

Ken Sexton recognized the future of the drywall business. He quit his job at Bird Building Supplies in Calgary, sold the family cottage, and borrowed $3,000 from the bank to fund the startup of Kenroc Building Supplies. The first location was on North Railway Street in Calgary. The building, says Kenroc President Brian Kusisto, was only big enough to fit three people. If a customer ever came in, someone would have to step outside. The only other structure onsite was an outhouse.

That was 50 years ago. Today the company has grown to 16 locations in Western Canada and sales well in excess of $100 million. (In 1985, Sexton founded the Sexton Group, as well.) At 88 years of age, he has stepped back from running the business. But that hasn’t stopped the company from celebrating the anniversary with a series of events at its stores.

The celebrations started, says Kusisto, in early May, and are being held for the benefit of both customers and staff. Four locations have already hosted events. Kenroc’s four outlets in British Columbia’s Lower Mainland will combine efforts, as will the two Calgary stores.

As for the future, the company will continue to grow “opportunistically,” says Kusisto. “One of our strengths is the ability to quickly identify opportunities, assess them, and act on them quickly,” he adds. “I think our coverage of Western Canada is fairly complete so I don’t think we have any defined plans for the West.”

He adds that he doesn’t expect Kenroc to expand into Eastern Canada any time soon, though he doesn’t rule anything out―should one of those opportunities present themselves. “But going farther from our base would require critical mass.”

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Sears Canada: is the end nigh?

TORONTO — Sears Canada reported a first-quarter net loss of $144.4 million, more than double the loss suffered in Q1 2016, when the legendary retailer incurred a loss of $63.6 million. Then, results were boosted by sale and leaseback transactions.

Same-store sales in the latest quarter rose by an encouraging 2.9% but revenue declined by 15.2% to $505.5 million. The retailer attributed the disparity primarily to lower revenues from its Direct business, due in part to cuts in product offerings and pick-up locations based on lower demand.

Eddie Lampert, controlling shareholder of U.S. parent Sears Holdings, has admitted that he would consider selling the Canadian business. Sears Holdings sold off part of Sears Canada in 2012, but still maintains an ownership stake.

In the U.S., Sears Holdings is not faring much better, despite posting its first quarterly profit in almost two years (Q1 profits got a lift from cost-cutting measures and the sale of the Craftsman line of tools). At the same time, sales for the quarter continued to decline, falling 12.4% at Sears stores and 11.2% at Kmart.

Nor is the slight lift in Q1 enough to counter the big-picture bad news. Sears Holdings suffered a $2 billion loss in 2016, and announced internally last week that it would close 72 additional retail locations by September. The closures are in addition to the 180 stores the retailer has shuttered since the beginning of the year. Included in this most recent round of closures are 16 Sears stores and 49 Kmart stores, which will bring the total store count down to about 1,200 from 2,073 in 2012—a loss of about 42% of the retailer’s stores over five years.

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Pay attention to change: what we learned at the Global DIY Summit

BERLIN — The fifth annual Global DIY Summit concluded in Berlin last week. This year’s motto was “A New Era—a Glimpse into the Future of Home Improvement”. Presentations included the use of digital platforms as new business models worldwide, political and economic forecasts in the wake of the Trump presidency and Brexit, how a company should start its own digital transformation, the promising future for the garden sector, and a global overview of home improvement stores around the world.

The summit was hosted by three international organizations: the European DIY Retail Association (EDRA), the European Federation of DIY Manufacturers (fediyma), and the Global Home Improvement Network (ghin). Three Canadian companies were in attendance at the event; one of them was HARDLINES.

The general perception of the global economy was positive and most of the speakers forecast more innovation and growth within the coming years.

The first day culminated with a Gala Dinner and the presentation of the Global DIY Lifetime Award. This year’s award went to Gregory M. Bridgeford, former Executive Vice President of Business Development and Chief Customer Officer at Lowe’s. In his acceptance speech, Bridgeford spoke to delegates about the importance of networking and how much Lowe’s had learned from the best practices of other home improvement companies from around the globe. 

Presenters shared a wealth of insights. According to Obi President Sergio Giroldi (shown here), Amazon will soon take over as the market leader in home improvement. Traditional dealers will have to embrace this future or go out of business. To do that effectively, he urged delegates to use technology to transfer customers into “fans”. In Europe, he said, the majority of people have their basic needs met, so they are more likely to be looking for wishes than needs. “We have to think about the future, not about our past,” he added. “Our mission is customer satisfaction.”

Stephen Collinge of Insight Retail Group warned delegates to prepare for “huge turbulence ahead,” as 52% of the Fortune 500 companies from 2000 are now gone. “They were out-innovated. They couldn’t simplify.”

He shared yet another startling fact: the Bank of England has forecast that 15 million jobs in Europe will be replaced by technology within the next decade. To reinforce his point, he shared that, just a week earlier, Tesco had made its first robot delivery in a driverless car. 

The next Global DIY Summit will be held in Barcelona June 13 to 14, 2018. More than 67% of the delegates confirmed their participation in next year’s Summit.

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Appointment notice at Hardlines

We are pleased to announce the promotion of Sigrid Forberg to the role of Editor at Hardlines Inc. Sigrid joined us just over two years ago as Managing Editor. Since then, she’s proved herself an indispensable part of the Hardlines Team.

She is responsible for all aspects of the editorial content of our print magazine, Hardlines Home Improvement Quarterly, including creative, scheduling, story ideas, and selection of new product submissions. In addition, Sigrid oversees production of our weekly HARDLINES e-newsletter. She also supports a wide range of research and event-planning functions.

Sigrid is a graduate of the Carleton University School of Journalism. Before joining Hardlines, she wrote and edited for the Royal Canadian Mounted Police (RCMP)’s internal magazines. She brings with her a wealth of experience in writing, an innate curiosity, a sharp eye for typos, a keen interest in storytelling, and strong research skills.

If you have a story idea or a new product, please contact Sigrid directly at the Hardlines World Headquarters.

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Masco Canada has welcomed two new members to its trade sales team. Gilles Rousseau joins as Eastern Regional Sales Manager. Previously Director of Sales for J. Pierre Sylvain Agency Inc. for 10 years, he will now be responsible for management and implementation of brand strategies for the Eastern region, which consists of Quebec and the Atlantic Provinces. Jad Badine joins as Director of Commercial Business Development, and will be responsible for establishing and leading the overall business development plan for Masco Canada’s institutional, commercial, hospitality, and property management segments. He was previously at TPC Wire & Cable.

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June 12, 2017 Volume

xxiii, #24

“There is no passion to be found playing small—in settling for a life that is less than the one you are capable of living.”
—Nelson Mandela (political activist and former president of South Africa, 1918-2013)

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Home Depot launches Orange Door campaign to support homeless youth

TORONTO — Home Depot stores across Canada kicked off the annual Orange Door Project fundraiser last week to help end youth homelessness. Until July 2, customers shopping at Home Depot Canada stores can support the campaign by donating $2 at the checkout in exchange for a paper orange door.

“In Canadian neighbourhoods, kids as young as 13 are experiencing homelessness,” said Home Depot Canada President Jeff Kinnaird. “Together, we can shine a light on this serious social issue and inspire our friends, family members, and neighbours to take action to help.”

Donations to the Orange Door Project campaign support organizations that provide safe, stable housing and life skills programs for homeless and at-risk youth. Home Depot Canada covers all administrative costs of the campaign, ensuring that 100% of customer donations benefit local youth shelters, drop-in centres, or aid organizations.

The campaign has raised $6.6 million for more than 300 non-profit groups since 2007, and the Home Depot Foundation has pledged a total of $20 million by 2018 to improve housing options, support life skills programs, and invest in research to help youth build brighter futures.

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Lee Valley Tools opens store in Niagara Falls, expands new concept prototype

OTTAWA — Lee Valley Tools’ next store will open in what may well be Canada’s most popular tourist spot, Niagara Falls, Ont. That outlet, which will open officially June 16, has been designed to appeal to a transient, impulse-driven consumer in a touristy environment.

The product mix of a traditional Lee Valley store caters to woodworkers, hobbyists, and people searching for unique cabinet hardware, toys, and puzzles. The prototype for the Niagara Falls store reflects a more diverse range of products, focusing on “fun” items, garden tools, retro gizmos, and home accessories.

The concept and merchandising mix were first developed at a boutique outlet Lee Valley owns in Almonte, Ont., about 45 minutes outside of Ottawa. The town draws a steady stream of tourists and day visitors, especially on weekends, to explore its shops and art galleries. The store was originally acquired by the Lee family and tailored to accommodate that clientele. It was also secured as a pastime for the company’s founder, Leonard Lee, in his retirement. He passed away on July 7, 2016, at the age of 77.

In a previous interview, Robin Lee, president of Lee Valley Tools and son of Leonard Lee, told HARDLINES that he believed this “discovery” type of store would be effective in other tourist destinations such Niagara Falls, Ont., or Stratford, Ont., home to the Stratford Shakespeare Festival.

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Quebec association breaks from CRBSC, will field advocacy issues on its own

LONGUEUIL, Que. — AQMAT, the Quebec hardware industry association, is set to open its own Ottawa office, in order to pursue industry advocacy with the federal government directly. The announcement coincides with AQMAT’s withdrawal from the Canadian Retail Building Supply Council.

At its most recent meeting on June 1, the directors of the association unanimously accepted to strengthen the lobbying function of association President Richard Darveau to lead representation at the federal level, a role he already fills provincially. The association has secured a national office in Ottawa, near Parliament Hill.

AQMAT will stop financing the Canadian Retail Building Council (CRBSC) and will officially withdraw from that national body. However, it intends to keep communications open with the four other regional associations (ABSDA, LBMAO, WRLA, and BSIA of B.C.), to continue exchanging best practices and information, and to defend the industry regarding common issues faced by businesses at the national level.

“We prefer to keep better control over the actions to be prioritized and the rhythm to be adopted to induce government action,” said AQMAT Chair Nicolas Couture. “As the CEO is duly registered as a lobbyist in Ottawa, I am confident that we will obtain results more quickly, and more in sync with what companies here expect from us.”

For now, the Quebec association has identified renovation tax credits as a priority, and will implement a study to evaluate the potential impact of such credits.

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Feds pledge loan support for beleaguered softwood industry

OTTAWA — The Canadian government has pledged $867 million in loans and loan guarantees to the softwood lumber industry, following the imposition of countervailing tariffs on softwood exports to the U.S. The Feds will work in concert with the provinces to support the industry.

Not surprisingly, the U.S. lumber industry is railing against the move, claiming it’s yet another example of government subsidies that tip the balance of trade in favour of Canadian exports.

The loans are designed to help softwood producers offset the impact of the U.S. tariffs, which range from 3% to 23%, depending on the company and province they’re in. The loans should be used, say insiders, to help the Canadian industry become less reliant on the U.S. by developing offshore markets.

Federal support for the forestry industry includes:

• federal loans and loan guarantees to complement provincial efforts;
• efforts to expand overseas markets and promote the diversification of Canadian wood products;
• helping Indigenous communities and organizations improve the performance of their forest sector initiatives;
• providing a temporary extension of the maximum period for work-sharing agreements from 38 to 76 weeks in order to reduce layoffs;
• and expanding support to help affected workers upgrade their skills and transition to new opportunities.

The Forest Products Association of Canada voiced its support for the government measures in a release. “We appreciate that the federal government is standing tall for Canadian forestry communities by launching a comprehensive package in the face of trade actions that we believe are without merit,” said Derek Nighbor, CEO of FBAC. “This support will assist our efforts in continuing to transform our sector, diversify our markets, and support our workers.”

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Brad Dixon has joined Castle Building Centres Group Ltd., in the role of Business Development Manager for British Columbia and Alberta. He has a long history in the industry that includes stints at IRLY Distributors and TIMBER MART. He was most recently at Orgill Canada. In his new role, Dixon takes over from Les Gillespie, who recently left Castle after nine years with the company. (1-778-808-7995)

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June 5, 2017 Volume

xxiii, #23

“No act of kindness, no matter how small, is ever wasted.”
—Aesop (Ancient Greek storyteller, c. 620-564 B.C.)

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Lowe’s Canada CEO urges retailers to engage staff as well as customers

TORONTO — Lowe’s Canada CEO Sylvain Prud’homme spoke at last week’s annual convention of the Retail Council of Canada. His message, made in front of about a thousand retailers and retail service providers from across Canada, outlined a strategy that involves everything from the power of the customer over the retail transaction to making hand tools in outer space.

Understanding the customer’s shopping process and lifestyle choices figured large, of course, but Prud’homme actually led off by talking about employee engagement. “Retail will experience about 35% employee turnover on average every year,” he noted. That means 10,000 new staff for Lowe’s Canada each year. “How do we get better at retaining those new employees?”

He talked about finding people with the right skill sets, then creating an environment in which they have the autonomy to function effectively.

Of course, the changing habits of today’s customer remain a challenge—and an enigma—for any retailer. Prud’homme pointed out that technology, especially mobile applications, have accelerated the rate of that change, and made customers more connected than ever. “They actually control their purchase experience, and that is something new for us. They can pick and choose the experiences they need.”

How to win these customers over? He outlined three approaches: listening, learning, and adapting. “And we do it in real time,” he added.

He also warned about the fickleness of shoppers, and how online use only exacerbates that trend. That’s why Lowe’s has been so aggressive about expanding its online presence, to offer “a seamless presence” to customers across digital and bricks-and-mortar realities.

“Your customer is only one click away from shifting their business away from your store,” he warned.

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New U.S. owner pledges support to Tembec following takeover

MONTREAL — After announcing its friendly takeover of Tembec last month, Rayonier Advanced Materials vowed to “come to bat” for the Quebec-based forestry firm in the U.S.-Canadian softwood lumber dispute. The pledge provides some welcome reassurance in what is the latest in a trail of out-of-province and international acquisitions of Quebec companies over the past decade.

“We’ll be supportive of whatever works best for Quebec, Ontario, and our position here,” Rayonier Chairman and CEO Paul Boynton told reporters. The $807 million acquisition doesn’t affect the countervailing duties imposed by the U.S. on Canadian softwood lumber, but Tembec CEO James Lopez said Rayonier’s size and capital will help to offset the costs associated with them.

Assurances that Tembec’s Montreal headquarters will be kept intact didn’t fully assuage Unifor, the labour union that bargains for 900 Tembec workers. “We are concerned that the headquarters of Canadian operations in Montreal will have only a minor role in the direction of the company’s operations,” said Unifor’s Quebec director, Renaud Gagné.

Meanwhile Roger Gauthier, president of the union’s Local 233, was cautiously optimistic. “They’re going to want to make our pulp just as good as their standard pulps,” he said in an interview. “I think for the town that’s going to be positive.” Still, Gauthier admitted to concerns about the Canadian business’s autonomy under the new owners.

Quebec Premier Philippe Couillard expressed his reluctance to intervene in a deal already agreed upon by the companies’ respective boards. Responding to questions about the Tembec sale while on a mission to Israel, the premier said that “when the two boards of directors decide in a consensual way to conclude a transaction, they must be allowed to act.” Yet the province’s corporate brain drain continues to be a touchy subject, emblematic of the divide between Couillard’s free trade-oriented Liberals and their nationalist opposition.

Rayonier’s acquisition adds Tembec to the list of firms sold out of province in recent years, including RONA, the iconic Saint-Hubert restaurants, the Groupe Uniprix pharmacy chain, Cirque du Soleil, and Alcan Aluminium. The loss of Saint-Hubert to Ontario-based Cara Operations, which owns Swiss Chalet, struck a particularly populist chord, while the Parti Québecois unsuccessfully sought to block the sale of RONA inc. to Lowe’s before that deal was completed last spring.

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Canadian Tire’s Canvas brand caters to hip, young shoppers

TORONTO — Canadian Tire’s preview of its spring Canvas line reflects the company’s commitment to reach a younger, hipper demographic.

This season’s showcase was in line with current design trends. In addition to the increased blurring between the indoor and outdoor looks, colours, patterns, and textiles play a major role in the décor on offer from Canvas. Black and white, terra cotta, and rose-gold touches blend together to create a hand-crafted theme. 

“Part of the Canvas brand is being able to tell the whole mix and match story,” says Tracy Platt, brand design & development manager, consumer brands for Canadian Tire.

That mixing and matching includes the natural-looking, yet durable tables, chairs, rugs, and outdoor accessories. And beyond the basic patio components, displays incorporated traditionally indoor accessories such as mirrors and the currently fashionable succulent plants, as well as lanterns and table centerpieces.

Another fun trend on display was pineapple-themed accessories. The tropical fruit, now experiencing a surgel in popularity, which Canadian Tire has picked up on, made appearances everywhere—from pillow patterns and patio umbrellas to fruit-shaped string lights and ceramic knick knacks.

For its line of textiles, Canadian Tire again commissioned a Canadian graphic designer to create a series of four cushions. The colourful offerings from Avril Loreti, a Toronto-based designer, are also water-, stain-, and UV-resistant. “Which is great,” Platt says. “Because you can leave them outside and they’ll stay just as vibrant and bright.”

She adds that working with designers is something she and her team feel strongly about, and having the hand-drawn look for their textiles helps set the line’s accessories apart, while still integrating well with the basic seasonal pieces on offer.

“We’re really working on being able to tell that whole decorating story,” says Platt. “That’s what Canvas is all about.”

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Hand tool inventor wins patent suit against Sears

CHICAGO — A federal jury has found that Sears and supplier Apex knowingly violated a patent with its Craftsman locking wrench. LoggerHead Tools, a father-and-son enterprise, filed a complaint five years ago over the product’s resemblance to its Bionic Wrench, which Sears ordered from LoggerHead from 2009 until the 2012 launch of Craftsman’s own Max Access Locking Wrench.

Now Dan Brown Sr. and his son have been awarded $6 million in damages for the copying of their product. Stanley Black & Decker bought the Craftsman line this year, but the tools are still sold at Sears stores.

“You don’t often see David in the David vs. Goliath battles win,” Dan Brown Jr. told the Chicago Tribune. “It’s a huge win for small businesses, small inventors, and people who think if they have a great idea they should be able to bring it to the market and not be crushed by a corporate giant.”

The Browns’ lawyer, Paul Skiermont, observed that small entrepreneurs, when they have the means to pursue large corporations at all, often settle intellectual property disputes for “pennies on the dollar.”

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Luc Lemonde, National Director, Dealer Sales at RONA, has informed us he has retired. His last day at Lowe’s/RONA was May 26.

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May 29, 2017 Volume

xxiii, #22

“Advice is what we ask for when we already know the answer but wish we didn’t.”
— Erica Jong (American novelist and poet, 1942- )

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How vendors can meet eRetail buyers—and other ways Hardlines is connecting the industry

WORLD HQ, Toronto — Here at the Hardlines World Headquarters, we continually look for new ways to bring information and services to you, our Faithful Readers. Here’s a rundown of what we have in store for you for the rest of 2017…

Home Improvement eRetailer Summit: A dynamic forum for suppliers and traditional retailers to learn from North America’s leading e-commerce buyers and executives. You will meet face-to-face with retail buyers who are interested in increasing their online sales with your products. The focus of this year’s eRetailer Summit is on hardware and tools, home décor, paint, housewares, lawn and garden, outdoor living, and flooring. Suppliers and retailers alike will learn how to develop winning e-commerce strategies.

Who’s Who Directory of Buyers: Yes, it’s mailing this week! Our listing of all the top retailers, buying groups, co-ops, and wholesalers in Canada. Each listing includes full contact info, key buyers and their categories, key executives and management teams, sales, and buying group affiliations. The Who’s Who is indispensable for anyone trying to expand their leads and understand who the top retail buyers are.

Annual Retail Report: This one will be released next month. A massive document, it consists of more than 170 PowerPoint slides with quite simply everything we know about this industry. Year-over-year growth, sales by store format, market share by province, detailed analysis of Home Depot, Lowe’s, Home Hardware, and Canadian Tire, plus breakdown and ranking of the buying groups, and leading retail chains. This report digs deep, with a recap of conditions affecting the industry, analysis of trends and business conditions, and critical forecasts for 2017 and 2018.

Hardlines Market Share Report: This important research document provides market share data for every home improvement banner in this country, including valuable year-over-year analysis. Available in August. (Pairs perfectly with our Retail Report!)

Free Daily News Updates: You don’t have to wait until Monday morning for your updates on the industry. We provide a free “clipping service” of news related to hardware, home improvement, and retail in general on a daily basis. Just sign up at our website under “Daily News Updates” or click here right now!

Hardlines Home Improvement Quarterly Magazine: HHIQ is mailed four times a year to more than 11,000 home improvement dealers and managers across Canada. Your best source for information on running your business better—and for vendors it’s absolutely the best way to advertise your message to the retail community!

And finally, don’t forget to mark in your calendar our 22nd annual Hardlines Conference, November 14 to 15 at the Sheraton on the Falls hotel in Niagara Falls, Ont. Speakers include executives from Lowe’s Canada, Peavey Industries, and Patrick Morin. The best networking event of the year!

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Home Depot reveals its hot sales drivers in Q1

ATLANTA — Home Depot reported healthy first-quarter results last week, including sales of $23.9 billion that were up 4.9% over 2016. In a call to analysts following the release of those results, Home Depot executives provided some insights into where the growth is coming from, including large-ticket sales, increases in its contractor business—and a dramatic rise in e-commerce.

According to Ted Decker, the retailer’s EVP of merchandising, “We had a great first quarter driven by continued strength across the store. Our pro business was particularly strong and outpaced the company average. We also saw excellent growth in our online business as online sales grew approximately 23%.”

Decker pointed out that Home Depot’s pro business keeps growing: “In the first quarter, sales with our pro customers outpaced the company average driven by both our high-spend and low-spend pros. We saw strong comps in several lumber categories—wire, commercial-industrial lighting, and gypsum.”

But other areas performed well in the first quarter, as well. “All of our merchandising departments posted positive comps. Appliances, lumber, and flooring had double-digit comps in the quarter. Tools, electrical, plumbing, décor, and kitchen-bath were above the company average.”

Product innovation continues to drive sales, said Craig Menear, Home Depot’s chairman, CEO and president. “The extension of lithium-ion battery technology into the outdoor power category is an excellent example of our ongoing focus on innovation and we continue to see great sales in this category.”

While noting the strength of Home Depot’s online sales strategy, he pointed out the importance of the company’s bricks-and-mortar presence, as customers still largely prefer to come to the store to finalize the sale. “With over 45% of our orders on homedepot.com, the customer is actually choosing to pick up in our stores.”

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U.S. lumber dealers confront higher prices in wake of Trump tariff declaration

SPECIAL REPORT — A new U.S. tariff on imported Canadian softwood lumber is the latest change to an old trade debate between the two countries. The U.S. government, as of late April, is implementing a 20% tariff on Canadian softwood.

Lumber sellers in the U.S. have been anticipating the tariff and increasing prices since the presidential election in November, says Ray Formosa, president of Brooks Lumber in Detroit. Brooks Lumber buys some Canadian utility- and economy-grade lumber, which is used to build commercial pallets.

In Canada, most forests are on crown land, and prices for harvesting trees on that land by private companies are set by the government as stumpage fees. Those stumpage fees are considered artificially low by the U.S. side, thereby constituting a government subsidy. In the U.S., most of the forest land harvested for softwood is privately held, and prices for the trees are market driven.

Due to competition, the tariff will impact lumber prices throughout North America, Formosa says. “It’s going to have a domino effect.” Construction costs will increase as a result, but he doesn’t think his business will suffer. “If everyone else’s prices are going to go up, so are mine,” he says. “I really don’t foresee it changing our business because everyone is in the same water. Nobody likes higher prices, but then again, if you’re all doing it, I say everyone’s going to have the same impact.”

Kenyon Noble Lumber & Hardware in Bozeman, Montana, has been planning ahead for the tariff since January, says general manager Mike Thompson. “If you appropriately planned for the tariff, then it shouldn’t affect your business.”

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Women carve out their place in the world of home improvement retailing

SPECIAL REPORT — Women make up more than half the population, and affect more than 80% of the buying decisions concerning home improvements and repairs. And there are many women who have chosen to build their careers in the industry.

Last fall, the Hardlines Conference brought together a panel of women from across the industry to weigh in on the role women have in the future and growth of the home improvement industry. Moderated by HARDLINES’ own publisher, Beverly Allen, the panellists consisted of Sherri Amos, director of dealer support for Home Hardware; Sara Clarkson, president of Storesupport Canada; Christine Joannou, key account manager for MAAX Bath; and Jillian Sexton, COO of Hector Building Supplies.

Sherri Amos started with Home Hardware 17 years ago. She told the audience, “Like many of you in this room, I’m sure, it was a happy accident that I found myself in this industry. But what I can say is that once I arrived, I really fell in love with what we do and how critical it is; how it’s a foundation within Canada and the stability it offers.”

Sexton, despite being born into the industry, nevertheless surprised her father with her decision to make a career in the family’s Nova Scotia chain of stores. Beyond the fact that having a thriving company that you can simply walk into is an opportunity not everyone gets, she says she found the field universally relevant. “Everyone has a home or wants a home,” says Sexton. “The industry isn’t going away, it may change or grow, but everyone’s always going to need things to build and modify their homes.”

Joannou, who works in fashion bath, started her career in in clothing retail before moving into sporting goods. Having been in the home improvement industry for 11 years, she says her gender offers her an advantage in the field as her category’s target customer is the female shopper. “Being a woman gives me the insight to enable me to relate to the customer better and target our offerings and marketing correctly for our target customer.”

(This story is excerpted from the latest issue of our sister publication, Hardlines Home Improvement Quarterly. This magazine gets mailed to more than 11,000 dealer-owners and managers across Canada. For more information, click here!)

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