RONA’s sales, profits up in 3Q

BOUCHERVILLE, Que.—RONA’s profits for the third quarter increased 5.8% to $56.1 million, up 5.8% over the comparable period last year. For the year to date, RONA’s net earnings reached $152.5 million, up 10.8% over the same period last year. Sales for the period rose 13.0% to $3.4 billion.

This growth reflects the expansion of the corporate and franchised store network, and dealer recruitment. Most importantly, results benefited from the acquisitions during the quarter of Chester Dawe, a key independent in Newfoundland, 51% of Materiaux Coupal Inc., a Montreal-area dealer, and Curtis Lumber in Burnaby, B.C. In total, RONA has added $300 million in annual sales through acquisitions so far this year. In addition, RONA has recruited 23 dealers since the beginning of 2006, increasing annual retail sales another $136 million.

“Our development plan is being implemented as planned,” said RONA president and CEO Robert Dutton in a release. “We’re right on target with our ‘7-07′ Program, having achieved 35% of our objective thanks to a combination of same-store sales growth, store construction, acquisitions and recruitment,” despite a less-than-favourable market, especially in Quebec and in Ontario.

Same-store sales during the third quarter rose 1.2%. Accounting for fluctuating lumber prices, same-store sales advanced by 7.2%.

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Canadian Tire’s 3Q earnings rise 13.1%

TORONTO—Canadian Tire Corp. wound up its third quarter with net earnings of $95.4 million, an increase of 13.1% from $84.4 million in 2005. Excluding non-operating gains and losses, net earnings were $94.4 million, an increase of 13.2%. Sales increased 9.0% to $2.43 billion, from $2.23 billion.

“Our sales and earnings performance for the third quarter, as with the first half of the year, reflects healthy customer response to our offerings across our network of businesses,” said Tom Gauld, Canadian Tire’s president and CEO. He added that sales for the fourth quarter are expected to remain strong, but warned that profits may suffer from seasonal promotional expenses and the openings of 34 Canadian Tire Retail Concept 20/20 stores. “Earnings for the fourth quarter will also be impacted by investments in the retail banking pilot, the expansion of the Gas Advantage MasterCard in Ontario and continued margin challenges at Petroleum.”

For the first nine months, net earnings were $246.3 million, up 16.2%.

Sales at Canadian Tire Retail (CTR) in the third quarter grew to $1.8 billion from $1.7 billion, an increase of 7.3%. The growth came partially as a result of strong promotional activity in the quarter. Same-store sales increased 5.6%, led by strong growth in the categories of kitchen and home appliances, car care and accessories and outdoor recreation. CTR’s profits for the quarter were up 14.1% to $98.2 million, reflecting higher operating revenue from product shipments and improved operating margins resulting from global sourcing initiatives and favourable exchange rates.

Year to date, retail sales for CTR were up 5.8% to $5.1 billion, from $4.8 billion during the same period a year earlier.

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CanWel customers meet in Montreal

MONTREAL—Customers of CanWel, Hardware Division gathered last week in Montreal to meet vendors and sit in on seminars. But the event, and the vendors, were all organized through CanWel’s partnership in PRO Retail Services, or PRS, as it is now being called.

The event was marked by a general enthusiasm and positive outlook by dealers and exhibitors alike. Business remains good for most independents, and this, combined with a sense that CanWel is getting its house in order, helped boost spirits.

CanWel, Hardware Division (formerly Sodisco-Howden Group), has partnered with TruServ Canada to create PRS, creating a banner-management team that oversees purchasing for CanWel, Hardware customers, while CanWel, Hardware supplies the product.

“The phone has been ringing off the hook since the show,” said Tony DiEmanuele, vice-president, business development and growth for TruServ, and a key member of the PRS team. “All the vendors wrote orders.”

DiEmanuele saw the success of the event as a sign that the independent served by CanWel is flourishing, despite consolidation pressures. “You can’t tell me that the independent is dead,” he said.

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Home décor expands in new Wal-Mart Supercentre

UNIONVILLE, Ont.—Wal-Mart’s much anticipated grocery-and-hard goods combo store is opening in this community just north of Toronto. It follows stores in London and Ancaster, Ont. The Wal-Mart Supercentre features expanded home décor, electronics and apparel offerings — and fresh meat and produce.

Ranging in size from 160,000 square feet to 200,000 square feet, the Wal-Mart Supercentres are about 30% bigger than traditional Wal-Mart stores and stock approximately 120,000 products, compared to 80,000.

On the hardlines side of the business, key departments such as home trends and electronics have been broadened and enhanced to offer more selection in a wider range of price points, from entry to higher-end merchandise.

At the grand opening last week, Mario Pilozzi, president and CEO of Wal-Mart Canada called the new concept an “evolutionary step” that aims to cater to time-pressed Canadian consumers. “We have grown and enhanced all the areas customers told us we should. The result is the real one-stop shop that Canadians have been waiting for, combining enhanced fashion, home trends, electronics, and a full fresh market,” Pilozzi added. “It’s not just about getting bigger, it’s about getting better.”

Wal-Mart’s home enhancement departments, collectively called “Home”, have grown from about 17,000 square feet in a traditional Wal-Mart to 26,000 sq.ft. in this store. The focus here is on four categories: bed and bath, kitchen and entertaining, furniture and organization, and home décor and seasonal accents.

Wal-Mart Canada plans an additional four Ontario stores, in Scarborough, Sarnia, Brampton, and Vaughan, in early 2007, plus another five to seven stores by the end of next year.

(I’ll report more on the impact of the new Wal-Mart Supercentre concept on the retailer’s home enhancement categories in the 1Q 2007 edition of our amazing sister publication, Hardlines Quarterly Report. — Michael)

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Aeroplan creates partnership with Home Hardware

MONTREAL & ST JACOBS, Ont.—Aeroplan and Home Hardware Stores Ltd. have forged a national, exclusive multi-year partnership. Starting in early 2007, Aeroplan members can earn one Aeroplan Mile for every $2 spent at the more than 1,000 Home Hardware stores across Canada.

Aeroplan members can also redeem Aeroplan Miles for Home Hardware Gift Cards.

With locations in major and secondary markets throughout the country, Home Hardware gives Aeroplan a valuable retail presence for its loyalty program. Besides Home Hardware, customers can earn Aeroplan Miles through a network of more than 60 partners, representing more than 100 brands in the financial, retail and travel sectors.  Aeroplan miles can be redeemed toward any available seat across the entire Air Canada and Air Canada Jazz networks, as well as more than 400 specialty, merchandise and experiential outlets.

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Home Depot plans 10 more Canadian stores before year’s end

TORONTO—While the industry awaits the arrival of Lowe’s into Canada next year, Home Depot’s Canadian division is working aggressively to ramp up its presence here and provide as much resistance to the Lowe’s initiative as it can possibly muster.

A recent management meeting held in Atlanta was reportedly devoted entirely to strategies for combating Lowe’s in its first foray outside of the U.S. Canada’s largest home improvement retailer intends to ensure its place at the top by opening 10 more stores before its fiscal year end on Jan. 31, 2007.

Most recently, Home Depot opened one store in Westbank, B.C., near Kelowna in British Columbia’s interior region, and another in Timmins, Ont. Other stores scheduled for the coming weeks include Midland, Ont., on Nov. 23 and Collingwood, Ont., later in December.

These sites represent Home Depot’s efforts to expand into secondary markets, but it is also continuing its efforts to develop urban markets. Hardlines expects to announce further planned openings in coming weeks.

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Ontario creates hardware & LBM apprenticeship program

ST. JACOBS, Ont.—A strong new training initiative is being launched by the Ontario Ministry of Training colleges and Universities. The first program of its kind in the province, the Hardware, Lumber and Building Materials Retailer Apprenticeship program provides significant government funding for comprehensive, industry specific training.

Tony Krotz is dealer education manager at Home Hardware Stores Ltd. He has spent the past three years working on this initiative, at various times with input and support from other industry groups, including Castle Building Centres, I.L.D.C., RONA inc., and the Lumber and Building Materials Association of Ontario. Also involved in the project is the Canadian Distance Education Association (CDEA).

The initial thrust of the program is to provide upgraded training for existing store staff, he says. “Owners and managers can focus on people already working in the stores. It will be for people that owners see potential in and want to develop further,” says Krotz.

“Eventually,” he adds, “the program will become a way to attract more people to our industry by helping them see it as a career option. The idea is that this is something that will attract people out of high school. By offering some sort of recognized professional certification, this program will give the industry more credibility as a career choice.”

To start, the program is limited in terms of both numbers and available funding to 600 people in a pilot between now and March 2007. Dealers who wish to get involved are expected to contact their respective dealer organization or buying group for details. Another source of information is Kevin Milne of CDEA: 519-584-0986; or milne@cdei.ca.

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Demands by retailers put pressure on inventories

TORONTO—The liquidator is no longer the grim reaper of the retail world, but an important business partner, according to Jonathan Hill, CEO of Liquidation World. The head of a Calgary-based retail liquidation operation that operates 100 outlets across North America, he spoke at the recent Hardlines Conference.

Hill said that merchandise handled by companies like his has historically been considered the shoddy left-overs from failing businesses. But today, he says, more than 85% of the inventory Liquidation World handles comes from healthy businesses.

The changing role of the liquidators has several causes. Pressure from shareholders has forced retailers to realize margins on stock quickly or move it out. In turn, retailers pressure suppliers to assume responsibility for product performance on the shelves. As well, the economics of global sourcing mean that off-shore containers are packed as tightly as possible to create the lowest cost per unit, regardless of whether retailers can actually move that much of one item.

The increasing complexity of retail forecasting also means that retailers must sometimes liquidate stock quickly, especially in the case of those whose strategy includes providing a fast-turning, highly-differentiated product line.

These trends are being further affected by a growing movement among retailers to trim both inventories and their range of suppliers. Companies such as Loblaw, Wal-Mart, Canadian Tire, and CanWel, Hardware Division are all looking to work with fewer, larger vendors.

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Home Depot discontinues two print catalogues

ATLANTA—Home Depot has decided to discontinue selling from two print catalogues that it launched with considerable fanfare only a year ago.

The retailer has ceased publication of 10 Crescent Lane and Paces Trading Co., through which it sold high-end furnishings and lighting, respectively. Those monthly catalogues had been mailed to more than one million names. However, both entities will have a presence on Home Depot’s main website. In addition, they will be incorporated into its core print catalogue.

Jean Osti Niemi, a company spokesperson, told Multichannel Merchant magazine that Home Depot made this move because it was getting more customer traffic through its website HomeDepot.com and through its Home Depot Direct catalogs.

Niemi said that Home Depot did not intend to merge its other upscale catalogue, Outdoor Living, into Home Depot Direct, and would continue to run Home Decorators Collection as a separate entity.

Home Depot had been using 10 Crescent Lane and Paces Trading Co. — which went to intersecting mailing lists — to target women with household incomes of more than $225,000.

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True Value posts 19% net gain

CHICAGO—True Value Hardware, the dealer-owned buying group, reported a 19% increase, to $18.3 million, in net margin for the quarter ended Sept. 30, on revenue of $497.9 million that was up 2.3% over the same period a year ago.

Through the first nine months of its fiscal year, the co-op’s wholesale sales rose 3.2% to $1.542 billion, and net margin was $55.2 million compared to $25 million in 2005.  Excluding the impact of an arbitration matter, True Value’s net margin rose 15.6% to $6.8 million.

Lyle Heidemann, True Value’s CEO, attributed his company’s financial performance to improvements in its product mix, its line-review process, retail support and training.  The company also continues to pay down its debt. Through nine months it had reduced its indebtedness by one third, to $158.7 million.

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Retailers should focus on store experience, not ads

NEW YORK—Retailers should spend less on marketing and advertising, and more on improving the customer experience right in the store, according to a new study from Deloitte & Touche USA LLP. They should also be developing multiple channels for reaching the consumer, especially those who walk into the store, then walk back out.

The study, which asked more than 4,400 consumers about their shopping behaviour through an online survey, determined that “non-purchasers” are three times as likely to permanently abandon a retailer as the ones that spend money. That should provide clues as to how retailers should spend their marketing dollars. “Retailers continue to devote substantial resources to traditional marketing vehicles, despite new communication mediums, demographic shifts, and a lack of proven return on investment,” said Pat Conroy, national managing principal of Deloitte’s Consumer Business practice. “By looking at what converts a shopper into a buyer — and, conversely, what keeps a shopper from buying — retailers can direct their efforts in a more positive manner.”

The study determined that one of the most effective ways to turn shoppers into buyers is by enhancing store navigation (“customers can’t buy what they can’t find”). Consumers who went to a store intending to buy an item but did not purchase it said that the number-one reason was that they could not find the item (16%), either because they could not locate it, it was out of stock, or help was not available to find it. In fact, of the consumers that said they received service in the store (31%), the majority (55
percent) did so to get help locating an item.

The barrage of advertising and marketing through television, radio and online ads, direct mail, coupons, and displays and signs results in information overload. The result is a relatively low impact on consumers, who were more likely to be affected by the environment once inside the store itself.

“Brand recognition, past in-store experiences, and consistent fulfillment of the brand promise are driving many more store visits and driving the conversion of shoppers to buyers,” said Scott Bearse, leader of Deloitte’s Retail Stores practice. “Consistently managing a successful series of customer purchase experiences is what creates a strong retail brand and ultimately increases shareholder value.”

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Home Depot’s Supply division wants economies of scale

TORONTO—Home Depot’s commercial wholesale business has a role model – its retail parent. According to Dan McAreavey, president of HD Supply, Home Depot transformed the DIY market and Home Depot Supply will do the same for the pro market globally.

One of the opportunities in the commercial wholesale channel, he noted, was just how fragmented it still is. If Home Depot’s supply business follows the lead of its retail side, that fragmentation will be consolidated quickly over the coming years by Home Depot’s efforts to buy up some, and drive others out of business.

“Technology and talent will be the two things we’ll rely on,” he said, to execute that growth strategy—both globally and locally.

HD Supply’s acquisition targets will be those companies that have the potential to grow. He cited Brafasco, an industrial fastener chain with 28 outlets in Ontario. “We have a strategy to take that nationally.” (In fact, the day after McAreavey’s presentation, Brafasco opened a 29th outlet in Toronto, on Wilson Ave. just west of Highway 400), with four more openings scheduled in coming months.) He also seeks out companies that have experience that can be migrated to the rest of the division. “When you acquire these companies, you acquire the expertise that is there.”

Another area where HD Supply can replicate the successes of the retail business is on the supply side, where Home Depot’s huge volumes are expected to help drive down costs to wholesale customers as well.

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Industry celebrates outstanding retailers at Awards Gala

TORONTO―Canada’s finest retailers were honoured when the Outstanding Retailer Awards were presented at the recent Industry Awards Gala. The ORAs, presented by Hardware Merchandising magazine, recognized retail excellence in hardware, building supply, contractor-oriented, and large-surface formats. At the individual level, one Award went to the best young retailer under the age of 35.

For a full list of winners, plus some cool pics from the Industry Awards Gala, click here.

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CanWel CEO confronts growth, challenges at Conference

TORONTO—What stands out about the CanWel of today is the range of businesses it encompasses. It has been aggressively consolidating, both horizontally as it buys up other wholesalers, and vertically, as it takes makes alliances or acquisitions to beef up its product range and the strategy behind this aggressive expansion was laid out at the recent Hardlines Conference by CanWel’s president and CEO, Tom Donaldson.

In fact, just days before the Conference, CanWel announced the purchase of five pressure-treated wood facilities across the country. But regardless of its add-on businesses, CanWel’s central role remains that of a distributor, and with that in mind, said Donaldson, everything depends on right pricing and “speed to market.”

Keeping costs down proves challenging in the increasingly global economy. “Importation certainly puts margins under pressure,” he said, “and you’re going to have to continue to source the world to stay competitive.”

Jack Van Kessel, Donaldson’s vice-president at the CanWel Hardware division, took over the podium to explain the status of that business and confront some of the concerns in the industry — and especially among CanWel customers — over the erratic fill rates coming out of CanWel’s hardware business. The acquisition of Sodisco-Howden Group at the end of 2004 added three DCs to CanWel’s infrastructure. It eventually closed down the West Coast facility, leaving one in London, Ont., and another in Victoriaville, Que. “Providing product from two distribution centres in Central Canada provides some logistics challenges,” said Van Kessel.

“Our fill rates are not where we want them to be and I’m aware of that,” Van Kessel continued. “But we’re focused on this and will get it fixed.” He also said margin pressure is a priority for CanWel — getting prices down to help its retail customers stay competitive with larger chains.

“Look to us for ‘best-in-class’ fill rates going forward,” he told the audience.

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BMR’s new bags mean green at the check-out

LONGEUEIL, Que. —While the retail community internationally is grappling with the environmental impact of plastic bags at checkout, Canada has yet to focus on this issue. Nevertheless, Le Groupe BMR is not waiting. It has developed a re-usable bag that is being made available to its customers.

The bags, imprinted with the BMR colours and logo, also feature logos from some of BMR’s top vendors, including Task Tools, Sico Paint, and Quality Craft.

The sheer volume of plastic bags generated at retail is being becoming an issue globally. In England, proposals are under way to initiate an “environmental levy” on the plastic bags. A similar bill has been put forward in Scottish Parliament, while a law already in place in Ireland has helped reduce bag use by 90% in that country.

In Australia, a voluntary code is in place that has reduced plastic bag use by about 45%. Bunnings, the big box DIY chain, has been pro-active in introducing re-usable bags of its own to meet environmental concerns of its customers.

BMR, which has 158 member dealers throughout Quebec, Eastern Ontario and the Maritimes, claims that its bags are the first re-usable bags from a home improvement group in Eastern Canada. They retail for ninety-nine cents.

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Weaker U.S. housing market drives West Fraser’s 3Q loss

VANCOUVER—The tumble in the U.S. housing market took its toll on West Fraser Timber’s latest results. The giant forestry company reported a loss of $8 million on sales of $809 million in the third quarter. That’s a swing from earnings of $18 million on sales of $890 million in the third quarter of 2005. Year to date, earnings were $102 million on sales of $2.60 billion, compared to earnings of $99 million on sales of $2.75 billion for the comparable period in 2005.

“The recent steep decline in U.S. housing starts and resulting decline in lumber prices dramatically affected our quarterly result,” said Hank Ketcham, chairman, president & CEO of West Fraser, in a release. “The low lumber prices not only resulted in lower revenue but led to a write-down of log and lumber inventories of approximately $36 million.”

The third quarter was further impacted by a $5 million write-down due to the shut-down of a jointly-owned sawmill in Red Earth, Alta. West Fraser also expensed $17 million in lumber duty payments in the quarter, down slightly from $22 million in the previous quarter.

With the finalization on Oct. 12, 2006, of the softwood lumber agreement with the U.S., West Fraser began paying an export tax of 15% to the Canadian government on shipments. However, the agreement has yet to be passed as legislation by Canadian Parliament. This is expected to occur in the fourth quarter, at which time West Fraser expects to get a rebate of approximately US$343 million before tax, plus interest.

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Lowe’s Robinson adamant about greenfields strategy

TORONTO— Lowe’s Canada CEO Doug Robinson said his company wants to build its presence in this country through an organic, greenfields strategy and has no plans to rush into acquisitions.

Despite some skepticism from the standing-room-only crowd at last week’s Hardlines Conference, He also challenged the notion that there’s not enough room in the Canadian marketplace for another player, or that good real estate is too scarce to accommodate another player in the home improvement field. He did say, however, that as a “process-oriented company, “Lowe’s won’t rush its Canadian plans. It takes time to develop sites.” He added that Lowe’s made a conscious decision to announce its plans to move into Canada well in advance of opening stores in order to be able to lay the necessary groundwork properly. That groundwork included finding support services, dealing with real estate developers, and attracting people for its team.

Asked about a recent UBS report suggesting that it made business sense for Lowe’s to acquire RONA, Robinson reminded audience members that “buildings have to fit our model, and just buying existing buildings might not fit the bill.” He was referring to the range of store formats that operate within RONA, most of which are not big boxes.

Lowe’s is currently organizing the logistical side of its operation, having recently hired Assured Logistics to help with the company’s distribution plans, and the search is on for a local marketing partner.

Robinson headlined the two-day Hardlines Conference, held Oct. 16 and 17 in conjunction with the new National Hardware Show Canada. (More on the Conference in both this week’s and next week’s editions. — Michael)

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National Hardware Show Canada makes it debut

The newly launched National Hardware Show Canada was held last week at the Toronto Congress Centre. The show was co-located with the long-running Garden Expo/Florist Expo, sponsored by the Landscape Ontario Horticultural Trades Association. The new show is owned and operated by Reed Exhibitions, whose U.S. headquarters are in Norwalk, Conn.

NHSC, which covered 100,000 square feet of exhibition space, featured about 250 exhibitors and played host to about 2,200 delegates, including home improvement retailers, wholesalers, distributors, and importers/exporters.

The arrival of this new show has been the subject of much speculation during the past several months. After all, it follows on the heels of two previous failed shows in Canada. The Canadian Hardware Show, owned by the erstwhile Canadian Retail Hardware Association, breathed its last in 2004, falling just short of a century in existence. A German trade fair organization, Messe Frankfurt, attempted to pick up the pieces in 2005 with a show of its own, called H2X. That show managed to attract only 150 exhibitors and quickly flamed out.

While modest in size, the latest show featured a range of diverse hardlines vendors. Although the show lacked the presence of larger brand-name vendors, the booths were lined with new faces from both Canada and the U.S., thanks to heavy promotion by Reed to existing exhibitors at its National Hardware Show in the U.S. In addition, a group of Chinese vendors filled the outer halls of the show.

Despite the disgruntlement of some vendors, the majority that HARDLINES spoke with found value in meeting both smaller retail buyers in addition to enough “A” buyers to make their presence worthwhile. The show also proved a valuable adjunct to the information program offered during the Hardlines Conference, which ran in tandem with the show.

Rob Cappiello, vice-president of Reed Exhibitions, says the show, from his standpoint, was an unqualified success. “The show will be back,” he said confidently, and it will be even bigger next year.”

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TIM-BR MARTS, Better Living Products receive Newsmaker awards

TORONTO—Two Canadian  home improvement companies that achieved exceptional growth over the last five years have been recognized with a coveted Hardlines Newsmaker of the Year Award. TIM-BR MARTS Ltd. and Better Living Products both received awards on Tuesday, Oct. 17 at the Industry Awards Gala, held at the Toronto Congress Centre as part of the new National Hardware Show Canada.

In presenting the award to TIM-BR MARTS in the retailer category, Michael McLarney, editor and publisher of Hardlines, cited the company’s extraordinary success in combining the operations of three other groups — TIM-BR Mart Ontario, AWARD in Atlantic Canada and The Signature Group. Just weeks ago, TIM-BR MARTS forged yet another alliance, this time with Groupe Mat Plus in Quebec. The resulting group has quadrupled in size over the past three years and now represents some 550 dealers across Canada. In addition, it has grown from $1.4 billion to $2.4 billion in purchases.

Better Living Products was winner of the award in the vendor category. This innovative company began in 1991 to manufacture and market the Dispenser, a shower wall system that tapped into a growing consumer taste for spa-inspired products. Today, the Dispenser unit is a world leading brand, and the company sells kitchen and bath products to distributors, retail stores and hotels in more than 70 countries.

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Hardlines, with Quebec association, launches French-language edition

MONTREAL & TORONTO—After more than a decade providing breaking news, information and competitive intelligence to Canada’s retail home improvement industry, Hardlines takes its role as a national publication to new heights with the launch of a French-language edition. Thanks to a landmark agreement with the Building Materials Retailers Association of Quˆ©bec (ADMACQ), Hardlines will now be available in French every single week.

“Quebec represents more than one-fifth of Canada’s retail home improvement market, so it’s not surprising that some of this country’s most innovative retailers and vendors are here,” said Donald O’Hara, president and general manager of ADMACQ. “The French-language edition of Hardlines will be able to reach them quickly and easily each week.”

Under O’Hara’s supervision, Hardlines will get translated each week into French. He’ll also ensure that relevant news from Quˆ©bec makes its way into the pages of Hardlines, broadening not just its reach but its scope.

“ADMACQ is a natural partner for us,” said Beverly Allen, director of sales & marketing for Hardlines. “This organization, which represents the home improvement industry in Quˆ©bec, has the expertise to allow us to ensure every French-speaking retailer and vendor can now be part of the magic that is Hardlines.”

To kick off the new edition, free trial issues of Hardlines will be offered to all ADMACQ members, and existing Hardlines subscribers have the choice to switch to the French-language version.

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Home Hardware dealer demonstrates strength of the independent

TORONTO—Retailer Christine Hand told an audience of close to 250 industry executives at the 2006 Hardlines Conference that tailoring product selection to a local market, providing exemplary customer service, and taking an active role in the community are all essential to the success of the independent retailer.

Hand, whose 20,000-square-foot Home Hardware store in Conception Bay, Nfld., has actually thrived since the arrival of big boxes in her tiny corner of that province, suggested that stiff competition has actually helped her grow her business by providing a basis for comparison, and by raising the competitive bar in her trading area.

She believes that offering staff competitive wages, contributing to RRSP funds, and allowing them to assume responsibility within the organization has been a significant factor in her success.

Focusing on staff encourages the positive atmosphere, says Hand, which contributes to her store’s ability to deliver customer service that big boxes can’t match. To illustrate the point, Hand described staff going out to deliver items to sick customers, visiting homeowners who have installed a new product, but can’t make it work, and being available to help in local emergencies—as they did one Christmas morning when a broken stove element threatened to wreak havoc on a turkey dinner.

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What do you stand for? Your brand should tell all

TORONTO—An explosion in product choices for consumers and the growth of the Internet as an information provider means that branding is becoming increasingly important to retailers, says Ted Matthews of Instinct Brand Equity Coaches.

Speaking to the Hardlines Conference 2006 audience, Matthews described how “hyper choice” in the marketplace has led to “hypermarketing” — an environment where every conceivable surface is loaded with messages urging us to buy.

Given that the average consumer gets about 1,500 marketing messages a day, he adds, retailers who want to succeed must deliver a clear, consistent message about what they bring to market.

Those conditions require retailers to be more creative about communicating to consumers, and to be aware of how technology is changing delivery of content to them.
Matthews noted, for example, that new technology and the growth of ad-free radio networks like Sirius allows visual media viewers to bypass commercials. That, says Matthews, is forcing businesses to find new ways to connect with existing and potential customers.

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BMR ad counters buying group confusion

LONGEUEIL, Que—The array of alliances on the Canadian buying group scene often leave the industry scratching its collective head over just how the various groups are inter-connected. The latest partnership, between TIM-BR MARTS Ltd., the Calgary based buying group, and Groupe Mat Plus, newly established and based in Quebec, adds to the roster of organizations inter-connected under just one group — Spancan.

Now a competing group is trying to cut through that clutter. Groupe BMR inc. is a buying group and wholesaler that represents 150 dealers, mainly in Quebec. It is about to launch an ad campaign that emphasizes simplicity, using the tag line, “Possibly the most uncomplicated relationship you’ll ever get into.”

The ad, which will appear initially in association member directories in both Quebec and Atlantic Canada, is part of BMR’s efforts to be more visible — and more vocal — as it moves its recruitment efforts beyond francophone markets. It also gives a nudge to TIM-BR MARTS, which was once partnered with BMR under Matreco. Now the two groups compete head-to-head.

“I’ve been showing our salespeople this ad and telling them we have one name, one focus,” says Gabriel Pollender, vice-president, marketing for BMR. He was hired earlier in the summer to spearhead the group’s promotional and marketing efforts.

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RONA renews its credit facilities, increases credit line

BOUCHERVILLE, Que—RONA inc., the hardware and home improvement distributor and retailer, has forged a new deal with its lenders that will increase its lines of credit. The syndicate of lenders, led by the National Bank of Canada, the Bank of Montreal, and La Caisse centrale Desjardins du Québec, will provide an unsecured, renewable credit facility of $600 million, with provision for an additional amount of up to $150 million, subject to certain conditions.

The facility, which will help RONA finance the costs of future expansion and ongoing consolidation, will be available for five years and may be extended for another two years. RONA’s obligations under this new credit agreement and a previous debenture issue will be guaranteed by some of its subsidiaries. The issue of the credit facility and the debentures will be completed in the coming weeks.

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Hardlines launches French edition with Quebec dealers’ association

MONTREAL & TORONTO—After more than a decade providing breaking news, information and competitive intelligence to Canada’s retail home improvement industry, Hardlines takes its role as a national publication to new heights with the launch today of a French-language edition.

Thanks to a landmark agreement with the Building Materials Retailers Association of Quebec (ADMACQ), Hardlines will now be available in French every single week. The launch, announced during the 11th Annual Hardlines Conference in Toronto, sealed the partnership between Hardlines and ADMACQ.

“Quebec represents more than one-fifth of Canada’s retail home improvement market, so it’s not surprising that some of this country’s most innovative retailers and vendors are here,” said Donald O’Hara, President and General Manager of ADMACQ. “The French-language edition of Hardlines will be able to reach them quickly and easily each week.”

Under O’Hara’s supervision, Hardlines will get translated each week into French. O’Hara will also ensure that relevant news from Québec makes its way into the pages of Hardlines, broadening not just its reach but its scope.

“ADMACQ is a natural partner for us,” said Beverly Allen, Director of Sales & Marketing for Hardlines. “This organization, which represents the home improvement industry in Québec, has the expertise to allow us to ensure every French-speaking retailer and vendor can now be part of the magic that is Hardlines.”

To kick off the new edition, free trial issues of Hardlines will be offered to all ADMACQ members, and existing Hardlines subscribers have the choice to switch to the French-language version.

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TruServ CEO sees bright future for Pro name under new alliance

WINNIPEG—Pro and Ace dealers can expect some new programs as a result of the merchandising alliance between its licensing distributor, CanWel, and TruServ Canada. The alliance, labeled Pro Retail Services, comprises the bannered customer base of CanWel and the banner expertise of TruServ, which is based here. That expertise is focusing on the value of the Pro brand, says TruServ Canada CEO Bill Morrison. “We’re developing our relationship with the Pro dealer with the objective of focusing on the individual dealer that has a unique relationship to his or her customer.”

That focus includes new categories and programs for Pro dealers, he says, that firmly identify the independent under the Pro name. The program will work just as effectively in francophone markets, he says, under the slogan, “je suis Pro.”

CanWel also has the license for the Ace banner in Canada. The status of that banner within the new program is pending, as CanWel and Ace continue negotiations.

Asked if the Pro Retail Services programs would rely on existing programs south of the border, where both Pro and Ace are well known, Morrison says his group is looking for “a made-in-Canada solution, and more importantly, a made-in-Quebec shopping experience.”

Part of that solution involves bringing a big-box mindset to the independent. “We need the attitude that the independents have to think like the big box, with the range of products and shopping experiences that consumers have come to expect from big boxes. The big boxes we admire are open and well-lit and have bright signage. We’ve brought these elements into the new Pro program,” Morrison says.

“We would like to re-establish Pro as one of the dominant brands in the marketplace.”

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U.S. builders seeks less reliance on Canadian lumber

ST. PETERBURG, Russia—American homebuilders are offering to share their construction know-how with Russia in exchange for more exports of that country’s lumber to the United States.

Speaking at the International Forest Forum here, Jerry Howard, CEO for the National Association of Home Builders, said that his group supports “open competition” that would lead to “a steady supply of affordably priced lumber.” His comments were made against the backdrop of the recent agreement between the U.S. and Canada to settle disputes over softwood lumber tariffs the U.S. imposes on Canadian imports. Those imports account for more than one-third of the lumber America consumes each year. American builders and some dealers fear that this agreement, which goes into effect Nov. 1, will artificially raise prices during slower demand periods.

“Today, the U.S. is overly reliant on Canadian imports to meet its lumber needs,” said Howard. “We are reaching out to you to correct this problem and we are looking to Russia to add equilibrium to our market for this essential commodity for the home building industry.”

During their week-long stay in Russia, NAHB officials met with officials from associations representing builders and suppliers. During its trip to Europe, NAHB also met with officials in Sweden about getting that country to expand its lumber exports to the U.S., as well.

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Lowe’s begins search for Canadian vendors

TORONTO—Line reviews began about six weeks ago at Lowe’s new corporate headquarters and customer support centre in Toronto’s north end. The process is being led by Ben Mauceri, vice-president merchandising. He was one of the few people at head office who, like Robinson himself, were brought up from Lowe’s headquarters in Mooresville, N.C. The rest of the merchandising team, which comprises sixteen buyers and four division directors, was recruited from some of Canada’s top retailers, including Canadian Tire and Wal-Mart.

According to Doug Robinson, president of Lowe’s Canada, this team has a mandate to “find the best values and best brands” for Canadian consumers.

While many U.S. companies — already supplying Lowe’s in the U.S. — will see their products appear on Canadian shelves, domestic suppliers are being sought, as well. “We will rely on U.S. vendors,” said Robinson, “but Ben’s team will look for the best products and values for Canada.”

One area in which Lowe’s expects to duplicate its U.S. successes is large appliances. In the U.S., Lowe’s is the number-two seller of washing machines, dryers and refrigerators. Second only to Sears, and gaining fast, it managed to secure $4.3 billion in sales from appliances last year. (By comparison, Home Depot, since it began selling appliances in 1994, has grown those sales to $1.8 billion.)

Lowe’s will use Assured Logistics, a subsidiary of Progistix-Solutions Inc., which is in turn owned by Canada Post, to handle its distribution needs in this country. “We can then continue to focus on the retail side,” said Robinson.

Lowe’s efforts to expand internationally may be coming just in time. In a meeting with investors recently, the company lowered its forecasts again for the year-end, citing a drop in U.S. housing and in consumer spending. The Canadian launch is expected to have an impact on results this year, due to start-up costs, but stores are expected to be profitable within the first year — in keeping with U.S. store performance metrics.

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TruServ to convert to corporate structure

WINNIPEG—TruServ Canada member dealers voted last week to accept a resolution by its board of directors to convert their organization from a member-owned co-operative to a corporate structure. The vote was passed almost unanimously by the voting members in attendance at its latest fall market — 134 in favour, none opposed, and only one abstaining.

The preferred shares will be owned entirely by the membership, à la Home Hardware, and not traded publicly.

The board spent the better part of the past year analyzing the potential change, and the past several months have been spent communicating the value of the proposed incorporation with the members. In fact, during dinner at the market on the evening before the vote, the TruServ board made a final plea to the members. “I want to stress the importance of moving forward. To do that, we must change,” said Pierre Levesque, chairman of the board and himself a dealer. “We believe we face a tremendous opportunity,” added Bill Morrison, TruServ’s president and CEO.

According to Morrison, the co-op model is no longer refined enough to enable TruServ to keep up with the tremendous changes taking place in the industry. A co-op cannot retain earnings. It must turn them back to members or otherwise reinvest in operations. And any decisions must have consensus from the entire membership.

The board was inspired by Home Hardware’s success under a dealer-owned corporate structure, and galvanized by the success of RONA to go corporate in 2003. TruServ’s conversion will be along the lines of Home Hardware, however, and not RONA, as all shares in the new TruServ corporation will be owned by the dealers; none will be floated publicly. The new structure, says Morrison, opens up an array of possibilities for TruServ. It will enable the organization to retain earnings, building equity for future investments, consider acquisitions of its own, and generally be better positioned to take advantage of the consolidation in the industry.

With this new structure, says Morrison, TruServ will be better able to forge stronger relationships with other groups. “We have the opportunity to change and really adopt new thinking, inviting other companies to think more strategically.”

TruServ is already a supplier to key buying groups such as Castle and TIM-BR MART, and, of course, it is closely allied with CanWel, Hardware Division (formerly Sodisco-Howden), through its partnership in Pro Retail Services. Morrison expects TruServ to be better able to tighten those relationships, as well as others in non-traditional channels such as grocery and pharmacy.

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CanWel announces purchase of five PTW plants

VANCOUVER—In an effort to increase its consolidation of the LBM market, CanWel Building Materials Income Fund, through its subsidiary CanWel Holding Partnership LP, is buying five pressure-treated wood facilities across Canada. The deal is valued at approximately $21 million.

The plants are owned by CanWel’s majority unit holder, Amar Doman. As a result of Doman’s financial interest in the transaction, he has abstained from voting on this transaction and the trustees of the Fund have set up a special committee to review the transaction, manage the acquisition, and provide recommendations to the full board of trustees.

The mills are CanadaWestern Pacific Wood Preservers Ltd., Western Cleanwood Preservers Ltd., Alberta Wood Preservers Ltd., Eastern Wood Preservers Ltd., and Quebec Wood Preservers Ltd. The five plants are located at or near Surrey, B.C., Edmonton, Toronto, and Montreal. They have already been CanWel suppliers for many years and represent another step in the wholesaler’s efforts to integrate vertically, as well as consolidate horizontally.

Following the acquisition, CanWel’s assets will comprise the five treating plants and 17 distribution centres located across Canada.

“The acquisition provides us with an integrated capability in treated lumber that is expected to enhance our profitability and growth strategies, as CanWel is currently the largest customer of the plants,” says Tom Donaldson, president and CEO of CanWel. “By vertically integrating these operations, CanWel reinforces its position within the pressure-treated arena.”

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HD Supply completes acquisition of Burrus Contractors Supply

ATLANTA—As it keeps buying up companies, Home Depot’s wholesale supply business has decided to re-brand itself as “HD Supply”, a move that affects operations both in the U.S. and in Canada. And with the new name comes an updated website: www.hdsupplyinc.com, that maps out the many divisions within Home Depot Supply.

Hot on the heels of the new name, HD Supply has acquired, through its White Cap Construction business, Burrus Contractors Supply, a distributor of concrete accessories, forming systems and fabricated rebar. Established in 1928, Burrus Contractors Supply operates in three locations in Texas and one in Louisiana. Terms of the deal, which is expected to close before the end of the year, were not disclosed.

With nearly 1,000 locations and more than 26,000 associates, HD Supply is fast becoming one of the largest diversified wholesale distributors in North America.

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Lowe’s sets debt sale price

MOORESVILLE, N.C.—Lowe’s has revealed pricing details about its planned sale of $1 billion in new debt, the proceeds of which would be used for “general corporate purposes” that include capital expenditures and buying back common stock.

The retailer will sell $550 million of 5.4% notes, due 2016; and $450 million of 5.8% notes, due 2036. It expects to close these sales on October 10. Merrill Lynch, Bank of America Securities and Wachovia Securities are managing these transactions.

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GE sells Advanced Materials Business to Apollo

Fairfield, Conn.—GE has signed a definitive agreement to sell its GE Advanced Materials business to Apollo Management L.P., a private investment firm. The deal is valued at approximately $3.8 billion in cash and securities. Upon completion of the transaction, GE will receive a 10% ownership stake in the new company and hold $400 million of notes. The closing of the transaction is subject to customary conditions, including the receipt of regulatory approvals, and is expected to occur before the end of 2006.

GE Advanced Materials is a $2.5 billion supplier of silicone-based products, silanes, sealants, urethane additives and adhesives; and high-purity fused quartz and ceramics materials. It is headquartered in Wilton, Conn., and employs 5,000 people in 38 locations worldwide.

GE Advanced Materials has two major joint ventures: GE Toshiba Silicones and GE Bayer Silicones. GE has reached definitive agreements with both Toshiba and Bayer to acquire 100% of their respective joint-venture equity stakes. Those companies will become wholly owned by GE and will be included in the Apollo acquisition.

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TIM-BR MART gains Quebec foothold with new alliance

CALGARY—TIM-BR MARTS Ltd. has brought yet another buying group into its fold with the addition of Groupe Mat Plus, effective Oct. 1.

I know what you’re thinking: what the heck is Groupe Mat Plus? If you look on your Amazing Hardlines Buying Group Org Chart™ you won’t find it. If you look in our Who’s Who Directory you won’t… (enough cheap plugs, already!—Editor).

Brand new, Groupe Mat Plus was formed at the beginning of September by four members of the negotiating team that works with Servimat, a building supply distribution arm of CanWel that serves mainly Pro and Ace dealers in Quebec. Those four dealers — Carl Strulevich of Probex Building Supplies in Roxboro, Eric Lessard of Quincaillerie Andrˆ® Lessard in St-Georges de Beauce, Luc Grenon of Centre de renovation FDS in Jonquiere, and Bernard Hamel  — decided to spearhead a move to make the dealers more formidable by organizing them into a buying group.

They had to look no further than their existing supplier for the man to helm the group. Daniel Thibault, formerly director of lumber with Servimat, is general manager of the group. Next, they began to shop for a better deal. They found it with TIM-BR MART, which is based here but has offices in Mississauga, Ont., and Bedford, N.S.

Thibault’s job will be to sit in on negotiations and to build membership. Presumably, he will be involved in a series of regional meetings that will begin this month with the 180 Servimat customers, confirming their commitment to be part of Mat Plus.

This latest merger gives TIM-BR MART a foothold back in Quebec. That province had represented a gap in the group’s coverage of the country since it split last fall with Longueuil-based Groupe BMR. Formerly, BMR and TIM-BR MART had an alliance under the umbrella buying group Matreco. TIM-BR MART now claims to surpass $2 billion in purchases annually, representing more than 550 locations across Canada.

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Quebec group’s new alliance good for CanWel

MONTREAL—The announcement last week that a fledgling buying group out of Quebec has united with TIM-BR MART may mark, on one hand, the further consolidation of independent dealers within fewer, larger buying groups. But it also represents a further consolidation of building materials distributor CanWel’s involvement in its customer base.

The new entity, Groupe Mat Plus, actually comprises former customers of Servimat, a distribution arm of CanWel inside Quebec. The move appears mutually considered by both the dealers and the distributor: Daniel Thibault, who had served as director of lumber for Servimat, runs the new group, which claims to represent more than 180 independently owned retail stores formerly served by Servimat. Servimat’s operations will be folded into Chalifour, another LBM distribution division that’s also part of CanWel.

By severing ties with its Pro and Ace dealers through Servimat, CanWel can fortify its role as a pure LBM distributor, a role that was blurred when it bought Sodisco-Howden Group at the end of 2004. That group already had bannered customers of its own (Ace and Pro), who competed with CanWel’s own customer base, especially Home Hardware and RONA. CanWel had, in effect, bought a company that competed with its best customers. Now, CanWel leaves the banner management to its partner, TruServ Canada, under an alliance called Pro Retail Services.

In addition, both TIM-BR MART and CanWel, through its CanWel, Hardware Division, are already linked by their membership in the umbrella buying group Spancan. TIM-BR MART is affiliated with SpanCan through its membership in IHDA, the Independent Hardware Dealers Association, and CanWel Hardware through its affiliation with Pro Retail Services (okay, I give up, where’s that Org Chart™—Editor).

(Click on Chart to view Quarterly Report)

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Home Hardware president expects big gains in ’06

ST. JACOBS, Ont.—Any slowdown being felt in the Canadian economy has yet to trickle down to the average home improvement retailer. At least, that’s not the case among more than 1,000 Home Hardware dealers, says Home Hardware’s vice-president and CEO, Paul Straus. Straus says sales year-to-date are up almost 9% over the same time last year.

Same-store sales, an important gauge of ongoing performance, are up by almost 6%. ’ÄòWe use that as a barometer because, when you’re dealer owned,” he points out, “we have to find ways to help dealers grow.”

Even by August, when housing starts were off for yet another month, Home Hardware dealers continued to perform well, he says. “In general, across the country, even though there are some regional differences, everything is good,” he says. “On the whole, they’re doing well.”

In fact, he expects that his dealers in 2006 will be up 10% over last year. A year earlier, topline sales by Home’s dealers increased by only 2.5%, reflecting the impact of tanking commodity prices in 2005. Nevertheless, that gain, albeit modest, ensured that Home Hardware held on to third place in Canada’s list of top 10 home improvement retailers, behind Home Depot Canada and RONA inc.

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Lowe’s again lowers 2006 earnings estimates

LANDSDOWNE, Va.—For the third time in four months, Lowe’s Cos., the industry’s second largest home improvement retailer, lowered its earnings-per-share forecast for fiscal 2006, citing the continued softening in buyer demand for housing as its main reason.

Officials for the 1,275-unit chain, which is preparing to enter Canada for the first time, told analysts here that profit for the year through Feb. 2 would be at the low end of a previously forecast range of $2 to $2.07 per share. The Mooresville, N.C.-based retailer also projected that earnings would grow by between 10 and 14%, compared with the average estimate among analysts of 11%.

Lowe’s officials believe that the downturn in the housing market could last as long as 18 months. Housing is one of three factors — the other two being consumer income and employment — that Greg Bridgeford, Lowe’s executive vp of business development, identified as the drivers of the home improvement industry.

Lowe’s admitted that it has experienced some “pullback” in its kitchen installation business. But Larry Stone, its senior executive vp of merchandising and marketing, said the company continues to gain market share in all 20 of its merchandise categories. The company also observed that consumers are still trading up to higher-priced appliances and doors.

Another key trend being pursued by Lowe’s is installed sales. Bridgeford said in the meeting that expansion beyond the traditional retail offering will provide more growth — and better margins. He pointed out the increasing importance of the do-it-for-me customer, vs. the DIY customer.

Lowe’s has identified this same trend in Canada. It expects installed sales to play a key role in its plans north of the border, where they will be offered from the get-go.

Despite some market softness, Lowe’s will continue to push ahead with its expansion plans. It intends to open 305 stores in 2007 and 2008, and forecasts that sales in those two years would rise by 10 -14% and 12-16% respectively.

“We remain focused on strategies to drive market share, however, near-term pressures on the U.S. consumer have led to a more cautious outlook for the second half of the year,” explained Robert Niblock, Lowe’s chairman, president and CEO, in a prepared statement. “Despite the backdrop of declining housing turnover, elevated energy costs and difficult comparisons resulting from active 2004 and 2005 hurricane seasons, I’m confident we have the plans and people in place to ensure we continue to meet the needs of consumers and gain market share.

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Volunteer line-up reflects Home Depot president’s clout

TORONTO—When Home Depot Canada president Annette Verschuren went looking for some corporate clout to support her company’s grassroots playground building initiative, the results were nothing short of impressive. Fully 20 of Canada’s major corporate leaders joined her last week to build a KaBOOM! playground for underprivileged kids.

Executives who joined Verschuren included George Cope, president and COO,
Bell Canada; Kevin Layden, president & COO, Best Buy Canada Ltd.; Jim Shepherd, president & CEO, Canfor Corp.; Lou Pagnutti, chairman & CEO, Ernst & Young; Garth Issett, vice-president, IBM Canada; Murray Taylor, Bill MacKinnon, CEO, KPMG; Phil Sorgen, president, Microsoft Canada; Kevin T. Boyce, CEO, Molson Canada; Paul Desmarais Jr., CEO, Power Corp. of Canada; and Mario Pilozzi, president, Wal-Mart Canada Corp.

The CEOs are part of a newly formed Corporate Council on Volunteering, co-chaired by Verschuren and Volunteer Canada president Marlene Deboisbriand. This event kicked off the Council’s first “Corporate Challenge on Volunteering”, an initiative that challenges Canadian businesses to support employee volunteerism.

The CEOs were accompanied by a contingent of more than 500 corporate volunteers and another 100 community residents from Toronto’s Lawrence Heights. The initiative, a first for Canada, is designed to encourage businesses of all sizes to support volunteer activity within their communities.

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Will Canada become Lowe’s testing ground?

TORONTO—Home Depot Canada has long served as a kind of “skunk works” for the larger U.S. organization, where new ideas were tested on a smaller scale before being rolled out — or discarded. Will Lowe’s use its new Canadian division in a similar way?

Take loyalty cards, for example. Even though no such beast exists in the U.S. yet, Canada just might be a good testing ground for such a product. One clue that it might is the hiring of Uwe Stueckmann as vice-president of marketing. Stueckmann’s track record includes establishing the Optimum loyalty card for Shoppers Drug Mart, where he worked as vice-president customer relationship management before joining the new Canadian Lowe’s team. Before joining Shoppers he worked as a senior consultant for MicroStrategy, a company that created CRM strategies for a range of companies in both the U.S. and Canada

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Kingfisher expands home handyman program

LONDON— In an effort to diversify beyond retail, Kingfisher plc is testing a new version of its “Hire a Handyman” service in two of its B&Q stores in the greater London area. The new program represents an increased range of services offered through that service.

Kingfisher is already established in kitchen installations, but the latest program includes installing doors, locks, faucet and lights. If considered successful, these additional services will be rolled out to other B&Q stores in major centres throughout the U.K.

One of the challenges faced by the giant home improvement retailer is the shortage in Britain of skilled labour. Kingfisher already tried earlier in the summer to bring in 2,000 skilled painters from Poland.

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Lowe’s unveils Canadian expansion plans

TORONTO—More than a year after announcing plans to come to Canada, Lowe’s Cos. has set asides concerns that it must purchase another company’s existing outlets to gain a foothold here. “Today, I can tell you we are absolutely on track with our plans to open 6-10 stores next year in Canada,” said Doug Robinson, president of Lowe’s Cos. Canada. He spoke with journalists last Thursday at the company’s corporate headquarters and customer support centre on Yonge St. in Toronto’s north end.

The previously announced Hamilton, Ont., location will be the first to open—though not until the second quarter of 2007. It will be followed by Brantford, about 100 km west of Toronto, South Brampton (Kennedy Rd. N. and Steeles W.), and Toronto (Caledonia Rd., behind an existing Home Depot). Another nine stores are already in the Lowe’s “pipeline”, which means they are approved internally and in various stages development. Each store will be a full-sized big box, carrying 60,000 SKUs and weighing in at 145,000 square feet of retail space—including garden centre—that represents an investment of $20.5 million and employment for up to 175 people.

All of these stores will be centred in Southern Ontario, specifically around the Greater Toronto Area. “Our focus is in Ontario,” said Robinson, “but we will look at other opportunities.” Other sites believed to be under consideration include Markham and Barrie.

Regional consumer tastes will dictate that the merchandise mix in these new stores may differ in some ways from its U.S. counterparts. But another distinction for Canadian stores will be the addition of food service. Coffee shops are standard in most Canadian big boxes, and Robinson said the company is in discussions with a number of providers.

He also said the company would soon begin recruiting staff, beginning with store managers. Catherine Townshend, vice-president of human resources for Lowe’s Canada, is overseeing the recruitment process. “More than 3,500 people have contacted Lowe’s’Äîunsolicited’Äîexpressing a desire to be part of the Lowe’s team.”

Lowe’s had 2005 sales of US$43.2 billion through more than 1,275 home improvement stores in 49 U.S. states. It may be half the size of its biggest rival, Home Depot, but it is nevertheless eight times larger than RONA and six times the size of Canadian Tire. But while Home Depot is the market leader in Canada and Mexico (after more than a decade here, it owns about 15% of the Canadian retail home improvement market), Lowe’s had yet to establish itself internationally, until now.

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Mark Foote becomes head of Loblaw

TORONTO.—Mark Foote has been named president and chief merchandising officer of Loblaw Cos. Ltd., responsible for all food and general merchandise sourcing, procurement, merchandising, information systems and supply chain activities. Foote replaces John Lederer, who has stepped down from the position of president “by mutual agreement,” according to a release.

The appointment is part of a restructuring announced by company head W. Galen Weston, who is stepping down from his role as chairman of Loblaw Cos. He’ll be succeeded by his son, Galen G. Weston as executive chairman of the giant grocery and general merchandise retailer. Galen the younger was formerly senior vice-president, corporate development.

Foote hot-footed it out of Canadian Tire back in April 2006 to join Loblaw as executive vice-president, general merchandise. He had been president of Canadian Tire Retail, and considered by many to be next in line for leadership of the entire company. At Loblaw, he was in charge of all procurement and merchandising activities in the general merchandise business.

His expertise in operations and merchandising was welcomed at Loblaw, which was having big troubles with its distribution following consolidation of operations into a new head office in Brampton, Ont. In addition, Loblaw has set its sights on increasing its general merchandise offerings to better compete with Wal-Mart, which is growing its grocery business in Canada.

Besides these executive changes, Allan Leighton has joined the board as deputy chairman. A longstanding advisor to the Weston family, Leighton has also been appointed deputy chairman of Loblaw’s parent company, George Weston Ltd.

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Short-handed, FCL asks suppliers to ship direct

SASKATOON—The high demand for workers’Äì-and the disproportionately high wages being paid—on Alberta’s Oil Sands have drained the province’s labour pool. Unable to compete for staff, many retailers and service companies have simply gone out of business. Now that shortage is being felt in larger operations, including the Calgary distribution centre of Federated Co-operatives Ltd.

FCL, the giant farm, grocery and hardware co-op based here, wants vendors to help by bypassing the warehouse altogether whenever possible. In a letter sent last week to vendors, Rod Baergen, general merchandise department manager of FCL writes, “Over the past number of months our Calgary General Merchandise Warehouse has felt the impact of the current labour shortage in the province of Alberta. This labour shortage has affected our ability to deliver goods to our retails on the regular schedule we have been used to in the past.”

Under the new system, vendors who currently supply product to the Calgary distribution centre are being requested to set up a direct ship program, as well. According to Baergen, all invoicing would continue to be processed through head office in Saskatoon. However, no special terms are offered vendors for going direct. Rather, shipments will continue to be made “under the current arrangements with your company.”

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Home Hardware finds growth through existing dealers

ST. JACOB’S, Ont.—When Paul McCann spoke to his fellow dealers at a breakfast meeting during last week’s Home Hardware Fall Market here, he talked about his expansion to three stores. The dealer, from Penticton, B.C., typifies the new model for successful growth—square footage through existing dealers, rather than relying solely on recruitment.

“There’s a certain segment of our dealers that understand there is potential to open second or third stores,” said Bill Ferguson, dealer support manager for Home Hardware. That kind of growth is something that the dealer-owned co-op is eager to support. “We have a whole network. Every department can get behind someone like Paul to help him manage and forecast. All the tools are there.”

Often, family members are integral to this kind of expansion. Ferguson mentions the Home Hardware dealer in Perth, Ont. Bob Ellard, a former Canadian Tire manager, saw an opportunity to add another store when his son joined the business. In his latest move, Ellard consolidated those two stores into one 45,000-square-foot building centre that had its grand opening this past spring. A Home Furniture outlet was added to the mix, as well. It is operated by Ellard’s wife and daughter. 

Creating a presence in a specific market that maximizes that market—whether the store is 45,000 square feet in size or 10,000 square feet—represents the new model for Home Hardware’s expansion, says Ferguson.

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Giardini gets vp job at Weyerhaeuser Canada

VANCOUVER—At Weyerhaeuser Co., Anne E. Giardini, 46, has been appointed vice-president and general counsel for Canada, effective immediately. Giardini previously served as assistant general counsel and assistant corporate secretary for Weyerhaeuser in Canada. During that time she played a key role in a number of transactions, including the acquisition of MacMillan Bloedel in 1999, the divestiture of the BC Coastal Group in 2005, and the recent combination of Weyerhaeuser’s Fine Paper business with
Domtar Inc.

In her new role, she reports directly to Sandy D. McDade, senior vice-president and general counsel for Weyerhaeuser, and will continue to be based in the company’s Canadian head office in Vancouver.

Giardini holds a B.A. (Economics) from Simon Fraser University, an LL.B from the University of British Columbia, and an LL.M. from Trinity Hall, University of Cambridge.

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Newell Rubbermaid to sell European décor business

ATLANTA—Newell Rubbermaid, the giant home improvement products supplier, has signed an agreement to sell portions of its Home Dˆ©cor Europe business to Hunter Douglas, the manufacturer best known for its window treatments.

The sale, according to a prepared statement, will include Newell’s operations in Portugal, the Nordic countries and in Central and Eastern Europe. Newell had previously sold off its Home Dˆ©cor business in the United Kingdom, and is looking for buyers for its dˆ©cor businesses in Western Europe. Newell Rubbermaid placed Home Dˆ©cor Europe under “discontinued businesses” on its balance sheet in late June.

The biggest part of what Hunter Douglas has agreed to buy makes drapery hardware and window treatments that Newell sells under its Gardinia brand and a few other labels.  Hunter Douglas is taking a minority stake in the management buyout of this business. The transaction is scheduled for completion by year’s end.

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Electronic fence company will supply prisons

MINNEAPOLIS—While it’s typically found on farms to hold back livestock, electronic perimeter security fence products made by Zareba Systems Inc. will be installed at several federal prisons throughout the U.S. Through its exclusive distributor, SIGCOM-GDI Fencing Solutions in Greensboro, N.C., Zareba was awarded the contract by the Federal Bureau of Prisons for prisons in North Carolina. Zareba developed a product specifically for use in the federal prison project in association with GDI.

The electronic perimeter security fences will be manufactured at the company’s Ellendale, Minn., facility and shipped sometime next year. Zareba expects the deal to be worth more than $500,000 in sales as a result of the Federal Bureau of Prisons’ contract with GDI.

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CanWel expands engineered wood products

VANCOUVER—CanWel Building Materials Income Fund, through its subsidiary, CanWel Building Materials Ltd., has cut a deal with Alpa Lumber’s flooring division, Alpa Floor Systems Inc., to start distributing AlpaJoist engineered floor systems. AlpaJoist is a trademarked engineered wood product that, until now, had been distributed only in the Greater Toronto Area through Alpa’s own network. CanWel will add the AlpaJoist line to its existing Engineered Wood Products Program and distribute it nationally.

The Engineered Wood Program is a new one for CanWel, created with the addition, only weeks ago, of Boise’s engineered wood trusses. That line competes head on with CanWel’s main competitor, Weyerhaeuser, and its popular Trus Joist product. It’s a market that is brand new for CanWel, but one it considers ripe for development.

Used primarily in the construction of floor and roofing systems in the new home construction and renovation segment, AlpaJoist is popular with the home building industry in the GTA because of a unique ’Äúwindow’Äù system in the joist’s panel, which allows for fast and efficient installation of plumbing, heating and electrical systems.

Renovation spending totalled $8.6 billion in the second quarter, up 8.1% from the same quarter in 2005. Acquisition costs rose 3.4% to $1.8 billion.

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Goodfellow provides mast for Blue Nose II schooner

Delson, Que.—Goodfellow, the lumber products distributor, has recently completed a 100-foot long glue-laminated wood beam that will be used to make the new mast for the famous Blue Nose II schooner. The beam was fabricated at Goodfellow’s head office facility here and shipped to the home of Canada’s most famous sailing vessel, Blue Nose II, in Lunenburg, N.S.

The square beam is 22 inches wide and made of 250 pieces of Douglas fir that were glued together in Goodfellow’s Goodlam glue-laminated wood factory. Comprising more than 4,000 board feet, it weighs six tons. A glue-laminated mast was preferred to a single timber for its increased durability and because the curing process of a tree trunk can take up to seven years.

Transporting the giant beam required securing it on a special trailer that measured more than 121 feet in length. Special permits and equipment were required and the truck had to be escorted by police cars all the way to Nova Scotia. Upon reaching Snyder’s Shipyard, it was shaped’Äïby hand’Äïinto a ship’s mast.

The Bluenose II was built to commemorate its predecessor, the Bluenose, Canada’s most famous ship. Launched at Lunenburg in 1921, it was, for a time, the world’s fastest sailboat. It won the International Fisherman’s Trophy in 1921, 1922 and 1923. It wrecked off Haiti in 1946.

The new mast will be installed on the Bluenose II in summer of 2007.

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Lowe’s gears up for Canadian launch

TORONTO—Plans for Lowe’s foray into Canada have been kept, for the most part, under wraps since being announced almost a year ago. Lowe’s plans to open between six and 10 stores in 2007, but has, to date, admitted to securing only one property (in Hamilton, Ont.). In addition, the Canadian buying team has been assembled and has been performing line reviews with suppliers for the past several weeks.

Now, however, Lowe’s is getting ready to make its presence in Canada felt more strongly. On Sept. 21, from its new corporate headquarters in Toronto’s north end, Lowe’s will make some announcements about its operations here, both to the media and among some government types.

HARDLINES expects the world’s second-largest home improvement retailer to announce the groundbreaking of at least two sites, with Hamilton being one likely contender.

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SPECIAL REPORT: U.S. homebuilders waiting out the market’s slide

NEW YORK—America’s largest production home builders, stunned by how quickly buyer demand has eroded this year, are assuming a defensive posture that includes reducing overhead, cutting back production and all but halting land purchases. For many large builders, the current market downturn has become a waiting game, where they hope to strengthen their balance sheets and build their liquidity in preparation for a rebound, which will happen, they say, only when consumers are convinced that home values and prices won’t deteriorate further.

That was the consensus opinion among 14 builders’Äîincluding 12 of the largest 15 in the country’Äîwhose senior-level executives spoke last week at the Homebuilders’ Symposium, co-sponsored here by Credit Suisse First Boston and Hanley Wood Market Intelligence. Several builders also insisted that they are trying to hold the line on their pricing and margins, even as those margins have been diluted by incentives, such as option upgrades and lower mortgage rates. These incentives have run rampant in many hot markets, as companies try desperately to move unsold inventory.

“This cycle is happening faster and going deeper than a lot of us thought it would,” said Tim Eller, CEO of Centex Homes, the industry’s fourth-largest builder, which has been among the most aggressive in using incentives to entice reluctant buyers. The industry’s sales in the second quarter of this year were down 21%, and cancellation rates have skyrocketed in many markets.

Every builder at the symposium, to a greater or lesser degree, agreed that the current downturn is the result of prices rising too high (often driven by the presence of speculators in hot markets) and too many homes being built. Consequently, many of the builders have scaled back their production for this year.

Most of the builders thought that business would be bad through next year, but there was less agreement about when demand might return. Chad Dreier, CEO of The Ryland Group, the industry’s eighth-largest builder, thinks the market has “plateaued” and that “2008 would be better than 2007.” But Tony Mon, CEO of Technical Olympic Homes, the 12th-largest builder, was far more pessimistic in his comment that the turnaround might not happen until 2009 or even later.

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Kingfisher posts 2Q results, anticipates return to profitability

LONDON—Retail profits in the first half of the year may have been down by 20% for Kingfisher plc, the giant U.K. holding company that owns B&Q, but the drop was less than expected, and actually flat for the second quarter. Not only that, but CEO Gerry Murphy expects profits to grow in the next quarter.

Sales for the first six months were up 6.6% to ¬£4.35 billion ($9.17 billion), while retail profit dropped 19.6% to ¬£231.5 million ($487.86 million). “The continuing weakness of the U.K. home improvement market has again impacted B&Q’s overall sales and margin performance,” said Murphy in a prepared release. “However, management’s action program is now showing encouraging signs of progress.”

Despite what Murphy called “signs of stabilization” at home, he expects the company’s best growth to continue coming from international markets, where sales were up 16% and retail profits were up 9%. Kingfisher has opened 19 new stores in seven countries in Europe and Asia during the past six months, including its first two stores in Russia. Kingfisher now operates 339 stores outside the U.K., which account for half of total sales.

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Chicago mayor’s veto topples big-box “living wage” bill

CHICAGO—Mayor Richard M. Daley has vetoed an ordinance this city’s Council passed in July by a vote of 35-14 that requires large-format retailers like Wal-Mart and Home Depot to pay their workers higher wages and benefits.

Daley used his veto authority for the first time in his 17 years in office to block a law that would have made big box dealers’Äîthose with at least $1 billion in annual sales and stores 90,000 square feet or larger’Äîpay their workers at least $10 per hour and the equivalent of $3 in fringe benefits by the year 2010.

Daley appears to have responded to threats by several dealers that this ordinance would keep them from opening stores within the city’s limits. Target, the department-store chain, called the ordinance the result of “an extreme agenda being promoted by special-interest groups.” Other dealers said Daley’s veto would make Chicago “business-friendly” again.

The mayor stated that he did not think the law would achieve its desired effect of ensuring that everyone in the city is working for a “decent wage”. He also wasn’t too thrilled when an alderman who supports the ordinance brought in the mayor of Santa Fe, N.M., and a supervisor from San Francisco to testify at a City Council meeting last week about similar laws their local governments have passed.

Two days later, with the way already paved by Daley, city councilors could not muster enough votes to override the mayoral veto and the big-box ordinance failed to pass.

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Canadian construction spending up in 2Q

OTTAWA—Residential construction investment totalled $20.8 billion in the second quarter, up 8.5% from the $19.2 billion invested in the second quarter of 2005. According to the latest report from Statistics Canada, this substantial growth was due to increases in all three components of residential construction, namely new homes, renovations, and acquisition costs.

Since the start of 2006, residential construction investment has totalled $37.7 billion, up 9.2% over the same period of 2005. Low mortgage rates, high employment, and a robust housing market in Western Canada are among the factors that stimulated housing demand. Rising prices for new homes also contributed to the increase in the level of residential construction investment.

The value of new home construction was particularly buoyant, hitting $10.4 billion in the second quarter, up 9.8% from the same quarter of 2005. New single-family home construction was up 8.9% to $6.5 billion, while investment in new multiple-unit construction rose 14.3% to $2.3 billion.

Renovation spending totalled $8.6 billion in the second quarter, up 8.1% from the same quarter in 2005. Acquisition costs rose 3.4% to $1.8 billion.

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Home Depot launches in-store “home shows”

ATLANTA—Home Depot is launching a national “home show” in more than 1,000 U.S. stores. The in-store promotional program, which started Sept. 7 and runs to Sept. 24, will feature live demonstrations, in-store celebrity clinics, a virtual home tour, and online workshops. Called “Home Show 06”, the event showcases new products in a range of categories, including energy efficiency, home safety and decor.

“We challenged our suppliers, our stores and our product merchants to source the marketplace for the very best innovations in home improvement products, and we are proud to present to our customers what is perhaps the largest single concentration of cutting-edge solutions for their homes,” said Bob Nardelli, chairman, president & CEO of The Home Depot in a prepared release. Innovations include a carpet that resists pet odors, a dishwasher that releases detergent automatically, and light bulbs that claim to last a decade.

In-store do-it-yourself clinics will be held on Thursdays, Saturdays and Sundays. Topics include “innovative paint applications”, “quick bathroom updates”, and “the latest in flooring solutions”. Television celebrities from The Learning Channel home improvement shows will also hold seminars. Leslie Segrete from “Trading Spaces” and “While You Were Out”, Andrew Dan Jumbo from “While You Were Out”, and Hildi Santo-Tomas from “Trading Spaces” are among the celebrity designers.

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RONA’Äôs Dutton uses humour to deliver serious message

BARRIE, Ont.—Robert Dutton is a funny guy. As the president and CEO of RONA inc. continues to improve his proficiency in English, his delivery gets more relaxed—and more humorous.

Dutton flexed his bilingual stand-up prowess at a presentation to the Chamber of Commerce in Barrie, Ont., where the company recently opened its first big-box store. He started by apologizing for his accent. “Is my English alright?” I don’Äôt understand it anyway,” he quipped.

“My father was Irish’Äîhe had a good Irish name—but my mother was a French Canadian, and she won the language war at home,” he told the audience.

On a more serious note, he reiterated his position on the imminent arrival of Lowe’Äôs Cos., the giant U.S. big-box retailer, which will open up to 10 stores in Canada next year. Speculation has grown that Lowe’Äôs may wish to buy RONA to fuel its expansion here. “Our business model is unique and Home Depot and the others have big-box stores only. I have to prove that Canadian retailers can succeed,” he said. “It frustrates me to hear that they must become Americanized.”

To underline his point, Dutton showed a slide that explained how many stores RONA has in a variety of formats. The chart was illustrated in the shape of a house. He paused and smiled: “Do you see a house? Good! You’Äôre normal.”

One of RONA’Äôs strengths, he added, is its ability to provide a range of store types, depending on the market. “We know our markets because every region of Canada has its own particular flavour.”

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Rate of U.S. house prices slows drastically

WASHINGTON—The rate at which homes increased in value during the second quarter was the slowest in 30 years, says a new report.

Offering yet another clue that the overheated U.S. housing market is cooling off, the report, from the Office of Federal Housing Enterprise Oversight, suggested that higher interest rates and rising inventories of unsold homes are dampening demand, thereby contributing to the drastic slowdown.

According to the report, home prices rose 10.06% from the second quarter of 2005 to the second quarter of this year, but by only 1.17% from the first quarter to the second quarter, for an annualized rate of 4.68%. By comparison, prices in the second quarter of 2005 were up 14.04% over the same period in 2004.

However, the rate of increase in housing prices still remains ahead of inflation. At 10.06%, it still outpaces other items in the basket of goods and services that comprise the Consumer Price Index, which was up 4.41% in the second quarter.

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Support by big retailers key to success of London DIY Show

LONDON—The London DIY show has weathered a change of ownership to ensure the participation of the U.K.’Äôs largest dealers. Brintex, the new owner and organizer of the London DIY Show, has reaffirmed all the attendance of key buyers from the industry’Äôs leading wholesalers and buying groups.

“The interest and support we get from the teams at the National Merchant Buying Society, Home Hardware, Mica Hardware, Stax and Decco is very important to us,” said Exhibition Director James Murray.

As in the U.S., retail buying power continues to consolidate. For example, NMBS has grown into the U.K.’Äôs largest independent buying group, with more than 600 independent members that own 1,400 outlets and represent ¬£500 million annually in sales. Home Hardware represents 330 members based across the Southern half of England and Wales. Together, these organisations represent a huge part of the independent retail market in the U.K.

The DIY & Garden Show and Totally Tools take place on January 14-16, 2007 in Earls Court, London. Already, 78% of the exhibition space has been booked. Visitors may now register for their tickets online at www.diyandgardenshow.com or www.totallytools.co.uk. For more information about exhibiting, email Paul Grinsell p.grinsell@hgluk.com. 

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