September 30, 2013, Volume xix, #33

“Example is not the main thing influencing others. It is the only thing.”
—Albert Schweitzer (humanitarian, philosopher,
musician and physician, 1875-1965)

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Vendors feeling effects of possible BMR-Coop merger

SPECIAL REPORT — It all started with an enigmatic press release in January 2013, when La Coop fédérée and BMR announced jointly “that discussions are currently underway towards an eventual business relationship.”

While the original release would not specify, the conventional wisdom holds that BMR would be taken over by La Coop. That makes sense: Boucherville, Que.-based BMR generates about $1.4 billion in retail sales through almost 190 member dealers, most of them in Quebec. La Coop’s hardware and home improvement revenues, mainly through its Unimat-bannered stores, are about $300 million. However, thanks to huge holdings in energy, meat processing, and farm and feed, its overall revenues are closer to $5 billion.

La Coop has also had a couple of strong years, despite current economic conditions in Quebec. Growth in recent years has included acquisitions in agriculture, grain marketing, and propane storage companies, both in and outside of Quebec. As a result, La Coop’s sales were up 15% in 2011 and 10% in 2012.

How close are the two sides to an agreement? HARDLINES has spoken with individuals from at least one competing company who have been questioned by the Competition Bureau regarding the deal. This is a common scenario when two competitors unite—and BMR and Unimat stores are often in competing markets, especially in small-town Quebec.

Vendors, as well, report that they are facing interesting new policies when they sit down with Unimat buyers. For example, some Unimat vendors received a new commercial agreement in recent weeks and months that is reportedly a virtual replica of the BMR contract. Other vendors report being told by the Unimat buyers themselves that BMR’s buying team will likely remain intact on the hardware side, while La Coop’s own buyers will handle farm and agro products in a the event of a merger.

Other incidents suggest the winds of change will only blow harder. La Coop cancelled its fall dealer show this year. René Labrecque, general manager of La Coop’s hardware and machinery division, which oversees the Unimat business, reportedly left the company on Friday.

The Journal de Quebec reported recently that BMR is “in talks with La Coop fédérée toward selling the latter its Potvin et Bouchard stores, which BMR has owned since 2008.” The article quotes Potvin et Bouchard general manager Michel Leclerc as saying, “It’s not sold, but it’s being discussed by BMR and La Coop fédérée.”

However, all indications are that the deal would not be restricted to BMR’s Potvin et Bouchard stores only, but to the entire BMR network.

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Home Hardware welcomes dealers to Fall Market

ST. JACOBS, Ont. — Last week, more than 10,000 dealer-owners, staff, suppliers, and guests from across Canada gathered for Home Hardware’s 101st semi-annual Fall Market. This year’s Market featured a number of initiatives being rolled out by Home for its dealers. These include a new partnership with Fedex to put outlets in select Home Hardware stores, and a warm-up to the company’s 50th anniversary in 2014, which will include a range of advertising and promotional initiatives across multiple media.

The market also had a special appearance by His Excellency the Right Honourable David Johnston, Governor General of Canada. Johnston, whose farm is in the St. Jacobs area (not far from that of Home Hardware president Paul Straus), spoke to the dealers at a general session to recognize and celebrate the continued commitment of Home dealers to serve local communities across the country.

(More on new programs and strategies introduced at the latest Home Hardware Market exclusively in upcoming issues of HARDLINES! —Michael)

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Dealers show mixed growth entering back half of year

SPECIAL REPORT — Talking with dealers at the recent Home Hardware Market, and across the country in general, continues to bear out the reality that the industry is moving up slowly at best.

Yes, we spoke with dealers who are making great gains, but they are innovating, finding new markets, and working at taking market share from competitors. And the mood in general at the show in St. Jacobs, Ont., remained positive, despite prevailing conditions, with most vendors we spoke with enjoying positive sales on the show floor.

However, the latest figures from Statistics Canada bear out the fact that business in 2013 is not booming by any means.

Retail sales rose 0.6% seasonally adjusted in July to $40.3 billion, led by higher sales at gasoline stations. In volume terms, retail sales increased 0.5%, a fourth increase in five months. The home improvement sector (designated by Statistics Canada as the “building material and garden equipment/supplies sub-category”) was up 0.4% seasonally adjusted, but in real terms the numbers are more dramatic.

Ed Strapagiel, a Toronto-based retail consultant, examined the numbers without seasonal weighting. “Canadian retail sales continue to improve, according to July 2013 results released by Statistics Canada. Total retail was up 4.8% from July a year ago [vs. 3.0% seasonally adjusted], the best same month gain so far this year. The increase more than makes up for a relatively weak showing in June.”

Strapagiel notes that retail sales for the first seven months of the years are up 2.0% compared to 2012. “This should improve by the end of the year if current trends continue.”

However, despite strong real gains in overall retail sales, the home improvement sector is lagging behind, showing growth of only 0.7% in July from the same month a year ago. That, despite being up a healthy 3.6% in July from the previous month, as the weather in most parts of the country finally improved. But year-to-date, LBM sales are up just 0.2%.

This aligns with HARDLINES’ outlook: a slow first half of the year was shored up by activity in July and August, which is expected to help boost industry sales overall in 2013 by between just 1% and 2%.

(Get full analysis of the industry, and the key players in it, including market shares and forecasts for 2013 and 2014, in the 2013 Hardlines Retail Report. With more than 150 PowerPoint slides filled with charts and graphs, it’s the only tool for measuring the growth and market shares of the key sectors and retail companies in this industry. Click here to order your copy now and view sample slides!)

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True Value show focuses on changes, consumers

   CHICAGO — At the recent True Value Fall Reunion, the message from the co-op’s leadership was clear: Change is here.

The company’s new CEO, John Hartmann, and chairman of the board Brent Burger, were formally introduced during the event’s general session on September 20. Since beginning his job four months ago, Hartmann has traveled across America, meeting with True Value retailers.

The dealer-owned co-op is continuing to support a new branding initiative aimed at helping True Value dealers create stronger connections with their customers. The importance of making an emotional connection with a customer and enhancing the customer experience was stressed. “Independent stores need to stay relevant in the eye of the customer,” said Burger.

Another focus of the market was growth—including the growth of existing members, attracting new entrepreneurs to the industry and conversions from other co-ops. In fact, there are reportedly 30 True Value stores under development right now.

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