September 7, 2015 Volume xxiii, #33

“Lots of folks confuse bad management with destiny.”—Frank McKinney Hubbard (American humourist, 1868-1930)

IN THIS ISSUE:

• Orgill reaches out to Canadians at latest show

• PrimeSource will shed Canadian operations through year-end

• Lowe’s Canada plans a total of 70 stores within two years

• RONA to test new format for its traditional big boxes

• PLUS: Lowe’s Canada has Air Miles, Sears Canada partners with Debbie Travis, Payzant buys Enfield in Halifax, Ace opens in Paraguay, Ikea Canada will only sell LEDs, Grainger completes acquisition of Cromwell, Masco Canada appoints Ken Roberts, retail sales increase —and more!

Orgill reaches out to Canadians at latest show

NEW ORLEANS — Orgill's fall dealer market has attracted Canadian dealers from every province and across a range of banners. Hot on the heels of the Memphis-based wholesaler's planned acquisition of Chalifour, this show is attracting more interest than ever from retailers and vendors alike north of the border.

“We expect we’ll break a record for attendance,” Ron Beal, president and CEO of Orgill, told HARDLINES at the market. “New Orleans has proven to be really popular with our dealers.”

The show drew a number of Canadian vendors, as well, in addition to plenty of U.S. vendors who will do business with Canadians. Those exhibitors each sported a Canadian flag in their booth?something that has become a common sight at this show.

Another fixture at the Orgill show is its model stores, including one that featured a full range of Canadian-compliant products. Called North American Home Centre, the store is stocked with an assortment that is geared 60% to contractors and 40% to DIYers.

“Everything in here is available for Canadian customers,” says Shane Leonard, a retail development manager for Orgill. “We really wanted to show the Canadian customers that come down that we can do business with Canada.”

The new model store features an open design centre and paint department, with room for contractors to bring their own customers into the store to get design and product ideas. The design area includes flooring samples, entry sets, and window trim ideas. Another feature of the model store is the back storage area, which is outfitted with merchandisers and shelves of its own, to show off as much product as possible

PrimeSource will shed Canadian operations through year-end

MISSISSAUGA, Ont. — PrimeSource’s announced withdrawal from the Canadian market continues, as it winds down operations in this country. The fastener and materials distributor will close its doors on October 30. Beginning November 1, the company will liquidate or move its final inventory and begin the full shutdown of the business.

“We are going to service our Canadian customers all the way to October 30,” says Danny Strachan, regional vice president of PrimeSource Canada, “and fulfill our commitments on open orders, after which we will begin the shutdown. This will last until the end of the year, or possibly January [2016].”

PrimeSource Canada has four full operations, in Vancouver, Calgary, Toronto, and Montreal, as well as two reload locations, in Winnipeg and Halifax. The reload centres will be closed on or about September 15. Those facilities carry LBM, including shingles and underlayment, but not fasteners, so orders through those centres will be supplied from other locations until October 30 as well.

Strachan adds that, as inventory winds down, “there could be stock outages.” In addition to filling orders, he is looking to dispose of remaining inventory. His advice to dealers and competitors who may want to keep product off the market: “We’re taking offers now.”

(NOTE: This article updates a previous story in HARDLINES that contained some incorrect information about PrimeSource’s timelines and distribution network.)

Lowe’s Canada plans a total of 70 stores within two years

SPECIAL REPORT ― Home Depot and Lowe’s reported strong second-quarter results, thanks in large part to the recovery of the housing market in the U.S. While the economic climate in Canada is not nearly as buoyant, both companies are banking on good growth here as well.

But Lowe’s is really stepping up its Canadian expansion in a concerted effort to reach the critical mass that will finally make its Canadian operations profitable. With the recent acquisition of 12 retail sites and a distribution centre from Target, combined with greenfields openings, Lowe’s expects to have 70 stores here by 2017. That store count will give the company the profitability it seeks in Canada.

According to Lowe’s chairman, president, and CEO Robert Niblock, the company would have been close to achieving profitability by next year. However, the costs surrounding the Target acquisitions will delay profitability until 2017.

Lowe’s Canada opened its 40th store in Saskatoon last week with two more, in Ancaster and Mississauga, Ont., expected to open sometime early next year. Expansion is being further supported by the promotion last week of Jeff Boyd as vice president, real estate, construction, and store design. Boyd joined Lowe’s Canada in October 2007 in the company’s real estate and construction division.

RONA to test new format for its traditional big boxes

BOUCHERVILLE, Que. — Even as it rolls out a big box model for its Reno-Depot stores, RONA inc. has now revealed a strategy for its traditional big boxes, as well.

According to Luc Rodier, executive vice president for RONA, the big box concept, which emerged in Canada in the early 1990s, must change to meet the needs of an evolving customer base. “I’d say the big box concept is due for an overhaul and we’re focusing on that.”

RONA is developing a concept that combines elements of Reno-Depot’s contractor-focused format with the more retail-driven L’Entrepôt/Home & Garden model. “Over time, you’re going to see this roll out.” He expects the new concept to be rolled out beginning in the middle of next year.

FROM THE ARCHIVES: This week in 1995

Home Hardware gets a big win in Quebec with the signing of L’Esperance. Turkstra, a big ILDC member, adds a store. And Beaver Lumber hits the airwaves with a new TV ad. Meanwhile, the Western Show in Vancouver prepares to play host to retailers such as Totem, Lumberland, and IRLY. Click here these blasts from the past!

DID YOU KNOW…?

…that Early Bird Pricing for the 20th Annual Hardlines Conference ends soon? Click here now to save money and ensure your spot at this incredible event!

RETAILER NEWS

TORONTO — Lowe’s Canada now has Air Miles. The home improvement retailer has announced an agreement with LoyaltyOne Co., owner and operator of the Air Miles Reward Program, to launch the reward program in Lowe’s stores. Full roll-out is anticipated for December 1. No other terms of the agreement have been released. Both RONA and TIM-BR MART already have the program in their stores, and on a regional basis, Kent has it in Atlantic Canada. Home Hardware uses Aeroplan.

TORONTO — Sears Canada has announced that it is entering into a strategic relationship with celebrity designer Debbie Travis to launch a new line of home products, exclusive to Sears Canada. The Debbie Travis collection is “inspired by the places around the world that are a meaningful part of Debbie's life and the people in those places who have had a positive impact on her.” The collection will be sold in stores, online, and by catalogue, starting next year. It will include tabletop, home décor, bed and bath, home furnishings and outdoor items, including furniture, tabletop, and cushions.

ENFIELD, N.S. — Payzant Building Products has expanded its real estate holdings, acquiring the facilities of the former Enfield Home Hardware Building Centre, which went bankrupt last spring. The receiver selected Payzant’s bid and the deal is expected to close by month's end. Under its terms, Payzant will acquire the former Home Hardware’s land and buildings, but not its home building division, Scotian Homes. The acquisition will be Payzant’s fourth outlet in Metro Halifax. The company also has a store in New Brunswick.

OAK BROOK, Ill. — Ace Hardware has opened its first store in Paraguay. Located in the capital city Asunción, it has a sales area of 22,000 square feet and offers about 12,000 SKUs.

BURLINGTON, Ont. — Ikea Canada announced that as of September 1, all Ikea stores will only sell LED bulbs and lighting, fulfilling a commitment announced in 2012. LED is a light source that uses 85% less energy than incandescent bulbs and can last up to 20 years. Each LED bulb reportedly saves approximately $10 in electricity costs per year, compared with incandescent bulbs. This year, Ikea has already sold 1.5 million LED bulbs to Canadians, which the company says has helped Canadian customers save 110 million kilowatt hours and about $12 million in energy costs.

SUPPLIER NEWS

CHICAGO — Grainger announced the completion of its acquisition of England’s Cromwell Group (Holdings) Ltd, a large British independent distributor of maintenance, repair, and operating products. Founded in 1970 and headquartered in Leicester, Cromwell serves more than 35,000 industrial and manufacturing customers worldwide with 80,000 industrial products, and employs more than 2,150 people. Sales for the closing fiscal year are forecasted to be approximately £283 million ($573.4 million). Cromwell will now operate as a subsidiary of Grainger.

NORWALK, Conn. — The National Hardware Show will return to Las Vegas this spring, reverting to the Central and North Halls of the Las Vegas Convention Centre after last year’s show in the Central and South Halls. As a result, the schedule will be offset by one day, beginning this year on Wednesday, May 4 and running until Friday, May 6. According to organizers, the floor layout will more closely resemble that of the 2014 show.

PEOPLE ON THE MOVE

Masco Canada has appointed Ken Roberts as its new president. He has been with Delta Faucet Company for 22 years and most recently held the position of vice president ‐ international.

Lynn Pendergrass has joined Sears Holdings in the new role of president of hardlines. Pendergrass will be responsible for working across the Kenmore, Craftsman & DieHard business unit and its hardlines partners—including Home Appliances, Lawn & Garden, Tools, and Sears Auto Centers. 

Rob Wallace has been promoted to director of marketing for Home Hardware Stores Ltd. A 23-year veteran of the company, Wallace has spent the last 14 years as public relations and promotional events manager. The appointment takes effect September 6, allowing outgoing marketing director Jack Baillie to co-ordinate a seamless transition with Wallace before retiring at the end of the month.

IN MEMORIAM

Former industry icon Glen Johnson passed away suddenly, but peacefully, on August 27. Glen was formerly with Beaver Lumber and Cashway for many years and was very well known in the industry. He is remembered fondly by his wife of 63 years, Nancy, his children, grandchildren, and great-grandchildren. For those who wish to, donations may be made to the Heart & Stroke Foundation.

ECONOMIC INDICATORS

Retail sales increased 0.6% to $43.2 billion in June, according to StatCan. Sales were up in eight of 11 sub-sectors, representing 64% of retail trade. In the first six months of 2015, retail sales were up 2.2% compared with the same period in 2014. Excluding gasoline stations, retail sales were up 5% in the first half of 2015. Following six straight monthly gains, sales at building material and garden equipment and supplies dealers were 1.4% lower in June. (StatCan)

Canada’s gross domestic product shrank by 0.5% in the second quarter, marking the second continuous quarter of negative growth following a contraction of 0.8% in the first quarter. This technically put Canada in a recession for the first half of the year. However, June’s GDP showed a broad-based recovery. This is leading some analysts to suggest that the third quarter is in a recovery and that the recession might be over already. (StatCan)

OVERHEARD

“As we grow our business in Canada, we continue to look for ways to add value for our customers and enhance their overall shopping experience. This partnership gives our customers one more reason to shop at Lowe’s.” ―Sylvain Prud'homme, president of Lowe’s Canada, on the retailer’s adoption of the Air Miles loyalty program.

OUT AND ABOUT
Katherine and Michael just got back from the Orgill Fall Market, where they hosted an incredible Canada Night Reception for visiting Canadian dealers. Later this week, Michael is off to Montreal for the RONA Buying Show.

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