October 26, 2015 Volume xxxiv, #40

Excellence means when a man or woman asks of himself more than others do.”
—José Ortega y Gasset, (Spanish philosopher and essayist, 1883-1955)

IN THIS ISSUE:

• Mobile sales were a key theme of latest Hardlines Conference

• Top Retailers awarded at Outstanding Retailer Awards Gala

• RONA boss is voted turnaround CEO of the year

• Ace deal is good news for Canadian vendors: Morrison

• PLUS: New buyer at Castle, Lowe’s ponders Aussie venture, Amazon making money, Saint-Gobain’s new North American HQ, retail sales up, Grainger’s Q3 —and more!

Mobile sales were a key theme of latest Hardlines Conference

TORONTO — One of the best online sellers in home improvement is Canadian Tire, but it still falls short. That was just one of the revelations at this year's Hardlines Conference. The 20th annual Hardlines Conference was held last week at the Westin Bristol Place Hotel in Toronto. It featured speakers and delegates from all over North America and Europe.

Almost 200 people listened raptly as Liz Drayton of Google Canada explained how retailers are using apps to literally hijack customers from competitors' stores with time-limited offers that have them running through the shopping mall for a deal. She also pointed out that their metrics gauge Canadian Tire as one of the best online sites and fastest upload speeds in this industry, yet it still falls short compared with other sectors, she noted. There are lots of ways companies can improve their speed, and Google can help, she added.

Another home improvement retailer making the most of current technology is Home Depot, which has an app for consumers that is voice and QR code searchable. A user can simply take a picture of a broken part or tool and the app will search for it automatically.

Drayton was followed by Joseph Thompson of BuildDirect, an online seller of building materials based in Vancouver. He estimated only 1% of building materials purchases worldwide are completed online. But, he added, this category is poised to grow exponentially, the way music and books already have. “We predict that home will be the next big thing in online selling,” Thompson said.

BuildDirect currently has 7,500 SKUs available, but expects to double that within three months, then double it again in another three months.

Top Retailers awarded at Outstanding Retailer Awards Gala

TORONTO — The Canadian home improvement industry gathered last week to recognize its top retailers during Hardlines’ 2015 Outstanding Retailer Awards. The awards were part of a gala dinner that concluded day one of the 20th Annual Hardlines Conference in Toronto.

Hardlines celebrated the industry’s finest at the ORA Gala Dinner. Dealers from across the country were honoured in seven categories covering the range of hardware and home improvement retailing formats. This year’s winners consistently displayed good business sense, which translated into strong annual sales increases. But they also operate their stores with a personal touch that connects them with their customers and their local communities.

The winners of the Hardlines 2015 Outstanding Retailer Awards are:

• Best Hardware Store – Harris Home Hardware, London, Ont., Ron and Tracey Harris, owners;
• Best Building Centre under 15,000 square feet – Les Entreprises Nova Centre de Rénovation Home Hardware, Rawdon, Que., Pierre Lane, owner;
• Best Building Centre over 15,000 square feet – W. Filsinger & Sons RONA, Guelph, Ont., Wayne Filsinger, owner;
• Best Contractor Specialist Retailer – Contractor First by RONA, Calgary, Alta., Justin Erdahl, manager;
• Best Large Surface Retailer – RONA Golden Mile, Scarborough, Ont. Padam Dugal, manager;
• Young Retailer of the Year – Josh Beusekom, owner, Fort Macleod TRU Hardware, Fort Macleod, Alta.;
• Marc Robichaud Memorial Community Leader Award – L.B.H. TIMBER MART, St. Albert, Alta., Doug Lemieux, owner.

These dealers and managers were chosen from a list of nominees who were all outstanding in their own right. But the winners each displayed an edge that put them ahead of their peers and identified them as truly outstanding.

RONA boss is voted turnaround CEO of the year

BOUCHERVILLE, Que. — Canadian Business magazine has chosen RONA CEO Robert Sawyer as “turnaround CEO of the year,” based on the positive results that his company has turned out over the last couple of quarters.

Sawyer spoke to the magazine about the challenges he faced taking up the helm of the then-struggling home improvement group. Not realizing the extent of the crisis, he says, he told himself, “Oh my God, I didn’t know the baby was sick like that.” Sawyer helped reverse the effects of a poorly executed expansion plan, tightening existing cost-cutting measures, and turning around the company’s banners, with a particular push for Reno-Depot.

RONA’s strong second-quarter results helped single out Sawyer for the recognition. The company reported a 5.4% increase in same-store sales and profits were up 19%.

Ace deal is good news for Canadian vendors: Morrison

WINNIPEG — TruServ Canada, the Winnipeg distribution business owned by RONA, is looking for ways to maximize its dealers’ access to a new range of products through RONA’s partnership with Ace International.

RONA secured the Canadian license for Ace just over a year ago, opening doors for the conversion of existing TRU dealers to Ace, as well as recruitment from other banners.

Canadian dealers will have access to products from Ace in three ways: from Canadian vendors that have supply arrangements with Ace and ship right into TruServ’s warehouse, from U.S. vendors through Ace, and Ace-branded product through Ace International’s Shanghai distribution facility. “It allows our buyers to make really strong decisions for the right product at the right price,” says Bill Morrison, president of TruServ Canada.

He says that the Winnipeg warehouse remains committed to national brands—especially from Canadian vendors—while adding Ace products. “Canadians have accepted and fully expect to see a national brand and a private brand on the shelf. They get it.”

FROM THE ARCHIVES: This week in 1995

Sexton Group General Manager Bob Mondy says his buying group had the best summer in 10 years, but with growth coming from the rural markets, as the urban centres “have not been very good,” he reports. A strike at Beaver Lumber’s Mississauga, Ont., distribution centre puts the last nail in the coffin of Beaver’s hardware distribution business, which it has decided to exit. (It would announce a deal with Ace Hardware soon after.) And a new store in Kelowna reflects the growth that is helping Revy Home Centres stay ahead of the current recession. Click here to read these blasts from the past!

DID YOU KNOW…?

RETAILER NEWS

SYDNEY — Analysts consulted by the Sydney Morning Herald believe Woolworth’s will exit its struggling joint venture with Lowe’s, Masters Home Improvement, if Lowe’s exercises its put option. Under the current terms of the agreement between the partners, Lowe’s became eligible on Tuesday to serve Woolworth’s with 13 months’ notice and require it to buy Lowe’s 33% stake in the loss-making venture. "If Lowe’s wants out, Woolies will want out as well," one analyst told the Herald.

BRENTWOOD — Tractor Supply Co. saw net sales rise by 8.5% to $1.48 billion from $1.36 billion compared with the Q3 last year. Comparable store sales increased 2.9% from the prior year's third quarter driven by strong performance in consumable, usable and edible (C.U.E.) products, principally in the pet and animal categories. Net income increased 14% to $87.3 million from $76.6 million and diluted earnings per share increased 16.4% to $0.64 from $0.55 in the previous third quarter.

SEATTLE — Amazon defied analyst expectations by posting earnings of 17 cents per share, its second quarter of growth in a row, in spite of a forecast loss of 13 cents per share. The e-retailer’s net sales increased 23% from the previous year, while its earnings compare to a 95 cent per-share loss a year earlier. North American sales rose 28% to $15 billion, from $11.7 billion in Q3 2014. Much of the growth was credited to the merchant’s booming Amazon Web Service, which provides cloud computing services to developers.

BENTONVILLE, Ark. — Investors are responding negatively to recent earnings forecasts from Wal-Mart Stores. Its shares took an $11 billion dive in one day last week after the company announced earnings will decline by up to 12% in fiscal 2017. The surprise announcement contradicted the forecasts of analysts, who anticipated a slight gain, and prompted an exodus of stockholders. The drop meant a loss of $370 million on paper for Warren Buffett, the U.S.’s second-richest man, whose Berkshire Hathaway group holds a stake of more than 2% in the retail giant.

SUPPLIER NEWS
MALVERN, Pa. — Saint-Gobain capped its 350th anniversary celebrations with the opening of a new North American corporate headquarters. The 320,000-square-foot facility stands on a 65-acre site. It will showcase Saint-Gobain’s portfolio of products, as well as that of its North American construction materials subsidiary, CertainTeed. The opening, attended by dignitaries including Pennsylvania’s Lieutenant (deputy) Governor, marked the culmination of a year of celebrations of the company’s 1665 establishment by King Louis XIV of France (at the time including Canada). Its original mandate was to manufacture glass for the Palace of Versailles’ Hall of Mirrors.

CHICAGO — Grainger’s third-quarter sales fell 1% to $2.5 billion, while net earnings were down 17% to $192 million versus $230 million in 2014. Earnings per share of $2.92 declined 12% versus $3.30 in 2014. Sales for its Canadian operations, Acklands-Grainger, declined 23% in U.S. dollars in the third quarter and declined 8% in local currency. The business in Canada continues to be affected by weak oil and gas prices and by lower commodity prices. Sales in the province of Alberta, which represents more than a third of the company's business in Canada, were down 26% in local currency versus the prior year. In contrast, sales for the remaining provinces in aggregate were down 3% in local currency versus the prior year.

PEOPLE ON THE MOVE
Gonzalo Renfigo has joined Castle Building Centres Group as senior buyer. He was formerly a merchandising manager at Lowe’s Canada.

ECONOMIC INDICATORS
Retail sales rose for the fourth consecutive month, advancing 0.5% to $43.6 billion in August. The increase was led by higher sales at motor vehicle and parts dealers. Excluding this sub-sector, retail sales were flat. Sales increased in four of 11 sub-sectors, representing 56% of retail trade. In volume terms, retail sales increased 0.7%. Building material and garden equipment and supplies dealers saw sales increase by 2.4% year over year. (StatCan)

Wholesale sales edged down 0.1% to $55.3 billion in August. Declines in four sub-sectors, in particular the machinery, equipment, and supplies sub-sector, accounted for the decrease. Sales in the building material and supplies sub-sector rose 1% to $7.7 billion in August, more than offsetting their decline in July. The lumber, millwork, hardware, and other building supplies industry (+3.8%) accounted for the gain in August with its third increase in four months. (StatCan)

NOTED
Participants at last week’s Hardlines Conference heard a talk by Joe Scarlett drawing on his 30 years in leadership positions with Tractor Supply Company. He has a keen interest in honing leadership skills that work and promoting ethics in corporate culture. That’s why he helped found the Scarlett Leadership Institute in 2006. You can find Joe’s blog, including sign-up info for his mailing list, here. 

OUT AND ABOUT
Hey, we ain’t goin’ nowhere for a few days as we rest up following our most amazing Hardlines Conference ever!

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