April 18, 2016 Volume xxii, #17

“It is not who is right, but what is right, that is of importance.”
—Thomas Huxley (English biologist and educator, 1825-1895)

IN THIS ISSUE:

• eBay Canada managing director will headline Hardlines Conference

• RONA takeover inches closer to finalization

• Low prices make Canac a tough competitor in Quebec

• CHHMA inducts industry leaders into Hall of Fame

• PLUS: Richelieu’s new showroom, Home Hardware among best managed, Castle’s Ken Jenkins blogs, Armstrong spins off flooring, Henkel’s new CEO, housing starts decline —and more!

eBay Canada managing director will headline Hardlines Conference

WORLD HQ, Toronto — Hardlines is pleased to announce that Andrea Stairs, who heads up eBay Canada, has agreed to join our roster of speakers at the 21st Annual Hardlines Conference, October 18 to 19, in Niagara Falls, Ont.

As eBay Canada’s managing director, Stairs leads the Canadian strategy and operations of one of the world’s largest online marketplaces—and Canada’s second largest e-commerce business. Stairs is responsible for cultivating eBay’s community of Canadian users. That includes everything from individual consumers to established brands and retailers. In addition, she oversees all of eBay’s Canadian functions, including product management, marketing, business development, and public and government relations.

Stairs joins an already-impressive lineup of speakers, which includes Ron Beal, president of Orgill Inc., the Memphis-based hardware wholesaler which owns Orgill Canada Hardlines; and Jay Heubner, president and general manager of Ace International.

Ibrahim Ibrahim, the retail futurist from the U.K. and long-time conference favourite, has also been confirmed to return to the Hardlines stage. Aron Gampel, vice president of Scotiabank Economics, is another speaker who’s been invited back after a resounding reception last year. Rounding out our lineup so far is Dan Tratensek, vice president of publishing for the North American Retail Hardware Association, with his insights into the issues facing independent dealers.

The 21st annual Hardlines Conference will be held at the Sheraton on the Falls Hotel in Niagara Falls, Ont., from October 18 to 19, 2016. It will play host to more than 175 dealers, managers, and executives in home improvement retailing in North America. For more information and to register, click here now.

RONA takeover inches closer to finalization

BOUCHERVILLE, Que. — Lowe’s bid to acquire RONA cleared another hurdle last week as the Superior Court of Quebec issued a judgment to green-light the deal under the provincial Business Corporations Act.

The fate of the proposal now rests with the federal Competition Bureau and the Investment Canada agency, having already won the unanimous recommendation of major stakeholder Caisse de dépôt et placement du Québec (which manages provincial pensions) as well as the approval by RONA’s common shareholders. Preferred shareholders, who were asked to take a loss on the original purchase price, overwhelmingly voted against the offer, but their numbers—representing only about 10% of outstanding shares—weren’t enough to defeat it.

To pay for the deal, as well as to pay off existing debt, Lowe’s has offered up to US$3.3 billion in senior unsecured notes.

The administrative approval of the deal is a setback for nationalists hoping for last-ditch government intervention to prevent the sale of one of Quebec’s most prominent retail success stories. Quebecor founder and opposition leader Pierre-Karl Péladeau, of the pro-independence Parti Québecois, deplored the sale of yet another Quebec company, echoing a popular sentiment that has since intensified with the announcement of Ontario-based Cara Operations’ acquisition of Saint-Hubert. The iconic restaurant chain’s fate was announced the same day as the RONA shareholder meeting.

In an effort to mollify those concerns, Lowe’s, which hired Quebecer Sylvain Prud’homme as head of its Canadian operation, has promised that head offices will remain in their current location on Montreal’s South Shore (pictured above). The Canadian Press reported that departing RONA CEO Robert Sawyer was confident the RONA and Reno-Depot brands would be maintained in Quebec. “Outside of Quebec it’s another ball game, probably the big box stores will be eventually merged (into the Lowe’s brand),” he added.

In addition, Lowe’s has pledged not to slash existing RONA jobs, agreeing to retain several key members of RONA’s current executive team. Shareholder rights group MEDAC has called on both federal and provincial governments to hold Lowe’s to those commitments. Spokesman Jean Dorion also expressed his dissatisfaction at the English-only publication of parts of the agreement.

Report on Business has noted that the number of corporate headquarters operating in Montreal has gone down in the past few years compared to other cities. Aluminum manufacturer Alcan, grocer Provigo, and even Cirque du Soleil are among the businesses bought up by out-of-province interests in recent years.

Xavier Barsalou-Duval, the Bloc Quebecois’ economic development critic, has called for Innovation, Science, and Economic Development Minister Navdeep Bains to block the sale of RONA, alleging that its former CEO, Robert Dutton, was laid off after the rejection of Lowe’s unsolicited first bid in 2012 in order to clear the way for a future deal.

Industry insiders consulted by HARDLINES anticipate that the deal will close by early summer.

Low prices make Canac a tough competitor in Quebec

QUEBEC CITY — Canac, the giant Quebec-based home improvement chain, is on an aggressive expansion track that is currently aimed squarely at the Montreal area (see last week’s issue! —your ever-helpful Editor). That expansion has been fuelled by a successful business model that has brought the retailer up to 24 stores. “We emphasize good service and we’re very aggressive on price,” says Jean Laberge, president of Canac. And that last point especially is what makes Canac a tough competitor.

Laberge says his company’s stores are the right size, around 25,000 square feet, with another 10,000 square feet for a garden centre, plus about 35,000 square feet of warehouse space. “We find it’s a good size for the market. We can still give good service to our customers.” By avoiding the big box model, he says, “we can see everyone in the stores.”

While Laberge considers the big box a big competitor, he is confident of Canac’s ability to endure. “They’re big and cannot move well. But me, I’m smaller than them and can work from one vendor to another, who may already support Home Depot but cannot supply RONA. It may cost me 2% more, but I can make it up at the distribution centre, where I don’t have to make a markup,” he says. “So I’m able to manage my way among these big groups.”

All that, plus lower administration costs, lets Canac keep its retail prices down. “We are good competitors for them and I can tell you, we bother them a lot.”

CHHMA inducts industry leaders into Hall of Fame

TORONTO — Two manufacturers and one publisher were inducted into the industry Hall of Fame last week, courtesy of the Canadian Hardware and Housewares Manufacturers Association.

At an awards lunch during the CHHMA’s annual general meeting and conference, James Mumby of Dynamic Paint Products, Bill Calisina of Bissell Canada, and Laurie O’Halloran, co-founder and editor/publisher of HomeStyle magazine (shown here, accepting the award from CHHMA President Vaughn Crofford and Jerry Cayne, founder of Cayne’s the Super Houseware Store). In accepting the award, O’Halloran thanked her parents, who took out a mortgage on their home to finance the startup of the magazine 26 years ago. Cayne, himself a past Hall of Fame recipient, referred to the magazine as “the life blood of the [housewares] industry.”

DID YOU KNOW…?

RETAILER NEWS

ST. JACOBS, Ont. — Home Hardware Stores has again been named among Canada’s Best Managed Companies, an accolade the company has retained since first receiving the distinction in 2012. In its fourth consecutive year of receiving this honour, Home Hardware is now considered a Gold Standard recipient. Canada’s Best Managed Companies was established in 1993 by Deloitte, CIBC, National Post, and Queen’s School of Business to recognize excellence in Canadian-owned and managed companies.

MISSISSAUGA, Ont. — Castle Building Centres President Ken Jenkins has a new blog, called “Insights with Ken Jenkins.” In it, he tackles various issues relevant to independent dealers and business people. The latest talks about the importance of keeping things simple, by focusing on techniques such as clear communications, effective meetings, and minimal bureaucracy. Read more here.

SUPPLIER NEWS
MISSISSAUGA, Ont. — Richelieu Hardware has expanded its showroom near Toronto’s Pearson International Airport in a new location at 6425 Airport Rd, Mississauga, Ont., just around the corner from its previous location on American Drive. The new space is 6,000 square feet in size, twice the size of its predecessor, and attached to a warehouse that is 100,000 square feet in size. That’s up from 62,000 square feet previously. While already open to the public, the showroom will host a grand opening “Trends Show” on June 2, featuring hands-on training and on-site promotions.

LANCASTER, Pa. — Armstrong Flooring announced last week that it has completed its separation from Armstrong World Industries. North America’s largest wood flooring producer is now an independent and publicly traded corporation, with Donald R. Meier as president and CEO. Meier was CEO of Armstrong’s flooring division prior to its separation. He hopes to grow the company’s business by focusing on new products and customer service. 

DUESSELDORF, Germany — The pressure was on Henkel’s CEO-designate Hans van Bylen as shareholders gathered for their last annual meeting under his predecessor, Kaspar Rorsted, recently. Investors presented van Bylen with a litany of demands including raises in share prices and dividend payments, Bloomberg reports, and underscored that Rorsted will be a tough act to follow.

ECONOMIC INDICATORS
The New Housing Price Index rose 0.2% in February, following a 0.1% increase in January. The advance was led by higher prices in Ontario and British Columbia. Of the metropolitan areas covered by the index, the combined regions of Toronto-Oshawa and Vancouver were the top contributors to the national increase. Overall, the index increased 1.8% over the 12-month period ending in February, following an identical increase in January. The combined metropolitan region of Toronto and Oshawa, at an increase of 4.4%, was the top contributor to the gain. (Canadian Real Estate Association)

The standalone monthly rate of housing starts for all areas in Canada was 204,251 units, seasonally adjusted, in March, down from 219,077 units in February. The SAAR of urban starts decreased by 7% in March to 185,022 units. Multiple urban starts decreased by 9.7% and single-detached urban starts decreased by 1.1%. (CMHC)

NOTED
Executives from around the world will descend on Stockholm, Sweden, for the Fourth Global DIY Summit in June. About 260 CEOs and other senior executives from more than 70 retail home improvement companies worldwide have already registered to attend the congress June 8 and 9. Among them are Ace Hardware, B&Q, Kingfisher, Lowe’s, and Home Depot. Click here for more info!

OVERHEARD…

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