April 25, 2016 Volume xxii, #18

“A strong spirit transcends rules.”
— Prince Rogers Nelson, aka Prince (American singer, pop star, songwriter of hits like “1999,” 1958-2016)

IN THIS ISSUE:

• Regional associations commit to align more closely under national umbrella

• Good weather, new vendors elevated the tone at latest Home Hardware Market

• Ace Canada welcomes new dealers at Spring Buying Show

• Lowe’s + RONA = a force for Home Depot to reckon with

• PLUS: CanSave will hold 25th Expo, Orchard Supply in Florida, RONA is saving bees, CertainTeed recognized, Canadian Tire returns to print, Spectrum to renovate head office, Grainger profits down, U.S. housing, new reps for Coast Distributors, Stanley B&D —and more!

Regional associations commit to align more closely under national umbrella

A united front working toward a pan-Canadian organization (from West-East): Brad McCluskie and Thomas Foreman from BSIA; Gary Hamilton, Mark Westrum, and Tom Bell from WRLA; Ron Schell, Ken Forbes, and David W. Campbell from LBMAO; Richard Darveau and Nicolas Couture from AQMAT; Chris Deveaux and Denis Melanson from ABSDA.

MISSISSAUGA, Ont. ― In a small inn at the mouth of the Credit River in Southern Ontario, executives of the five regional retail building materials associations held a special meeting two weeks ago. There, they voted in favour of changes to their relationship. Those changes mark a turning point in the representation of 2,400 Canadian dealers and of their suppliers.

The groups agreed to codify the role and position of their umbrella association, the Canadian Retail Building Supply Council (CRBSC), which has in the past provided a forum for the member organizations informally to exchange ideas, information, and practices. Now, the members have developed a rationale to have the CRBSC represent the industry more visibly, especially at the federal government level, while proactively addressing national issues.

“Founded in the mid-1980s, the umbrella organization established its mission without taking into account the means of achieving it,” says Council President Richard Darveau, who is also president and CEO of the Quebec industry association, AQMAT.

The first decision was to incorporate the CRBSC in accordance with the Canada Not-for-profit Corporations Act. The second decision was to establish the organization’s headquarters in Ottawa, with five regional offices represented by the respective associations: the Building Supply Industry Association of British Columbia in Surrey, B.C.; the Western Retail Lumber Association in Winnipeg; the Lumber and Building Materials Association of Ontario, based in Mississauga, Ont.; the Quebec Hardware and Building Association in Longueuil, Que.; and the Atlantic Building Supply Association, headquartered in Dieppe, N.B.

A key mandate of the newly strengthened CRBSC will be to document the effectiveness of past federal renovation tax credits in terms of their impact on society, the economy, and public finances. The goal is to objectively discuss which measures to take in the future. A study will be carried out by an independent economist and tax specialist. Other initiatives will be raising the awareness of home improvement retail as a career option, with concrete tools to select employees, and a national hiring campaign. Also: online training for renovation and construction project quoting will also be available starting this fall.

The fourth key decision by the CRBSC and its five founding associations was to give their official endorsement to the annual Hardlines Conference so the Canadian industry will enjoy an event that is worthy of both its vitality and scale. Therefore, changes in image and organization of this conference are expected beginning with the 22nd edition in the fall of 2017.

Good weather, new vendors elevated the tone at latest Home Hardware Market

ST. JACOBS, Ont. — Dealers from across Canada again gathered in the small Southwestern Ontario town of St. Jacobs for Home Hardware’s semi-annual market. The good weather of recent weeks helped boost spirits on the show floor, while a number of new vendors upped the range of products available.

The dealers were reportedly pleased with the fresh offerings, especially in the category of kitchen and bath cabinets and counters.

According to Jessica Kuepfer, a spokesperson for Home Hardware, “There were more kitchen vendors and counter displays because of an increased desire and need for the products among our dealers.” She notes that more and more Home dealers are expanding this category. “We wanted to demonstrate the display opportunities available to our stores and provide them a space to ask questions and find the best product for their communities.”

Ace Canada welcomes new dealers at Spring Buying Show

WINNIPEG ― Ace Canada completed its Spring Buying Show at the newly refurbished Winnipeg RBC Convention Centre, from April 16 to 18.

The show highlighted seasonal offers for fall and winter selling, including fourth-quarter holiday sales ideas. But perhaps more significantly, it played host to a slew of dealers who have adopted the Ace banner. “We’ve gone from zero to 60 in just a little over one year,” says Bill Morrison, president of Ace Canada. Those numbers reflect both conversions of the distributor’s TRU dealers and independents from other groups. “We are proud to welcome the new dealers who have joined us.”

The appeal of the Ace banner, which is licensed in Canada by RONA inc., came into question upon the announcement that RONA would be acquired by Lowe’s, making it―and the Ace name―part of Lowe’s Canada. However, based on the numbers that are picking up the Ace brand, it’s proving a good fit for many dealers.

Ace is well known in the U.S., where it competes with Lowe’s. It is a dealer-owned co-op, structured similarly to Home Hardware Stores Ltd. here in Canada. Ace was formerly licensed by TIMBER MART Group, but that relationship ended in August 2015, whereupon RONA picked up the banner as another offering for dealers, especially smaller stores served by its TruServ Canada distribution business based in Winnipeg. TruServ has since been renamed Ace Canada.

Lowe’s + RONA = a force for Home Depot to reckon with

SPECIAL REPORT ― Pending final approvals from the Competition Bureau, RONA is just months, or even weeks, away from becoming part of Lowe’s Canada. The resulting union will create a retail juggernaut.

RONA has 13% of the Canadian retail home improvement market, based on sales at the cash register. It has 500 stores, of which 236 are corporately owned. By contrast, Lowe’s Canada has just 2.4% market share through 42 stores. RONA reported 2015 consolidated sales of $4.1 billion, which measures its wholesale sales combined with retail sales through corporate stores. But once sales from its independents are added in, RONA’s contribution to the market grows to more than $5 billion.

Together, Lowe’s and RONA’s sales will reach an estimated $6.6 billion, narrowing the gap with the industry leader, Home Depot Canada, which had sales in 2015 of more than $7 billion.

But Lowe’s Canada is part of a much larger operation, of course. Lowe’s Cos. in the U.S. is the number-two home improvement retailer worldwide, second only to Home Depot. Lowe’s total sales in 2015 were US$59.1 billion through 1,857 stores, compared with Home Depot, which has 2,274 stores and sales of US$88.5 billion.

Despite its increased size, the Lowe’s-RONA combo will still face challenges in various regions of the country. However, multiple banners and store sizes, through Lowe’s, RONA, and Ace, will give Lowe’s the versatility to penetrate regional markets with footprints that aren’t confined to the big box model. And that’s something Home Depot Canada can’t offer.

Canadian Stores        Lowe’s/RONA             Home Depot Canada
Sales ($ billions)                      $6.6                             $7.2
Store Count                             542                              182
No. of Employees                    28,000                         32,000

(CORRECTION: The information in this chart appeared incorrectly in the latest issue of our print magazine, HHIQ. Those numbers have been corrected here. HARDLINES apologizes for the error.)

DID YOU KNOW…?

RETAILER NEWS

BOUCHERVILLE, Que. — RONA inc. has announced that it will curb the use of neonicotinoids, or neonics, pesticides considered harmful to bee populations. Now, more than 95% of the plants available at RONA’s big box stores are free of neonics, down from 70% a year ago. In recent years, RONA has been working closely with its suppliers to gradually eliminate the use of neonics by implementing alternatives to their cultivation methods. “We feel it is important to do what we can to protect the bee populations,’’ says Jules Foisy-Lapointe, sustainable development director at RONA.

MISSISSAUGA, Ont. — Castle Building Centres Group Ltd. has added a new member, Johnson Hardware in Killarney, Man. When two local hardware stores closed their doors in the town last year, Brendin Johnson recognized the opportunity to provide a one-stop hardware store for his community. He wanted to offer local contractors and consumers alike a range of products that had previously been unavailable in the area.
 
TORONTO — Canadian Tire has brought back its catalogue, after a 10-year hiatus. Called the “Wow Guide,” the 200-page publication is an adjunct to the retailer’s online catalogue, and even features “hover and discover” capability for shoppers to connect to the products online with their mobile devices. With 12 million catalogues printed, it’s being used as a tool to raise awareness for Canadian Tire’s digital offerings.

SAN JOSE, Calif. — Lowe’s subsidiary Orchard Supply Co. has secured a site for the first of three Florida stores. Located in Deerfield Beach, in south Florida, the 2.06-acre property is slated to become Orchard Supply’s first store in the state in the fall. According to the company’s website, other stores are in the works for Fort Lauderdale and Coral Springs.

SUPPLIER NEWS
MALVERN, Pa. — CertainTeed’s vinyl siding and insulated siding topped Builder magazine’s Brand Use Study for the 20th year in a row, placing number one across the board. The study, published every spring, is conducted by the Farnsworth Group, and covers “Brand Familiarity,”  “Brand Used in the Past Two Years,” “Brand Used Most,” and “Quality” ratings. 

MIDDLETON, Wis. — Spectrum Brands is planning a 30,000-square-foot addition to the south end of its four-storey head office, which is currently 220,000 square feet. The company will break ground next month on the development, which is slated for completion next spring. The space is needed for the additional personnel the company plans to hire in administration, marketing, and technology over the next several years. Spectrum moved into its current headquarters in 2013.

BARRIE, Ont. — CanSave, the Ontario specialty distributor building supplies, doors, and kitchen and bath cabinets, will host its 25th Expo at the Barrie Molson Centre, on June 2. Besides product offerings from CanSave’s own suppliers, the event will feature seminars, newly updated showrooms, factory tours of the company’s door and cabinet manufacturing, and the “all-day Jeld-Wen Lounge.” The day will end with a cocktail party, dinner, and live entertainment. For more information, click here.

NEW BRITAIN, Conn. — Stanley Black & Decker reported a surprise spike of 17% in its revenue, while raising its outlook for the year. Volume growth and pricing boosted gains as currency headwinds began to ease. The company now expects to earn between $6.20 and $6.40 per share this year, a hike from its previous guidance of $6 to $6.20. Profits for the quarter totalled $189.4 million, or $1.28 a share, an increase from $162.3 million, or $1.04 a share, a year ago. Sales rose 1.6% to $2.67 billion.

PEOPLE ON THE MOVE
Coast Distributors Ltd., the Nanaimo, B.C.-based hardware wholesaler, has added two members to its outside sales team. Kevin Fookes has been living on Vancouver Island for 25 years, most of which he has spent in the door and window business. He will be calling on Northern Vancouver Island. (250-203-7910) Rees Eyre has been in the building supply industry for more than 10 years, having worked for PrimeSource and Tree Island Steel. He lives on the Lower Mainland and will be servicing customers in Greater Vancouver and the Sunshine Coast. (604-763-2003)

ECONOMIC INDICATORS
U.S. home builders kept their confidence in April, as the NAHB/Wells-Fargo index remained at 58 for the third consecutive month. While the sales outlook for the next six months and the gauge of buyer traffic edged up, builders’ assessment of the current sales picture declined. (National Association of Home Builders)

OVERHEARD…
“We have just taken a big step toward implementing real resources within the CRBSC, allowing it to fulfill its promises and, more importantly, to meet the expectations clearly set by banners, manufacturers, distributors, and by hardware and home improvement store owners that make up our global membership.” ―Richard Darveau, president of the Canadian Retail Building Supply Council, on the landmark commitment by the CRBSC’s five regional associations to work more closely together.

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