May 30, 2016 Volume xxii, #22

“Simple can be harder than complex: You have to work hard to get your thinking clean to make it simple. But it’s worth it in the end because once you get there, you can move mountains.”
—Steve Jobs (inventor, IT entrepreneur, and co-founder of Apple Computers, 1955-2011)

IN THIS ISSUE:

• Lowe’s to evaluate role of various operations in its newly expanded network

• Lowe’s Canada president outlines RONA consolidation strategy

• Two years in, Slegg remains a good fit for WSB Titan

• Disappointed with sales, Canadian Tire pulls urban test store

• PLUS: Jeni’s Hardware is sold, new Castle dealer in Maritimes, Lowe’s Canada on Vancouver Island, sales at Walmart Canada, New Ross Home Hardware opens, CertainTeed buys Matterhorn, Canadian retail sales rise, housing starts for the GTA—and more!

Lowe’s to evaluate role of various operations in its newly expanded network

TORONTO — Only two days into his new job as the head of the unified Lowe’s/RONA business, Sylvain Prud’homme admits that a lot of questions still don’t have answers. “There’s a lot we need to figure out in the first 30 days,” he says. That includes deciding what the Lowe’s office in Toronto will look like, who will stay, and who will replace him personally to run the Lowe’s business there.

That someone may or may not come from within the Lowe’s or RONA ranks. And they may or may not be in charge of a separate buying team in Toronto, “but this is a top priority we have to address right now.”

The lease at the current office is due to expire soon, as well, further complicating the future of the Toronto operation. However, Prud’homme says the office will not move to Lowe’s Canada’s new distribution centre in Milton, Ont. It’s just too far away from the current location and would be too much of a disruption for the team. “We’re looking for something more central than Milton.”

Another key asset of RONA is the Ace Canada distribution facility in Winnipeg (formerly TruServ Canada). “It’s a part of this support for the independent dealers that we have. The exact role will be defined in consultation with Ace.” Will the Winnipeg DC remain part of that support? “I’ll be honest. I don’t know the role of all the DCs yet.”

Lowe’s Canada president outlines RONA consolidation strategy

BOUCHERVILLE, Que. ― Lowe’s is planning a “gradual evolution” at RONA after closing its acquisition of the larger Canadian retailer, according to the Canadian Press. “It’s not something that will happen overnight,” Lowe’s Canada CEO Sylvain Prud’homme told a press conference at RONA’s headquarters.

“[Consumers] will see some changes in the early stages, but I think it’s going to come to a point where early 2017 is probably going to be where you are going to see some major changes.” Those changes will include ramped-up e-retail offerings and the roll-out of appliances in some RONA stores. Prud’homme stressed that Lowe’s can lend its expertise to enhance the customer experience within the RONA stores.

In the meantime, Lowe’s will focus on building brand awareness in the Canadian market and retaining the existing RONA banners. These include Dick’s Lumber, Marcil, Reno-Depot, and the Ace brand, to which Lowe’s holds the license in Canada. The latter will be part of a strategy to continue supporting independent dealers across the country.

“We are going to make sure that we have the proper big box store in Quebec,” said Prud’homme. “It doesn’t mean at this point that they will be branded Lowe’s.” In fact, he doesn’t think the Lowe’s name will even be rolled out at all in Quebec.

Two years in, Slegg remains a good fit for WSB Titan

VAUGHAN, Ont. — Slegg Lumber is a leading home centre chain on Vancouver Island. While it’s a major supplier to the area’s contractors, it has a retail face, something that its owner WSB Titan lacks.

WSB Titan is the giant commercial drywall operation headquartered just north of Toronto. According to Doug Skrepnek, one of the principals of WSB Titan, and president of Watson Building Supplies, the acquisition in 2014 of Slegg Lumber, with 11 retail locations and a door plant, was part of an ongoing growth strategy for the giant gypsum dealer. Last year, Titan also became an equity partner in BC Ceiling Systems, a West Coast distributor with locations in Vancouver, Richmond, and Langley, B.C., and in Calgary. 

Disappointed with sales, Canadian Tire pulls urban test store

TORONTO — As hardware retailers struggle to provide a profitable service model for downtown locations in Canadian cities, one street in Toronto has been a lab for a store model that failed, even as another an independent competitor a block away is burgeoning.

Canadian Tire has closed a prototype “urban” Express store, located in the Greektown neighbourhood of Toronto’s east end. The store, which was being watched by head office as a possible prototype for further locations, had been tailored specifically to the home maintenance needs of the inner-city customer when it was installed in 2013. Canadian Tire originally planned to open up to six such stores over the following year, including one in Ottawa, but none materialized.
 
The associate dealer of the Express store was Peter Oliver, who also operates a full-sized Canadian Tire a few kilometres south in the city’s Leslieville neighbourhood. Faced with high rent typical of an inner-city retail space, the smaller test store was designed utilizing two levels, with an emphasis on convenience and décor over building materials.

The store sat on one of the busiest streets in Toronto, renowned for its shops and restaurants. However, according to one source close to the story, a combination of those high costs and the failure of the store’s lower level to draw traffic led to the experiment being terminated.

Meanwhile, a Home hardware store just across the street has expanded, holding its grand opening only weeks after the Canadian Tire store was shuttered. Malcolm Firkser took over an existing Home Hardware after the current owner decided to retire. He then moved the store a few doors down and nearly doubled the size. Commenting on his erstwhile competition, he says that factors such as higher rents across the road on the south side of the street contributed to the Canadian Tire store’s demise.

Meanwhile, his own store is performing well. “Location, location, location,” Firkser insists. “This store has been busy from day one. We’re 35% over projection.”

DID YOU KNOW…?

RETAILER NEWS

LA SALLE, Man. — Jeni’s Food and Hardware, in La Salle, Man., has been sold to Carman Co-op. The store, established in 1999 by Tom Bell, was a long-time Sexton member that served as the general store for the town southwest of Winnipeg, selling everything from tools to milk to liquor. (The store’s name was derived from the first two letters of his daughters Jennifer and Nicole’s names.) Over the past 19 years, the business has been able to employ more than 70 people and has processed 1.4 million transactions. The existing staff is remaining at Jeni’s as it transitions to the co-op, and Bell himself confirms he will stay on.

MISSISSAUGA, Ont. ― Moffett’s Hardware, which has served the town of Sussex, N.B., since 1922, is the latest member of Castle Building Centres Group. Owner Don Moffett is the grandson of founder Sterling Moffett, and took over for his father Dave in the early 1970s. The store is the community’s destination specialist in hardware, paint, and home décor. A SICO paint dealer for over 20 years, it also attracts local anglers and hunters with its selection of sporting goods.

TORONTO — Lowe’s Canada is growing its presence as it ramps up to take over a number of former Target sites. The first such location is slated to open later this summer on Vancouver Island, says Lowe's Canada spokeswoman Sandy Indig in a recent Times Colonist news report. Lowe’s was granted a building permit for a 100,000-square-foot store in a shopping centre on the island. The new location is expected to create 125 permanent jobs. 

TORONTO ― Sales at established Walmart stores in Canada rose for the eighth quarter in a row, as store traffic increased by 4.6% and drove up sales by 6.7%. The retailer posted a $3.08 billion profit, with revenues of $115.9 billion. Same-store sales at U.S. stores rose by 1%. Walmart’s results separate it from traditional department stores, which struggle with their numbers at this time of year. The company has now rolled out its pilot grocery delivery program to a dozen Toronto-area stores, ramping up its competitiveness in the food market.

ST. JACOBS, Ont. ― New Ross Home Hardware Building Centre in New Ross, N.S., has finished several months of renovations and hosted a ribbon-cutting ceremony last week to showcase the results. Dealer-owner Bruce Elliott has been part of the Home Hardware family since 1977 and owns several stores in Nova Scotia. He sold the New Ross store in 1989, but has returned to the location.

SUPPLIER NEWS
MALVERN, Pa. — CertainTeed has acquired the Matterhorn metal roofing brand from Michigan-based metal roofing manufacturer Quality Edge, Inc. The purchase expands CertainTeed’s roofing portfolio and ability to serve distributors and contractors throughout North America with a consolidated source of asphalt shingles and metal roofing products. In a release announcing the acquisition, CertainTeed stated the expansion and acquisition are in response to the increasing popularity of metal roofing in both residential and commercial applications in recent years.

ECONOMIC INDICATORS
Canadian retail sales rose 5.5% in the first quarter from a year ago, the strongest quarter in six years. Gains were broadly distributed across sectors including home improvement, drug stores, and new car dealerships. The store merchandise sector rose 6.4%, again with large gains in several store types, including a 10.7% spike in building material and garden equipment stores. (StatCan)

Total housing starts for the Greater Toronto Area are expected to range between 39,500 and 43,500 units in 2016 and move lower to 35,000 and 41,000 starts next year. Apartment starts will see the highest activity in both years, while single-detached homes are expected to show solid growth in 2016 before moving lower next year. Resale homes sales will strengthen and range between 99,500 and 106,000 in 2016 and decline to 92,000 and 102,000 in 2017. The average home price will continue to rise and range between $671,000 and $697,000 in 2016, but the pace of growth will slow down next year and prices will range from $694,000 to $742,000. (CMHC)

Following gains in January and February, Canadian retail sales decreased 1% in March to $43.8 billion. Sales were down in six of 11 subsectors, representing 74% of total retail trade. Sales at building material and garden equipment and supplies dealers fell by 0.7%, the second decline in eight months, more than offsetting the gain in February. (StatCan)

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