July 11, 2016 Volume xxi, #28

“If you don’t like the peaches, walk on by the tree.”
—Waylon Jennings (American “outlaw” country singer and songwriter, 1937-2002)

IN THIS ISSUE:

• Superior Plus sells off Construction Products business

• Lowe’s has aggressive plans for openings through year-end 2016

• Consolidation makes industry’s top retailers more powerful than ever

• Summertime means store openings for Home Hardware

• PLUS: Richelieu Hardware opens Toronto-area showroom, Ingersoll Products introduces drywall finishing product, Epicor acquired by KKR, Newell sells window covering brands to Hunter Douglas, Amazon reprises Prime Day, Canadian Tire tries new concept, Mike Springer retires, Home Hardware’s Mark Cullen honoured —and more!
  
  

  SUMMER PUBLISHING SCHEDULE: Please note there will be no weekly edition of HARDLINES on August 8, 21, or 29. The World Headquarters will remain open, however, during this time. The regular weekly schedule will resume September 5.

Superior Plus sells off Construction Products business

TORONTO — Energy holdings company Superior Plus Corp. is selling its Construction Products Distribution business (CPD) in a cash deal worth US$325 million ($420 million). The buyer is Foundation Building Materials, LLC, a California-based construction materials distributor with 85 branches across the U.S. The deal is expected to close in the second half of 2016, pending necessary approvals.

In the U.S., the business includes CPI, a 130-outlet commercial drywall chain. In Canada, the business includes the Allroc buying group and Winroc, a chain of commercial drywall outlets owned by Allroc. Superior Plus and Allroc did not reply to multiple requests for more information about how the sale will impact the Canadian operations. However, business appears to be continuing as usual at Allroc: it recently signed a new member, Del-Pro Building Supplies, in Whitby, Ont.

The sale of CPD follows a strategic review process which commenced in early 2014. This review was subsequently terminated after a failed attempt to sell the business. According to Superior Plus, management did not believe the prospective purchaser was offering enough money to reflect CPD’s value. Following the termination of the initial strategic review process, Superior focused on increasing the standalone value of CPD.

Those efforts included moving head office from Calgary to Irving, Tex., exiting some markets in Canada, the implementation of a new management team, the initiation of various growth initiatives and the replacement of two legacy ERP systems with a single, integrated system.

Superior will use the proceeds from the sale “to reduce debt, increase its financial flexibility, and enable Superior to redeploy capital to its Energy Distribution and Specialty Chemicals businesses.”

Lowe’s has aggressive plans for openings through year-end 2016

TORONTO — Lowe’s Canada opened its sixth store in the Greater Toronto Area at the end of June. Two more opened just last week, in Abbotsford, B.C., and Signal Hill in Southwest Calgary. These stores were all part of Lowe’s acquisition of a dozen former Target locations across the country, and in the case of the Danforth store, they can come with their own set of challenges in terms of layout and design.

Many of the Target stores that were opened during that retailer’s ill-fated foray into Canada were smaller than usual for the giant mass merchant—under 100,000 square feet. (These locations had, in turn, been purchased from Hudson’s Bay Company and were originally Zellers stores.) Fitting into this smaller footprint meant doing things a little differently for Lowe’s, as well.

The newest store, on Danforth Avenue in Toronto’s East End, has lower ceilings than a standard big box space, and the tighter space required a slightly different layout than might be found in a greenfields building. It feels wider than usual, and not as deep as a regular Lowe’s store. That works to the company’s advantage here, as the store has a main entrance from the parking lot on one side, and another entrance from the tiny shopping mall that the store anchors.

Consolidation makes industry’s top retailers more powerful than ever

WORLD HEADQUARTERS, Toronto — Just four retailers—Home Depot Canada, Lowe’s Canada, Home Hardware Stores Ltd., and Canadian Tire Retail—account for well over half of all retail hardware and home improvement sales in the country.
And thanks to consolidation of Lowe’s and RONA, the Top Four got bigger than ever in 2015, according to the latest findings in a new report by HARDLINES. The Hardlines Retail Report reveals that Home Depot remains in the number-one spot with sales exceeding $7 billion. However, Big Orange faces tough competition: through its acquisition of RONA inc., effective May 20, Lowe’s Canada moves firmly into the number-two spot.

While these giant U.S.-based companies now dominate the scene, the number-three position is held by a group of independents. Through a combination of aggressive dealer recruitment, in combination with growth by existing dealers, Home Hardware maintains third place in the Top Four.

Canadian Tire Retail is fourth in our Top Four elite group. (*NOTE: HARDLINES estimates only the sales by Canadian Tire Retail stores of merchandise related to hardware, home improvement, housewares, and décor to calculate that company’s size in the industry.)

Summertime means store openings for Home Hardware

ST. JACOBS, Ont. — Home Hardware has been actively working with its dealer-members to expand and open new stores, with a number coming on stream as summer gets under way.

In Jonquière, Que., where the company is enjoying some brisk growth (with half a dozen store openings in that province already this year), an existing dealer, Centre de Rénovation FDS Home Hardware, has more than doubled in size at a new location. The 35,000-square-foot facility features a wider product selection, modern store layout, and a 16,000-square-foot drive-through lumber and building materials warehouse. The facility now covers 51,000 square feet. Dealer-owners Luc and David Grenon have been in the home improvement industry for more than 30 years.

Home opened a new location in Altona Mall, in Southern Manitoba, at the end of June. The Janzen family, of nearby Winkler, purchased the Home Hardware in Morden last year and has expanded from there. “We didn’t do a lot of promoting or advertising because it’s a new store,” says owner David Janzen. “We have new equipment; everything is new so we had to get used to it.” Janzen’s sons, Conroy and Regan, who grew up in Bolivia where the family served as missionaries, will manage the location.

In Ontario, Grand Valley Home Hardware, near Orangeville, has re-opened under new ownership, in a new location that’s almost double the size of the previous store. The 4,100-square-foot store is operated by dealer-owners Brian, Terri, Scott, and Corrine Arthurs, who also run Arthurs Fuel out of the same location.

DID YOU KNOW…?

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RETAILER NEWS

SEATTLE — Thousands of small businesses selling on Amazon will participate in the second-annual Prime Day on July 12. Small businesses, entrepreneurs, and sellers on Amazon will offer deals on everything from electronics to toys, household goods, and apparel. Prime Day deals from sellers and small businesses worldwide grew by more than 100% year-over-year. Last year, Prime members purchased more than 14 million items from sellers and small businesses. However, Amazon was a victim of its own success: widely promoted specials lasted for the blink of an eye, with a much-hyped $75 TV set selling out in eight seconds. 

FORT MCMURRAY — Canadian Tire has opened a new specialty store that focuses on sporting goods. Called the Outdoor Store, it features 12,000 square feet of fishing, firearms, camping, and marine merchandise. With an entire section devoted to firearms and archery equipment, it also has a fishing section that features a wide range of fishing tackle.

SUPPLIER NEWS
MISSISSAUGA, Ont. — Richelieu Hardware held a grand opening at the beginning of June for its new 7,000-square-foot industrial showroom on Airport Road, near the Toronto International Airport. The event brought together almost 50 vendors and showcased the latest home trends with a focus on the kitchen and closet areas, signalling Richelieu’s effort to target architecture and design professionals as well as consumers. With 110,000 SKUs and growing, Richelieu is still committed to growing its retail footprint and developing retail products, but its industrial and professional customers account for some 80% of its business. 

INGERSOLL, Ont. — Ingersoll Products, Inc. has been tapped by Hyde Tools to introduce its new drywall finishing product to Canada. The Hyde MudGun, manufactured for Hyde by Ingersoll, claims to be the first-ever engineered system that will help both professionals and do-it-yourselfers apply drywall compound in a clean, easy fashion, leaving a more professional finish. A pro model loads directly from 18-litre buckets, while a smaller gun aimed at painters, plumbers, remodelers, and DIY users, uses pre-packaged “MudPaks.” (Click here for more information.)

AUSTIN, Texas — Epicor Software has announced it will be acquired by the global investment firm KKR from funds advised by Apax Partners. Financial terms of the transaction were not disclosed. The company provides software to the manufacturing, distribution, and retail sectors. “Our top priority continues to be delivering cloud-ready, market-leading solutions paired with a world-class customer experience,” said CEO and President Joe Cowan.

ATLANTA — Newell Brands Inc. has concluded a previously announced deal to sell its Levolor and Kirsch window covering brands to privately-held Hunter Douglas, the giant window coverings company. The brands were part of Newell’s Décor business, within its Home Solutions segment. The sale will earn Newell $270 million, which will be used to pay down debt. Newell says it will focus on “high-potential growth opportunities.”

PEOPLE ON THE MOVE
Mike Springer has retired from the home improvement industry. After more than 40 years, starting as a young teenager working at Kipling Heights Dominion Hardware in Toronto’s West End, Springer has retired to Comeauville, a little town in Nova Scotia. His career has included working at Horizon Plastics International Inc. in Cobourg, Ont., tub and shower-maker Maax, and a long stint at Novi Canadian Ltd. in Toronto. Before joining the manufacturing side, Springer worked for Cochrane-Dunlop out of Thunder Bay, Ont. (where this Editor first had the pleasure of meeting him). (mikespringer@hotmail.ca)

Home Hardware’s gardening expert, Mark Cullen, will be invested as a Member of the Order of Canada by Governor General David Johnston in a ceremony at Rideau Hall, on a date still to be determined. The rank of Member (which follows the grades of Companion and Officer) is awarded to Canadians who make outstanding contributions at a local level, and entitles the appointee to use the letters C.M. after their name. Cullen’s citation hailed him for “promoting and developing horticulture education in Canada and for his ability to explain how Canadians can protect the environment.”

NOTED
In test mode since last year, Wal-Mart is taking on Amazon’s priority delivery service, Amazon Prime, with a program of its own. Called Shipping Pass, it offers unlimited free shipping on many online purchases from Walmart.com. After a trial run that started last year, Wal-Mart is rolling it out to a wider audience, offering a free 30-day trial for the service. Walmart’s Shipping Pass costs $49 per year, versus Amazon Prime at $99.

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