July 18, 2016 Volume xxi, #29

“Every noble work is at first impossible.”
—Thomas Carlyle (Scottish writer and historian, 1767–1830)

IN THIS ISSUE:

• Addition of BMR makes ILDC Canada’s biggest buying group

• Medline’s ouster from Canadian Tire raises eyebrows

• Private label versus national brands: the battle continues

• Leonard Lee, Lee Valley Tools: our hats off to a true entrepreneur

• PLUS: Gore joins BMR, housing starts, building permits, Amazon’s Prime Day, Walmart’s free delivery, Husqvarna’s new batteries —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.

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Addition of BMR makes ILDC Canada’s biggest buying group

BOUCHERVILLE, Que. — Groupe BMR has joined the Independent Lumber Dealers Co-operative (ILDC). Already one of the country’s largest buying groups, the addition of BMR will give ILDC combined sales of about $4.3 billion through just 22 members and put it firmly in place as Canada’s largest home improvement buying group.

“We are happy to welcome a major Canadian player such as BMR in our group,” said Paul Bonhomme, president of ILDC and head of Les Enterprises P. Bonhomme, a 10-store chain in the Ottawa-Gatineau region. “This new partnership strengthens our position in the home improvement industry in Canada, which benefits our current and future members.”

Other members include some of the country’s largest independent or closely-held retail chains, including Kent Building Supplies, Patrick Morin, Copp Buildall, McMunn & Yates, and Central Supply. BMR brings another 325 outlets and about $1.7 billion in retail sales to ILDC.

La Coop had been a member itself up until February 2015, when it completed the acquisition of BMR. That group, considered a direct competitor to many existing ILDC members, forced La Coop to exit the group. However, the retail landscape in Quebec has changed dramatically since then, with the takeover of RONA by Lowe’s, the aggressive geographic expansion by Canac, and the consolidation of La Coop and BMR.

“The great purchasing power of ILDC, combined with our own, and their business model that allows us to preserve our independence, were important factors in our decision to join the group,” said Pascal Houle, CEO of Groupe BMR. He added that he looks forward to sharing experiences and best practices with the other ILDC members.

Medline’s ouster from Canadian Tire raises eyebrows

TORONTO — Last week’s announced departure of Michael Medline from Canadian Tire Corp., where he served as president and CEO, came suddenly and without explanation. Medline was replaced by Stephen Wetmore, who had been deputy chair of Canadian Tire.

For Wetmore, this marks a return to the role he held before Medline took over, and Medline had in fact worked under him previously. Wetmore was CEO from January 2009 to December 2014. Medline became president in 2013 and CEO in 2014.

“The board has taken a unanimous decision to change the leadership of the company at a time of unprecedented change in the retail industry,” said Maureen Sabia, chair of Canadian Tire. “While our short-term priorities are delivering results, the board’s responsibility is the long-term success of Canadian Tire.”

If there are any clues as to why Medline was ousted, they may lie in Sabia’s next statement, which suggest the move was planned and that Wetmore was not simply parachuted in: “Stephen transformed our company during his previous tenure and laid the foundation for our current performance. We believe he is uniquely qualified to lead the company through the increasing complexities of the new world of retail. His appointment as president and CEO is neither an interim, nor a short term, appointment.”

One source HARDLINES spoke with indicated Wetmore had been actively working with Canadian Tire’s executive team on a daily basis for the past several months, which would further suggest that this latest shakeup was a planned one.

Medline, who had held the top job at Canadian Tire since December 2014, distinguished himself early on. And prior to that, his background had included a number of “fix-it” roles for Canadian Tire, including turning around the automotive business from 2009 to 2011. After that, when Canadian Tire—under Wetmore as CEO—purchased Forzani Group to expand its presence in sporting goods, Medline was put in charge of that business for three years.

His next post was as president of Canadian Tire Corp., and within a year he had added the CEO title, as Wetmore moved into the role of deputy chairman, a non-executive role.

Despite gains on the retail side, Medline’s reign was marred by the company’s inability to build its online business effectively. A pilot online buying program in Nova Scotia dragged on for almost a year longer than expected before a wider rollout was implemented. And more recently, a hard-copy catalogue, called the “Wow” Guide, reportedly fell short of igniting the kind of digital sales that it was intended to deliver.

Canadian Tire’s common shares are currently trading at an 18-month low, having slipped 22% since December 2015. Despite Medline’s internal fixes and focus on the retail side of the business, Canadian Tire’s board may find comfort in Wetmore’s more corporate approach to ensure a successful long-term strategy.

Private label versus national brands: the battle continues

SPECIAL REPORT — Ten years ago, most retailers were scrambling to increase their investment in house brands, or private-label products. In recent years, that trend has eased, or at very least, been transformed, as retailers begin to support more national brands again, while at the same time developing more and more proprietary brands of their own.

Private label is just one of the trends examined in depth in the newly-released Hardlines Retail Report.

Most retailers source their private-label products through their own sourcing or buying offices in Asia. Canadian Tire, Home Depot, RONA, Lowe’s and other major retailers all have their own buying offices in Shanghai, Hong Kong, and/or Singapore. This procurement model ties in well with the model of effective proprietary brands and private labels that can offer a value price point for consumers and a margin advantage for dealers.

Reducing emphasis on private labels and proprietary brands has become a worldwide trend in recent years. However, private labels are continually being developed that will complement strong national brands, and even wholesalers such as Orgill, Ace, and Home Hardware continue to develop their own private brands.

Canadian Tire exemplifies a focus on strong in-house brands that have the trappings of a national brand. These include Canvas, Woods, and Maximum. For example, the Canvas brand, which was introduced during Christmas 2013, was expanded considerably for this spring. It now includes outdoor furniture for yards and smaller items designed for condo living. The brand is expanding further with the addition of accessories such as rugs, lighting, and cushions.

Canadian Tire is just one of the retail companies analyzed in the 2016-2017 Hardlines Retail Report . Private label products represent one of a number of trends examined in depth. With almost 200 PowerPoint slides, dozens of charts and graphs, and analysis available only from HARDLINES, this is a marketer’s dream tool. (Click here for more info and to order this amazing research document now!)

Leonard Lee, Lee Valley Tools: our hats off to a true entrepreneur

OTTAWA — The recent passing of Leonard Lee, founder of Lee Valley Tools, marks the end of a long career of a true retail pioneer. Lee, who died on July 7 at the age of 77, was born in Wadena, Sask. A former civil servant, his career included a stint with the Canadian Foreign Service, as well as the Canadian Consumer Council and the National Dairy Council.

Raised in a log cabin with dirt floors and neither electricity nor indoor plumbing, Lee studied civil engineering at the Royal Military College, ultimately graduating with a degree in economics from Queen’s University. He started Lee Valley Tools in 1978 as a mail-order catalogue business for specialty wood-working tools.

Lee had a special connection with Hardlines. He spoke at our annual conference twice, and is remembered by many delegates as one of our best speakers ever. He talked about the fearless choices he made to build his company, and shared the fair and open way he treated his employees. Combined with his stories of being wooed by big retailers like Zellers and Home Depot Canada, his presentations literally made us laugh and cry.

In addition to Lee Valley, Lee was also the founder of medical tools developer Canica Design and Algrove Publishing, which specializes in reprints of out-of-print technical books. Appointed to the Order of Canada with the rank of Member in 2003, Lee was suffering from vascular dementia in his final years and, according to Robin Lee, his son and president of Lee Valley Tools, his condition had begun to deteriorate rapidly in the past months.

DID YOU KNOW…?

... that just four companies account for well over half of all retail home improvement sales in Canada? Or that those four companies increased their market share again in 2015? Find out what these companies are doing to lead, and how the industry has grown overall in the 2016-2017 Hardlines Retail Report. (Click here to order this amazing research document now!)

RETAILER NEWS

BENTONVILLE, Ark. — Amazon’s “Prime Day” sales extravaganza, held July 12, reportedly was the company’s biggest day ever. This year, the second time it’s run Prime Day, Amazon’s sales were greater than Prime Day, Black Friday, and Cyber Monday combined in 2015. The promotion had its biggest competitor, Walmart, at ready, as well. Walmart shipped all orders for free with no minimum all last week to go head-to-head with Amazon.

PERTH, Australia — Bunnings Group CEO John Gillam outlined the company’s strategy for its newly acquired U.K. Homebase stores in a presentation at the end of June. Gillam said the “turnaround’ of Homebase stores into Bunnings is in progress, and after four months the thinking behind the acquisition was being “validated.” The Bunnings Warehouse banner will be piloted in the U.K. by year’s end as Bunnings merchandise is rolled out, while at the same time “essential local elements” will be preserved. The acquisition of Homebase is expected to be more lucrative than the failed Masters venture by its rival Woolworths (in partnership with Lowe’s).

BENTONVILLE, Ark. — Walmart is testing out “quality carts” at 500 stores, designed to help employees sort produce and reduce waste on the floor. Armed with scales and a refuse box, the carts allow tasks normally carried out in the back of the store from within the retail space. The pilot stores each have one such cart for now, with plans to place them in most U.S. stores by the end of the third quarter.

SUPPLIER NEWS
MISSISSAUGA, Ont. — Husqvarna has introduced a new range of professional-grade, battery-powered tools, aiming to provide comparable performance to its other products but with a handheld power source. The Husqvarna Battery Series features an assortment of blowers, chainsaws and trimmers for both professional users and do-it-yourself consumers. “This new handheld battery series features a unique combination of powerful machinery and cleaner operation,” said marketing director Michelle Sordi. 

ECONOMIC INDICATORS

Housing starts in June were up for all areas in Canada to 218,333 units from 186,709 units in May, seasonally adjusted. Urban starts increased by 18.1% in June to 202,702 units. Multiple urban starts increased by 26.7% to 142,819 units in June and the single-detached urban starts increased by 1.7% to 59,883 units. In June, urban starts increased in British Columbia, Ontario, and in the Prairies, but decreased in Atlantic Canada and Quebec. Rural starts were estimated at 15,631 units seasonally adjusted. (CMHC)

Municipalities issued building permits worth $6.8 billion in May, down 1.9% from the previous month. Lower construction intentions for commercial buildings in Quebec and Ontario and single-family homes in Ontario contributed most to the decrease. In the residential sector, the value of building permits was down 1.1% to $4.3 billion, following a 0.9% drop the previous month. The increase in the value of multi-family dwelling permits was not sufficient to offset the decline for single-family dwellings. (StatCan)

PEOPLE ON THE MOVE

Groupe BMR has announced the appointment of Mélanie Gore as director–Flyers and Business Intelligence. Under the supervision of Alain John Pinard, her duties will include managing the flyer program, the loyalty programs, and BMR’s customer databases. Gore brings with her 10 years of experience in the marketing department at RONA, as well as time most recently as loyalty marketing director for Groupe Atis.

NOTED

Attention Vendors who would like to build your online business: Hardlines is co-producing the first-ever Home Improvement eRetailer Summit October 26-28, 2016, in Fort Lauderdale, Fla. This event will give you the opportunity to get face-to-face with 20 of North America’s top eRetailers. Seriously! We’re creating an intimate workshop environment for eRetail executives to share ideas with suppliers and vendors. For more information, please contact: Sonya Ruff Jarvis, founder of the eRetailer Summit, at sonya@eretailersummit.com.

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