September 5, 2016 Volume xxi, #29

“The most dangerous strategy is to jump a chasm in two leaps.”
— Benjamin Disraeli (British politician and writer, 1804-1881)

IN THIS ISSUE:

• Executives at RONA show reaffirm Lowe’s commitment to independents

• On relocating Lowe’s Toronto office, re-branding RONA stores, aligning the buying teams, and more

• Canadians gather in Vegas for Orgill Fall Dealer Market

• Could the Quebec government have blocked the sale of RONA?

• PLUS: Gypsum tariff looms, two new Reno-Depots, EAB’s 40th, Castle adds stores, CanWel acquires TFI, Festool road show, BMR builds, new site for RONA affiliate, DeWalt’s 60-volt line, U.S. housing starts —and more!
  
  

Executives at RONA show reaffirm Lowe’s commitment to independents

MONTREAL — With about 230 independent dealers in attendance, this year’s RONA show enjoyed the best attendance yet. And though it may not be the largest show in Canada by anyone’s estimation, the intimacy of the event ended up working in its favour.

The annual show, held September 1 at the Palais de congès in Montreal, is the third one by RONA (shouldn’t that be Lowe’s Canada? —Editor) geared specifically for its independent, or “affiliated” dealers. It featured 290 vendors, and most of them who spoke with HARDLINES were pleased with the traffic—and the opportunity to spend time with their customers. Show organizers worked with this aspect of the event, as well, creating lots of open spaces and lounge areas for dealers to speak with vendors, RONA reps, and each other.

One vendor observed that the show was working better for his company this year as his team had tailored its own assortments to best suit smaller independents, rather than the corporate proximity stores and big boxes. Another observed that the show’s “Hot Deals,” a standard part of many shows, required dealers to go back to the respective vendors’ booths to complete the orders. Once there, vendors could present more offerings and interact further with their customers.

An added buzz permeated the show floor, as this is the first one under the ownership of Lowe’s. The day before the show, dealers got a message from Lowe’s Canada executives that drove home their commitment to independent dealers. Sylvain Prud’homme, president and CEO of Lowe’s Canada, told the group that the company is firmly committed to building both the RONA and Ace brands on behalf of independents in Canada.

Those banners will constitute one of the pillars of the Lowe’s Canada organization, and be headed by Alain Brisebois, executive vice president, affiliate dealers and operations central services. Reporting to him, Philippe Element, vice president, dealer sales and support, oversees the RONA banner, while Ace is under the aegis of Bill Morrison, who is vice president of Lowe’s Canada, Ace Canada Division, based in its Winnipeg office.

On relocating Lowe’s Toronto office, re-branding RONA stores, aligning the buying teams, and more

SPECIAL REPORT — HARDLINES had the chance to sit with executives from Lowe’s Canada in Montreal last week, during the RONA Show. Here’s what we learned in our conversation with President and CEO Sylvain Prud’homme and Alain Brisebois, EVP, affiliate dealers and operations central services, Lowe’s Canada:

• The Lowe’s Canada office, currently on Yonge Street in North York, a section of Northern Toronto, will not move to RONA’s old (and we mean old! —Editor) headquarters on Martin Grove Road, near the airport. That facility came with RONA’s purchase of Lansing Buildall, as part of its acquisition of Revy back in 2001. No, the Lowe’s offices will move to a new site in the Hewlett Packard building on Spectrum Way in Mississauga. The personnel at the Martingrove will move there, as well. The move is expected to be completed by spring 2017.

• “The RONA banner will definitely be used to support proximity and building centre affiliates,” said Prud’homme. There is no plan to turn all the RONA dealers into Ace dealers, or vice versa.

• However, many RONA big boxes may very likely be re-branded Lowe’s, he said. “There’s a very good chance that the big box stores outside Quebec will be branded Lowe’s.” In Quebec, they may remain RONA, but Prud’homme says he’ll let the customer decide. “I can’t confirm what the brand will be in Quebec.”

• The Toronto-area office will remain the headquarters for the Lowe’s business, and act as a regional support centre overseeing the big boxes operating under the Lowe’s banner. It is led by Jim Caldwell, who formerly headed up furniture retailer The Brick. That office will maintain its own merchandising team. The Milton, Ont., distribution centre that Lowe’s purchased last year from Target will continue to serve the Lowe’s stores nationally.

• The Boucherville site is not just the head office for Lowe’s Canada. It is also the wholesale distribution centre for sales to independents. Lowe’s will maintain a procurement team there for commodities and a merchandising team for affiliate dealers, led by Head of Marketing and Merchandising Igor Halencak, who now reports to Brisebois.

Canadians gather in Vegas for Orgill Fall Dealer Market

LAS VEGAS, Nev. — Dealers from around the world gathered for the Orgill Fall Dealer Market, August 25 to 27 at the Sands Expo Convention Centre, including Canadians from every province and territory.

Ron Beal, president of the Memphis-based hardware distributor, told HARDLINES that the show drew a record number of dealers. The company further reports that the number of Canadian retailers registered for the show was more than double the number for last year's Fall Dealer Market. However, a number of vendors felt attendance was down somewhat from the previous event, held in February, which is typically the larger one overall for Orgill.

The market featured a range of sales and promotional opportunities, including Door Busters, Market Busters, Coupon Specials, New Items and Pallets.  It also included a special promotions area just for its Canadian customers—more important than ever since Orgill expanded its reach in Canada with its 2015 acquisition of Chalifour. That promotional area drew the Canadian dealers for the bulk of day one of the show, with some increased traffic by Canadians reported on the main floor on day two.

The Canadian vendors at the show were confronted as well by the recent the recent closing of Orgill’s Canadian buying office. That loss means the end of a number of long-term relationships that underlie the buying process in this country. Among the vendors hoping to begin making that up with the Memphis buyers during the Vegas market, many expressed their concern over building these relationships anew—beginning with this show.

Vendors were particularly pleased to have the Canadian presence at the market re-integrated into the overall event. Previously, they had been hived off into a special Canadian area on the show floor.

Although Orgill does not support a banner of its own, it nevertheless offers a wide range of services and merchandising programs for independent dealers. This year’s event featured three fully merchandised model stores, including one strictly for Canucks: Maple Ridge Home Centre, with a 50-50 DIY-pro customer mix and completely Canadian-compliant products.

Could the Quebec government have blocked the sale of RONA?

QUEBEC CITY — Questions surrounding the conduct of Quebec transportation minister Jacques Daoust over the sale of RONA inc. have led to his resignation.

Daoust has come under fire for his involvement as economy minister in giving the Investissement Québec agency the green light to unload its shares in RONA, thereby forfeiting the chance to block the shareholder supermajority needed to approve the company’s sale to Lowe’s.
 
Daoust has steadfastly denied either approving the share dump or being in the loop on the sale of RONA, but an email exchange uncovered by TVA Nouvelles reveals his then-Chief of Staff Pierre Ouellet gave Investissement Québec the minister’s blessing to sell the shares. Daoust’s denials have worn thin since June when a report from the province’s auditor general said Investissement Québec minutes showed he had attended a meeting where RONA’s potential sale was discussed, and gave the agency’s board of directors the go-ahead to sell its stock.
 
In stepping down, Daoust has continued to maintain his version of the events. Daoust’s former chief of staff, however, contradicted him in a hearing held in the National Assembly late in August. Pierre Ouellet told a legislative committee that the ex-minister was apprised of Investissement Québec’s intention to sell its shares. Daoust’s response, according to Ouellet, was, “It’s [Investissement Québec’s] responsibility; they’ll live with the consequences.”

DID YOU KNOW…?

... Early Bird Special Pricing and special room rates for the 21st Annual Hardlines Conference is available only until September 9. With a lineup of speakers from Orgill, Scotiabank, Ace International, Lee Valley Tools, TIM-BR MART, Castle, and more, you don’t want to miss this incredible conference, October 18 to 19 in Niagara Falls! Click here right now to register. (Hurry and you can still get a room with a view of the Falls!)

RETAILER NEWS

BOUCHERVILLE, Que. — Lowe’s celebrated the grand opening of its first store in Thunder Bay, Ont., on August 23. Mayor Keith Hobbs joined Lowe’s Canada Executive VP Jim Caldwell for an official board cutting and community grant donation presentation to The City of Thunder Bay Playgrounds Program.

CAVENDISH, Nfld. — The Jackson family, which has owned and operated Cavendish Castle Building Centre for more than 40 years, opened a second location in nearby New Harbour. Founder Norm Jackson’s son Ren will manage the new store, while his son Darryl will stay on at the Cavendish Castle location.

BOUCHERVILLE, Que. ― Groupe BMR inc. has acquired land adjacent to its Ostiguy & Frères corporate store located at 1000 Industriel Blvd. in Chambly. The real estate will become the site of a new warehouse for building materials for that store. It should be finished by December.

BOUCHERVILLE, Que. ― Lowe’s Canada opened two Reno-Depot stores on September 1. The first, in Trois Rivières, is 67,000 square feet in size. A slightly larger 86,000-square-foot store in RONA’s home town of Boucherville opened the same day. This opening also tied in with an official announcement by Lowe’s Canada to partner with the city of Boucherville as the community celebrates its 350th anniversary next year. These openings bring the total number of Reno-Depot stores to 21.

BOUCHERVILLE, Que. — Lowe’s Canada has begun construction of a new affiliate RONA store in Blainville, Que., slated to open in spring 2017. The store owners, Groupe Lespérance, already operate another location in Blainville, as well as a store in nearby Sainte-Thérèse.

HOFFMAN ESTATES, Ill. — Sears in the U.S. is selling paint again. The mass merchant dropped the category in 2012, but has added it back in, citing customer demand. To start, 23 stores will try out the new lines, which include its own Weatherbeater and Easy Living brands. Sears will also launch a line of paint, under the Craftsman name, for use on metal, porches, and garage floors.

ST. JACOBS, Ont. — A family-owned Home Hardware in the heart of the banner’s Waterloo Region home turf is changing hands after nearly 70 years. McNaughton’s Home Hardware in Newbury, Ont., will keep its name and its 60 employees under new owner Graham Young. Jack McNaughton founded the store with his two brothers in 1948.
 

SUPPLIER NEWS
DELTA, B.C. — Power tool accessory maker EAB celebrates its 40th anniversary this month, launching a limited edition 40th Anniversary Blade. The brand got its start in 1976, with a philosophy of quality, competitive pricing, and recycling and remanufacturing. Today, it has three brands for its bits, hole saws, abrasives and other accessories: Exchange-A-Blade, Stay Sharp, and RazorBack. At its facility in British Columbia's Lower Mainland, EAB remanufactures more than 35,000 blades annually from its 40,000-square-foot facility. In the average year, the company says it manages to keep 60 tons of steel out of landfills—equivalent to 60 automobiles.

TORONTO — Power-tool maker Festool is rolling across North America with a road show aimed at its contractor and heavy-duty users. A 48-foot trailer is enroute across the continent featuring Festool’s high-performance power tools demonstrated by Festool’s team of experts. It toured Western Canada in the summer with stops in Vancouver, Kelowna, Edmonton, Calgary, and Regina. It’s visiting the Greater Toronto Area, Ottawa, and Montreal this fall. Click here to view a video introduction and get details of the tour.

LAS VEGAS, Nev. — Stanley Black & Decker had a big presence at the latest Orgill Dealer Market, showing off its latest technology. The DeWalt FlexVolt is a new power system with a 60-volt lithium-ion platform that includes a table saw that can take two batteries for 120 volts of power. The battery system is backwards compatible, meaning it can be used with existing 20-volt DeWalt tools.

OTTAWA — The Canadian government may be about to impose a tariff on gypsum wallboard being sold in Canada from the U.S. The tariff was triggered by a complaint filed with Canada Border Services by CertainTeed. That complaint alleged that competitors including CGC, Georgia Pacific Gypsum, and American Gypsum, were “dumping,” or selling wallboard in Western Canada below market prices in the U.S. In an email to HARDLINES, Matthew Walker, general manager of Certainteed Gypsum Canada, points out that the company is the only domestic gypsum board manufacturer in Western Canada, “due to the fact that, unlike other companies, CertainTeed has remained committed to local Canadian manufacturing.” CGC has countered through a letter to customers signed by Don Brandt, VP sales, which says in part, “We are vigorously challenging CertainTeed’s complaint. (We’ll have more on this in next week’s edition. ―Editor)

VANCOUVER — CanWel Building Materials announced that it has agreed in principle to acquire the business of Total Forest Industries, a lumber pressure-treating plant in Hagersville, Ont., from a privately held arm’s-length vendor. The facility will be CanWel’s 10th North American treating plant.

CORRECTION:  In our last issue of the newsletter (August 15, 2016), we stated that Lowe’s Canada is the exclusive retailer for SMEG appliances. This is not in fact the case. We apologize for the error.

ECONOMIC INDICATORS
U.S. building permits for privately owned housing units in July were at a seasonally adjusted annual rate of 1,152,000, representing a 0.1% decline from the previous month but an increase of 0.9% from last July. Housing starts were at a SAAR of 1,211,000. This is 2.1% above June and 5.6% above July 2015. (U.S. Commerce Dept.)

Sales of new single-family houses in the U.S. in July were 654,000 at a seasonally adjusted annual rate (SAAR), up 12.4% from June’s revised rate and up 31.3% from July 2015. (U.S. Commerce Dept.)

OVERHEARD…
“I have always believed that if you make something, you should take responsibility for it.” —Rob Forbes, founder and owner of EAB Tool Company, which offers an exchange program for power tool accessories, which it remanufactures at its facility in Delta, B.C.

NOTED
Wow! We’ve just done the judging for the Outstanding Retailer Awards finalists and the winning stores are truly outstanding! The best fun is calling the winners and telling them the good news. Be sure and join us at the ORA Gala Dinner, October 18, in Niagara Falls, Ont., during the 21st Annual Hardlines Conference.

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