October 31, 2016 Volume xxii, #41
“They that are born on Halloween shall see more than other folk..”
—Anonymous
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Industry leaders anticipate growth, with challenges, ahead
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Exclusive: TIMBER MART’s Bernie Owens talks to CHHMA members
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Female panellists share insights at Hardlines Conference
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LBM/L&G sector bucks retail trend with strong sales
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PLUS: Home Depot’s top vendors, Home Hardware brand recognized, expansion at Coast, Home Hardware to drop credit card provider, Corian pop-up studio, U.S. housing, 3M results, Sherwin Williams revises forecasts and more!
Industry leaders anticipate growth, with challenges, ahead
SPECIAL REPORT — A survey of attitudes of home improvement executives indicates that growth continues in the industry, despite macro challenges to the economy. One thing they all agreed on was that low energy prices have been the industry’s biggest challenge this year so far.
The largest concern retailers collectively listed was the economic conditions in Alberta and Saskatchewan. Steve Buckle, president of Sexton Group Ltd., says those two provinces represent more than 40% of his buying group’s purchasing volume in any given year. “That’s a big part of our picture, and it’s struggling greatly,” says Buckle. Buckle says one of the toughest things for his members in Ontario and British Columbia, where they are actually experiencing a good amount of growth, is diminishing margins.
“The margin that our members are seeing continues to be challenged even in very good, strong marketplaces,” he says. “There’s just more competition out there and often the contracting firms and the home building firms are getting bigger and stronger and more demanding.”
Over at Home Hardware, Terry Davis, CEO of Home Hardware, echoes Buckle’s comments on the market in the Prairies. And he adds that other provinces, such as Newfoundland and Labrador, have also being impacted by the downturn—and it’s not necessarily just in energy-reliant businesses.
Tony Steier is the director of home and building supplies for Federated Co-operatives Ltd. (FCL). He notes that warm temperatures and lots of rain have only added to those economic concerns in the West. “The weather has been so unusual, it has affected business differently than in the past,” says Steier. In the face of these difficulties, shoppers are much more reticent to spend on items they don’t consider to be necessities.
Pascal Houle, CEO of Quebec-based BMR, echoes that sentiment. He adds that 2016 has been a year of consolidation, with the big news being the takeover of RONA by Lowe’s. The increasingly smaller selection of retailers has created “its own challenges in order to remain competitive.”
(This is an excerpt of the cover story in the latest issue of our sister publication, Hardlines Home Improvement Quarterly magazine. It’s in the mail now to 11,000-plus dealers and store managers across Canada. Click here to learn more about HHIQ!)
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Exclusive: TIMBER MART’s Bernie Owens talks to CHHMA members
LONGUEUIL, Que. — The Canadian Hardware & Housewares Manufacturers Association welcomed TIMBER MART President Bernie Owens as guest speaker at its fall breakfast seminar last week.
Addressing members at the Holiday Inn Montreal-Longueuil, Owens stressed the importance of independent dealers rallying under a flexible buying group to compete in a market that increasingly favours big boxes. He began by noting that he has experience from the vendor’s perspective. “As much as I’m on the buying group side of the fence,” he told the gathering, “for 21 years I was on your side of the fence,” adding that he can relate to the challenges vendors face.
Owens gave an overview of the evolution of the group since he took the helm, recounting how a formerly loose cluster of regional banners learned to start “pulling in the same direction.” At the same time, he took pains to make it clear that in centralizing the direction of the company, its leadership has not sacrificed its flexibility in responding to diverse regional and local needs. Noting that member stores represent an array of formats and specialties—from gypsum dealers to lumber yards to garden centres—he acknowledged that there is no one-size-fits-all approach, and emphasized that TIMBER MART has “no cookie-cutter format to impose.”
Pointing to data from HARDLINES’ own Retail Report and a Washington Times report showing the decline in market share among independent hardware dealers in the U.S., Owens said he sees this trend extending to Canada. Membership in a buying group like TIMBER MART offers independent stores the kind of clout they need to compete with larger players, while respecting their independence and offering personalized support to stores.
He listed several ways the group keeps costs down for members—such as opting for a simple banner identity over a more expensive brand development, eliminating spot programs, and providing for pool buying and flexible shipping options. For example, he suggested, a local dealer may choose to serve as a pickup point for one or more neighbouring stores on a group order.
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Female panellists share insights at Hardlines Conference
NIAGARA FALLS, Ont. — The retail home improvement industry has long been a male-dominated industry. And while that is changing, is it changing fast enough? This question was examined by a panel of industry leaders—all women—at the 21st Annual Hardlines Conference.
The event, which gathered 165 people at the Sheraton on the Falls hotel in Niagara Falls earlier this month, was a forum for the latest ideas and intelligence on retail in general, and the direction of this sector in particular. The panel consisted of Sherri Amos, Director, Dealer Support, Home Hardware Stores Ltd.; Sara Clarkson, President, Storesupport Canada; Christine Joannou, Key Account Manger Retail Canada, MAAX Bath Inc.; and Jillian Sexton, COO of Hector Building Supplies, a TIMBER MART dealer in Pictou County, N.S. The panel was moderated by Beverly Allen, Publisher of Hardlines Inc.
Allen, who joined Hardlines almost 20 years ago when women were in a distinct minority, introduced the panel by pointing out that times are indeed changing. Sexton from TIMBER MART reinforced that notion by saying that she prefers not to have to evaluate employees or customers on the basis of their gender. “I prefer to be gender blind now,” she emphasized.
Joannou of MAAX observed that home improvement has been rounded out over the years by the rise of housewares and décor, categories which traditionally cater to women. Allen reminded the audience of a survey conducted by ACNielsen for Hardlines in the early 1980s that determined that more than 80% of buying decisions about home improvements and renovations involve the woman in a household.
Retailers have to change how they cater to women, said Clarkson of Storesupport. Where she once loved to wander through a store, today her shopping tactics are much more targeted. “I am time-pressed, so I plan ahead before I step into a store,” she added. And she’s not the only one. Home Hardware’s Amos, a mother of four, said she always researches her purchases online so as not to waste any time in the store.
The service aspect of home improvement stores is a large part of helping customers successfully save time, Sexton added.
All the women on the panel made it clear that they don’t need to be treated differently from men. Yet opportunities abound for dealers who are imaginative, said Amos. Events in-store such as ladies’ nights can work well, if done appropriately.
For the future, all the panellists agreed that women need to be encouraged to build careers in this industry. Sexton summed it up when she said she looked forward to a future “where it’s an industry where everyone works in it and gender is not an issue.”
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LBM/L&G sector bucks retail trend with strong sales
TORONTO — Last week’s release of retail sales by Statistics Canada was full of mixed messages. For August, retail sales edged down 0.1% to $44.0 billion from the previous month, with lower sales at motor vehicle and parts dealers and general merchandise stores being the greatest contributors to the decline.
According to retail expert Ed Strapagiel, the bigger picture on retail in Canada is brighter. Total actual (not seasonally adjusted) retail sales were up 2.6% in August compared with a year ago. However, this rather modest gain was still an improvement compared to the prior month of July, he points out.
Retail overall is up 3.7% year to date. “That’s strong performance, especially considering that the gain for all of 2015 was just 1.7%,” Strapagiel says. “On the other hand, most of 2016’s gain so far happened in the first few months of the year.”
There is even more good news here for this industry: year-over-year sales by building material and garden equipment and supplies dealers were up 10.1%. In actual terms (not seasonally adjusted), sales were up 7.2% year over year, and up 7.3% year to date.
Strapagiel says this sector is not typical of retail in general, or where he sees retail going in the near term. “Home improvement and lawn and garden seems to be on a planet by itself,” he notes. “It’s bucking the trend.”
He notes that both housing and automotive are showing strength, “because those are not really bought. They’re financed. And with low interest rates, that’s pretty darned appealing.”
Strapagiel believes retail is at the top of a 12-month cycle and expects it to soften in coming months, citing factors such as lack of growth in the GDP, employment numbers, and even uncertainty around the upcoming election in the U.S. He anticipates that retail overall may grow by only 2.8% in 2016. “In short, Canadian retail is slowing down going into the final third of 2016 and the all-important holiday sales season.”
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RETAILER NEWS
LONDON, Ont. ― Home Hardware Stores Ltd. is ending its agreement with VersaBank relating to the retail co-op’s private-label credit card, effective December 31, 2016. VersaBank, formerly Pacific & Western Bank of Canada, says it will continue to issue and service all aspects of the Home credit card until the end of the year and will continue to service the wind-down and collection of receivables beyond that date. VersaBank is a technology-based, digital Canadian chartered bank.
ATLANTA ― Home Depot recently presented its awards to select vendors in a range of categories. Pergo Outlast+ won the retailer's 2016 Innovation Award. (Runner-up honours were awarded to Milwaukee Tools for its Milwaukee M18 Fuel with One-Key, which allows users to connect to the tool with a smartphone; and Heath Zenith lighting was singled out for its Defiant LED Blade motion-activated security lights.) Trex Enhance Composite Decking, made from 95% recycled materials, won Environmental Partner of the Year and PPG won Marketing Innovation for its Glidden Diamond Launch campaign. In addition, Home Depot recognized the following products: Ryobi Ultra Quiet Garage Door Opener; Mohawk Industries Lifeproof Carpet; Feit LED Edge-Lit Flat Panel Lighting; Masterbrand’s Thomasville Studio 1904 cabinets; the Nexgrill Evolution Plus 5-Burner Gas Grill with Side Burner; Apex Tool Group Husky 100 (Black) Mechanics Hand Tools; and Freud’s Diablo Carbide-Tipped Hole Saw.
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ST. JACOBS, Ont. — Home Hardware ranks third among Canada’s top 10 most reputable companies in corporate social responsibility, according to a recent study by the Reputation Institute. The 2016 CSR RepTrak surveyed 300 Canadian companies and collected more than 40,000 ratings to compile the top 10 list, which outlines those companies that are highly regarded by customers for exhibiting the following attributes: being environmentally friendly, behaving ethically, having a positive societal influence, and operating with openness and transparency.
SUPPLIER NEWS
TOLEDO, Ohio — Owens Corning has reported its Q3 results at $1.09, which is 10 cents better than analysts’ estimates for the company. Revenue for the quarter came in at $1.52 billion versus the consensus estimate of $1.51 billion. According to the company, its roofing business had a strong quarter with favourable market conditions, great margin performance, and revenue growth. When it comes to growth for the rest of the year, the company expects an environment consistent with consensus expectations for U.S. housing starts and moderate global growth.
ST. PAUL, Minn. — 3M Co. scaled back its revenue and earnings for the year for a second time in the face of stagnation in emerging markets, including China. The maker of Scotch tape and Post-It notes anticipates flat revenues for the year, where it has previously foreseen a possible increase of 1%. The strength of the U.S. dollar also negatively impacted the company, which relies on international sales for some two-thirds of its revenues. Profits for the third quarter rose to $1.33 billion, or $2.15 per share, from $1.30 billion, or $2.05 per share, the same time last year.
TORONTO — DuPont Corian, a counter material used by architects and designers around the globe, is being featured in a pop-up design studio in Toronto’s Design Exchange until December 15. The oversized displays in the studio space are inspired by a child’s world and experiences children gain through play, “where everything is big and nothing is impossible,” according to a release. Visitors can explore the colours, shapes, and textures of Corian, as well as a range of fabrication techniques such as illumination, thermoforming, etching, and wireless phone charging.
CLEVELAND — The Sherwin-Williams Co. again trimmed its earnings guidance as it posted Q3 earnings well under estimates. The paint manufacturer, which recently acquired rival Valspar, now expects yearly earnings in the range of $11.30 to $11.40 per share. It had already lowered the estimate to between $11.65 and $11.85 per share. For the third quarter, EPS were just $4.08, while the company had expected $4.10 to $4.30. A 4% revenue increase to $3.28 billion was in line with Thomson Reuters estimates. Valspar agreed in June to its acquisition by Sherwin-Williams, the latter’s largest ever at a cost of $9 billion.
PEOPLE ON THE MOVE
Coast Distributors has announced the addition of Charles Cho to its outside sales force. Born and raised in British Columbia, Cho started his retail career in high school when his parents moved to Mission, B.C., where they owned a grocery store. From there, he worked at Safeway’s distribution centre for 15 years in Burnaby, B.C., then switching to the hardlines field, where he cut his teeth with King Marketing and RDTS.
ECONOMIC INDICATORS
Sales of new single-family houses in the U.S. in September were 593,000 at a seasonally adjusted annual rate, up 3.1% from August and up a healthy 29.8% from September 2015. (U.S. Commerce Dept.)
OVERHEARD…
“It looks like it'll be more of a ho-hum rather than a ho-ho Christmas for many retailers.”
―Ed Strapagiel, a Toronto-based retail consultant, offers a less-than-enthusiastic outlook for retail overall for the rest of the year, despite a strong showing by the LBM industry.
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