December 5, 2016 Volume xxii, #46
“Knowledge speaks, but wisdom listens.”
—James Marshall “Jimi” Hendrix (American rock guitarist, singer, and songwriter, 1942-1970)
HOLIDAY PUBLISHING SCHEDULE: We take a bit of a break during the holidays, so there will be no weekly edition of HARDLINES on December 12 or 26. The World Headquarters will remain open until December 22, however, as we put the finishing touches on the next issue of our sister publication, Hardlines Home Improvement Quarterly magazine, which gets mailed to more than 11,000 dealers across Canada. Our regular weekly schedule will resume January 2.
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Home Depot and Lowe’s count on contractor sales
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LBM sales stay strong amidst overall sluggish retail scene
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Ikea Canada cracks $2 billion in sales on double-digit growth
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Kent buys up Central Home Improvements
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PLUS: Lowe’s latest opens in Toronto, Chemong Home Hardware expansion, Home Depot delivery service, RCR reboots Climaloc brand, CHHMA Industry Cocktail, softwood lumber dispute, Pollock at Mitten/Ply Gem, Di Bratto joins Rust-Oleum, True Value in Puerto Rico, and more!
Home Depot and Lowe’s count on contractor sales
SPECIAL REPORT — While Home Depot and Lowe’s enjoyed strong third-quarter sales growth, both big box retailers acknowledge how important the contractor customer has been to that growth.
Home Depot reported positive comps across all merchandising departments during the latest quarter, which ended October 30. While both pro and retail customers drove that growth, the company admits that pro sales grew faster than DIY sales in the quarter.
“Our pro business continues to be driven by a strong offering of brands that pros demand, [and] consistent product innovation, as well as enhanced delivery and credit offerings to help them more efficiently manage their business,” said Home Depot Chairman, CEO, and President Craig Menear in his Q3 call to analysts.
Likewise, Lowe’s is investing heavily to woo contractors and trades. Expecting that “housing will continue to be a bright spot in the economy” for its U.S. business, Lowe’s CEO and chairman Robert Niblock said he expects the company’s contractor and pro business to keep growing. “Pro continues to outperform and we remain focused on deepening our relationship with this important customer,” he noted.
Like Home Depot, Lowe’s sees its focus on proprietary brands as an important driver of pro sales. Those brands include Marshalltown, which Niblock considers “a trusted pro brand,” as well as exclusive brands such as Hitachi and Bostitch pneumatic tools, Vaughan hammers, and its own private-label line of Kobalt tools.
At Home Depot, pro sales are driving big-ticket sales as well. Sales over $900 were the fastest growing for the company in the last quarter, most of that attributable to contractors. These large basket sales, which account for 20% of Home Depot’s overall turnover, were up 11.3% in the quarter. Other factors affecting big sales are heavy appliance sales and Home Depot’s services business. Other strong categories were commercial and industrial lighting, fencing, plywood, pressure-treated decking, and interior doors.
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LBM sales stay strong amidst overall sluggish retail scene
OTTAWA — Total Canadian retail sales were up 3.0% in September 2016 versus a year ago, according to the latest real, not seasonally adjusted, numbers from Statistics Canada. While some press releases saw this as an improvement, according to retail analyst Ed Strapagiel, “it’s really not worth getting too excited about.”
He points out that 2016’s quarterly year-over-year sales gains: total retail in Q1 was up 5.6% and Q2 was up 3.8%, but the third quarter increased by only 2.0%. And, he adds, the trend lines don’t look good for Q4.
However, the building material and garden equipment-supplies sub-sector continues to perform well, remaining steady throughout 2016. Sales were up 7.0% for the latest quarter and up 7.2% year over year.
Strapagiel’s downbeat outlook for the fourth quarter should not impact the LBM side of this industry, as the holiday season is not necessarily a big driver of renovation and home improvement sales. That being said, Q4 tends to be slower historically for most dealers on the LBM side, while hardware and home centre dealers would look forward to an uptick, especially in housewares and power tools.
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Ikea Canada cracks $2 billion in sales on double-digit growth
BURLINGTON, Ont. — Ikea Canada announced total sales of $2.05 billion in Canada for the financial year ending August 31, 2016, an increase of 14.2% on the previous year, marking its second year of double-digit growth.
The company claims it increased its market share in the furniture and home furnishings category by 1.0% to 9.4% in fiscal 2016, giving it the number-one share position in the that sector for the third consecutive year. Store sales grew by 12.7% over the past year, while online sales soared by 41.3%.
Acting President David McCabe attributes the success to staying focused on its customers and “really understanding how people live here in Canada and presenting our unique product range in a relevant and inspiring way.” Ikea has also been working to make the brand more accessible and available, he says, “and [we] are pleased that in the last year over 115 million customers visited either our bricks-and-mortar units or online platforms.”
In fiscal 2016, Ikea Canada kicked off a coast-to-coast expansion plan to double the number of stores by 2025. It announced a new store in Halifax, set to open in fall 2017. It also opened six pick-up and order points in new markets, and introduced its first “Collection Point” in Halifax, a pick-up station for online purchases operated by a third-party service provider. And investments were made into its e-commerce platforms in an attempt to provide a more seamless shopping experience across all channels.
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Kent buys up Central Home Improvements
ST. JOHN — Central Home Improvements, a fixture in Nova Scotia since 1976, will become part of the Kent Building Supplies group of stores on January 1, according to founder Steve Smith. Noting that the company had reached “a crossroads,” Smith said in an email that “demographics are changing and with [that] has come greater pressures to invest heavily in infrastructure and technology in order to grow and expand.”
He was persuaded to sell to Kent, a division of J.D. Irving, in part because of the New Brunswick-based conglomerate’s roots and track record in the Maritimes.
The business, which is wholly owned by Smith, is part of the Central Group of Companies, along with Atlantic Windows, Central Truss, and a number of other companies related to residential and commercial real estate and land development.
Central has seven Nova Scotia stores, primarily in Northeastern Nova Scotia, with one location in Windsor. Stores range from big boxes in Stellarton, Antigonish, and Sydney; as well as small and mid-sized stores in Guysborough, Inverness, Windsor, and Port Hawkesbury. They will be added to Kent’s existing network of 43 stores throughout Atlantic Canada. The new owner has said Central’s current employees will keep their jobs.
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DID YOU KNOW…?
... that you can still get our two top reports, the Retail Report and Market Share Report, for a special combined price that will save you hundreds of dollars? But time is running out for this special offer. These Reports represent the most comprehensive analysis of retail home improvement in Canada. Sales, forecasts, market shares, strategies of the top players, and more. Click here now to take advantage of this special offer before it ends!
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RETAILER NEWS
TORONTO — Lowe’s held the grand opening for its new North York store in Centerpoint Mall on November 24. Jim Caldwell, Executive VP for Big Box Retail, joined employees for an official board cutting and community grant donation presentation to North York Women’s Shelter. The new store represents an approximate local investment of more than $23 million and will create 120 jobs, with an additional 30 to 40 seasonal positions. The two-storey site, a former Target location, offers some 40,000 SKUs within a retail space of approximately 67,600 square feet.
ST. JACOBS, Ont. — Chemong Home Hardware Building Centre in Selwyn, Ont., is in the process of adding an additional 14,000 square feet to its retail building, bringing the total square footage of the building to 39,000 square feet. Work to expand the store began three months ago and is expected to last until the spring of 2017. The store is open for business during the renovation and plans for a Grand Reopening Celebration are already under way.
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CHICAGO — The True Value Company has announced Hardware Group as its newest member. With 23 stores in Puerto Rico and growing, the partnership will expand True Value's presence and capabilities in the Americas. Founded in 2011, Hardware Group is an association of 15 member-owners with stores throughout Puerto Rico. Retail locations vary in size from convenience formats to a larger “mega” layout, with many Hardware Group stores serving the convenience hardware customer and DIYer.
ATLANTA — Home Depot has been rolling out a new delivery service in recent months. It’s now in about 1,600 stores and, according to the company, the program has resulted in double-digit growth in deliveries. About half of that growth is believed to be from incremental sales.
SUPPLIER NEWS
BOUCHERVILLE, Que. — RCR International has launched a brand new Climaloc Solutions website. The online strategy reflects a larger initiative by RCR, which manufactures and distributes more than 3,000 products, to revitalize the Climaloc brand over the past year. Starting with its merchandising strategy, RCR redesigned Climaloc’s packaging and in-store displays to make product selection easier for do-it-yourselfers. RCR boasts that the new website has a “clean and uncluttered look” and provides lots of tips, tricks, and how-to videos.
MONTREAL — The Canadian Hardware and Housewares Manufacturers Association held its annual Industry Cocktail event at the Casino de Montréal recently, welcoming more than 80 members and guests. Attendees mingled over a lively evening of music and food. The casino’s Bar Dame de Coeur was closed to the public in order to allow CHHMA member vendors and agents welcome representatives from BMR, AQMAT, and TIMBER MART, among others.
EDMONTON — The Alberta Softwood Lumber Trade Council has hit back at a petition filed by the U.S. Lumber Coalition that could open the door to new litigation between the two countries. The petition asks the U.S. Commerce Department to investigate the possibility of imposing duties on Canadian softwood lumber. It has been expected since a one-year moratorium on further litigation expired last month. “The U.S. lumber lobby’s arguments are not supported by facts, and are similar to claims that were made in previous rounds of trade litigation and rejected by independent panels,” said Council co-chair David Anderson in a statement. “The position of our council and industry is that Canadian lumber manufacture is not subsidized and does not cause injury to the American industry, and we are confident that position will again prevail.”
PEOPLE ON THE MOVE
Darryl Pollock is now product manager at Mitten/Ply Gem Building Products. He comes over from CanWel Building Materials, where he had worked for the past 15 years, most recently as national inventory co-ordinator. He reports to John Vukanovich, vice president, marketing at Ply Gem Canada.
Isabella Di Bratto has joined Rust-Oleum Consumer Brands Canada as brand manager reporting to Lawrence Genga, senior director, marketing and R&D. Di Bratto was most recently brand manager with Frank T. Ross-Weldbond. The appointment is effective today.
ECONOMIC INDICATORS
The average equity Canadian homeowners hold in their property increased slightly in the third quarter to 34.8% from 34.4% in the previous quarter. (CMHC)
New U.S. residential sales declined unexpectedly in October, with sales of new single-family dwellings falling 1.9% to a seasonally adjusted annual rate of 563,000 units. The September rate, originally reported as 593,000, was revised to 574,000 units. (U.S. Census Bureau)
OVERHEARD…
“If K-Mart and True Value Hardware had a child and [it] was born north of the border... it could be Canadian Tire.
—Jocelyn L., a shopper from San Francisco, in an online review of her first visit to a Canadian Tire store, during a recent visit to Toronto.
OUT AND ABOUT
Publisher Beverly Allen will be in Chicago next week for the NRHA's State of Independents Conference. Be sure to catch her presentation if you're in town!