“That which has been believed by everyone, always and everywhere, has every chance of being false.”
—Paul Valéry (French poet, essayist, and philosopher, 1871-1945)

IN THIS ISSUE:

• Lowe’s introduces 2% deduction off invoices, causing concern among vendors

• Amidst takeover by Peavey, TSC’s focus remains on execution

• Ace Canada eliminates spring show, offers online alternatives

• Agencies of today: the front lines in the battle for shelf space

• PLUS: New head of Goodfellow, MAAX sold to American Bath, Henkel partners with Ellsworth Adhesives, Castle adds dealers, Regal ideas wins at IBS, Ace recognized, Newell sells off Rubbermaid unit, U.S. retail inches up, and more!
  
  

Lowe’s introduces 2% deduction off invoices, causing concern among vendors

BOUCHERVILLE, Que. — Lowe’s Canada is looking for ways to save money and invest in the consolidation of its business following the acquisition of RONA last year. But its latest move has sent a chill through the vendor community.

A letter has been sent out to vendors, dated January 13, 2017, addressing the company’s efforts to combine the Lowe’s and RONA businesses, and to enhance its stores to drive sales. It then goes on to ask the vendors themselves to support the costs attached to growing the Canadian business by accepting a 2% discount on all invoices. The discount will be applied to all agreements with both Lowe’s and RONA stores in Canada. Called a “business development rebate,” the new terms will be effective retroactively from January 1.

The letter is signed by Alain Brisebois, EVP operations and central services, and Igor Halencak, VP national procurement and global sourcing. It includes a consent form and a deadline of February 3.

While an exceptional move for this industry, the practice has been used in the grocery sector. And it’s having a wider impact through the industry: other retail groups have noticed this practice and are beginning to question their suppliers on the availability of similar concessions for themselves, putting even further pressure on vendors. (After it took over Safeway in 2013, Sobeys imposed a 1% retroactive “synergy” on its vendors. Competitors lost no time making similar demands.)

In conversation with HARDLINES, Brisebois said he wants to emphasize a partnership approach and believes that vendors will come on board with the strategy when they meet face-to-face with his team to understand the upsides.

“It will bring growth and require partnership with the vendors,” Brisebois notes. He adds that Lowe’s will be “a good investment” for this industry, and the support of the vendors in addition to Lowe’s own investments will translate into growth for both parties. “These top-line initiatives include store upgrades and conversions, better merchandising, and investment in our staff training for the Canadian market.”

A spokesperson for Lowe’s Canada clarified further with this statement emphasizing that the funds will not go to Lowe’s bottom line, but aim to boost top-line sales and benefit both the retailer and its vendors. “Lowe’s Canada intends to make important investments over the next few years, such as an improved IT infrastructure, enhanced omni-channel capabilities, store conversions, store renovations, and most of all investment in our people … We are looking to our business partners to help support this above-stated transformation and participate with us as we grow and transform the Canadian home improvement landscape.”

Amidst takeover by Peavey, TSC’s focus remains on execution

LONDON, Ont. — Darryl Jenkins is pretty excited about his business. He’s the head of TSC Stores, a chain of 51 farm and hardware outlets stretched out across Ontario, and into Manitoba, which focus on rural, pet, and agrarian markets. In July 2016, Peavey Industries, which owns 36 Peavey Mart stores in Western Canada, announced it had taken a stake in TSC. The investment in TSC includes a transition period that will allow Peavey to acquire complete ownership in TSC over the next couple of years.

After some initial distractions, typical of any takeover, Jenkins is now happy to be able to get back to what he says is the main business: taking care of TSC’s core customers.

On a tour of its flagship store, a few minutes from TSC’s head office in London’s east end, he walks proudly through the aisles, showing off the company’s retail strengths. Right at the front of the store, just to the right of the checkouts, is a workwear section—a very large workwear section given the overall size of the store. “We want to own the workwear business,” Jenkins says, pointing out the array of brands that get strong billing here. They include Carhartt, Dickies, Kodiak, and TSC’s private brand name, Ox Gear. He notes that other companies have pulled back from this category, opening up an opportunity for TSC. In fact, the company has just added a more popular—and less-farm oriented—line, Levi’s.

The workwear ties in well with another strength, hunting and fishing.

Meanwhile, TSC has revamped other areas, including a discount section at the front of the store on the left side of the checkouts. Considered a poor use of prime retail real estate, the area was changed to seasonal, with large outdoor power equipment now featured there, including snow blowers for winter time.

Another strong category for TSC is pet food and pet supplies. Jenkins says the company’s biggest supplier is pet food maker Purina. Pet sales, especially food and care products, are repeat sales that bring customers back every month, he says.

The changes to the floor plan and merchandising have been under way for well over a year, as the company cleaned up its stores and began aligning its practices to prepare for the takeover by Peavey.

Ace Canada eliminates spring show, offers online alternatives

WINNIPEG — Ace Canada has cancelled its Spring Buying Show in Winnipeg this year. Instead, the hardware wholesaler, which is a division of Lowe’s Canada, will offer dealers the opportunity to make their bookings online, including special promotions, pallet offers, vendor specials, and extended dating for their fall and winter seasonal needs.

The show was originally scheduled for April 22 to 24 at the Winnipeg RBC Convention Centre.

The move is aimed at saving time and travel costs for its independent customers. It also reflects some of the changes moving through all aspects of Lowe’s Canadian business since it took over RONA last year. Ace Canada was part of the RONA deal, and the Winnipeg warehouse supplies independents across the country, though most heavily focused on Western Canada. Formerly TruServ Canada, the business has hosted a fall and spring market for those dealers, who operate mainly under the Ace and V&S banners, as well as a growing number of RONA dealers, for many years.

“Dealers have told us that they would save money by booking their products online. Vendors have expressed interest in attending only one show per year,” said Bill Morrison, divisional vice president of Ace Canada. The online option has been available to them in the past, in addition to the physical shows.

Agencies of today: the front lines in the battle for shelf space

SPECIAL REPORT — In the halcyon days of big box retail, agencies did millions of dollars of business each year simply servicing the Home Depots, Lowe’s, RONAs, and Canadian Tires. But when those companies decided one after another to move that role in-house, a number of Canadian agencies went under. And the ones that were left had to work hard to prove their worth.

Agents, and the manufacturers that employ them, say the most important factor in proving their worth is providing an added value. Whether through hosting hands-on product knowledge events and “lunch-and-learns,” or advocating for the brand in-store, there’s much more to the job than merchandising.

Paul Crawford, president of King Marketing, says there are a number of reasons why manufacturers seek out agents: economics, geography, customer intimacy, and the need for “feet on the street.” With a new product, or prospective new retailers, some manufacturers might not have the money, relationships, or employees to cover Canada’s spread-out hardware stores.

But for consumers to be able to understand the products, retail associates have to be able to explain them. And that takes product knowledge. Krista Hamilton, from McDonald Sales, says there’s a direct correlation between knowledge and higher sales. “Product knowledge is critical at the store level,” says Hamilton. “You can sell a product to the warehouse, but if you don’t have anyone actually at the ground level, pushing it through at the store level, the sales will remain very low.”

(This article is excerpted from the latest issue of our sister publication, Hardlines Home Improvement Quarterly magazine, which mailed earlier this month to more than 11,000 dealers across Canada. For your own copy, click here! ―Editor)

DID YOU KNOW…?

... that the Hardlines Conference will return to Niagara Falls, Ont., this year? That’s right, we’ve booked you another fabulous view of the Falls while you take part in the country’s only national summit for the retail home improvement industry. And we’ve already confirmed some amazing speakers, including one of the largest independent home improvement chains in the country and a North American leader in retail sales trends. Stay tuned! Mark your calendars now for November 14 to 15, 2017. See you in Niagara Falls!

RETAILER NEWS

MISSISSAUGA, Ont. ― Castle Building Centres has announced the signing of two new members. Florence Mill Inc. is a family-owned business in Florence, in Southwestern Ontario, that was founded back in the early 1970s. Over time, the business evolved into a full-service lumber, building materials, and hardware store now owned and operated by Jeff and Sue Rickman, along with their son Chris. The other signup is another member in Quebec: Matériaux Direct in La Pocatière, in the Lower Saint Lawrence region north of Quebec City. The store was established by Dany Levesque and Maxime Bossinotte, who identified a growing demand for LBM by the contractors in their market. They plan to hold an official grand opening for the store in early spring.

OAK BROOK, Ill. — Ace Hardware has been ranked number seven, as well as first place in its category, in Entrepreneur magazine’s Franchise 500 report. Recognized by entrepreneurs and franchisors as a top competitive tool of measurement, the report recognizes Ace for exceptional performance in areas including financial strength and stability, growth rate, and brand power.

SUPPLIER NEWS
MONTREAL – Bath maker MAAX is being sold off to the American Bath Group by owner Brookfield Asset Management. The value of the sale was not disclosed. MAAX has four plants in Canada, three of them in Quebec, and four more in the U.S. Founded 47 years ago in Quebec, the company says it will keeps its production facilities in place, working independently from Tennessee-based American Bath. It will continue to be headed by CEO Mark Gold.

MISSISSAUGA, Ont. — Ellsworth Adhesives has been designated an authorized distributor of Henkel’s surface treatments and structural adhesives for the aerospace industry in Canada. Germantown, Wis.-based Ellsworth has a warehouse in Stoney Creek, Ont. Roger Lee, Ellsworth’s North American VP and general manager, praised the “strong global partnership between Henkel and Ellsworth Adhesives.”

ATLANTA — Newell Brands announced last week an agreement to sell its Rubbermaid consumer storage totes business, which represents about $70 million in annual sales, to plastics firm United Solutions. While financial terms of the deal were not disclosed, it includes a five-year licence for the Rubbermaid name. At the same time, Newell is divesting its matches, logs, toothpick, and laundry businesses.

DELTA, B.C. — Regal ideas, manufacturer of aluminum railing systems, has won the Best of IBS Award for Most Innovative Building Product at this year’s NAHB International Builders Show held in Orlando, Fla. Regal ideas’ LED lighting and railing systems, including Crystal Rail, were among more than 400 entries in nine categories were considered for the awards. In addition, Regal’s Quick Step Stair System was selected as a finalist for Best Outdoor Living Product.

PEOPLE ON THE MOVE
Goodfellow Inc., the lumber and hardwood flooring distributor, has named Patrick Goodfellow to the position of president and CEO. He spent the last 10 years at the company in the role of vice-president, hardwood. Goodfellow replaces Denis Fraser, who is stepping down, effective immediately. Fraser had held the CEO position for two years after taking over from Michael Goodfellow.

Former Canadian Tire CEO and President Michael Medline has been named to the same position at Empire Co., which owns the Sobeys grocery chain. Medline, who left Canadian Tire suddenly in July, will take up his new position immediately, working during the transition with François Vimard, who has been named executive vice-president.

ECONOMIC INDICATORS
U.S. retail sales made a slight gain in December over the previous month, as consumers cautiously increased spending on holiday gifts and automobiles. Sales overall increased 0.6%, but excluding a 2.4% hike in auto sales and a 2% increase in spending at the gas pump, retail sales were flat. Online retailers, however, stood out as a growth segment, increasing by 1.3%, while department stores lost 0.6% of sales compared with November. (U.S. Commerce Dept.)

NOTED
Industry veteran Shawn Hamill has made a big career change. He and his wife Leanne have bought a property in Roatán, Honduras, which they’ve turned into an inn. Over Christmas, the facility welcomed its first guests, offering three suites and a standard room, all catering to the upscale traveller who seeks an alternative to all-inclusive, big resort travel. Shawn is offering a 10% discount to HARDLINES subscribers throughout 2017. Check out their website is www.junglereefinn.com or look them up on Facebook at www.facebook.com/JungleReefInn. You can also contact Shawn directly: shamill@slhsales.ca; 1-519-221-3230)

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