July 10, 2017 Volume xxiii, #28

“You may not control all the events that happen to you, but you can decide not to be reduced by them.”

—Maya Angelou (American poet, essayist, and civil rights activist, 1928-2014)

IN THIS ISSUE:

• The big get bigger: Industry’s Top Four keep consolidating the market

• Jim Caldwell departs Lowe’s Canada, Reno-Depot’s Guy Beaumier steps in

• Cologne’s hardware and garden trade fairs: a great opportunity for North Americans

• Canadian Tire expands customer product testing to enhance online reviews

• PLUS: Lowe’s Canada joins with Habitat, RONA and Home Hardware among most trusted brands, Kent named a “champion”, Sears launches appliance and mattress store, Amazon Prime popular in Canada, CGC celebrates 100th anniversary of Sheetrock, building permits hit record high, Costco sales, Jacuzzi buys Canadian company, and more!
  
  

The big get bigger: Industry’s Top Four keep consolidating the market

WORLD HEADQUARTERS, Toronto ― Canada’s retail home improvement market grew at a healthy pace in 2016, up 2.9% over the previous year, thanks to Canada’s red hot housing market, low interest rates, and ageing housing stock—all factors driving renovation sales. And that momentum is forecast to continue in 2017 and 2018, according to the latest Hardlines Retail Report.

However, while the future looks stable for this industry throughout most of the country, all is not entirely rosy for Canada’s hardware stores and building supply dealers.

Tough competition that includes some of the country’s largest retailers, including Lowe’s and Home Depot, as well as the challenge of selling products that need careful explanation about how to use or install them, give the retail home improvement industry challenges and opportunities all its own.
 
The toughest competition from within is coming from the industry’s largest players. According to the Hardlines Retail Report, Home Depot Canada, which is number one with sales of almost $8 billion, must contend with its biggest rival from south of the border, Lowe’s, which purchased RONA inc. last year and has been expanding aggressively.

In fact, thanks to this growth by Lowe’s Canada, along with solid same-store sales gains by Home Depot Canada, the market share of these big box retailers is now at a record high, accounting for more than one-quarter of all sales in the sector.

Along with Home Depot Canada and Lowe’s Canada, two other retail groups, Home Hardware Stores Ltd. and Canadian Tire Retail, make up well over half of all sales by hardware stores and building supply dealers in Canada. These “Top Four” retailers collectively grew their sales at a rate that was almost double the industry average last year, driving more consolidation at the top and ensuring that the big players in this industry continued to get bigger in 2016.

(With 200 PowerPoint slides, dozens of charts and graphs, and in-depth analysis available only from HARDLINES, this study provides full details of the size and growth of the Canadian retail home improvement market. Click here for more info and to order this amazing report now!)

Jim Caldwell departs Lowe’s Canada, Reno-Depot’s Guy Beaumier steps in

BOUCHERVILLE, Que. ― Jim Caldwell, executive vice president of the Lowe’s big box business for Lowe’s Canada, has left the company. In his place, Lowe’s Canada has appointed Guy Beaumier, executive vice-president for the retailer’s Reno-Depot and Pro businesses, as interim head of the Lowe’s banner.

A spokesperson for Lowe’s Canada, Valérie Gonzalo, stressed the contribution Caldwell made to the company during his tenure there. A big part of his mandate was the conversion of certain RONA big box stores to the Lowe’s banner. The first such opening was the Namao store in Edmonton. “We’re very happy with the results there since it opened,” Gonzalo said. “It’s one of his latest achievements.”
 
Caldwell had been hired almost exactly a year ago, on June 20, 2016. Before joining Lowe’s Canada, he was president of the Brick Group, Canada’s largest furniture retailer. Prior to the Brick, Caldwell had spent 27 years at Wal-Mart in Canada.

Stepping in to replace Caldwell, Beaumier’s expertise is not limited to the RONA side of the business. He has also served as VP, operations at Lowe’s Canada. His background before that was from the grocery side, with stints at both Loblaw and Sobeys. According to the email from Lowe’s, he’s “the right candidate to assume this interim role as we enter a new phase in growing our big box segment.”

The statement went on to reaffirm Lowe’s Canada’s commitment to its other retail formats. “Lowe’s Canada continues to be firmly committed to its multi-business unit and banner strategy in Canada. We are convinced that it provides us with a unique competitive advantage, allowing us to deliver on our long-range growth plan and realize our mission to become Canada’s number-one choice in home improvement.”

Cologne’s hardware and garden trade fairs: a great opportunity for North Americans

SPECIAL REPORT — For vendors and retailers seeking new products and new merchandising ideas, it’s hard to beat the energy and diversity of the industry trade fairs mounted by Koelnmesse. That organization owns and operates two significant shows for the home improvement industry: spoga+gafa, the lawn and garden show September 3 to 5; and the International Hardware Fair, being held next spring from March 4 to 7.

While these shows attract people from throughout Europe and Asia (spoga+gafa will host 2,039 exhibitors and 39,000 delegates from 59 countries), North Americans are less likely to make the trek across the pond to attend. That’s a shame, because these events are true forums for innovation.

For example, at the lawn and garden show, you can expect the largest display of barbecues in the world, says Stefan Lohrberg, the new project manager for spoga+gafa. Weber alone takes up almost 1,100 square feet of space. An entire hall at the fair is devoted to outdoor furniture, and another is strictly for barbecue accessories—yes, an entire hall for barbecue accessories. Other categories highlighted include sports and games, camping and leisure, and live goods.

“It’s one of our fastest growing shows,” he adds. And it attracts big players from all over the world, including Walmart, OBI, and Costco.

Innovation is also the watchword at the International Hardware Fair. Next year’s show will feature lots of content and learning, much of it generated through a stage in the middle of the show floor. Speakers will feature leading e-commerce sellers including Google, Ali Baba, eBay, Google, and Amazon.

Canadian Tire expands customer product testing to enhance online reviews

TORONTO — A recent survey commissioned by Canadian Tire shows that online ratings and reviews influence 80% of Canadians’ purchasing decisions, and the same percentage are looking for truthful product reviews written by real people.

Online product reviews from real customers and users are perceived to be more truthful, creating confidence in the reviews. The survey, conducted by Innovative Research Group and Heartbeat Analytics in late April, also shows that more than three-quarters wish Canadian retailers would be more proactive in ensuring that product reviews, ratings, and testimonials about their products are authentic and truthful.

This research supports a big investment by Canadian Tire in its “Tested for Life in Canada” program, which uses a sample of customers across the country to try out new products at home and give feedback on them. The feedback provided by users creates a pool of online product reviews that enhances the legitimacy of the products themselves.

The company has recently expanded the reach of the testing program, which uses a panel of 15,000 Canadians coast to coast. By the end of this year, the number of products put out for testing will reach 7,000.

Canadian Tire claims that “Tested for Life in Canada” is the country’s largest consumer testing group. Users evaluate products for ease of use, functionality, and durability and assign a star rating out of five. A product is awarded a badge when it is assigned four or more stars by at least eight testers.

DID YOU KNOW…?

...that the deadline is looming for entering the Outstanding Retailer Awards? If you’ve got a winning retail operation, why not submit your store in the ORA contest? You have to send it to us by July 28. But it will be worth it: Winners will receive a trip for two to Niagara Falls, Ont., to attend the Gala Awards Dinner and participate in the 22nd Hardlines Conference, November 14 to 15, 2017. Categories include Best Hardware Store, Best Building Supply Dealer, Best Contractor Specialist, an award for Community Involvement, and our Young Retailer of the Year Award. Don’t miss out on this once-in-a-lifetime experience! (Click here for more information and to download your entry form today!)

RETAILER NEWS

BOUCHERVILLE, Que. — Lowe’s Canada will be part of a widespread initiative this year by Habitat for Humanity Canada. Habitat’s 34th Jimmy & Rosalynn Carter Work Project will take place in every province and territory across Canada with a goal to build 150 homes to mark Canada’s 150th anniversary of Confederation. Former U.S. President Jimmy Carter and his wife Rosalynn will visit Canada from July 9 to 14, focusing their efforts in Edmonton and Winnipeg. Volunteers from 15 Lowe’s and RONA stores, as well as from Lowe’s head office—including Lowe’s Canada President and CEO Sylvain Prud’homme and Richard Maltsbarger, chief development officer and president, International for Lowe’s—will be among the executives working alongside volunteers at both the Edmonton and Winnipeg builds.

TORONTO — In honour of Canada 150, brand consulting firm Interbrand Canada has released “The Interbrand 150: Iconic Canadian Brands Report—Our Time to Grow” to showcase the influence and impact of leading Canadian brands. Among those recognized are RONA, HBC, Canadian Tire, Home Hardware, Dollarama, and Tilley Endurables. Throughout spring 2017, Canadians were invited to nominate the brands they considered iconic and shared their personal stories.

SAINT JOHN — Kent Building Supplies has been named a “Champion for Change” by the not-for-profit Adventure Group, in recognition of business practices supporting the advancement of P.E.I. women in the workplace. The honour comes at the conclusion of a three-year project partially funded by Status of Women Canada. The Adventure Group praised Kent’s mentoring program and training opportunities. “Our motto at Kent is to give a strong foundation from the first day so we see everyone succeed,” said Kent’s HR director, Marie McInnis. “We recognize that training develops skills [and] enhances productivity and quality of work.”

HOFFMAN ESTATES, Ill. — While Sears Holdings has recently announced hundreds of store closures, the company is also introducing a new business model to the market. Sears Appliances & Mattresses in Pharr, Tex., is a new Sears-branded store that focuses exclusively on appliances and mattresses. The company says “plans are underway to open additional Sears freestanding stores dedicated to two of its strongest categories.”

SEATTLE — Amazon says its sales of Amazon Prime memberships in Canada grew by 80% in 2016. The online retailer charges an annual membership fee of $79 for the priority service, which was launched in Canada in 2013.

ISSAQUAH, Wash. ― Costco reported net sales of $12.17 billion for June, an increase of 7% from $11.33 billion during the similar period last year. Year-to-date net sales reached $104.28 billion, up 6%. Same-store sales were up 6.5% in the U.S. for the month, and up 3.2% in Canada. Year-to-date same-store sales were up 3.9% and 4.0% respectively.
 

SUPPLIER NEWS
MISSISSAUGA, Ont. — Drywall manufacturer CGC Inc. is celebrating the 100th anniversary of its Sheetrock brand of gypsum panels, one of its most popular portfolios. Gypsum panels were originally created by USG Corp., CGC’s parent company, 100 years ago by putting gypsum plaster between two sheets of paper. This invention allowed builders to complete the installation process faster, as the long drying time associated with plaster was eliminated. CGC, which has manufactured and distributed Sheetrock products in Canada since the 1930s, is celebrating the milestone with a series of events across Canada bringing together employees, dealers, and customers.

CHINO HILLS, Calif. — Jacuzzi Brands LLC has bought two companies. Hydropool Hot Tubs and Swim Spas (Hydropool) is a Canadian company based in Mississauga, Ont., that sells swim spas and hot tubs. Itasca, Ill.-based BathWraps is a bathware supplier whose products are sold through specialty remodelling dealers in the U.S. Bob Rowan, CEO of Jacuzzi, said, “Both companies are complementary to our core business and are led by exceptional management teams, which will remain in place as the businesses continue to operate independently.” Terms of the deals were not disclosed.

ECONOMIC INDICATORS
Canadian municipalities issued $7.7 billion worth of building permits in May, up 8.9% from April and the third highest value on record. The national increase was mainly the result of higher construction intentions for residential buildings, particularly in Ontario. Seven provinces registered gains in the total value of building permits in May, and every building component increased except institutional structures. Residential building permits rose 10.8% from April to $5 billion. (StatCan)

NOTED
According to a recent survey commissioned by Canadian Tire, online product reviews, ratings, and testimonials have a higher influence on purchasing decisions for respondents aged 30 to 34 than for older shoppers. In addition, women aged 30 to 34 are most likely to indicate that online product reviews have a lot of influence on their purchasing decisions.

OVERHEARD…
“At Lowe’s Canada, our shared purpose is to ‘help people love where they live.’ We are therefore extremely proud to support Habitat for Humanity Canada’s important work because we believe that everyone in Canada has the right to a safe, affordable, and decent place to live in.”
—Sylvain Prud’homme, president and CEO of Lowe’s Canada, on the involvement of his company, as well as his personal involvement, in upcoming Habitat for Humanity builds in Winnipeg and Edmonton.

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