July 17, 2017 Volume xxiii, #29


“I’ve got all the money I’ll ever need—if I die by four o’clock.”
—Henny Youngman (American comedian and master of the one-liner, 1906-1998)

 

SUMMER PUBLISHING SCHEDULE: Please note that HARDLINES is published once in August. There will be no issues on July 31, August 14, 21, and 28. We resume our regular publishing schedule with our September 4 edition.

IN THIS ISSUE:

  • Newfoundland and Labrador dealer Notre Dame Agencies adds 10th location

  • Could Ace Hardware buy True Value in the U.S.?

  • Lowe’s Canada CEO: ignore online selling at your peril

  • Shades of Ikea: Target and Amazon expand their private-label hardlines brands

  • PLUS: Lowe’s Canada partners with Canadian Red Cross, Home Depot to purchase Compact Power Equipment, Walmart’s “On-Time, In-Full” deadline looms, Gracious Home bought, Richelieu Hardware sales rise, new hire at BMR, Bruce White retires at Home Hardware, housing starts, and more!

Newfoundland and Labrador dealer Notre Dame Agencies adds 10th location

LEWISPORTE, NL ― Notre Dame Agencies, a large independent dealer in Newfoundland and Labrador, has purchased its 10th retail location, the former Warr’s Castle Building Centre in Springdale, NL.

Cluny Sheppard, chairman of the board of Notre Dame Agencies, oversees a retail empire in Newfoundland that consists of the 10 Castle building centres (the Cornerbrook store is shown here), as well as a chain of seven furniture stores under the Notre Dame Home Furnishings banner, and Notre Dame Recreation, which sells recreational vehicles and gear from two locations in Newfoundland and Labrador. The building centres alone generate estimated sales of $72 million (source: Hardlines Who’s Who Directory).

Warr’s, a long-time Castle member, began in 1908 as a logging and sawmill operation. The family-owned business grew over the decades into a full-service lumber, building materials, and hardware outlet, serving a mix of contractors and consumers.

Manager Peter Young and his staff are expected to continue on at the Springdale location following the acquisition.

Under former owner Brian Warr, Warr’s had been exploring succession strategies for the business, which employed a number of family members. Brian Warr eventually entered politics, and since 2015 has had a seat in Newfoundland and Labrador’s House of Assembly as the elected Liberal representative for Baie Verte-Green Bay.

 

Could Ace Hardware buy True Value in the U.S.?

CHICAGO — According to a Bloomberg report last week, True Value Co. is “considering a sale that could value the home-improvement store chain at about $800 million.” People who asked not to be identified as they weren’t authorized to speak publicly say the company is working with an investment bank to examine strategic options, including a sale, according to the Bloomberg report.

“The process is expected to attract private equity firms,” said the report. However, no final decision has been made, and the company may not pursue a sale.

“There is no company out there that is more focused on the independent hardware retailer,” Jean Niemi, vice president of communications for the co-op, said. “True Value remains committed to our long-term strategic plan and, as part of that, we are continuously assessing and evaluating many opportunities in an effort to create maximum value for all of our retailers.”

True Value is a co-op made up of about 4,400 independently owned and operated hardware stores. In its annual report, the company reported gross billings of $2,073.7 million, and revenue was up 1.1% year over year to $1,514.1 million.

Both Ace and True Value are dealer-owned co-ops. An acquisition by Ace would result in a network of 9,400 stores.

 

Lowe’s Canada CEO: ignore online at your peril

TORONTO — What a customer uses a computer or mobile device for while undertaking a home improvement project depends on what point they are at in a project. That’s why it’s important for a retailer to be effective at every one of those points of contact.

This was just one of the insights offered up by Lowe’s Canada CEO Sylvain Prud’homme at the annual convention of the Retail Council of Canada last month. He said that 87% of customers used the web before a purchase, for research. As they get closer to the purchasing stage, 79% go online to compare prices. Then, even after they’ve visited the store and made their purchase, 35% of shoppers will experience cognitive dissonance and check online products and pricing again.

“Your customer is only one click away from shifting their business away from your store,” he said. That’s why Lowe’s Canada is committed to offering “a seamless experience” across the digital and bricks-and-mortar worlds. Prud’homme pointed out that the penetration of e-commerce is higher in Canada than in the U.S., though the outcome is not always to make a purchase.

He added that RONA’s customer base is coming on board with the omni-channel approach of Lowe’s.

In his presentation, he cited the competitive field as it exists among bricks-and-mortar dealers, including Patrick Morin, Ikea, Canadian Tire, Home Hardware, and Costco. But to that list, he would add the likes of Wayfair, Ali Baba, and Houzz, all of which exist exclusively online.

“Innovation has been at the heart of Lowe’s strategy for years,” he said. “And it’s not just improving what already exists,” but looking in new ways at one’s business. He pointed to space-age innovations from Lowe’s such as robots in store in the U.S., the virtual-reality “Holoroom” being used in some stores in Canada, and a 3D printer that’s being used by the International Space Station orbiting earth.

 

Shades of Ikea: Target and Amazon expand their private-label hardlines brands

SPECIAL REPORT ― As traditional hardware retailers fight to defend their market share against e-retailers, a growing number of private-label brands is also seeking a piece of the pie. In the U.S., mass-merchant retailer Target has just unveiled four new in-house lines―including one dedicated to homewares. Project 62 includes everything from kitchen utensils and vases to kitchen trolleys and end tables, potentially encouraging customers to make a one-stop shop and save a trip to a hardware store.

The four new brands represent the first wave of at least 12 new launches over the next two years, which Target announced back in February. The retailer got its first private label in 1991 when it acquired Merona, an existing clothing line that sold in several department stores before becoming a Target exclusive. With the debut of the Archer Farms grocery line in 1995, Target had its first homegrown store brand. In announcing the four latest brands, the retailer also made it known that several others will be retired―Merona among them.

When it comes to private-label growth, however, it’s hard to beat Amazon. The e-retailer first launched its Amazon Basics line in 2009, offering everyday items from its wildly popular batteries to baby wipes. As an incentive to Prime membership, which Amazon continues to push, some lines are available to members only.

Most of Amazon’s offerings are in categories like food or clothing that don’t directly impact on hardware retail. But its Pinzon line focuses on décor, including bedding and linens, meaning that it covers some of the same turf as some upscale hardware stores and home centres. A report by One Click Retail at the close of last year found that Amazon’s plumbing, electrical, and hardware categories each generated more than $20 million in sales in October 2016 alone.

Private brands are likely to continue growing in popularity, in no small part because of the appealing profit margins they yield for retailers and the customer loyalty they can encourage. In devising strategy, retailers will need to hold their own against store brand offerings from general merchandisers like Walmart and Target and e-retailers like Amazon.

Some have done that by cultivating their own private-label offerings. Canadian Tire, notably, has a focus on strong in-house brands: in the fourth quarter of 2016, private label accounted for one-third of its sales, including 88% of its Christmas product sales.

 

DID YOU KNOW…?

...that the deadline is looming for entering the Outstanding Retailer Awards? If you have, or know about, a winning retail operation, why not submit it in the ORA contest? You’ve got until July 28 to get your entry in. It will be worth the effort: 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 has launched a national campaign, in partnership with the Canadian Red Cross, to aid victims of the wildfires currently raging in British Columbia. Customers of the various Lowe’s Canada banners, which consist of RONA, Réno-Dépôt, Marcil, Dick’s Lumber, and Ace stores across the country, will be invited at checkout to make a donation to the British Columbia Fires fund established by the Red Cross. Funds raised will be used to provide relief supplies such as camp beds and blankets, facilitate the reunification of families, and provide financial assistance to disaster victims.

ATLANTA — The Home Depot has announced an agreement to purchase Compact Power Equipment, Inc., a provider of equipment rental and maintenance services, for $265 million in cash. The transaction is expected to close by the end of the company's fiscal second quarter. As a commercial partner of the Home Depot since 2009, Compact Power Equipment currently provides compact equipment rentals at more than 1,000 stores across the U.S. and Canada. The company also provides equipment maintenance services nationwide to a range of customers, including Home Depot.


 

BENTONVILLE, Ark. ― Back in February, Walmart introduced its “On-Time, In-Full” (OTIF) program to suppliers. The program requires suppliers to deliver full truckloads of certain fast-turning items on time or face fines of up to 3% on the value of the shipment. And the deadline for compliance begins in August. The retailer anticipates that the OTIF program could add $1 billion in revenue.

NEW YORK ― Two years after a former Walmart executive and her business partner acquired luxury hardware store chain Gracious Home, a discount chain’s founder has bought the business out of bankruptcy. Tom Sullivan, who started flooring discounter Lumber Liquidators, bought New York’s Gracious Home retail operation for $4 million in late June. Sullivan left Lumber Liquidators in December, exiting his role on the beleaguered company’s board of directors, according to a company filing with the U.S. Securities and Exchange Commission. Gracious Home dwindled in the past two years from a four-store chain to the single New York location it currently operates.
 

SUPPLIER NEWS
MONTREAL — Richelieu Hardware saw sales rise by 11.9% to $243.3 million in the second quarter, and an increase of 8.1% in the first half for a total of $439.2 million. Net earnings increased 14.1% to $17.6 million in the second quarter. In the first half, they rose 12.6% to $29.6 million. In Canada, Richelieu recorded sales of $163.7 million, an increase of $15.7 million or 10.6% over the previous second quarter.

 

PEOPLE ON THE MOVE
Following changes to the LBM staff at Groupe BMR, Jean-Marc Prud’homme has been appointed Senior Director–Forest Products. He will be in charge of purchases for all wood products―plywood, lumber, engineered wood, Canexel products, and other commodities. Prud’homme previously worked at Goodfellow and Matériaux Pont-Masson.

Taiga has announced that Bernie Gauthier, already General Manager of siding, is taking on the additional role of National Sales Manager for preserved wood products. Gauthier will report to Executive VP and COO Russ Permann, and will oversee the regional treated wood sales managers. Before joining Taiga, Gauthier developed sales and marketing for the Resisto brand.

Home Hardware has announced changes in its LBM department: Doug Shantz has accepted the position of Director, Lumber and Building Materials. He will report to Joel Marks, VP Merchandise. Shantz was previously the Merchandise Manager for LBM in Ontario, and is succeeded in that role by Mark Pardue, previously a regional LBM Co- qordinator. Bruce White, VP merchandise for LBM, is officially retiring.

IN MEMORIAM
Fred Whyte, the former president of Stihl Inc., died on July 7 at his Virginia Beach, Va., home. The “Man of Stihl” was 70 years old. Originally from Vancouver, Whyte began his career as a regional manager for Stihl American. When he was 34, he led the company’s international expansion into Canada. In 1992, Whyte was named president of Stihl. During his time as president, he helped grow Stihl into a major brand. Whyte retired in 2015 after more than 45 years of service, including 23 years as the company’s president.

 

ECONOMIC INDICATORS
The seasonally adjusted annual rate of housing starts was 212,695 units in June, up from 194,955 units in May. The SAAR of urban starts increased by 9.6% in June to 194,773 units. Multiple urban starts increased by 9.4% to 127,944 units and single-detached urban starts increased by 10.1%, to 66,829 units. (CMHC)

 

OVERHEARD…
“We are actually the first retailer doing business in space.”
— Sylvain Prud’homme, president and CEO of Lowe’s Canada, explaining how Lowe’s has a 3D printer that’s being used to produce tools by the International Space Station orbiting earth. Prud’homme was speaking at last month’s annual convention of the Retail Council of Canada.


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