August 7, 2017 Volume xxiii, #31


“The habit of reading is the only enjoyment in which there is no alloy; it lasts when all other pleasures fade.”
—Anthony Trollope (British novelist, 1815-82)

 

SUMMER PUBLISHING SCHEDULE: HARDLINES will not be published on August 14 or 21. We resume our regular publishing schedule with our August 28 edition. Meanwhile, the World Headquarters remains open during this time.


IN THIS ISSUE:

  • TIMBER MART becomes home improvement partner of Canadian Football League

  • Home Depot sees growth in power tools, LED, outdoor products, and flooring

  • Colombian dealers face rise of big boxes, urged to make their stores destinations

  • Colombia’s tiny hardware stores: a lesson in co-operation and convenience

  • International garden fair spoga+gafa ramps up with appeal to North Americans

  • Down memory lane: industry veteran’s summer reading for the hardware industry

  • PLUS: Home Hardware sponsors curling, Lowe’s switches two more RONA Stores, Lowe’s launches DIY training in U.S., Cobra Anchors invests, changes at Orgill Canada, Ikea adds Vancouver Collection Points, Masco posts Q2 earnings, Bemis sees earnings slide, CanWel announces Q2, Weyerhaeuser revenue rises, West Fraser to acquire Gilman, shareholders approve Tembec sale, Allan’s Home Hardware, John Herbert receives DIY Lifetime Award, Scott Ride heads up H. Paulin, and more!

TIMBER MART becomes home improvement partner of Canadian Football League

MEMPHIS, Tenn. — Hardware wholesaler Orgill is preparing for its next Dealer Market, August 24 to 26 in Boston, and it anticipates attendance by hundreds of Canadian independents.

Although a full-line distributor, Orgill does not attach itself to a banner. It counts among its customers in this country independents from just about every buying group. And those dealers will have lots to see at the next show, which will take up every available bit of space at the Boston Convention and Exhibition Centre.  

The show is known for its model stores. Dealers who sell to contractors and professionals will be especially interested in “Central Tool & Building Supply,” a brand new model store that caters to pros. This footprint will feature 100% Canadian-compliant assortments, with displays from both the London, Ont., distribution centre and the new Post Falls, Idaho, DC.

“We wanted to highlight how a pro-focused retailer can utilize a tool niche featuring powerful brands to really build a store-within-a-store concept that will appeal to the professional contractor and builder market,” says Philip Walker, SVP merchandising services for Orgill.

The “Walnut Grove” model store has been scaled down this time, from 12,000 to just 8,500 square feet. Orgill is using the smaller footprint to show off its latest techniques for helping dealers maximize space on the store floor. The wholesaler promises to fit 15,000 square feet of products into the smaller space.

 

Home Depot sees growth in power tools, LED, outdoor products, and flooring

BOSTON — Home Depot executives gave some clues to the company’s growth vectors at a recent investor conference. Ted Decker, EVP, merchandising and Paul Deveno, regional vice president of New England for Home Depot, shared the company’s passion for product innovation at the Oppenheimer 17th Annual Consumer Conference in Boston.

“We always talk about [how] we want to be number one in product authority for home improvement, and it’s the innovation and the value that we bring that I think differentiates and has differentiated Home Depot,” said Decker.

While new products are part of every department, some categories are being redefined by new technologies and innovation. Decker pointed specifically to lithium-ion battery technology for power tools. Features like longer run times and the reliability of brushless motors make cordless products really appealing to heavy users, including pros and contractors. They can, he observed, get through a work day on just one or two charges.

And that technology has expanded effectively to outdoor power, especially gas-powered tools, making them lighter, more reliable, and easier to use and maintain. They are also more environmentally friendly, said Decker.

“This technology is really transforming the industry and it’s going into—it’s unbelievable what it’s going into. Vacuum cleaners, paint sprayers, pneumatic nailers are becoming battery-powered, so you don’t need the compressor and the hose,” Deveno added. “And just imagine the job site set-up.”

Another growth category for Home Depot is in LED lighting. Here, Decker said, light fixtures are now being designed to accommodate this new technology, “so the possibilities of design are incredible, how the light is part of the actual fixture...”

But one of Home Depot’s best performers in Q1 was flooring. “Flooring right now is one of our absolute strongest categories, said Decker. “We reported in the first quarter double-digit comps in our flooring business and it’s both in hard surface and soft surface.” But even here, he said, technology is at work, as carpet can now be extruded with the colour right in it, rather than having to dye the yarn. The chemical properties of these carpets make them stain proof and pet proof.

Advances on the hard-surface side include is a solid-core vinyl flooring that can be used like a laminate. This product can be used in basements that are prone to saturating water and flooding. “We now have solid-core vinyl flooring, which is nearly as rigid as a piece of laminate or wood. It’s 100% waterproof,” said Decker.

 

Colombian dealers face rise of big boxes, urged to make their stores destinations

BOGOTA, Colombia — Smaller hardware stores are still widespread in South America’s third-largest economy. And the culture of Colombia, with a ready pool of affordable labour, does not have the same DIY customers that drive North American home improvement sales. Nevertheless, those dealers were urged to focus on a number of strategies to ward off the rise of big boxes there.

The advice came from our own editor-in-chief, Michael McLarney, who was invited down to present at Expo Fierros, the country’s trade show and conference for the hardware industry. He suggested that dealers develop a presence online, improve their stores’ merchandising, and find niches that can make their businesses destinations that differentiate them from their competitors.

McLarney also recommended investing in employees—providing them with training such as the online courses available from the North American Hardware Association—and offering ways to increase staff loyalty and decrease turnover. They can include profit sharing or rewarding key personnel with shares in the business.

Buying groups are a relatively new concept in Colombia and McLarney encouraged dealers to explore this model as a way to ensure their longevity. The main big box competitor in South America is Sodimac, which, in Colombia, is co-owned by the Corona Group. Sodimac is reportedly getting more aggressive about expansion in Colombia, and may begin rolling out a smaller-store concept called Express, which would increase its competitiveness against smaller independents.

 

Colombia’s tiny hardware stores: a lesson in co-operation and convenience

BOGOTA, Colombia — An invitation to Bogota, Colombia, to speak at Expo Fierros, the hardware conference and trade show for the Andina region of South America, became an introduction for this editor to see hardware retailing that is unlike anything in Canada. Yet, there may be some lessons Canadian retailers could learn.

Unlike Canada, where more than half of all retail sales are generated by just four retail groups (source: 2017 Hardlines Retail Report), the majority of stores, called ferreterias, are family-owned and small. Very small. The day after the expo, I got to see some of those stores first hand. The two brothers who own the publishing company that puts on the show, Marcelano and Mariano Arranga, took me on a tour through Bogota, a city with twice the population of Toronto and 12 times the size of Vancouver.

Nor did we drive anywhere. Depending on the neighbourhood, stores can be found on every block. I, in turn, found myself being led on a walking tour by the Arranga brothers that lasted for more than three hours.

A typical store is little more than a store front, often no more than 10 or 12 feet wide. A sliding partition, like a garage door, goes up and reveals a counter that runs the width of the store. One or two people might sit behind that counter, with only a few feet of space behind them. But that space is crammed with products.

Many of the stores are highly specialized and clustered together, creating something of an outdoor mall experience. On one block, a row of storefronts specialize in electrical products. One carries electrical connectors and wiring, another lightbulbs and nothing else, while yet another is dedicated only to commercial lighting fixtures and tubes.

A couple of stores we visited did have a wider range of products. In one case, the store ran straight back narrowly from the street for about 75 feet. All along the hall were nooks and anterooms and we found ourselves squeezing sideways to fit into more than a couple of those spaces, which were all filled with products. One had huge spools of wire and cable, while another was stacked high with bags of cement.

Colombia—and South America in general—has one dominant big box chain, Sodimac. Based in Chile, that company has been making gains in Colombia through an alliance with a domestic wholesaler, the Corona Group. Another smaller chain, with home centres of its own, is Ferricentro. It has six stores throughout Colombia’s northern region, including one in Bogota. That store is stacked on four storeys, with a product mix aimed at pros and industrial contractors. Its closest comparison in Canada might be to the Reno-Depot chain, which is part of Lowe’s Canada.

Colombia’s retailers do not, for the most part, organize as part of buying groups, though a new organization, Red Ferretera, founded two years ago in Santiago de Cali, has managed to rally 50 ferreterias there to combine buying power and begin seeking negotiations with the vendor community in Colombia.

Nor does the country have an association representing retailers. I was asked many questions about the value of the North American Retail Hardware Association in Canada, and the range of training courses it offers for employees to improve everything from product knowledge to sales skills.

Based on the growth of big boxes in Colombia, the dealers there will face tougher, more organized competition in coming years—a trend faced by Canadian dealers since the mid-1990s.

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International garden fair spoga+gafa ramps up with appeal to North Americans

COLOGNE, Germany — The international garden fair spoga+gafa is slated to feature more than 2,000 exhibitors from 59 countries this year. The annual event is a showcase for outdoor living and lawn and garden trends from around the world.

The show is owned and operated by Koelnmesse GmbH and both it and its sister event, Eisenwarenmesse, the International Hardware Fair, are being driven by a young, energetic management team. Stefan Lohrberg, the new project manager for spoga+gafa (shown left), along with Matthias Becker, project manager for Eisenwarenmesse, the International Hardware Fair, are both keen to attract overseas visitors—and Canada is one of their priorities.

Sections of the garden fair’s more than 2.4 million square feet of space will be divided into product themes: Garden Living, Garden Unique, Garden Creation & Care, and Garden BBQ. Aside from these main product themes, exhibitors will be on hand with smart gardening tools, outdoor kitchens, and battery-powered products. Manufacturers will also conduct product presentations.

“In the garden furniture, grill, and outdoor decoration sections, spoga+gafa has the world’s largest coherent offering and that is unique,” says Katharina Hamma, COO of Koelnmesse. “With an over 80% share of foreign exhibitors, spoga+gafa is once again achieving a fantastic result and is thus underlining its position as the leading international garden fair.”

(To learn more about the event and to register, click here.)

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Down memory lane: industry veteran’s summer reading for the hardware industry

LEWISPORTE, NL — Laurie Blackwood Pike has been a familiar face in the hardware industry in Atlantic Canada for more than four decades. Having worked on dealer development teams for everyone from Cochrane-Dunlap to Ace Hardware, and most recently Home Hardware, he’s likely visited just about every hardware store down east. He also had a store of his own in the mid-1980s.

Now Pike has turned to writing, and his new book, Grandpa Pike’s Outhouse Reader, takes a light-hearted look at episodes from his life—including some humorous tales of his time on the road. One story recalls him being mentored by a seasoned hardware salesman, who warned Pike against drinking too much or getting involved romantically with any of the customers’ employees. On their first night out, that industry “veteran” managed to break both those rules, along with a couple more.

Not all the stories are humorous. Some are poignant recollections of tougher times, such as his arrival in Ontario as a young man after hitchhiking from Halifax in search of work. Here’s an excerpt: “Sleep wouldn’t come, and finally hearing footsteps approaching, I sat up and facing me was one of St. Catharines’ finest, a police officer. He asked me what I was doing and where I was from. I told him my story. I must have looked quite dejected, because he listened and actually sympathized. ‘Come down to the station with me,’ he said, ‘and let’s see if we can figure something out.’ ”

Pike, who adopted the moniker “Grandpa” when his hair turned white prematurely while in he was in his 20s, lives in Placentia, NL, with his wife Kathleen, where he continues to write and play music. (Click here to get your own copy of Grandpa Pike’s Outhouse Reader.)

 

DID YOU KNOW…?

...that 51% of dealers expect online sales to be a big challenge looking out five to seven years? But guess what? That will be too late! That’s why we’re co-hosting the 2nd Annual Home Improvement eRetailer Summit, September 13-14 at the Rosen Shingle Creek in Orlando, Fla. Retailers looking to understand the e-commerce space and suppliers who want to make real connections with leading eRetail decision makers will find this ground-breaking forum an amazing way to meet, share ideas, and grow online sales. You will get face-to-face with, and learn from, the top hardware, housewares, and home improvement eRetailers in North America! Check it out now―or contact Beverly Allen for more info. Then join us in Orlando!

RETAILER NEWS

ST. JACOBS, Ont. — Home Hardware is the new title sponsor for the curling Road to the Roar Pre-Trials. The event selects the final two entries in each gender category for the 2017 Tim Hortons Roar of the Rings event, which in turn will finalize the lineup of Team Canada at the 2018 Olympic Winter Games in Pyeongchang, South Korea. The Road to the Roar event will gather 14 teams each from the men’s and women’s categories to compete in Summerside, P.E.I., in November, with the Roar of the Rings following in Ottawa in December.

BOUCHERVILLE, Que. — Two more RONA Home and Garden stores, in Kitchener, Ont., and Calgary, will be fully renovated and switched to the Lowe’s banner. The new Kitchener Lowe’s will be the smaller of the two, with 93,064 square feet of retail, a 28,881-square-foot garden centre, and an outdoor lumber yard with 20,381 square feet. The Calgary Lowe’s will feature 114,570 square feet of retail sales space, an adjacent garden centre with 17,540 square feet of space, and a 48,129-square-foot outdoor lumber yard.

 

COCHRANE, Ont. — Allan’s Home Hardware Building Centre is celebrating its 40th anniversary. Owner Gary Shanks is hosting an anniversary sale this month along with a customer appreciation day.

BURLINGTON, Ont. — Ikea customers in Victoria, Kelowna, and Nanaimo, B.C., now have their own Collection Points. Customers can shop online for home furnishings and have them delivered to their selected Collection Point for $79, regardless of the size and value of their purchase. This means they will be able to ship anything from a single sofa to an entire kitchen for a flat rate and represents significant savings over the average home delivery fee of $170.

CHARLOTTE, N.C. — Lowe’s recently launched a program for its U.S. customers called The UpSkill Project that trains consumers on the skills they need to complete DIY home improvement projects. The program will send Lowe’s employees to 40 communities in the U.S. to teach nearly 200 consumers the skills they need to complete various home improvement tasks. According to Lowe’s, the communities and the consumers were selected from videos consumers submitted detailing the skills they wanted to learn to complete specific projects in their homes.

SUPPLIER NEWS
MONTREAL — Cobra Anchors Co. Ltd., a maker of masonry and hollow-wall anchors, has completed an $8.2 million investment in the Anjou borough of Montreal. The investment included a plant expansion and the addition of new machinery, automation, and robotics. The family-owned business, which is headquartered in Montreal and has been in operation since 1973, claims to be one of the largest manufacturers of masonry and hollow-wall anchors in North America. With 222 employees, the company also owns manufacturing in the U.S. as well as a distribution centre in France.

LIVONIA, Mich. — Masco Corp. posted Q2 earnings of $0.49 per share, an increase of 9% from the same period last year. Sales rose 3% to $2.1 billion, while operating profit increased by 7% to $357 million. Higher sales in plumbing, decorative architecture, and windows offset a decline in cabinetry sales. CEO and President Keith Allman said that in cabinetry, Masco “exited certain lower margin builder businesses” and is now on track for growth. The company repurchased 1.2 million shares during the quarter.

NEENAH, Wis. — Bemis Co. saw adjusted earnings slide 28% to $0.48 per share, hit by political instability in Brazil. With non-recurring costs included, earnings totaled $0.30 per share, compared to $0.53 a year ago. Revenues also fell short of expectations, declining to $1.012 billion from $1.021 billion in Q2 of 2016.

VANCOUVER — CanWel Building Materials announced Q2 revenues of $320 million, up 10.3% from $290 million in the same period in 2016. Net earnings before non-recurring items, including costs related to acquisitions, rose to $11 million during the quarter, compared to $9.7 million last year. The increase in revenues was attributed to several factors, including the company’s product mix strategy, a U.S. housing rebound, and the results of completed acquisitions. CanWel’s forestry segment, which began operations midway through last year’s Q2, saw sales adversely impacted by the weather.

FEDERAL WAY, Wash. — Weyerhaeuser posted earnings of $0.28 per share, while revenues came in at $1.81 billion. The second quarter saw the forestry firm reach an agreement to sell its operations in Uruguay. Its wood products business, which makes up more than 70% of sales, saw revenues rise by 12.8% to $1.3 million.

VANCOUVER — West Fraser Timber announced that it has entered into an agreement to acquire the operations of the Gilman Companies from the Howard Gilman Foundation and other shareholders for approximately US$430 million. The Gilman Companies are composed of six sawmills and a fingerjoint mill in Florida and Georgia as well as an administrative office in St. Marys, Ga. The deal, which is expected to close in the third quarter, is part of West Fraser’s broader strategy of U.S. expansion.

MONTREAL — Shareholders in Tembec have overwhelmingly voted to approve the company’s sale to Florida-based Rayonier Advanced Materials. Some 95% of shareholders voting agreed to the friendly takeover bid, which cleared a major hurdle when two major shareholders dropped their objections. Oaktree Capital Management and Restructuring Capital Associates balked at the original offer of $4.05 per share, but came around when Rayonier raised the bid to $4.75 per share. Rayonier, though not bound in writing, has pledged to maintain Tembec’s Canadian head office. Tembec reported Q3 earnings of $17 million, an increase from $9 million last year.

NEW BRITAIN, Conn. — Stanley Black & Decker reported earnings of $277.2 million, or $1.82 per share, up from $217.5 million ($1.84) the same time last year. Revenues were up 10.2% to $3.23 billion, compared to $2.93 billion. The second-quarter results included $8 million in restructuring costs.

PEOPLE ON THE MOVE
Erik Schlaud has moved into a new role at Orgill as Vice President of Sales, Canada division. Schlaud began with Orgill in 1998 as a sales manager. For the past four years, he has led Orgill’s sales efforts in Canada as District Manager and has played a major role in the company’s growth and expansion here. Bobby Massingill, Orgill’s Vice President of sales for the Eastern U.S. Myron Boswell is now responsible for both the Mid America and East divisions in the U.S. Boswell was key to sales development in Canada for several years, particularly in his most recent role as Vice President of Sales for Mid America and Canada. Taking over the reins from Boswell, Schlaud leads the Orgill Canada sales team, consisting of nearly three dozen field service reps and business development managers.

John W. Herbert is the recipient of this year’s German DIY Lifetime Award. The UK native is general secretary of both the European DIY Retail Association and the Global Home Improvement Network. Herbert has been in leading positions with international home improvement retailers for almost 35 years, including time at Home Depot in the U.S. and Germany’s Knauber, whose signature management and customer service style he established. (Herbert will address the annual Hardlines Conference this fall, his only North American stop. If you haven’t yet signed up for this not-to-be-missed event, returning this year to Niagara Falls by popular demand, click here for more information and to register!)

Scott Ride is now the President of H. Paulin & Co. Ltd., since the retirement of former President Richard Paulin on July 1. Ride was formerly COO at the company. H. Paulin was acquired by the Hillman Group in 2013.

ECONOMIC INDICATORS
Retail sales increased for the third consecutive month, rising 0.6% to $48.9 billion in May. Sales were up in five of 11 sub-sectors, representing 56% of total retail trade.
Higher sales at motor vehicle and parts dealers were the main contributor to the gain. Excluding sales in this sub-sector, retail sales were down 0.1% in May. After removing the effects of price changes, retail sales in volume terms rose 1.1%. (StatCan)

The number of building permits issued in June in the U.S. reached 1,254,000 seasonally adjusted, up 7.4% from May rate, and up 5.1% from June 2016. Housing starts in June 2017 were up 8.3% seasonally adjusted to 1,215,000 units, and up 2.1% from June 2016. (U.S. Census Bureau)

OVERHEARD…
“The Home Depot has always stood for product, service, and value. And we firmly believe the product is king. We spend just an inordinate amount of time on product and innovation and value for the customer.”
—Ted Decker, executive vice president, merchandising for The Home Depot, speaking recently at the Oppenheimer Consumer Conference in Boston.


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