October 16, 2017 Volume xxiii, #39

“Desperation is sometimes as powerful an inspirer as genius.”
—Benjamin Disraeli (British politician, 1804-1881)

IN THIS ISSUE:

• With closure of Sears Canada, other retailers eye its hardlines categories

• Mike Daniels readies for retirement, leaves a 46-year legacy

• UFA’s farm and hardware stores strive for a “one-stop” experience

• PLUS: Canac to open northeast of Montreal, Lowe’s second RONA remodel, Home Depot Canada Foundation helps in Kelowna, Home’s dealer-owner Drew Merrett recognized, LM2 adds lines, Lee Valley founder honoured by Royal Military College, Costco announces year end, Goodfellow reports earnings, CanWel completes previously announced acquisition, Dignard named VP at Goodfellow, Pike receives gold hammer, housing starts, and more!
  
  

With closure of Sears Canada, other retailers eye its hardlines categories

TORONTO — The pending closure of Sears Canada marks the death knell for yet another major retailer in this country, but it hardly comes as a surprise. The company has been ailing for a decade.

Now, the retailer has applied for court approval to liquidate all of its remaining 150 stores—down from a high of 225—with the court expected to hear the motion on October 13. It first entered bankruptcy protection back in June.

While efforts in recent years to reposition have drawn the retailer more and more into fashion and soft goods, Sears’s woes are nevertheless being watched carefully by hardware retailers. Both Home Depot and Lowe’s have been putting more emphasis than ever on their sales of heavy appliances, a category which Sears has been dominant in. Home Hardware Stores Ltd. has been enhancing offerings—and merchandising programs—to its dealers, as well, in an effort to capture more of the white goods market in smaller communities. Canadian Tire is reportedly interested in picking up Sears’s Kenmore appliance brand.

Other categories that could be up for grabs would include seasonal and outdoor living.

Pending court approval, Sears Canada expects to begin liquidation sales starting October 19. The sales will continue until late December or early January 2018. About 12,000 employees will lose their jobs over that time, including about 800 at head office that are expected to be let go over the coming week.

The retailer applied for bankruptcy protection on June 22 and began seeking proposals for the acquisition of the Canadian operation’s business or other assets, and the selloff of retail leases. At that time, it announced it would close 59 locations.

After failing to cobble together a comprehensive deal for the entire business, it made the move, based on the recommendation of advisors and the bankruptcy monitor, FTI Consulting, Inc., to wind down the company once and for all and close the remaining 131 locations: 74 Sears department stores, eight Sears Home stores, and 49 Hometown stores.

Mike Daniels readies for retirement, leaves a 46-year legacy

AJAX, Ont. — Mike Daniels may have spent the past 18 years working in an unassuming commercial building northeast of Toronto, but the modest location belies his role as one of the single most powerful buyers in Canada.

Daniels is the general manager of Spancan, a buying group that brings ILDC, TIMBER MART, and Federated Co-operatives to the negotiating table with hardlines suppliers on behalf of more than 1,300 stores across the country.

Now, the next big deal Daniels has his eye on involves grandchildren and golf. He will retire at the end of 2017 and his replacement—unnamed as of press time—is slated to come on board October 31.  

Daniels began his career at Canadian Tire in 1971, working there for 16 years before moving over to Beaver Lumber, where he spent another six and a half years. When Home Depot acquired Aikenheads, Daniels was part of the merchandising team under then-president Stephen Bebis. Starting as a buyer, he was quickly promoted to divisional merchandise manager, overseeing all the buying for Canada. He worked there for almost five years before joining Spancan.

Amidst the sea of LBM buying groups in this industry, Spancan was rare for its focus on the hardware side of the business. Daniels says the group has been able to play an important role in helping independents to buy better, “and I’ve been pleased to be able to help them out over the years.” The smaller size of Spancan, and the intimacy of his dealings with the independent groups, was a nice departure from the corporate environment he’d spent his career in previously. “I’ve met so many good people—and successful entrepreneurs. It’s been a wonderful experience.”

And that attitude has been a two-way street. Vendors are overwhelmingly positive in their opinion of Daniels, who is renowned for his honesty and fairness in dealing with them.

He prepares for his exit from this industry with some observations about how it has evolved since he started out. “The business is changing so much, and what’s been going on in the last while is mind-boggling.” Daniels says suppliers have been getting an ever-increasing say in what is sold and how, including controlling margins, and negotiations in general have become much more complex and detailed. “The relationship between the buyer and the seller has changed. That relationship is not what it used to be. Lawyers and financial experts have replaced the handshake.”

UFA’s farm and hardware stores strive for a “one-stop” experience

CALGARY — With 35 Farm & Ranch Supply stores throughout Alberta, UFA is a major player in hardware retailing in Western Canada. But it faces tough competition in a market that has been, for the past couple of years, the country’s most beleaguered.

With Glenn Bingley, formerly of Home Depot Canada, in charge of the co-op’s hardware chain as COO of retail operations, he says his team is working on increasing same-store sales, rather than looking for new store locations. And a big area of growth has been seasonal. “We’re learning lots [in this category] and we’re starting to see that improved sales performance.”

Bingley says the changes have come right from the customers themselves. “We did a lot of focus groups last year. We met UFA members and asked them what they look for and how we can do better.”

The responses indicated a desire for more assortments that would make the Farm & Ranch Supply stores what Bingley calls a “one-stop shop.”  Not the extent of a big box, he points out, “But we have to meet the basic needs for repair and renovation.” That means everything from fence posts and livestock supplies to something as basic as the right lightbulb.

DID YOU KNOW…?

...that we’ve managed to extend the deadline for our deal on hotel rooms at the upcoming Hardlines Conference in Niagara Falls? You now have until this coming Thursday, October 19, to get the low price of $165 for the falls view at the Sheraton on the Falls, or save even more with the city view for just $135. Make sure you register for the 22nd Annual Hardlines Conference and then click here to reserve your room today!

RETAILER NEWS

QUEBEC CITY — Canac will open a store in Contrecœur, northeast of Montreal, on the site of the town’s upcoming Cité 3000 development. Designed as a gateway to the Port of Montreal, the two-million-square-foot industrial, commercial, and residential project opens its doors next year, and is slated to welcome a Canac store in 2019. Meanwhile, building for the Canac store in nearby Sorel-Tracy is ongoing. Although expected to open next year, no firm opening date has been set for that location.

BOUCHERVILLE, Que. — Lowe’s Canada has opened its second store under the new model of Lowe’s stores in Canada. The Langford, B.C., store was converted from a former RONA Home and Garden and follows the first converted RONA store in Edmonton North. In addition to DIY customers, the Langford location will serve contractors with the introduction of the retailer’s Contractor Rewards Program, a drive-through lumber yard, and a single-billing system allowing professional customers to make purchases at any RONA corporate store in Western Canada.

KELOWNA, B.C. — The Canadian Mental Health Association in Kelowna has received a $50,000 grant from the Home Depot Canada Foundation. The funding, part of the foundation’s Orange Door Project in support of housing and facilities for homeless youth, went toward the building of the teaching kitchen and resource room at Foundry Kelowna. The newly built centre, of which CMHA is the lead agency, helps youth find housing and teaches cooking as a skill for home and for potential employment.

ST. JACOBS, Ont. — Drew Merrett, dealer-owner of Merrett Home Hardware Building Centre in Peterborough, Ont., was awarded the 16th annual Paul Straus Public Relations Award during Home Hardware’s Fall Shareholders’ Meeting in St. Jacobs, Ont., in late September. Merrett’s store was celebrated for its efforts in fundraising and dedication to social causes.

ISSAQUAH, Wash. — Costco Wholesale Corp. announced Q4 net sales of $41.36 billion, a 15.8% hike from $35.73 billion a year ago. Net sales for the year were $126.17 billion, up by 8.7% from $116.07 billion in 2016. At the same time, the company reported net sales of $12.4 billion for the month of September, an increase of 12.1% from $11.06 billion last September. Net income for the quarter was $919 million, compared to $779 million last year.

SUPPLIER NEWS
DELSON, Que. — Goodfellow has reported $1.6 million in net earnings for its third quarter. Sales for the period amounted to $143 million. The company credited a loosening of inventory restrictions in May with generating a sales push that carried over to Q3.

LAVAL, Que. — Rep agency LM2 is now representing Newell Brands for Quebec, Ontario, and the Maritimes. Assortments represented will include Quickie mops and cleaning products under the Jardin brand. LM2 will celebrate its 25th anniversary in 2018.

VANCOUVER — CanWel Building Materials has completed its previously announced acquisition of Honsador Building Products for USD$82.3 million. The deal makes Honsador an indirect wholly-owned subsidiary of CanWel. The Hawaii-based company’s operations have been combined with CanWel’s North American platform.

PEOPLE ON THE MOVE
Goodfellow has announced the promotion of Luc Dignard to the position of VP of LBM for Quebec. Dignard, who has been with the company for 23 years, will continue to report directly to Patrick Goodfellow while also working closely with National LBM VP Jeff Morrison.

Laurie Blackwood Pike, a fixture of the hardware industry in Atlantic Canada for more than half a century, was awarded the Gold Hammer Award recently. In a surprise ceremony at the nearby Aylward’s Home Hardware Building Centre in Placentia, Nfld., Pike was presented with the hammer, which is sponsored by Estwing. Besides being a retailer himself at one time, Pike has worked for Cochrane-Dunlop, Sodisco-Howden, Benjamin Moore, and most recently at Home Hardware as dealer development manager for Atlantic Canada. Family and friends were joined by individuals from the industry, including Roy Crawley, regional manager for Home Hardware Stores; Danny Aylward and Andy Edwards of Aylward’s Home Hardware Building Centre; and Dave Dingwell, a former colleague during the Cochrane-Dunlop days.

ECONOMIC INDICATORS
Housing starts reached 217,118 units seasonally adjusted in September, down from 225,918 units in August. Urban starts decreased by 5.1% to 198,910 units seasonally adjusted. Multiple urban starts decreased by 10.7% to 131,388 units, while single-detached urban starts increased by 8.2%, to 67,522 units. (CMHC)

The value of building permits issued in August was down 5.5% from July, representing the second consecutive monthly decrease. However, the year-to-date value of building permits is up 8.7% compared with 2016. Permits for multi-family dwellings declined by 6.0% from July, despite an overall upward trend that has persisted since 2009. (StatCan)

NOTED
The Royal Military College in Kingston, Ont., has posthumously inducted honorary colonel and former cadet Leonard Lee to its Wall of Fame. Lee entered the former Royal Roads Military College in British Columbia in 1958, but transferred to Kingston’s RMC where he graduated in 1962 before studying economics at Queen’s. He was named honorary colonel of 14 Air Maintenance Squadron in 14 Wing, Greenwood, N.S., in 2008. Lee, who founded Lee Valley Tools in Ottawa in 1978, died in 2016.

OVERHEARD…
 “We feel really good about the business now and expect a strong finish to the year.”
—Glenn Bingley, COO of retail operations for UFA, on efforts to refocus the co-op’s retail operations, including the remerchandising of its Farm & Ranch Supply stores in Alberta.

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