October 23, 2017 Volume xxiii, #40


“Man’s many desires are like the small metal coins he carries about in his pocket. The more he has, the more they weigh him down.”
—Satya Sai Baba (Indian guru and philanthropist, 1926-2011)

IN THIS ISSUE:

  • Sears closing affects vendor base, ex-employees, and now Parliament

  • Canadian Building Supply Council: new name, enhanced mandate

  • Doug Bitter named new purchasing director at Spancan

  • Outstanding Retailers will be honoured at the upcoming Hardlines Conference

  • PLUS: Federated Co-op gas bars donate to non-profits, Dave Boyce leaves Delroc for new role, Wolseley Canada joins Octo, Giant Tiger opens in Bedford, N.S., Sears Canada chairman resigns, America’s oldest hardware store closes for good, Lowe’s and The Home Depot open warehouses to serve hurricane victims, Grainger posts Q3 earnings, existing home sales, and more!

Sears closing affects vendor base, ex-employees, and now Parliament

TORONTO — The beginning of the end arrived for Sears Canada last week, with the retailer’s announcement that it had received permission from the Ontario Superior Court of Justice to liquidate its remaining assets. All 74 full-service department stores, along with the 49 Sears Hometown outlets and eight Sears Home Stores will be up for sale.

The news came after successive quarters of losses and a fire sale of properties and product lines, culminating in a judicial grant of credit protection for Sears Canada in June. It also spelled the departure of Executive Chairman Brandon Stranzl, who came on board in the summer of 2015 with the goal of drumming up bids for the business.

The company’s downfall has had reverberations across sectors, industries, and countries. Customers lose out on Sears Protection Agreement warranties, though Sears will continue to service mattresses and other furnishings under the Guardsman brand. Suppliers too have been left hanging, even though some saw the writing on the wall and had begun to diversify their accounts, weaning themselves off Sears.

Many, however, are scrambling to fill Sears’s shoes. Mark Brunet, owner of Ottawa’s Cozy Canuck Heating & Cooling, told the Globe and Mail he stood to lose some 80% of his business without the Sears account. On the other hand, former Sears Canada CEO Mark Cohen called the company’s fate “predictable,” telling BNN that “there can’t possibly be any vendors to Sears Canada who can be surprised by this news.”

The retailer also took heat from labour advocates over layoffs and pension cuts. A hardship fund set up by Sears for employees was derided as equivalent to nothing since any assistance provided counts as severance pay deductible from Employment Insurance. Some workers told the CBC they wouldn’t even bother applying, but Susan Ursel, a lawyer for the employees, suggested a bureaucratic solution could be found if Service Canada classifies the aid as a “grant”, which is excluded from income reportable to EI. Still, her firm claims that Stranzl promised in August to dedicate the entire $500,000 hardship fund to laid-off employees, but only $300,000 has been donated so far.

The fall of Sears has made its way right up to the House of Commons. Scott Duvall, a New Democrat representing a Hamilton, Ont., riding, called for an emergency parliamentary debate on the liquidation plan, which he said will hurt workers and retail vendors.

Perhaps the most scathing analysis came from CustomerLAB CEO Jim Danahy, who told BNN that Sears Holdings’ track record of decisions shows the U.S. parent was never serious about turning around the Canadian business. Danahy decried the “orderly dismemberment of a venerable retailer by some pretty cynical folks who … could keep it alive long enough to sell off the parts at premium prices.”

With liquidation sales going into the seasonal shopping rush, other retailers will be looking to see if the deep discounts sap their crucial fourth quarters. As Danahy told the Financial Post, the “liquidation is going to spoil the party” for rivals like Walmart, Canadian Tire, and Hudson’s Bay.” Retail Council of Canada President Diane Brisebois echoed the sentiment, remarking that, while there may not be a “good time” to liquidate, February would be preferable to the year’s busiest season.

 

Canadian Building Supply Council: new name, enhanced mandate

MONCTON — The umbrella organization that draws together most of Canada’s regional LBM associations has a renewed mandate—and a new name.

The Canadian Retail Building Supply Council brings together the Atlantic Building Supply Dealers Association (ABSDA), the Lumber and Building Materials Association of Ontario (LBMAO), the Western Retail Lumber Association (WRLA), and the Building Supply Industry Association of British Columbia (BSIA). Its new name, the Building Material Council of Canada, was developed to better reflect the group’s aim to represent all aspects of the industry going forward, including retailers and suppliers alike.

BMCC represents four of the five regional associations. At this time, the Quebec association, AQMAT, has chosen to pursue lobbying efforts on its own, after breaking from the larger group earlier this year.

BMCC’s current president, Denis Melanson, who is also president of the ABSDA, is taking a new national strategic partnership to the market, in an effort to give a wider range of stakeholders a voice in the process of the council. He is currently reaching out to buying groups and key suppliers to rally support for a new basket of initiatives that mark the group’s new focus on national issues.

Melanson and his fellow regional association heads, Dave Campbell of LBMAO, Liz Kovach of WRLA, and Thomas Foreman of BSIA, all of whom comprise the council’s directors, have determined the following areas of concern: advocacy—working together with a combined voice in Ottawa, and raising awareness of the vast array of career opportunities within the home improvement industry.

BMCC is currently building a national career website with a job board that will be supported by a full social media campaign to raise awareness among a younger, millennial workforce. The campaign will aim to change misconceptions about the home improvement industry and highlight career opportunities on both the retail and supply sides of the business. The campaign will focus on three groups: 18 to 25 year olds recently out of school; their parents; and educators and career counsellors.

To support the council, Melanson is turning to the buying groups, retail groups, and key suppliers to participate at varying levels of financial participation. “We’re launching a national strategic partnership,” says Melanson. “We’re not looking for sponsors; we’re looking for investors.” Those investors will, he adds, become part of the dialogue about how to help the industry.

Each of the regional associations has invested to become a founding member. In addition, Jeld-Wen, Home Hardware Stores Ltd., and Castle Building Centres Ltd. have contributed as founding investors, bringing the overall investment so far to $175,000.

(HARDLINES is supporting the BMCC as an official Media Sponsor, and will host the council at our upcoming Hardlines Conference. BMCC is invited to hold its AGM there, and Denis Melanson will deliver the association’s annual report card on day one of the conference, November 14, in Niagara Falls, Ont.)

 

Doug Bitter named new purchasing director at Spancan

 

AJAX, Ont. — Spancan, the giant hardware buying group for co-op and independent dealers, has been on the hunt over the past several weeks for a replacement for its general manager, Mike Daniels. Daniels has announced he will retire at the end of the year.

Now that search has ended with the appointment of Doug Bitter. He will oversee vendor negotiations for the group as director of purchasing. He starts October 31.

Bitter comes to his new role with three decades of experience in the industry. He spent many years at Lansing Buildall, Revy and then RONA, working as a store manager and sales manager before taking on roles in merchandising and as a negotiator for lumber and building materials. Most recently, he spent a year at LBM wholesaler Taiga. He has a bachelor’s degree in finance and commerce from the University of Toronto.

Spancan represents Independent Lumber Dealers Co-operative, TIMBER MART, and Federated Co-operatives at the negotiating table with hardlines suppliers on behalf of more than 1,300 stores across the country. Bitter takes over as Daniels exits Spancan after 18 years there. He will work alongside Bitter through a transition period until the end of this year.

 

Outstanding Retailers will be honoured at the upcoming Hardlines Conference

NIAGARA FALLS, Ont. — The Canadian home improvement industry will gather next month to recognize its top retailers at the 2017 Outstanding Retailer Awards Gala Dinner. The Gala will be held November 14, at the end of day one of the 22nd Annual Hardlines Conference in Niagara Falls, Ont.

HARDLINES will again celebrate the industry’s finest at the ORA Gala Dinner. Dealers from across the country will be honoured in seven categories covering the range of hardware and home improvement retailing formats. Delegates at the Hardlines Conference will be able to join leaders from the retail chains, co-ops, and buying groups who will attend the Gala Dinner to honour their members and fellow retailers.

Dealers from across Canada, representing a range of the industry’s leading home improvement banners, will be awarded in the following categories:

  • Best Hardware Store, any size;
  • Best Building Centre under 15,000 square feet;
  • Best Building Centre over 15,000 square feet;
  • Best Contractor Specialist;
  • Best Large Surface Retailer;
  • Best Young Retailer;
  • Marc Robichaud Community Leader.

Launched in 1992, the Outstanding Retailer Awards are the industry’s only national awards program dedicated to celebrating the achievements of hardware and building supply dealers in Canada. In its 25-year history, the program has honoured more than 150 retailers. To secure your seat at this important event, click here now.

 

DID YOU KNOW…?

...that the Lumber and Building Materials Association of Ontario is holding its 100th anniversary celebration in Niagara-on-the-Lake, immediately following the Hardlines Conference in nearby Niagara Falls? The event, which will be held in conjunction with the LBMAO’s annual general meeting, will be at the Queen’s Landing Hotel November 15 and 16. Click here to sign up!

RETAILER NEWS

SASKATOON — On September 19, 380 Federated Co-op gas bars throughout Western Canada and northwest Ontario participated in Fuel Good Day, donating at least five cents from every litre of fuel sold to local non-profit groups. The $570,000 raised on Fuel Good Day will be shared by more than 160 local organizations and causes throughout Western Canada.

OTTAWA — Giant Tiger celebrated the official opening of a new store in Bedford, N.S., this past weekend. The 24,000-square-foot store offered a day of free activities for customers of all ages.

 

TORONTO — Sears Canada Executive Chairman Brandon Stranzl resigned last week as the company announced it has received final court approval to liquidate its assets. Stranzl’s brief had been to secure a bid that would ensure the troubled retailer’s viability as a going concern. “In light of the liquidation, his services are no longer required as executive chairman,” the company said in the statement announcing the wind-down of its operations.

WORCESTER, Mass. — The Elwood Adams Store has operated in this New England town since 1782. But last week the retailer, whose heritage storefront dates to 1831, closed its doors for good. Mark Lannon, an assistant manager, told MassLive.com that the store’s fortunes began to change with the advent of the big box, but the explosion of online retail signaled the death knell.

HOUSTON — Lowe’s and The Home Depot each opened warehouses in the Houston area to help meet demand for building materials following Hurricane Harvey, reports the Houston Chronicle. Lowe’s signed a lease on a 244,000-square-foot warehouse near Bush Intercontinental Airport, and Home Depot leased a 300,000-square-foot space northwest of the city. The retailers operate a combined 72 stores in the area. Hurricane Harvey made landfall in Houston on Aug. 25, causing drastic flooding.

 

SUPPLIER NEWS
BURLINGTON, Ont. — Wolseley Canada is becoming a member of buying group Octo, effective January 1. The plumbing and HVAC distributor, founded by six wholesalers in 1982, now has 69 members across Canada in a variety of related market segments. According to Octo chief Claude Beaulac, Wolseley is joining the group’s 400-plus members to deliver value to its customers.

LAKE FOREST, Ill. — W.W. Grainger posted Q3 net earnings of $162 million, a decline of 13% from $186 million a year ago. At the same time, sales rose by 2% to $2.6 billion compared to the third quarter of last year. Sales in the Canadian division increased by 5%, but saw a $15 million operating loss in the quarter, up 1% from 2016.

 

PEOPLE ON THE MOVE
Dave Boyce has left his role as general manager of Delroc Industries to become president of Fasteel Industries in Surrey, B.C. He has been replaced at Delroc by Derrick Gray, who was previously Western Canadian sales manager for Dryco Building Supplies. (dgray@delroc.com)

Ray Tierney is now senior national accounts manager at LIXIL Water Technology Americas. He was previously at ITW Construction Products Canada as national account manager.

 

ECONOMIC INDICATORS
The seasonally adjusted annual rate of sales of existing homes rose by 2.1% in September. The gains were led by Toronto and Vancouver, and followed on a lacklustre market in the spring. Actual resales, however, declined 11% from last September, while home prices increased by 10.7%. (Canadian Real Estate Association)

The impact of Hurricanes Harvey and Irma was felt by housing construction in the U.S., with the seasonal rate of new builds in September declining by 4.7% to 1.127 million. The third consecutive monthly decrease, it brought housing starts to their lowest rate since September of last year. However, it’s 6.1% above the September 2016 rate of 1.062 million. The southern states, including storm-afflicted Texas and Florida, account for about half of U.S. homebuilding activity. (U.S. Commerce Dept.)

 

NOTED
June 2017 was the first month where the value of building permits for multi-family dwelling units for Canada surpassed the value of single-family dwelling permits. According to StatCan, the multi-family component was $294.3 million higher than the single-family component in June.

 


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