January 15, 2018 Volume xxiv, #2

“Wise sayings often fall on barren ground, but a kind word is never thrown away.”
—Arthur Helps (English writer, 1813-1875)

IN THIS ISSUE:

• Conversion of Marcil stores increases presence of RONA brand in Quebec

• Goodfellow begins year of celebrations for its 120th anniversary

• Brand building, loyalty, and big boxes: CHHMA’s Vaughan Crofford reflects

• Lowe’s DNA is important to continued integration of Canadian operations

• PLUS: Home Hardware hosts contractors, fifth new-look Lowe’s opens, Home Depot acquires The Company Store, Sears to shutter more stores, Ace Hardware in grocery stores, Wal-Mart changes name, Hudon appointed at Innovak, Bromiley named VP at Rockwool, John Herbert honoured, housing starts, and more!
  
  

Conversion of Marcil stores increases presence of RONA brand in Quebec

BOUCHERVILLE, Que. — Lowe’s Canada is switching all its Marcil stores to the RONA banner. The stores, known for catering to a mix of DIY and contractor customers, will fit into RONA’s format for its small to medium-sized building centres, known internally as “proximity stores”.

The switch happens February 26.

With the changeover, the product selection at the Marcil stores will double, from about 20,000 SKUs to more than 40,000. The expanded assortments will include home appliances and a bigger seasonal department. The greater range of products will be available both in-store and online at www.rona.ca.

“RONA and Marcil operate in the same market segment, have complementary locations, and both serve a large client base of contractors and pros. It was therefore natural to combine the strengths of both banners,” said Serge Éthier, EVP of RONA Proximity. “This decision will allow us to maximize our products and services offering to Marcil retail and professional customers, while simplifying our operations.”

Lowe’s has been managing a family of banners since it took over RONA in 2016. In fact, when Canadian CEO Sylvain Prud’homme presented at the Hardlines Conference last fall, he stressed that range of brands and formats operating as Lowe’s, RONA, Réno-Dépôt, Marcil, Dick’s Lumber, and Ace. Those stores comprise a network of 630-plus stores, of which 435 carry the RONA banner either as corporate stores or affiliate dealers (as of December 15, 2017).

The Marcil stores would fit easily into the proximity model of RONA, so the conversions could be executed without too much disruption. While this latest move reflects a common direction taken by many companies to unify their brand with fewer banners, it also points to Lowe’s commitment to continue to support the RONA banner, at least in Quebec, where it remains dominant.

Goodfellow begins year of celebrations for its 120th anniversary

DELSON, Que. — Goodfellow, the building materials manufacturer and distributor, had humble beginnings in 1898 when it was founded by George C. Goodfellow. Keeping abreast of new trends and technologies of the time, Goodfellow began supplying the automobile industry with wood used in car frames and running boards.

In 2018, it is celebrating a legacy that stretches back 120 years. A series of events for customers will take place at events throughout the year, starting with the WRLA Buying Show in Calgary this week, and at the TIMBER MART National Buying Show in Montreal, February 16 to 17.

The company was originally a manufacturer specializing in hardwoods and timbers. Over time, it became a processor and distributor of exotic woods, Douglas fir, construction timber, cedar, pine, and hardwoods, branding itself as “The Wood Specialist”.

Charles Goodfellow took over the reins of the company in the late 1940s, then his brother George C. Goodfellow took over in 1970. In the late ’80s, Charles’s son Richard took the helm until his retirement in 2014.

As the company has grown over the years, it has evolved into a broad-line distributor of building materials and allied products with sales of more than $500 million. This is the company Patrick Goodfellow, Richard’s son, inherited when he took over as president and CEO of Goodfellow in January 2017.

“The industry has changed,” admits Mary Lohmus, EVP of Goodfellow for Ontario and
Western Canada. “We’re proud to say we’re 120 years old and doing well in the business, and been able to diversify.”

Today, Goodfellow distributes a wide range of flooring, siding, and decking products. Its other lines include pressure-treated lumber, glue-laminated wood beam structures, wood sidings, and plywood and speciality wood panels. “The manufacturing side makes us unique,” says Lohmus. “We started in wood manufacturing and our roots are in hardwoods and heavy timbers. Then we evolved into many other products.”

The diversity of products, backed by a consistent company culture that has been maintained by generations of the Goodfellow family, has helped ensure Goodfellow’s growth over the past 120 years. Under new CEO Patrick Goodfellow’s direction, and with a depth of employee knowledge that spreads across 15 facilities nationally, “I think that’s what has kept us young and healthy,” Lohmus says.

Brand building, loyalty, and big boxes: CHHMA’s Vaughan Crofford reflects

SCARBOROUGH, Ont. — With more than 50 years in the hardware and home improvement industry, Vaughan Crofford can look back with a broad perspective on the changes that have occurred in this industry during that time.

Crofford served as president of the Canadian Hardware and Housewares Manufacturers Association (CHHMA) for 23 years before retiring at the end of 2017. Prior to that, he was director of marketing at Federated Co-operatives Ltd. In an exclusive interview with HARDLINES, he reflects on this industry.

On making retail more exciting: “Retailers need to have the product on display to let the customer touch and feel and to have the expertise, the customer service on hand to show young consumers how to use that product. Retailers have some advantages over the internet and they need to figure out how to capitalize on that.”

On big box stores: “They look great, they’ve got so much going on. But they’re just too big. You can’t have 35 toilets in stock.”

On how manufacturers can improve: “I have to say, at the end of the day, the greatest challenge for manufacturers is to create or somehow position their brand as important to the consumer today, as so much has been commoditized. Brand differentiation suffered with Chinese sourcing. It’s harder to sell when all the products are coming from the same factories. But there are some brands that are important to the consumer, and to the contractor. Those brands can’t get pushed around by the retailers.”

On retailers and the internet: “I think that the retailers have to step back and look at themselves. All the retailers are having a problem figuring out how they can succeed today. They’re so afraid of the internet. Stores will remain important, too. Don’t tell me that people don’t want to touch and feel products. That they just want it to show up on their doorstep? Retailers can compete with and use the internet to their advantage. There’s always going to be retail. There needs to be retail.”

On leaving the industry after all these years: “One of the emotions that would come up is a little bit of sadness. To me, I have made so many good friends in every community I’ve been in.”

On what’s changed most markedly: “Some of my sadness comes from a sense that the personal touch has gone out of the industry. Technology and texts and emails eliminated the need for clerical help. And for many companies, the top end is also going in Canada. How many companies here don’t have a president—or even a senior guy—in this country? The president in Canada used to answer to the president in the U.S. Now the top person is often at a VP level, with a very restricted budget, reporting to a VP down there. All the good jobs have left Canada as manufacturing has moved offshore. We lost so many good people and the good relationships that came from that.”

(This interview has been edited for length and clarity.)

Lowe’s DNA is important to continued integration of Canadian operations

MOORESVILLE, N.C. — According to the latest results from Lowe’s Cos., Canadian stores are performing strongly. In a call to analysts following the company’s third quarter results release, Robert Niblock, chairman, president, and CEO of Lowe’s, made no bones about the strong performance of the company’s international operations.

Sales for the third quarter rose a healthy 6.5% to $16.8 billion. “Internationally, we delivered strong performance, including high single-digit comps in Canada and double-digit comp growth in Mexico in local currency.”

Niblock added that the RONA stores are benefiting as they get more integrated with Lowe’s own merchandising practices, including the continued rollout of appliances—now in 70 stores—and the continued conversion of RONA big box stores to the Lowe’s banner. And the company continues to drive growth with its e-commerce platform. “We’re excited with the momentum of the business and believe we are well-positioned for continued success in Canada.”

Richard Maltsbarger, chief development officer and president of Lowe’s international business, clarified the extent of the RONA conversions. “We have brought our first two big box evolutions live from the RONA brand into the Lowe’s brand out from Western Canada. We’re underway with several more now.” The fifth conversion was completed last week in the National Capital Region (see Retailer News this issue. —Editor).

Maltsbarger highlighted another very important advancement in Canada. “And we're seeing really good strong pro results in our business in Canada, given our higher mix of the pro across our different banners, including those specifically focused on the pro in both Quebec and out west.”

DID YOU KNOW…?

...that the Orgill Spring Dealer Market is coming up February 22 to 24 in Orlando, Fla.? And did you know that HARDLINES will once again host a Canada Night Reception for all the Canucks heading down to the show? It’s going to be at B.B. King’s Blues Club. If you’re a dealer, watch for your email invitation in the coming weeks. The event is kindly sponsored by a handful of Orgill vendors who want to get face to face with 275 dealers and Orgill team members. Want to sponsor? Contact David Chestnut!

RETAILER NEWS

PETERBOROUGH, Ont. — Home Hardware Stores Limited will host contractors, renovators, builders, and trades with its annual series of contractor appreciation events. Now called the Pro Show (changed from “Tough as Nails” in years past), the first one is at the Peterborough Memorial Centre on January 15. There, 65 vendors will meet with an expected 800 participants. The tour continues in Sudbury, Ont., on January 18; Waterloo, Ont., on January 29; Saskatoon on February 15; Quebec City on March 14; and Moncton on March 27.

BOUCHERVILLE, Que. — Lowe’s Canada has opened its fifth store under the new model of Lowe’s stores in Canada. The Gloucester, Ont., store, was converted from the local former RONA Home and Garden. It is the first new model Lowe’s store to open in the National Capital Region.

ATLANTA — The Home Depot has closed a deal with Pennsylvania-based Hanover Direct to acquire The Company Store, an online vendor of home décor and textile products. The deal bolsters Home Depot’s online presence and its control over its supply chain.

HOFFMAN ESTATES, Ill. — Sears plans to shutter 103 stores across its Sears and Kmart banners. The 64 Kmart and 39 Sears stores affected are slated to close their doors in March and April.

OAK BROOK, Ill. — Ace Hardware is in talks with U.S. retailer Kroger to set up Ace kiosks within Kroger supermarkets. The “store-within-a-store” concept is familiar terrain for the hardware co-op, which has put them in grocery stores and paint retailers such as Benjamin Moore.

BENTONVILLE, Ark. — Wal-Mart Stores Inc. says it will legally become Walmart Inc. as of February 1, 2018. The move reflects the retail giant’s omnichannel strategy, which includes multiple banners and fulfillment options.

PEOPLE ON THE MOVE
André Hudon has been appointed president and CEO of The Innovak Group. Before joining the Pointe-Claire, Que.-based hand tool company, he was general manager at Acklands-Grainger.

Mark Bromiley has been named vice president business development at Rockwool North America. He’s been with Rockwool (formerly Roxul in Canada) since 2008, most recently as North American business development manager. (mark.bromiley@rockwool.com)

John W. Herbert, general secretary of EDRA, the European DIY retail association, as well as the global network GHIN, has been honoured by the German retail home improvement industry as the 2017 recipient of the DIY Lifetime Award. The prize is awarded annually by the German DIY retail association BHB and Dähne Verlag, publisher of DIY International magazine. Herbert is recognised as a renowned trade expert and a friend of Hardlines who spoke at the Hardlines Conference in 2017. Born in Great Britain, he served as an officer in the British Army stationed on the Rhine in Germany. His retail career began in 1983 at Knauber, a family-run home improvement chain based in Bonn. In 2001, he moved to The Home Depot in the U.S. as president of the EXPO Design Center West Coast sales channel. From 2002 to 2008, he served as managing director of BHB, adding duties as general secretary of EDRA, which he formed to bring Europe’s retail home improvement associations together.

IN MEMORIAM
Les Coleman, retired VP of sales at Hamilton Beach, died early Christmas morning at Northumberland Hills Hospital. He is survived by his spouse Margaret, children Kelly and Jason (Sherry), and grandchildren Jacob and Maya, as well as his sister Nancy and her family. The online book of condolences can be viewed and signed here.

ECONOMIC INDICATORS
The standalone monthly rate of housing starts across Canada was 216,980 units (seasonally adjusted) in December, down from 251,675 units in November. Urban starts seasonally adjusted decreased by 15.1% in December to 198,132 units. Multiple urban starts decreased by 22% to 135,176 units in December. Single-detached urban starts increased by 4.7% to 62,956 units. Rural starts were estimated at a SAAR of 18,848 units. (CMHC)

Sales of existing homes in the U.S. rose to an 11-year high in November, an increase of 5.6%. The seasonally adjusted annual rate of 5.81 million units signaled new momentum in a market which had stalled for much of the year. (National Association of Realtors)

NOTED
The Canadian Press has named the demise of Sears Canada as 2017’s business story of the year.

OVERHEARD…
“We are committed to RONA and the proximity building centre model as one of Lowe’s Canada’s pillars of growth.”
—Serge Éthier, EVP of RONA Proximity, on the upcoming conversion of Lowe’s Canada’s chain of 17 Marcil stores to the RONA banner.

“These shows allow us to show our appreciation to the professional contractors and reinforce the many ways in which we work to be the building centre of choice for both contractors and homeowners.”
—Alec Thompson, contractor communications marketing manager for Home Hardware Stores, on the company’s annual Pro Shows, being held across the country over the coming weeks.

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