January 29, 2018 Volume xxiv, #4


“Be patient with everyone, but above all with yourself.”
—St. Francis de Sales (French-born Roman Catholic bishop and patron saint of writers, 1567-1622)


IN THIS ISSUE:

  • Despite regional concerns, buying groups expect a strong year

  • Orgill Market previews “what’s in store” for Canadian dealers

  • Canadian Tire’s Mike Magennis outlines company’s customer-focused evolution

  • Canada continues to battle U.S. over softwood duties

  • PLUS: Ace Canada gains two in Quebec, Lowe’s store opens, Peter Legge at BSIA bash, international associations partner, Toys “R” Us will close 180 stores, hires at Liteline, eRetailer Summit to offer online marketplace, U.S. housing intentions, and more!

Despite regional concerns, buying groups expect a strong year

NATIONAL REPORT — “In talking to our members, we’re looking forward to a good year. There’s lots of work out there, and we’ll work hard to get our share.”

Those comments, by Bob Holmes, general manager of the TORBSA buying group, reflect the positive attitude of other groups in the industry, as they prepare for the year ahead. While the economy is forecast to grow moderately, most LBM buying groups are anticipating that home renovation and construction will benefit significantly from that growth.

TORBSA is based in Bolton, Ont., and most of its members are in Southern or Central Ontario. That province had solid growth in most regions last year, and Holmes expects that to continue in 2018.

In Winnipeg, Steve Buckle shares Holmes’s confidence. Buckle is president of the Sexton Group. It has 375 members located in every province and territory, but well over half of them are in Alberta, Saskatchewan, and British Columbia (source: Hardlines Who’s Who Directory—your ever-helpful and shamelessly self-promoting Editor). Sexton’s purchase volumes were up about 15% in 2017, he says, thanks in part to the addition of 18 new members. He estimates that half that growth was related to rapid price inflation in commodity wood products and gypsum.

For Pascal Houle, president of Groupe BMR, whose 300 dealers are located primarily in Quebec, conditions in that province have been more favourable, improving through 2017. “Be it construction starts, homeownership, renovation spending, or consumer confidence, all the indicators are good, which bodes well for our dealers,” he says. “Already, over the course of last year, we saw our dealers’ results improve and our growth increase.”

He adds that both DIY and contractor business looks strong. “Yes, I’d say that both client segments are doing equally well. Quebec’s housing stock is aging, so renovation prospects are good. In recent years, we observed a slowdown in the construction of single-family houses in favour of renovation. Our BMR dealers maintain very good relations with the contractors, and now that we are foreseeing an upturn in construction starts, it’s all looking up from here.”

Bernie Owens, president of TIMBER MART, says the mood is “very positive” nationally. “I see no big red flags for the economy.” He’s especially positive about his dealers in British Columbia. There, he says, they should do as well as in 2017, “and last year was a really good year.”

For Buckle, the recovery in Alberta remains fragile. “We are predicting business to be flat.” Nor does he expect Manitoba to repeat its strong growth performance in 2018. That province’s strong performance in 2017 was the result of a new lot levy in Winnipeg. “That encouraged builders to push construction forward.”

He does not think Ontario, and the Greater Toronto Area in particular, appears set to grow over the previous year, nor does British Columbia. “However, these markets are performing well already,” he points out.

Owens at TIMBER MART is likewise cautious about Alberta. Despite the fact that the economy there appears to have bottomed out, he doesn’t expect his dealers to feel the positive effects in the near term.

Houle expects varying conditions depending on where his dealers are located, as well. He is especially optimistic about business in the larger cities. “We see great potential in the urban markets in particular. Largely because of immigration, the population of these centres is increasing, which is why we are looking to set up shop [there].”

One concern, says Holmes at TORBSA, will be getting product. “Availability and supply of product, as the U.S. market takes off and disaster recovery continues there, eats up a lot of product.” He points out that most manufacturers nowadays are either based in, or do their biggest business, south of the border. “Most manufacturers have their footprint in the U.S. and they’ll look at that market first. I think we’ll have tight supply this year,” especially, he notes, in commodities such as gypsum and insulation.

Owens echoes Holmes’s concern, calling product supply “one of our primary concerns for our dealers for 2018.”

Overall, however, the groups are citing positive outlooks for the year ahead. Buckle expects housing starts to decline, renovation to be robust, and agricultural regions to be stronger than in 2017. He says that Sexton members continue to gain share, “and we expect to continue to add substantial new members in 2018,” which should drive 10% growth for the group.

For Houle at BMR, positive economic indicators and a number of projects under way by the group are paving the way for a strong year—an outlook shared by BMR dealers. “At our last Salon Groupe BMR at the end of 2017, there was a wave of optimism. The dealers sense the excitement in the markets and we are very pleased about it. They share our confidence for the year to come and those to follow.”

Orgill Market previews “what’s in store” for Canadian dealers

MEMPHIS, Tenn. — The upcoming Orgill Dealer Market in Orlando, Fla., will have some attractions geared especially for Canadian customers, including over 700 vendors exhibiting on the market floor.

This show will be held at the Orange County Convention Center and much like the last show, held last summer in Boston, Canadian customers will be able to find promotions developed specifically for them. The Smart Start programs will be featured in an 8,000-square-foot area with a variety of assortments in multiple categories. The featured category will be plumbing and electrical. But thousands of assortments will be represented from more than 100 Canadian Smart Start vendors.

As at past shows, new-concept stores will be front and centre. “Central Tool & Building Supply” will offer a heavier mix of products for contractors and trades. It’s also more than 50% bigger, to accommodate more electrical, plumbing, and paint. All the products in this model store will again be 100% Canadian-compliant and feature products from Orgill’s London, Ont., distribution centre.

The Brand Building team will be demonstrating some new resources available to dealers. Brand Building Guides include monthly buying, marketing, and merchandising tools that can be used to help plan and execute marketing efforts. BrandBase is the newest initiative and is a DIY-integrated marketing platform allowing retailers to customize and design their own marketing materials, including circulars, hotsheets, and in-store signage. BrandBase software demonstrations will be available in the Brand Building area and clinics will be part of Orgill’s extensive program of seminars, which will run throughout the show. 

Deals will be front and centre at the Orlando show. Door Busters will feature 16,000 square feet of products that can be booked out six months, while thousands of Pallet Buys will be featured at the back of the show.

“The decision to come to the show is an easy one when you consider the profitability gained with a strategic purchasing strategy,” says Phillip Walker, senior vice president of merchandising services for Orgill. “In addition, the Dealer Market offers the perfect opportunity to see all the new products and services available to retailers.”

 

Canadian Tire’s Mike Magennis outlines company’s customer-focused evolution

MISSISSAUGA, Ont. — Canadian Tire’s latest strategy focuses on the end customer, forcing each division to work together in new ways. Called “one company, one customer”, Canadian Tire is looking for ways to present itself as a solution for a customer whose needs extend into different fields, not just, say, automotive or hardware.

Explaining that strategy to vendors was one of the goals of Canadian Tire’s Mike Magennis when he spoke recently at a breakfast seminar hosted by the Canadian Hardware and Housewares Manufacturers Association (CHHMA). Magennis has taken on a new role as vice president, business development and operations. A 26-year veteran of the company on the merchandising side, he reports directly to Greg Hicks, president of Canadian Tire Retail.

Talking to the CHHMA vendor members, Magennis outlined how Canadian Tire’s new customer-facing strategy requires each division to shift its focus beyond operations and logistics internally toward the customer and their expectations. That has meant integrating its online presence with its physical stores. The company’s various retail banners generate huge traffic online, but that traffic, he noted, is not always transactional.

“We believe there’s a huge opportunity to unlock that channel.” But, slow to embrace online sales as effectively as some of its competitors, Magennis admitted that this is one of the reasons why Canadian Tire has been “a little bit behind.”

And the stakes are higher than ever. Four hundred stores now have their inventory online. That means customers can shop for the product, identify its availability at a nearby store, reserve the product, then pick it up in-store. However, that process is not always as quick or convenient as it should be. “Our stores were not designed for this,” he explained.

A pilot home delivery program is being tested in the Ottawa region. It began in November 2017, with the capability to ship small packages. On January 23, it started shipping large packages, as well, using third-party couriers. The test has been going well, Magennis said, increasing customer interactions, “and it’s provided us with some great learnings and it’s actually exceeded our targets.” When the pricing and operational issues are worked out, the program will be rolled out to all Canadian Tire stores.

 

Canada continues to battle U.S. over softwood duties


OTTAWA — Canada’s federal government is hitting back on two fronts at protectionist U.S. trade policies, including anti-dumping tariffs on imports of Canadian softwood lumber, taking its grievances to both NAFTA and the World Trade Organization.

Most of the nearly 200 trade violations alleged in the 32-page complaint concern other trading partners such as China and India, leading U.S. trade czar Robert Lighthizer to question the move. “Canada is acting against its own workers’ and businesses’ interests,” he fired back. “Even if Canada succeeded on these groundless claims, other countries would primarily benefit, not Canada.”

Former Ambassador Bruce Heyman, who represented the Obama administration in Ottawa from 2014 to 2017, was more sympathetic, telling CNBC that Donald Trump is “playing a bit of Russian roulette” with his NAFTA posturing. “It’s one thing to do [that] with your enemies,” he added. “It’s another thing to do it with your best friend.”

Undaunted, the Canadians this month followed up their WTO complaint by invoking Chapter 19 of NAFTA, applying for review of U.S. duties on softwood lumber and Bombardier aircraft by a bilateral trade panel. The Chapter 19 process, which allows Canada or Mexico to seek redress outside the domestic U.S. legal system, is itself a sticking point in the ongoing NAFTA negotiations. The White House is pushing for its provisions to be dropped from a “modernized” NAFTA deal.

The final round of negotiations concluded last week in Montreal. Canadian officials have been preparing for the possibility that the U.S. will signal its intention to withdraw from the agreement altogether, as Foreign Affairs Minister Chrystia Freeland’s advisory council believes it will do. The revised Trans-Pacific Partnership and even a fallback on NAFTA’s predecessor the FTA (which excludes Mexico) have been floated as potential “insurance” measures in such an event. Yet the vast majority of economists surveyed in a Reuters poll believe the agreement will be renewed without major changes.

DID YOU KNOW…?

...that Hardlines will once again host our Canada Night International Reception at the International Hardware Fair in Cologne, Germany? That’s right, we’ll be rounding up Canucks—vendors and retail buyers alike—who are attending the world’s largest hardware show for some great networking, incredible German beer, and a chorus or two of “O Canada.” Join your hosts Beverly Allen and Sigrid Forberg on day one of the fair, March 4. Details to come!

RETAILER NEWS

BOUCHERVILLE, Que. — Ace Canada announced it has welcomed two retailers in Gaspésie. Quincaillerie B.L. in Mont-Louis is a family business founded 35 years ago. Owners David and Louis Lemieux were attracted by Ace’s online channel, which complements their in-store offerings. Richard Briand, owner of Centre de rénovation Port-Daniel, echoed that thinking. “It was important for me to use the technology available to provide more options to people in the region,” he said in a statement.

BOUCHERVILLE, Que. — Lowe’s Canada has opened its 62nd store under the Lowe’s banner. The Red Deer, Alta., store is the first Lowe’s location in the area. It represents a local investment of more than $23 million and 128 new permanent jobs, with an additional 25 to 40 seasonal roles. The store features a retail space totalling more than 103,000 square feet, including 86,300 square feet of retail sales space and an adjacent garden centre of 17,300 square feet.

 

 

BONN, Germany —The International Federation of Hardware and Housewares Associations (IHA) has become a member of the Global Home Improvement Network (GHIN). This marks a partnership between the group that represents independent dealers around the world and GHIN’s membership of larger retail chains internationally. The IHA, with 14 country associations as members, is dedicated to supporting the sustainability and growth of privately-owned retail hardware and housewares businesses. The North American Retail Hardware Association (NRHA), represented in Canada by Hardlines, is a member of IHA. The membership of EDRA/GHIN now consists of 120 home centres operating 23,000 stores in 102 countries.

TORONTO — Toys “R” Us has just announced it will close 180 stores in the U.S. But the president of the Canadian company has issued an announcement that all 83 Toys “R” Us stores in this country will remain open for business. The company launched a financial restructuring of the business in both the U.S. and Canada last September, but the company in Canada is a going concern, says Melanie Teed-Murch. “Since the initiation of our September court proceedings, our primary focus has been reimagining our business with you, our customers, in mind and ensuring a normal course of operations. Our team is hard at work strengthening our competitive position and making the improvements necessary to ensure that we have the products when, where, and how you choose to shop with us,” said Teed-Murch in a release.

SURREY, B.C. — To help celebrate its 80th anniversary this year, the Building Supply Industry Association of B.C. (BSIA) has invited renowned business leader Peter Legge to be the keynote at its gala event. Legge is the head of Canada Wide Media, the giant Western magazine publishing company, as well as a professional speaker. The gala will be held at Harrison Hot Springs Resort, July 5 and 6, 2018.

SEATTLE — Amazon opened the doors of its fully automated grocery store to the public last week, after a year-long pilot catering exclusively to its employees. At Amazon Go, there are no carts, cashiers, or checkout lines. Instead, customers check in with an app when they enter, charge items to their electronic account by removing them from the shelves (placing an item back on the shelf deletes the charge), and then “Just Walk Out”. The online merchant, which reached a deal last summer to acquire Whole Foods Markets, says it has no plans to roll out similar technology in that banner.

 
SUPPLIER NEWS
CHICAGO — Home Improvement eRetailer Summit has entered into a strategic partnership with software provider Bamboo Rose, allowing participants at the next Summit to upload their product onto a virtual showroom for a 90-day period at a nominal fee. Bamboo Rose is the creator and host of the “eRetailer Summit Private Marketplace.” The 3rd Annual Home Improvement eRetailer Summit takes place November 7 to 9 at Hotel Monaco Chicago.

 

PEOPLE ON THE MOVE
Lora Meseman (Deighton) has joined EQ3 as director of omnichannel. Before this appointment at the Winnipeg-based furniture retailer and manufacturer, she spent 24 years at TruServ Canada, also in Winnipeg, then Ace Canada, where she served in a variety of communications and marketing roles. (lmeseman@eq3.ca)

Philip Fitzpatrick has been promoted to vice president and general manager of Positec Canada. He will be primarily responsible for overseeing the planning and implementation of sales, marketing, and product development programs, targeting existing and new markets.

Steve McMullen has been promoted to the role of regional sales manager – Ontario and Western Canada for Liteline Corporation. He joined Liteline in 2016 as regional sales manager for Ontario. Since then, he has leveraged his experience in the lighting industry to play a pivotal role in the growth of the company through customer relations, sales, and marketing. Also at Liteline: Evan Sadofsky has joined as inside sales manager. He brings 17 years of industry experience to the role, having worked previously at Alico Industries, a decorative lighting company. 

Mark Kennedy has been promoted to the position of vice president of Star Building Materials Ltd. in Winnipeg. He was formerly business development manager for the company.

 

ECONOMIC INDICATORS
In the U.S., housing units authorized by building permits in December were at a seasonally adjusted annual rate of 1,302,000. That rate is 0.1% below the November’s rate of 1,303,000, but is 2.8% above the December 2016 rate of 1,266,000. Housing starts for the month were at a seasonally adjusted rate of 1,192,000, down 8.2% from November’s estimate of 1,299,000 and down 6% from the December 2016 rate of 1,268,000. (U.S. Census Bureau)

 

NOTED
Canadian Tire will celebrate 100 years in 2022. By then, says CEO Stephen Wetmore, the company’s goal is to be the number-one retailer in the eyes of Canadian consumers.

 

OVERHEARD…
“For 2018, all indications are for us that it will be a very positive year, unless there are some hiccups along the way.”
—Bernie Owens, president of TIMBER MART, on business conditions affecting his members nationally.

 


CLASSIFIED ADS