July 30, 2018 Volume xxiv, #30
"To me, the fundamental tales of life are: do good, do the best you can and reach for the stars sometimes.”
―Valerie Pringle (Canadian broadcast journalist and TV host, 1953- )
SUMMER PUBLISHING SCHEDULE: Please note that HARDLINES is published only once in August. There will be no issues on August 13, 20, and 27. We resume our regular publishing schedule with our September 3 edition.
(Click here to receive FREE Daily News updates to keep you informed between issues!)
IN THIS ISSUE:
- What’s really new about RONA’s new-look stores? Just take a look
- Home Depot goes after the home décor market
- New Lowe’s CEO hits the ground running with executive overhaul
- Home organization: a growing category―and a sales opportunity
- PLUS: RONA store in Surrey, IKEA Canada to open in Quebec City, retired Sears Canada workers try to save their pensions, unionized employees at Laurent Lapointe are not so lucky, Home Depot Canada Energy Star National Retailer of the Year―again, West Fraser reports Q2, Intertape Polymer to buy Polyair Inter Pack, Festool to expand head office, Stanley Black & Decker’s net sale, retail sales increase and more!
What’s really new about RONA’s new-look stores? Just take a look
TORONTO — “The customer was at the centre of our thought process when developing the new RONA building centre model.” That, says Patrick Lapointe, divisional vice-president, RONA operations, has been the guiding direction for parent company Lowe’s Canada as it works to increase the profitability of its RONA stores, in all their various formats.
The new home centre model, an evolution and renaming of its proximity stores, works toward three goals, says Lapointe, “to better meet current needs and trends in home improvement, become a true one-stop-shop for our customers’ home improvement projects and enhance our offering for contractors and pros.” The home centre in Etobicoke, in Toronto’s West End, is the latest example of the new look.
With this in mind, the store is aimed at both DIYers and contractors, and features a number of innovations, including some that borrow from its big box counterparts.
It’s the second RONA location in Ontario to be converted, and up to six more are expected to be completed by the end of 2018.
(For a tour of the new-look RONA home centre, click here.)
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Home Depot goes after the home décor market
ATLANTA — Home Depot is moving to position itself as the go-to destination for home décor products, in a shot across the bow of U.S. giants like J.C. Penney and Bed Bath & Beyond. An email to customers at the beginning of the month declared, “Your favourite home improvement destination is about to become your new favourite décor destination.”
The move is an indicator that Home Depot is planning to take advantage of the profile that e-retailer The Company Store, which it acquired at the end of last year, has built up in the upmarket housewares and design business. The signs were pointing that way soon after the purchase of The Company Store. Only a month later, Home Depot was touting its wares at Frankfurt’s home textiles show.
At the time of the acquisition, a Credit Suisse analyst found that décor categories alone constituted just 3% of Home Depot’s sales, even though ancillary categories make up about one-quarter. Realtor.com placed home décor on a list of categories for which customers can find better deals elsewhere than home improvement big boxes. Yet an Apex Market Report earlier this summer placed Home Depot among the top players for wall décor.
In its latest promotion, Home Depot’s offerings include furniture, linens, bath accessories and table and wall decorations. No fewer than 66 bath towels are available, some bearing the Company Store brand. Apart from area rugs, the retailer is sticking to offering “soft” items online for the time being, but execs will no doubt be watching sales closely. If the category is a success through the online channel, we could be seeing “soft” home offerings alongside Home Depot’s in-store hardlines.
This isn’t Home Depot’s first foray into home décor. In the ’90s, the company piloted a spin-off called Expo, a store for upmarket home improvement lines along with décor offerings such as textiles and dining ware. The Company Store takeover marks the first time Home Depot has seriously revisited the “soft” categories since it closed its Expo stores around the end of the last decade. With J.C. Penney, Bed Bath & Beyond and especially Sears all facing their own challenges, the timing may just be right.
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New Lowe’s CEO hits the ground running with executive overhaul
MOORESVILLE, N.C. ― In his inaugural initiative as Lowe’s Cos. CEO, Marvin Ellison announced major changes to the retailer’s leadership structure. Gone are the positions of chief operating officer, chief customer officer, corporate administration executive and chief development officer. Their responsibilities will be transferred to other executives under Ellison’s immediate oversight.
Ellison took the reins in Mooresville on July 2, having been lured away from the same position at J.C. Penney at the behest of activist Lowe’s shareholder Bill Ackman. Previous CEO Robert Niblock announced his retirement in March after 25 years with the company, including 13 as CEO. Ellison has a brief to cut costs and maximize profits to close in on rival Home Depot.
Because of the restructuring, Chief Customer Officer Michael McDermott will step down in November after just two years in the post, while COO Richard Maltsbarger left the company immediately. He had been in that role since November, having joined the company in 2004.
Chervon North America CEO William Boltz has been named executive VP of merchandising. His CV, like Ellison’s, includes time at Home Depot. He will step into his new role in mid-August.
Lowe’s is searching for outside candidates for EVP of stores and the newly created position of EVP of supply chain. Mike West, senior VP of supply chain operations, will fill the latter role in the interim. CFO Michael Croom retires in October, and an outside search is underway for his successor.
N. Brian Peace, senior VP of administration, will now report Bill McCanless, who remains as executive VP, general counsel and corporate secretary. Peace will transition to an unspecified position in the fall.
And more recently, Joseph M. McFarland III has been named executive vice president, stores, effective Aug. 15. In this role, McFarland will oversee the north, south and west divisions, Orchard Supply Hardware, pro and services businesses, operations engineering and asset protection for the organization. Like Ellison, McFarland most recently served in an executive leadership role at J.C. Penney and, prior to that, worked for Home Depot.
The changes do not affect Lowe’s Canada, where Sylvain Prud’homme remains in charge of Canadian and Mexican operations as president and CEO.
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Home organization: a growing category?and a sales opportunity
SPECIAL REPORT ― Home organization products comprise a growing category, and DIYers are the most frequent buyers of the cabinets, benches and other storage items they need to put their houses in order.
Packaged Facts, a U.S. consumer research firm, projects that home organization sales in that country will reach $19.5 billion in 2021. The group also reports that about 80% of sales in the category are for DIY organization projects.
In keeping with that trend, consumers say they are more likely to do their own work on home organization projects than hire professional help, according to recent research from Home Innovation Research Labs. About 75% of consumers install their own closet and garage storage.
Organization products for closets and garages range from metal hooks and plastic totes to countertops and cabinetry, making the category a good fit for hardware and home improvement retailers.
The North American Retail Hardware Association (NRHA) recommends that a good place to start with this category is with small items already carried in the store. Merchandising hooks, small shelves and bins together can help a retailer gauge whether customers are willing to step up to bigger and more complex organization products.
(NRHA is represented in Canada by Hardlines. To learn more about the NRHA and the range of online training programs available, please click here!)
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DID YOU KNOW...?
...that we’ve finalized the lineup for the 2018 Hardlines Conference? That’s right, we’ll have speakers from Sexton Group, Home Hardware, Lowe’s Canada, TIMBER MART, Orgill, RONA, eBay Canada and more! What you may not know, however, is that space will be limited for this year’s conference. We’re holding it at Queen’s Landing in historic Niagara-on-the-Lake, Ont. Click here to learn more and secure your seat today!
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RETAILER NEWS
SURREY, B.C. ― The RONA store in Surrey, B.C., also known as the Fleetwood store, is using extra space in its warehouse to serve as a direct delivery centre hub for other RONA corporate stores in the area. The 55,000-square-foot store, which has another 50,000 square feet for the lumber yard, is now supplying to 10 of the 40 stores in the Lower Mainland. According to Interim Manager Adam Creelman, the cities of Chilliwack and Abbotsford have their own distribution.
QUEBEC CITY — IKEA Canada will open a store in Quebec City on August 22. The existing Quebec City pick-up and order point will close on August 13. The 340,000-square-foot location will include a showroom and market hall, as well as a full restaurant and a children’s play area. This will be IKEA's 14th store in Canada.
TORONTO ― Retired Sears Canada workers have filed a motion in an Ontario court asking for the retailer’s remaining cash to shore up their pensions. According to the motion, some 18,000 retirees will receive less than they earned in pensions, as the plan is about $260 million short of funds. It argues that the pensioners should receive priority over other unsecured creditors, now that secured creditors have been repaid. They are seeking a total amount of nearly $730 million, including health and life insurance benefits. The court-appointed monitor for Sears’ liquidation process recently reported the company has about $135 million in cash remaining.
SAGUENAY, Que. ― The Quebec Superior Court has rejected a claim by unionized employees of the Laurent Lapointe store, which closed in December. The ruling concluded that the store had not been negligent or unethical when it laid off several employees the day after announcing it would seek investor capital that would allow it to remain open. That announcement, however, did not contain any guarantees, and the workers will receive only 3% of the lost wages claimed. Justice Jacques Babin noted that in a bankruptcy scenario, the employees would have been left empty handed.
TORONTO — For the 10th time, and fifth year in a row, The Home Depot Canada has been named the Energy Star National Retailer of the Year. Home Depot Canada was recognized for its commitment to offering consumers the most energy-efficient products and technology on the market. The retailer collaborates with vendors and utilities to make energy-efficient products more affordable and accessible for customers through rebates on products such as LED bulbs and Energy Star certified heat pumps, as well as education for customers on Energy Star products.
SUPPLIER NEWS
VANCOUVER ― West Fraser Timber Co. reported Q2 earnings of $346 million, on sales of $1.84 billion. The results compared to $197 million in earnings and $1.36 billion in sales in the previous quarter, and $146 million on $1.32 billion in Q2 of last year. The company’s lumber segment generated operating earnings of $358 million, up from $189 million in Q1.
MONTREAL ― Intertape Polymer Group has reached an agreement to acquire 100% of the outstanding value of Polyair Inter Pack. A privately held company with headquarters in Toronto and Chicago, Polyair specializes in bubble cushioning, foam, mailers and air pillow systems and shares IPG’s focus on e-commerce. The transaction is subject to regulatory approval.
LEBANON, Ind. ― The head office for Festool USA and Festool Canada will grow by 80,000 square feet, in its second large-scale expansion of the past three years. In a release, the company pointed to strong sales as the opportunity for the $9.3 million investment. Construction is slated to begin this November and will be completed by December of next year. Festool’s North American headquarters moved to its current location in 2006, and doubled its footprint in 2015.
NEW BRITAIN, Conn. ― Stanley Black & Decker announced that its net sales for Q2 came to $3.6 billion, up 11% from a year ago, with organic growth of 7%. Earnings of $1.96 per share had increased by $0.10 from Q2 of 2017. Restructuring charges for the quarter were $13.4 million. Excluding charges, restructuring charges for the quarter were $8.9 million compared to $6.3 million in Q2 2017.
ECONOMIC INDICATORS
Retail sales increased 2% in May to $50.8 billion, following a 0.9% decline in April. Sales rose in eight of 11 subsectors, representing 70% of retail trade. A 5.4% hike in sales at building material and garden equipment and supplies dealers contributed to the gain. Excluding the automotive and gasoline sub-sectors, sales rose by 0.9%. ―StatCan
U.S. residential housing activity dipped in June. Sales of new single-family houses last month were at a seasonally adjusted annual rate of 631,000, down 5.3% from May’s level of 666,000. However, it’s up 2.4% over June 2017. —U.S. Census Bureau
Ace Hardware Corp. has named Kim Lefko senior vice president, chief marketing officer (CMO). Lefko will report directly to John Venhuizen, president and CEO of the co-op. As the company’s new CMO, Lefko will be responsible for the brand’s global marketing and advertising. She will also be charged with leading digital initiatives and creating new strategies to further Ace Hardware’s reach.