Page 1

HARDLINES.CA

C O N N E C T I N G

T H E

H O M E

I M P R O V E M E N T

I N D U S T R Y

FIRST QUARTER / 2012

NEW TREND: ‘SHOP LOCAL’

OPTIONS FOR INDEPENDENTS

PLUS:

Main street hardware stores winning back the business

An executive interview with Robert Dutton and Bill Morrison

Q Budgeting for profits

Q Retail business conditions Q Your online reputation Q Merchandising and graphics Q Osoyoos Home Hardware

HOME IMPROVEMENT QUARTERLY

F E AT U R E S T O R Y

WHOLESALE CHANGES LBM distributors devise new ways to serve dealers

Canadian Publications Mail Agreement # 42175020. POSTMASTER: Send address changes to Hardlines Home Improvement Quarterly, 360 Dupont St., Toronto ON Canada M5R 1V9


YOUR FUTURE IS GREEN

187 DEALERS IN 5 PROVINCES 4 LUMBER & BUILDING MATERIAL WAREHOUSES 1 HARDWARE WAREHOUSE

For more information, Please contact Al Holton toll free : 1 800 361-0885 cell : 519 657-5808 www.bmr.co

HARDWARE


FIRST QUARTER / 2012 VOLUME 2, NO. 1 416-489-3396 EDITOR Michael McLarney, mike@hardlines.ca CONTRIBUTING EDITORS John Caulfield Stephen Payne CONTRIBUTING WRITERS Carl Duguay Martin Livingston Bruce Smith Bill Wilson ART DIRECTION TwoCreative.ca PUBLISHER Beverly Allen, bev@hardlines.ca

HARDLINES Inc. is: HARDLINES News HARDLINES weekly e-newsletter is the premier source for information on home improvement retailing in Canada.

HARDLINES Website From Mt. Pearl, NF to Victoria, BC, Canadians come to the Hardlines website for news, special reports, events, and market intelligence.

PRODUCTION MANAGER/CIRCULATION DIRECTOR Brady Peever, brady@hardlines.ca ACCOUNTING Margaret Wulff, margaret@hardlines.ca OFFICE MANAGER Katherine Yager, kate@hardlines.ca EDITORIAL OFFICES 360 Dupont St., Toronto ON Canada M5R 1V9 Hardlines Home Improvement Quarterly is published four times a year by Hardlines Inc., 360 Dupont St., Toronto, Ontario Canada M5R 1V9. $25 per issue or $90 per year for Canada. Subscriptions to the Continental United States: $105 per year and $35 per issue. All other countries: $130 per year. (Air mail $60 per year additional) Subscriber Services: To subscribe, renew your subscription, or change your address or contact information, please contact our Circulation Department at 289-997-5408; hardlines@circlink.ca.

HARDLINES Who’s Who Directory Detailed listings of buyers,sales, executive teams and store locations for more than 75 of Canada’s leading hardware and home improvement chains, independents, buying groups, wholesalers, co-ops and mass merchants.

HARDLINES Consulting Let the Hardlines team bring you the consultative guidance and support by Canadian market experts that you desire to facilitate your growth in this market.

Canadian Publications Mail Agreement # 42175020 POSTMASTER: Send address changes to Hardlines Home Improvement Quarterly, 360 Dupont St., Toronto ON Canada M5R 1V9. All editorial contents copyrighted 2012 by Hardlines Inc. No editorial may be reproduced without prior permission of the publisher. www.hardlines.ca www.hardlines.ca

Contact Beverly Allen, Publisher, Hardlines Inc. for more information: Phone: 416.489.3396; Mobile: 647.880.4589 bev@hardlines.ca Hardlines Home Improvement Quarterly SECOND QUARTER / 2011

3


“Joining Home Hardware has been like a great train ride – and we’re enjoying every moment. From training courses to on-going programs and seminars, Home provides all the services our staff – and our store – need to succeed. With Home, we know we’re headed in the right direction. This is one journey we’re glad we decided to take.” André Lacroix Ferris Home Hardware North Bay ON

To find out how you can benefit by joining Home, visit home-owner.ca - or talk to one of us. Dunc Wilson, National, 519.498.1302 Georgette Carriere, Ontario, 519.501.5988 Luc Martin, Quebec, 819.357.0203 Andrew Parkhill, Western Canada, 604.751.3853 Kevin MacDonald, Atlantic Canada, 902.368.1620


VOLUME 2, NO. 1

CONTENTS

FIRST QUARTER / 2012

COVER FEATURE

WHOLESALE CHANGES 21

LBM distributors devise new ways to serve dealers

DEPARTMENTS EDITOR’S MESSAGE

7

‘Shop local’ gathers momentum

BUSINESS CONDITIONS

8

MARKET REPORT

EXECUTIVE INTERVIEW

NEW OPTIONS FOR INDEPENDENTS 32

10

An interview with Robert Dutton of RONA and Bill Morrison of TruServ Canada

18

Chalifour Canada introduces 800 new Ace products New Unimat store is La Coop fédérée’s largest

Listen to your customers online

MERCHANDISING

power of 42 The in-store graphics

SPECIAL FEATURE

THE AMERICANS ARE COMING (AGAIN) 28

Castle president lauds independent thinking Home Building Centre dealers flock to installed sales

Green cleaning products, insulation

SOCIAL MEDIA

NEWSROUNDUP 12 RONA gets into modular homes

Where will the growth come from?

CATEGORY SPOTLIGHT

38

Palette deals, decor highlight BMR show

Dealers face a flat year

There’s a new wave of U.S.-based discounters coming to Canada

STORE MANAGEMENT

BUDGETING FOR PROFITS IN 2012 40

DEALER FILE

Sologuk, 44 Frances Osoyoos Home Hardware INDUSTRY AWARDS

MARTS named 46 TIM-BR Newsmaker of the Year ENDCAP

Schaefer, 50 Gina Ace Hardware,

A look at the most critical numbers on your P&L as you plan ahead

Baltimore & Washington, USA

Hardlines Home Improvement Quarterly

FIRST QUARTER / 2012

5


MAY 1-3, 2012 LAS VEGAS CONVENTION CENTER NATIONALHARDWARESHOW.COM

INCREASE YOUR SHELF WORTH inspire your shelves with fresh insights at t h e N at i o n a l H a r d wa r e S h o w 速

MORE Big Brands Apex Tool Group | Milwaukee Electric | Flambeau Outdoors | ITW Brands & Many Many More...

MORE New Products MORE Ways to Increase Sales Per Transaction Co-Location with Lancaster Paint Show Featuring 3M | Purdy Brush | Dap Inc. | Rustoleum NEW ON THE SHOW FLOOR: MADE IN USA

& ENERGY EFFICIENT PRODUCTS PAVILION

HARDWARE & TOOLS | PDRA PAINT & ACCESSORIES | LAWN, GARDEN & OUTDOOR LIVING HOMEWARES | PLUMBING & ELECTRICAL | S T O R A G E & O R G A N I Z AT I O N TA I L G AT E & O U T D O O R R E C R E AT I O N | INTERNATIONAL SOURCING | PET PRODUCTS

REGISTER TODAY AT NATIONALHARDWARESHOW.COM/HL


EDI T OR ’ S ME S S A GE

THINK LOCAL, THINK YOUR TOWN MICHAEL MCLARNEY, EDITOR

t started with grocery. Shop locally, buy produce from only local or regional suppliers. But that notion has expanded to a more wholistic concept of supporting not just the suppliers, but the merchants. Consumers are seeing value in spending at stores that are enmeshed in their community. Call it downtown, call it the local neighbourhood. Call it the main street of your town. All of them suffered neglect over the past two decades as retailers grew bigger and found larger locales – whether at the edge of town or in a power centre away from your local shopping area. The big-box phenomenon drove the trend, without question, leading the way with giant 120,000- and 200,000-square-foot outlets that inexorably sucked retail traffic – and the economic life – out of many communities. Now many main street retailers are fighting back. This issue celebrates that renaissance of the local merchant. Gina Schaefer, talks about her eight Ace hardware stores in the heart of Washington, DC and Baltimore (see “Endcap,” page 50). Frustrated by the fact that to do any home improvement shopping herself she had to get in a car and drive, Gina became determined to create a destination for hardware shoppers in her inner city community. Her vision of a viable urban hardware store has

I

been realized in part by tremendous support that she engenders from her neighbours, who recognize that money spent in her store stays in their community. Frances Sologuk understands the value of tapping into, and supporting, one’s community. Like so many dealers in this country, her Home Hardware store has made community involvement a cornerstone of her store’s posi-

Now many main street retailers are fighting back.

tioning in the vacation and wine region of British Columbia’s southern Okanagan Valley (see “Community Relations File,” page 44). The importance of local dealers getting national support is also the strategic thinking behind the new “TRU” banner, created by TruServ Canada (see “Executive Interview,” page 28). TRU responds to the desire of a new generation of dealers to stay involved in their community – whether in small towns or big city neighbourhoods. As consumers return to local merchants for hometown service, dealers have to be ready to meet that consumer with an equation of engagement and powerful customer service. At HARDLINES, we consider that challenge to be job one for 2012.

mike@hardlines.ca www.hardlines.ca

Hardlines Home Improvement Quarterly

FIRST QUARTER / 2012

7


QUARTERLY BUSINESS CONDITIONS

RETAIL CONDITIONS

TOUGHER IN THIRD QUARTER Following an improvement in conditions in the second quarter, sales among dealers across the country lost some of their momentum in the third quarter.

ealers have been consistently pessimistic since the second quarter of last year. The surge experienced in the first quarter of 2010, due to the wrap-up of the Home Renovation Tax Credit, was short lived. And that slowdown persisted through 2011. While the second quarter showed some glimmers of improvement for dealers, 70.4 percent of dealers surveyed for the latest HARDLINES Business Conditions Survey, done in conjunction with the NRHA Canada, indicated that sales were either down or flat in the third quarter, compared with the same quarter a year earlier. In the second quarter of 2011, by comparison, 66.6 percent of dealers reported being down or flat.

D

8

FIRST QUARTER / 2012

While 48.1 percent of the dealers reported that their sales were down in the second quarter, that number increased slightly to 50.0 percent by the third quarter. Only 29.6 percent of dealers experienced an increase in sales in the third quarter over the same quarter a year earlier. That is down from exactly one-third reporting an increase in their sales in the second quarter of 2011.

STAFFING REMAINS A BIG CONCERN Dealers are making changes to adapt to both seasonal and economic changes in the retail market. Just 7.5 percent of dealers added employees in the third quarter, versus 27.2 percent who increased staff in

Hardlines Home Improvement Quarterly

the second quarter. Fully 29.9 percent of dealers decreased their staff. That compares with 18.5 percent who cut staff in the second quarter. The single biggest issue for dealers in the third quarter was staffing, reported by 21.5 percent of respondents. The next most important issue was increased competition, reported by 18.5 percent, followed by customer retention (16.9 percent), and training (15.1 percent).

OUTLOOK IS MIXED Dealer optimism continued to erode in the third quarter. Just over one-third said they expect sales to increase during the next

www.hardlines.ca


THIRD QUARTER six months, down from 61.3 percent who responded positively in the second quarter. Conversely, 41.1 percent said they did not expect their sales to increase in the next six months, up from 16.2 percent in the second quarter. Dealers become somewhat more optimistic in their outlook over the next 12 months, with 57.1 percent expecting sales to increase. This level is similar to the response in the second quarter, at 60.5 percent. However, the percentage of dealers who don’t think sales will increase climbed to 21.9 percent, compared with just 14.8 percent in the second quarter.

VENDORS SEE SOME IMPROVEMENT Compared with the second quarter, vendors’ prospects improved. Of the vendors responding, 31.8 percent saw sales improve in the third quarter, a healthy increase from 22.2 percent in the second quarter. Vendors reporting a drop in sales fell to 53.4 percent in the third quarter from 58.9 percent in the second quarter. Overall, however, vendors responding to the Third Quarter Business Conditions Survey were slightly worse off than the dealers. Those reporting that their sales were either up or the same in the third quarter versus the same period a year earlier amounted to 46.6 percent, less than the 50 percent of dealers who indicated that sales were up or the same.

RETAILERS: 3Q SALES 2011 VS. 2010

www.hardlines.ca

VENDORS: 3Q SALES 2011 VS. 2010

14.8% SAME

20.4% SAME

29.6% UP

31.8% UP

50.0% DOWN

53.4% DOWN

RETAILERS: Do you expect sales to increase during the next six months?

VENDORS: Do you expect sales to increase during the next six months?

12.5% NOT SURE

25.2% NOT SURE 33.6% YES 28.4% NO

59.1% YES

41.1% NO

RETAILERS: Did you offer new products in the second quarter?

CONCLUSION Based on the pattern of responses to the Business Conditions Survey through the first three quarters of 2011, HARDLINES anticipates that as much as 70 percent of the dealers in Canada will have ended the year with either negative or flat sales growth compared with the previous year. Given the economic uncertainty both at home and abroad, dealers are wise to remain cautious about their prospects coming into the 2012.

B U S INE S S C ONDI T ION S

YES

NO

64.5%

35.5%

RETAILERS: Top issues in 3Q Customer retention

16.9%

Expanding products

Training

21.5%

15.1%

Staffing

18.5% Increased competition

Adding new services

11.7% 7.7% 8.6% Succession

Source: HARDLINES Quarterly Business Conditions Survey

Hardlines Home Improvement Quarterly

FIRST QUARTER / 2012

9


WHERE WILL THE

GROWTH COME FROM? Independents will have to duke it out with large-surface retailers to achieve any growth in the coming year. n estimated three-quarters of Canadian home improvement and hardware dealers have ended 2011 with f lat or negative growth (and, yes, most of them are in the latter category), holding overall industry growth year over year at near-f lat levels. Dealers are looking to distinguish themselves with higher-value products in the front end as a way to carve out more margin and

A

10

FIRST QUARTER / 2012

set themselves apart from the mass merchants and discounters. At the back end, they’re focusing more than ever on delivering competitive pricing and a meaningful level of service to their contractor and builder customers. Meanwhile, the big boxes are focusing on price and improved customer service. In other words, everyone is after everyone else’s business. Because a whole lot of

Hardlines Home Improvement Quarterly

growth is not expected from the marketplace. Housing starts are forecast to “stabilize” into 2012, according to Canada Mortgage and Housing Corporation. After a slight increase to 191,000 units in 2011, up only slightly from 189,930 units in 2010, starts are forecast to drop again this year to 186,750 units. Reno spending, which is at least as big as expenditures on new housing, will be

www.hardlines.ca


M A R K E T R EP OR T

RETAIL SEGMENT ANALYSIS

affected by sales of existing homes. In 2012, resales are expected to move up 4.6 percent from 446,700 units to 458,000 units.

Industry growth by retail segment ($ millions) Store Format

2009

IT’S ALL ABOUT MARKET SHARE

Hardware stores

So where will the growth come from? The fortunes of independents will continue to be dictated by local markets. Watch for some erratic growth coming out of Alberta, especially in the north, while Newfoundland is projected to continue with steady growth. But other parts of the country will have to rely on stealing market share to grow. By segment, hardware stores can expect some growth, especially after seeing their collective sales drop by almost 10 percent in 2010. Some recovery will occur as consumers look to local markets as the “shop local” movement gains momentum, and as ageing consumers place more value on the convenience that smaller stores offer. Building centres will make modest gains in 2012, though not as aggressive as the 3.1 percent gains made in 2010.

Building centres

LARGE RETAILERS POSITIONED FOR GROWTH The retailers best positioned to do this are the big chains. And considering that the big boxes were most adversely affected by the slowdown of the recession and the two years that followed, they are expected to make the most significant gains in 2012. Home Depot Canada, especially, was hard hit during the recession. Some turnaround is expected from this company in 2011, which will continue into 2012. Like it’s orange competitor, RONA will not be building any new boxes this year. Rather, it will keep cleaning up its existing ones. If RONA maintains efforts to tidy up its big boxes and tighten inventory, those stores will enjoy some recovery, as well. Kent’s big boxes in Atlantic Canada will benefit from sustained consumer confi-

www.hardlines.ca

2010

Change

$5,264

$4,769

-9.4%

$17,608

$18,147

3.1%

Big boxes

$8,279

$8,045

-2.8%

Canadian Tire*

$4,690

$4,783

2.0%

Mass merchants*

$1,821

$1,821

0.0%

Club stores*

$1,454

$1,614

11.0%

$39,116

$39,179

0.2%

TOTAL

* Estimated related hardware, décor, and home improvement sales only

Estimated growth of big boxes in 2011 ($ millions) Company

2009

2010

2011 (fc)

Change

Home Depot Canada

$5,565

$5,192

$5,281

1.7%

RONA*

$2,231

$2,231

$2,248

0.8%

Kent*

$244

$251

$256

2.0%

Lowe’s Canada

$239

$371

$496

33.7%

$8,279

$8,045

$8,281

2.9%

TOTAL * Big box stores only

dence and aggressive advertising. But the biggest growth, percentage-wise, if not necessarily in dollar terms, will continue to come from Lowe’s Canada. It intends to open at least four stores in 2012, including possibly one in a new province. The box stores already showed some signs of recovery in 2011; they are forecast to grow by 2.9 percent by the end of last year. That beats — and contributes to — HARDLINES’ growth forecast for the entire industry of 1.6 percent in 2012. Canadian Tire, as well, continues to weather the slowdown with its pricedriven strategy that pulls consumers into its stores for flyer-driven specials

and increased emphasis on consumables. Although clothes and food and grocery continue to drive traffic and volumes for mass merchants, Walmart Canada is looking again at hardlines, especially décor and housewares items. Last summer, it launched “Hometrends,” a collection of furniture, decorative accessories, and functional items. Source: HARDLINES Retail Home Improvement Report, 2011-2012 Edition. The Annual Report on Canada’s Retail Hardware/Home Improvement Industry. For more information, visit hardlines.ca and click on “Publications and Reports.”

Hardlines Home Improvement Quarterly

FIRST QUARTER / 2012

11


NEWSROUNDUP OF THE HOME IMPROVEMENT INDUS TRY

Visit Hardlines.ca for breaking news in the Home Improvement Industry

From palette deals to sophisticated décor items, the BMR buying expo offered a range of product and merchandising options.

PALETTE DEALS, UPSCALE DECOR HIGHLIGHT BMR DEALER SHOW he mood was upbeat among both dealers and vendors at the recent expo of BMR, the buying group and full-line wholesaler of hardware and building materials to its 190-plus dealers. Despite coming at the end of a year where most dealers, in and out of Quebec, will be lucky to match last year’s sales, dealers at the show were looking ahead with enough optimism to generate purchases. From palette deals to sophisticated décor items, the buying expo offered a range of product and merchandising options. “The great thing is that the vendors are taking orders,” said Bruno Baldessari, retail project director at BMR, as he walked through the aisles of the mid-November show at the Quebec City Convention

T

12

FIRST QUARTER / 2012

Centre. “That’s the basis of a strong buying show.” BMR is supporting its liquidation and palette sales, a significant presence at the show, with flyer promotions every two weeks. Down the hall, the company’s storewithin-a-store décor offering, Boutique Inspiration, featured textured wall coverings, artificial flowers, mirrors, vases, framed pictures, and more. There was even a full lighting collection, now in its second year, backed by a catalogue of its own. Another store-within-a-store merchandising feature, Agrizone, first introduced at last year’s BMR show, showcased an expanded range of products suited for dealers serving rural and farm markets. “Clothing is by far the biggest category

Hardlines Home Improvement Quarterly

here,” Baldessari said. Other strong categories include equine and pet food. “We focus a lot on the front end of the store,” he continued. “The dealers who have combined that into their stores have done well.” The right mix of front and back end is different for each store, he added, but insists BMR’s hardware offerings have generally helped his dealers. “The ones who are doing more retail are doing better overall.”

www.hardlines.ca


KNOWLEDGE IS POWER. Stay in the know every single week with HARDLINES. Subscribe online at Hardlines.ca

RONA PARTNERS WITH MODULAR HOME MANUFACTURERS he weak housing market south of the border has prompted a number of American modular home builders to enter the Canadian market. And that has taken a bite out of LBM dealer sales to homebuilders in smaller communities, says Maxime Harvey, RONA’s merchandising director for forest products, RONA has come up with a way for its independent dealers to fight back, with a pre-fab home program of its own. Called “Fabrica,” the program represents a partnership with modular home builders in different provinces. That partnership will be two-pronged: consumers will be able to order full home packages that will be constructed and delivered by the

T

modular home builder; home builders and contractors will be able to order preconstructed components, including walls and roof, ready for finishing. A system of pre-assembled, insulated walls is available in lengths up to 40 feet long. “A building team could get the walls up on an existing foundation within a day,” says Harvey. According to Harvey, dealers no longer have to sit by and watch building material sales go to a competitor. And, he adds, “Once you are able to capture the customer with the pre-fab part, then you get them to stay inside the store to sell them everything else.” Harvey expects the program to up and running on a trial basis with a handful of dealers in Quebec, Ontario, and the West by this spring.

BRIEFLY TOTEM PROMOTING CLEAN AIR TREE KITS Totem Building Supplies plans to plant one million trees in Alberta’s boreal forests near Slave Lake, and the company has recently completed planting the first 100,000 trees. The initiative is just one component of Totem’s long-term sustainable development platform. Totem customers are encouraged to purchase a Clean Air Tree Kit, containing Canadian white spruce tree seeds. They can then plant their own tree and use a special PIN code inside the tree kit to register their planting on the World Clean Air Forest Initiative website and world map. Totem uses the proceeds from each tree kit sold to plant even more trees.

CANADIAN TIRE THINKS SMALL “The era of the big box is starting to have a bit of a sunset,” says Rob Shields, vice-president of marketing for Canadian Tire. While Canadian Tire hasn’t given up on big boxes (“If a trading area can support a 90,000-square-foot store, we put one in”), Shields says Canadian Tire’s smaller stores are playing “a much bigger role in our brand strategy.”

LOWE’S TRACKS CUSTOMERS’ HABITS THROUGH KEY FOBS

Thanks to a new partnership between RONA and regional modular home builders, independent dealers will be able to provide full home packages, says Maxime Harvey, merchandising director for forest products at RONA inc.

www.hardlines.ca

Lowe’s has ramped up its service offering with a new online program called My Lowe’s, available through all of its U.S. stores. Customers create a profile in-store or online and are then given a key fob. With it, all purchases from Lowe’s are henceforth recorded, in an effort to simplify future purchases or re-orders, e.g., more paint for a touch up or filters for an air conditioner. Based on a customer’s purchase history, My Lowe’s will even send reminders, such as when to refertilize the lawn or add chemicals to the pool.

Hardlines Home Improvement Quarterly

FIRST QUARTER / 2012

13


NEWSROUNDUP

STAY TRUE TO YOUR CORE BUSINESS, CASTLE PRESIDENT ADVISES INDEPENDENTS gainst a backdrop of a tough economy, the president of Castle Building Centres says the independent dealer remains the backbone of the retail home improvement industry Ken Jenkins, who spoke at the 16th Annual Hardlines Conference last fall, acknowledged that big box competitors

A

They are the ones we have to listen to for support,” he said, referring to Castle’s business model, which leaves marketing and merchandising decisions to the dealers themselves. Based on Castle’s approach, he offered some suggestions for independent dealers: “Stay true to your core and stay focused on the strengths of your business. Don’t take product or get into businesses that benefit head office — don’t believe that they know what’s best for your business.” During his presentation, Jenkins discussed what he called “myths” about independent dealers in this industry, including the perception that independents don’t have a plan. “Some of the most sophisticated business plans that I have read in my career have been supplied by independent dealers,” he said.

Ken Jenkins, president of Castle Building Centres

“Some of the most sophisticated business plans that I have read in my career have been supplied by independent [dealers].”

And as for the notion that buying groups that promote their members’ independence, like Castle, can’t run coordinated programs, Jenkins had this to say: “The idea that you can’t herd cats is another myth. All you have to do is find a common denominator. And we have found that the ultimate common denominator is finding ways to make our dealers money.”

Home Building Centre dealers flock to installed sales As the importance of services within the retail industry increases, Home Hardware has been fine-tuning its Home Installs program. According to Murray Cutler, who heads up the program, the number of dealers using the program has almost doubled in recent years, and now 223 dealers — representing almost half of Home’s building centres and home centres — are using the program. And more dealers are signing up every week, he notes.

14

FIRST QUARTER / 2012

That growth is coming because the program stays focused on the dealers’ needs. “We now have a nine-member advisory board of dealers from across the country to finetune the program and explore ways to grow it among the dealers.” Project sales through Home Installs can range from $10,000 to $40,000, Cutler says. Home offers a number of things to support the program for its dealers, including in-store

Hardlines Home Improvement Quarterly

signage (ceiling banners, banner hangers, display decals, and wall murals), brochures and brochure holders, vehicle graphics, and even an eight-foot Home Installs booth rental for dealers who want to participate in local home shows. A series of six optional flyers is designed to generate sales from homeowners as they plan their renovation projects. Topics of the flyers include kitchen and flooring, garage and shed, and windows and doors. www.hardlines.ca

PHOTO: CALLUM PINKNEY

have raised the bar — and continue to drive consumer awareness of home improvement. But despite their arrival in Canada almost two decades ago, “they did not cause the end of an industry,” he said, and independents in Canada continue to flourish. Jenkins touted the merits of those independents in his presentation. “The entrepreneur today is the driver of the economy.


CHALIFOUR CANADA INTRODUCES 800 NEW ACE PRODUCTS ce-branded product got a big push at Chalifour Canada’s retailer buying expo at the Place Bonaventure, Montreal, in late October. More than 800 new Ace products, available to dealers though Chalifour’s own warehouse, were introduced. Following years of aggressive promotion, there are now 145 Ace-branded stores in Canada. Most of them are in the province of Quebec, the result of a concerted effort over the past few years to convert them from the Pro banner or from un-bannered independents that had been serviced historically by Chalifour Canada (and its predecessors, CanWel Hardware and Sodisco-Howden). And while six more dealers converted to Ace last year, the Pro banner is still flown by 32 dealers. Nor are there any immi-

A

nent plans to stop supporting Pro, says Andrew Allen, vice-president of sales and operations for Chalifour Canada, which, through its parent company, TIM-BR MARTS Ltd., owns and manages Ace in this country. “We leave that decision up to the individual dealer,” he says. Nevertheless, it’s clear that more Pro dealers are slowly drifting to the much more extensive Ace offerings, originating through Ace Hardware’s headquarters in Oak Brook, IL. There are more than 4,400 Ace dealers worldwide. Ace dealers in this country have “full access” to all Ace programs, says Randy Martin, vice-president, hardware for Chalifour Canada, which, in addition to its Ace offerings, deals with about 500 hardware and LBM vendors and offers 35,000 SKUs.

BRIEFLY

HOME HARDWARE APPOINTMENTS At Home Hardware Stores, John Dyksterhuis has been appointed vice-president, distribution. Darrin Noble has been appointed vice-president, general manager, Burford Paint and Home Products.

RONA SPONSORS VANCOUVER CANUCKS RONA has forged a three-year partnership with Canucks Sports & Entertainment, owners of the NHL hockey team in Vancouver, Canada’s third-largest metropolitan area. With this deal, the RONA brand will be a permanent fixture during Vancouver Canucks home games and will appear in locations visible to TV cameras, with one logo on the ice and a second on the boards near the home team’s net. The RONA name will also be on the players’ practice jerseys. The announcement also marks the beginning of a community-building initiative between RONA and the team. Together, they will renovate youth sports facilities in local communities.

TRUSERV ADDING SERVICES, BRANDS TRUSERV CANADA has plans to widen its range of services to independent hardware and building supply dealers with new financing tools. In partnership with Desjardins financial, TruServ, which was purchased by RONA in the fourth quarter of 2010, is reviewing the viability of offering credit cards and gift cards under its new TRU brand. Since its acquisition by RONA, the Winnipeg-based wholesaler has already introduced its dealers to Haussman power tools, as well offering them access to the Uberhaus and Facto brands, which were all previously exclusive to RONA dealers. Ace-branded product got a big push at Chalifour Canada’s retailer buying expo at the Place Bonaventure, Montreal, in late October

www.hardlines.ca

Hardlines Home Improvement Quarterly

FIRST QUARTER / 2012

15


NEWSROUNDUP

NEW UNIMAT STORE IS COOP FÉDÉRÉE’S LARGEST

L

largest members, Coop des Appalaches. It’s also La Coop’s 177th Unimat location, all but two of which are in the province of Quebec (there are two Ontario locations, near Ottawa). “This store has a real ‘wow’ effect,” says René Labrecque, Unimat’s executive director. “Consumers want everything under one roof, and, above all, to be guided towards

La Coop fédérée’s new Unimat store in Thetford Mines, QC, features wide open sightlines and new merchandising techniques. At 32,000 square feet, it is the largest of the farm co-op’s 177 stores.

Unimat: the growth of a retail brand The Unimat brand has now completely replaced the former Co-op brand in the province of Quebec in all 177 of La Coop fédérée’s retail hardware and building supply outlets. The decision to phase out Co-op was a strategic decision to appeal to a wider customer base, says René Labrecque, Unimat executive director. “People would see a Co-op sign and think, oh, I’m not a member, so I won’t go in,” he said. “So we decided to be more inclusive.” Despite the changes, 147 of the 177 Unimat stores are still operated by local

16

FIRST QUARTER / 2012

co-operatives. The remaining 30 are independent dealers who like the Unimat brand and the supply chain that La Coop fédérée offers them, Labrecque says. Recently, Unimat has been the incubator for a new private-label farm and garden brand. It’s called Unijardins and was “prelaunched” at La Coop’s recent dealer show. It will be phased in as a replacement for La Coop’s older garden brand, Plusvert. Unijardins covers animal and bird feed, lawn and garden products, fertilizer and live plants.

Hardlines Home Improvement Quarterly

Unimat has grown steadily since the banner was introduced in 2004, Labrecque says. Three new dealers joined up in 2011, after six dealers signed in 2010. A member of three national buying groups (Spancan, ILDC and IPCO), La Coop fédérée’s estimated retail sales, through Unimat, exceed $300 million. Overall, La Coop’s total revenues, as a farm co-op, all divisions, are approximately $4.4 billion.

www.hardlines.ca

PHOTO: JEAN-YVES CLICHE FOR UNIMAT

a Coop fédérée, Quebec’s farm cooperative, has unveiled the largest retail outlet in its network, in Thetford Mines, QC. The state-of-the-art Unimat home improvement store measures 32,000 square feet. This is the first Unimat to bring together a complete range of home improvement products under one roof. In addition to the farm and garden SKUs that have been Unimat’s main strength since the banner was launched by La Coop in 2004, this new store includes expanded selections of plumbing, electrical, and hardware, as well as a large decoration centre. It features a wide-open, accessible look and boasts good sightlines. This is also the first Unimat store to offer a complete range of LBM, presented inside the store on cantilevered racking. But most significantly, it presents a fresh, new image for Unimat. The $7 million project is a partnership between La Coop fédérée and one of its

what will best fill their needs.” He emphasizes that the new location will combine the best of both large and small footprints. “The customer will enjoy the feel of a neighbourhood hardware store, even in a large warehouse, due to our superior, personalized service and warm welcome.” Some of this store’s innovative features could show up next in a new, smaller Unimat under construction in St-Bruno, QC. It’s an 8,000-square-foot model owned by Nutrinov, another of La Coop fédérée’s affiliated dealers. Opening is scheduled for spring 2012.


If we weren’t such polite Canadians we’d boast that we have about six times the buying power, almost twice the SKUs and a better pricing guarantee than our American wholesaler friends. But they do squeeze great orange juice, eh? TRUSERV CANADA has been supplying the hardlines needs of independent dealers, on a low-cost, no frills basis, for almost 100 years. Now we are part of the largest hardware and LBM distribution company in Canada. Which means that we can confi dently beat any hardware distributor’s Canadian pricing, coast to coast, every time, guaranteed. Note: Offer does not apply to citrus products. Scan for complete details.

www.truserv.ca/priceguarantee

The landscape has changed. Call us toll free 1.800.665.5085 www.truserv.ca


C AT EGOR Y S P O T L IGH T

GREEN CLEANING PRODUCTS WITHOUT GREENWASHING reen” cleaning products for household use first came to the attention of North American consumers 30 years ago, with the introduction into hardware and grocery stores of Simple Green. It was (and is) a non-toxic, non-abrasive, environmentally-friendly cleaner that had been developed by a father-and-son team in California for cleaning machinery in the food industry. It launched a category. Today, more than 200 major firms manufacture eco-friendly cleaning products in North America. The major home improvement retail banners in Canada have all launched their own brands. That’s a lot of competition for the customer’s attention. Customer confusion (and fears of “greenwashing”) has been reduced by certification from organizations such as Green Seal and EcoLogo. When products are seen as offering real value, they are even more attractive to consumers. Here are some recently-launched products in this important category:

G

Carpet cleaning is a lot easier with the new generation of steam cleaners, like Bissell’s ProHeat 2X Healthy Home Cleaner. It comes with Microban antimicrobial product protection, is compact, convenient to use, and over the medium term, more economical than renting a commercial machine from the grocery store or hiring a carpet cleaning service. There are also steam cleaners for hardwood, laminate, tile, vinyl, stone, and marble floors. The Black & Decker Steam Mop uses regular tap water to wipe out 99.9 percent of germs, dust mites and bacteria. And with the Steam Mop there are no chemicals and no water residue on the floors when you’re done. Surface cleansers are among the most frequently purchased cleaning products. Environmental ethics aside, price is the major determining factor when it comes to which brands to buy. The new Vim PowerPro Naturals uses up to 98 percent naturally derived ingredients, and is priced in line with regular Vim cleaners.

BY CARL DUGUAY

Planet People has a whole new approach to household cleaners. Most cleaners are comprised of 95 percent water and five percent cleaning solution, but the company’s new iQ cleaners do away with the water. To make a bottle of cleaner, consumers just fi ll a re-usable iQ bottle with their own tap water and drop in a no mess iQ REFill cartridge, which contains the cleaning solution. This reduces the plastic waste associated with traditional cleaners by 80 percent.

Bissell’s ProHeat 2X Healthy Home Cleaner

The Black & Decker Steam Mop uses regular tap water to wipe out 99.9 per cent of germs, dust mites and bacteria.

iQ cleaners reduce plastic waste by allowing the consumer to add their own tap water to a concentrate that comes in cartridges.

18

FIRST QUARTER / 2012

Hardlines Home Improvement Quarterly

www.hardlines.ca


HOUSEHOLD CLEANERS & INSULATION

Saving space on the store floor is just one of the reasons for OC’s introduction of “SuperSaver” bags for the EcoTouch product. They are the same physical size as traditional bags of insulation, but contain 11 to 60 percent more insulation. Less packaging is also expected to result in a 27 percent reduction in landfill. Roxul’s ComfortBatt insulation is made of stone and recycled slag that gives it

dimensional stability — which means no sagging between studs. It provides an effective barrier against noise, is waterrepellent, doesn’t support mould or fungal growth, is CFC (chlorofluorocarbon) and HCFC (hydrochlorofluorocarbon) free, is fire-resistant (up to 2,150 F) and contains 75 percent recycled material. Plus, it’s Greenguard certified. Spray foam insulation, which has been available to commercial insulators for some time, is becoming increasingly popular with DIYers. Spray foam in aerosol cans, like Dow’s Great Stuff, is super convenient, and relatively easy-to-use for sealing air gaps around outdoor fixtures, electrical outlets, windows and doors, sill plates and the like. For insulating larger areas, home owners can now use products like Dura-Foam, from Canadian Industrial Distributors. Dura-Foam is a single-component polyurethane foam that is freeze/thaw stable, making it ideal for harsh Canadian winters, and it doesn’t emit any ozone depleting volatile organic compounds. Tiger Foam is another quick curing, spray polyurethane foam air sealant kit that doesn’t contain CFCs, VOCs, or formaldehyde.

Johns Manville Unfaced EasyFit perforated thermal and acoustical fiber glass insulation features vertical perforations. Rather than cutting the insulation, installers can separate sections by hand to fit nonstandard-width framing cavities.

Tiger Foam Spray Foam Kits are quick curing. These spray polyurethane foam air sealant kits are manufactured to the highest standards for the Canadian construction market.

INNOVATIVE INSULATION TO WARM UP YOUR SALES he new EcoTouch PINK FIBERGLAS insulation from Owens Corning has a minimum of 30 percent postconsumer recycled content and 50 percent total recycled content. Plus it’s made of all natural materials and a formaldehydefree formulation. And, for every pound of EcoTouch insulation you install, you save 12 percent more energy than was used to produce it.

T

Dow’s Great Sutff is a super-convenient spray foam insulation perfect for DIYers.

www.hardlines.ca

Hardlines Home Improvement Quarterly

FIRST QUARTER / 2012

19


BUILDING PRODUCTS CANADA LTD.

Weapon of mass construction. Let’s face it, you’re nothing without your customers. They want the best – whether it’s service, products, or pricing – and you want to be the one to give it to them. It’s sort of the same way we approached the development of the complete Grip-Rite™ Fastening System – professional-grade pneumatic tools, compressors, fasteners and accessories designed and built to meet the needs of the most demanding customers – yours. Get a grip and call us at 800-665-6605 to become a stocking distributor today. Or visit www.grip-rite.com for more information.

PNEUMATIC TOOLS

COMPRESSORS

HAND DRIVE FASTENERS

COLLATED FASTENERS

ACCESSORIES


COVER STORY

BY JOHN CAULFIELD

LBM WHOLESALERS

No stone unturned After surviving another tough year, with commodity prices stuck in the doldrums, Canada’s LBM wholesalers are counting on new product lines, new alliances and, in some cases, new markets to kickstart new growth.

www.hardlines.ca

Hardlines Home Improvement Quarterly

FIRST QUARTER / 2012

21


LBM WHOLESALERS

Commodities prices are off by 10 to 12 percent. —Al Jack, AFA Forest Products

COVER STORY

W

hen Canada’s leading distributors of lumber and building materials look back on 2011, they’ll likely recall two very different scenarios. During the first six months of the year, most distributors feared the worst as their businesses struggled to match the same period in 2010, when renovation tax credits were still pumping up sales and Ontario’s new tax system hadn’t kicked in. During the second six months, many distributors made up enough lost ground to at least draw even with what they generated during the previous year. “There’s no rhythm to the market,” laments Dan McArthur, president of Barrie, ON-based CanSave. But the good news is that Canada’s housing market has so far held up better than its U.S. counterpart. “And consumers are still investing in their homes,” observes Ron Van Pelt, vicepresident of Canadian sales for Guardian Building Products, Mississauga, ON. Making money, though, remains a challenge. “Commodities prices are off by 10 to 12 percent,” said Al Jack, CEO of AFA Forest Products, Bolton, ON, during an

interview with HARDLINES in November. Yet, AFA’s sales for the year were up over 2010, partly on the strength of its new DC in Saskatoon operating since May, and its DC in Kelowna, BC, up and running since September 2010. Having DCs as close to customers as possible is critical to LBM distributors’ success at a time when dealers are ordering smaller quantities more frequently, but expect the same high level of service. “A lot of dealers are afraid of inventory, and are running tighter, which plays to our strengths because we’re a no-minimum-order distributor,” says McArthur. He notes that his company has refined its logistics to the point where it’s getting close to a 100 percent fi ll rates on smaller orders. “We want to be an extension of our dealers’ warehouses.” Some distributors are making less-thantruckload runs to accommodate their customers’ delivery expectations, although count Guardian’s Van Pelt among those who aren’t thrilled about this trend. “Dealers like to have just-in-time deliveries. But the pressure should be on your sales team to fi ll those trucks.”

Some LBM wholesalers lament that they are not recouping their freight costs.

22

FIRST QUARTER / 2012

Hardlines Home Improvement Quarterly

www.hardlines.ca


Taiga was once solely a forest products supplier. Now it offers 13 product categories, all of which it warehouses.

Several distributors complain, too, that they’re not recouping their freight costs because dealers balk at paying extra for quicker deliveries of smaller orders, thinking they have distributors at a disadvantage when everyone is scrambling for business. However, there are limits to how far some distributors will oblige their customers. “Nowhere at the top of our letterhead does it say I’m a financial institution,” says Al Jack.

DIVERSIFYING PRODUCT ASSORTMENTS Distributors are understandably touchy on the subject of profit, as margins in general and those for lumber in particular have been “very depressed,” says David Campbell, president of the Lumber and Building Materials Association of Ontario (LBMAO). The problem every distributor faces, explains Cam White, president and CEO of Burnaby, BC-based Taiga Building products, is that deflation in commodity prices has made each truckload of product worth considerably less than it was. To shore up their profits, LBM distributors say they’ve been shifting their inventories

www.hardlines.ca

to more specialty products and away from commodities. Following its acquisition of Broadleaf Logistics last year—the aftermath of which reduced the combined company’s footprint by eight DCs to 18—CanWel Building Materials, based in Vancouver, has exited a number of low-margin categories and continues to move beyond basic wood products to more roofing, insulation, composites, and treated lumber, says its chairman and CEO, Amar Doman. Taiga was once solely a forest products supplier; now it offers 13 product categories, all of which it warehouses, says White. Jeld-Wen of Canada, Winnipeg, MB, has in recent years added higher-margin triple-pane windows, and what Brad West, its director of sales for Eastern Canada, calls a “hybrid” window, made from vinyl capped with metal. AFA recently brought on flooring made in China, “but we’ve stayed away from the low-end stuff and stuck with the [flooring] with few claim problems,” says Jack. Selling private-labeled merchandise has proved to be a margin booster, as CanSave can attest with its brand of vanities, as well as the Doorsmith (interior doors) and

“ “

A lot of dealers are afraid of inventory, and are running tighter, which plays to our strengths.

—Dan McArthur, president, CanSave

Hardlines Home Improvement Quarterly

FIRST QUARTER / 2012

23


LBM WHOLESALERS

There was a time when you were able to call when a downturn was ending, but not today.

—David Campbell, LBMAO

COVER STORY Cabinetsmith (kitchen cabinets) lines it produces. Guardian has had success with proprietary brands for decking, house wrap, and ice and water products.

COMPETITIVE PRESSURES FROM ALL ANGLES Most LBM distributors already have scaled their businesses to sync up with current market conditions. But they aren’t blind, either, to the fragility of the global economy, and how quickly things can change. “Let me get my coin out and toss it in the air,” responds LBMAO’s Campbell when asked how he thinks 2012 will turn out for Canada’s distributors. “Who really knows? If you would have said a year ago that interest rates would still be low now, I would have said no way. There was a time when you were able to call when a downturn was ending, but not today.” Of greatest concern to many distributors is Canada’s housing market, which

is projected to “stabilize” in 2012, and show modest growth in sales and prices, according to the Canada Mortgage and Housing Corporation’s fourth-quarter housing outlook. “The housing market is a big part of our business, and it’s going to be flat to down next year,” so taking market share from competitors will have to be one of JeldWen’s growth strategies, says West. That could be a tall order in the highly fragmented window category, which has over 200 window suppliers in Quebec alone. Distributors are also apprehensive about their dealers’ businesses, as retail sales of building materials were treading flat for 2011, according to the latest Statistics Canada data. Van Pelt thinks Guardian should benefit from new building codes and the attractiveness of the country’s ecoEnergy Retrofit program. “Plus, consumers still have a decent amount of equity in their homes.” But he

Trailer loads aren’t as full as they used to be, as dealers look for “just in time” delivery quantities.

24

FIRST QUARTER / 2012

Hardlines Home Improvement Quarterly

www.hardlines.ca


also sees “storm clouds ahead” in high unemployment and fading consumer confidence. “We’re not an island, and we’re affected by all the other stuff that’s occurring in the world. So it’s going to be a challenging year.” To that very point, Canadian distributors say they’ve been getting more competitive heat from U.S.-based companies that are trying to make up for lost business domestically by capturing more sales in Canada. For some, that’s meant opening office wholesale operations. Others, though, are buying market share, as Chicago-based PrimeSource Building Products did a year ago when it acquired Langtry Industries and its six distribution centres. “We see green pastures just about everywhere,” says Mike Gibson, PrimeSource Canada’s regional vice president, who asserts his company is the only distributor of fasteners and related tools with a national footprint in Canada. Pressure also comes from Canada’s everexpanding buying groups that can be LBM distributors’ customers and competitors simultaneously. TIM-BR MARTS in particular — with its acquisition of CanWel’s hardlines division and its purchasing alliance with buying group IRLY Distributors — is Exhibit A for how buying group consolidation poses a potential threat to the traditional distribution channel. IRLY’s union with TIM-BR MARTS certainly fortified the Surrey, BC-based group’s position with its dealer-members, said Susan Robinson, IRLY’s president. She states that dealers have become so confident in IRLY’s reliability that several now just spot-check shipments, rather than conduct line-by-line receiving. “Our sales and coverage strengthened in 2011 and will be even stronger in 2012, ” Robinson says.

LEAVING NO STONE UNTURNED Given this competitive climate, it’s not surprising that some LBM distributors are looking west and south for new growth

www.hardlines.ca

avenues. Taiga, for one, generates about $65 million in annual sales in shipments to Asia and South America. White, its CEO, acknowledges that Taiga’s exports account for only a sliver of its overall volume. “But it’s worth keeping our oars in the water.” Taiga also wants to increase its shipments to the United States, either out of its 16 Canadian DCs or by acquiring distribution capacity south of the border. “We’re getting a call a week to buy someone, and all you need to buy is money,” says White. As for expanding their sales in Canada, distributors say the trick going forward will be how well they distinguish their products and services from the rest of the pack. “Anyone can sell a slab door, but will they prehang and pre-finish those doors?” says West of Jeld-Wen, calling attention to two services his company offers through its six DCs and four manufacturing facilities in Canada. Guardian’s value proposition, Van Pelt says, continues to be its strong relationships with dealers. CanSave now distributes cabinets for manufacturers such as Merillat and pre-hangs doors for Therma-Tru and other suppliers. Its door and cabinet divisions account for two-thirds of its annual sales, says McArthur. Jack is keeping a close eye on the U.S. economy for signs of what might happen in Canada down the road. But regardless of that outcome, he predicts “The Americanization of Canadian distribution,” where dealers have been circumventing distributors by buying directly from manufacturers and mills, is in its fi nal stage. “We’re not going away,” says Jack about LBM distributors in general and AFA specifically. In fact, he sees room for physical expansion in markets such as Quebec, where AFA operates only one DC. “We tend to go where the population goes,” he says.

We’re getting a call a week to buy someone, and all you need to buy is money.

—Cam White, president and CEO, Taiga Forest Products

Hardlines Home Improvement Quarterly

FIRST QUARTER / 2012

25


we train the

LEADERS OF TOMORROW


At RONA, we are the only ones who think not only of your present but also of your future by training the leaders of tomorrow. PRESIDENT’S CAMP

TALENT AND LEADERSHIP DEVELOPMENT RONA’s president and senior management believe that investing directly in young people is crucial. Every year, some 60 participants (merchants’ children and future owners) from all across the country come together to cultivate their talents. We are proud to have been the first to provide young leaders with such a unique mentorship opportunity starting three years ago. Work sessions, coaching workshops, and meetings with inspiring entrepreneurs Tours of new concept stores (New York, Montreal)

Training on emerging market trends, leadership, and consumer habits

YOUNG LEADERS NETWORK

EXCEPTIONAL NETWORKING OPPORTUNITIES Sharing information on trends and business opportunities Networking gatherings

Building a network of RONA merchants on Facebook via the New World Group


BY STEPHEN PAYNE

BRACE YOURSELF: AMERICANS ARECOMING (AGAIN)

THE

28

FIRST QUARTER / 2012

Hardlines Home Improvement Quarterly

www.hardlines.ca


FEATURE

A M E R I C A N R E TA I L E R S

With a weak economy south of the border, more major American discounters have decided to enter Canada for the first time. Three powerful surges of U.S. retail muscle in the next 24 months will add “the equivalent of 300 new Canadian Tire stores” in the Great White North, says Ed Strapagiel, a veteran analyst of the shopping cart wars in this country.

T

he newest wave of American discount retailers now surging into Canada will add so much extra competition over the next two years that it will be “the equivalent of 300 new Canadian Tires coming on-stream in what is essentially a flat market,” says Ed Strapagiel, executive vice-president of Kubas Primedia, one of Canada’s leading retail consultant fi rms. Strapagiel’s map of the latest American invasion, delivered during his address at the 16th annual Hardlines Conference in Toronto last fall, focused on three major U.S. discounters: Target and Big Lots,

www.hardlines.ca

who are new entrants into Canada, and Walmart, which has been here since 1994 and is now adding dozens of Walmart Supercentre locations. But he mentioned other rumoured newcomers, too.

TARGET GETS 135 LOCATIONS Target Corporation, based in Minneapolis, MN, will begin opening up to 135 locations in Canada early in 2013. “They will be adding about 15 million square feet, out of the ether,” Strapagiel said. Target acquired the leasehold rights to up to 220 Zellers locations in Canada, in January 2011, for $1.83 billion. Famous for

Hardlines Home Improvement Quarterly

FIRST QUARTER / 2012

29


A M E R I C A N R E TA I L E R S its “cheap chic” clothing, but also a major player in home products, Target is expected to shake up many categories of Canadian retailing, including small but important segments of our own industry. Target is a brilliant mover of merchandise. According to Strapagiel, the retailer’s

FEATURE price: only $1.8 million in cash. “But it is spending $32 million on fixing them up,” Strapagiel noted. Big Lots has a powerful private label brand, he added, and some of those products have already begun to show up in Liquidation World locations in Canada.

In Canada, Target’s stores will largely be in anchor positions in shopping centres, which sets them apart from the stand-alone Target stores that are the norm south of the border.

sales per square foot in the U.S. are about 2.5 times higher than Zellers ever achieved here. Currently, Zellers continues to operate under the Zellers brand, but Target has already begun its Canadian hiring. Target is a major competitor of Walmart south of the border but, interestingly, it is leasing 39 of its Zellers locations to Walmart Canada (see sidebar). In Canada, Target’s stores will largely be in anchor positions in shopping centres, which sets them apart from the standalone Target stores that are the norm south of the border.

BIG LOTS WANTS 100 STORES HERE Big Lots, the retailer of closeout and distressed merchandise, headquartered in Columbus, OH, is planning to operate more than 100 units in Canada, Strapagiel said. It already has some 1,400 stores in the U.S., operating in 47 states. In July 2011, it got the bulk of its Canadian locations underway by acquiring the 92 stores of Calgary-based Liquidation World — ironically enough, at a liquidation

30

FIRST QUARTER / 2012

Big Lots is strong in toys, furniture, clothing, housewares, and small electronics. Because of its focus on liquidation products, its SKU base fluctuates constantly, with not all products available in all stores at all times. But it is a powerful discount player in the U.S. and its staying power has been demonstrated through the economic downturn there.

AND RUMOURS OF MORE TO COME Strapagiel ended his presentation by saying, “My apologies if I scared the bejeebers out of you this morning.” He got a big laugh at that, but he closed by observing that many more U.S. retailers are rumoured to be heading this way. They include, he said, Maceys, JCPenney, and Dicks Sporting Goods, but he also pointed to Crate & Barrel, Bed, Bath & Beyond, and Lowe’s, all which are here now but all in expansion mode. He gave his audience — and this industry in general — an important wake-up call.

Walmart Canada continuing to supersize Ed Strapagiel, executive vicepresident of Kubas Primedia, told his listeners at the 16th annual Hardlines Conference that Walmart, well-established in Canada since 1994, is still aggressively expanding its base here. It recently cut a deal with Target to lease 39 of that chain’s Zellers locations in Canada. “It’s another year’s worth of Supercentre expansions,” Strapagiel said, “and Walmart’s sales per square foot are even higher than Target’s.” The Bentonville, AR-based colossus, the world’s largest corporation, is opening these Canadian-based Supercentres at a rate of approximately three per month, Strapagiel noted. The company has said that it will have 164 Supercentres upand-running by the end of January 2012, which, added to the retailer’s 169 standard-sized Walmarts, will give the mega-chain a total of 323 Canadian units by that time.

(Go to hardlines.ca and click on HARDLINES TV to see Ed Strapagiel’s presentation at the Hardlines Conference.)

Hardlines Home Improvement Quarterly

www.hardlines.ca


A PROMISE DELIVERED.

WEATHER LOCK

CLIMA CORE

Our patented system overlaps the interior and exterior skins, keeping moisture out and extending the life of your door.

We have the highest quality insulation between the panels which provides higher R-Value, better strength and consistent protection from the elements.

DURA WARE Every Steel-Craft component is made by Steel-Craft. Track, hinges, and rollers are made to handle our weather.

THE DOOR WITH MORE. For a complete list of products and specs, visit steel-craft.ca

Steel-Craft doors will never let you down. For over 40 years we’ve been building doors ready to handle whatever Mother Nature throws their way. Sell more than just a door – sell quality, craftsmanship and Canadian know-how.


BY MICHAEL McLARNEY

RONA BUYS TRUSERV: ONE YEAR LATER

New options for independents RONA’s acquisition of TruServ Canada, just over a year ago, created a new market opportunity for RONA and a new era for the Winnipeg-based wholesale hardware cooperative. RONA now has a distribution channel to serve independents under other banners, while TruServ has received a much-needed infusion of cash and resources to keep it competitive. Recently, we sat down with the key executives at both firms, ROBERT DUTTON, president and CEO of RONA; and BILL MORRISON, president of TruServ Canada, to discuss how the two banners, which will remain distinct, can help each other.

32

FIRST QUARTER / 2012

Hardlines Home Improvement Quarterly

www.hardlines.ca


ROBERT DUTTON & BILL MORRISON

Bill Morrison

Robert Dutton

President of TRUSERV CANADA

CEO of RONA

TruServ has really gotten behind its new banner, TRU. What’s the thinking behind this new banner? BM: What has resonated with the dealers is that this is a dealer-focused initiative. TruServ has been able to put dealers at the heart of the program. We’re not putting our name out there. We’re putting our partners’ names out there. For many dealers it’s been very interesting. It’s like a re-birth of their business.

How does RONA fit into this new program? RD: The very nature of the new TRU initiative responds to the very things RONA

www.hardlines.ca

E X EC U T I V E IN T ER V IE W

stands for. If you think about it, this is how RONA started, with a group of independents working together. So it goes back to RONA’s dealer roots. BM: My observation is that RONA found the right business for its culture. RONA is about values, as well as about business, so it fits with TruServ. It’s a good fit of two cultures. And in return, TruServ can embrace the values that RONA represents.

Let’s back up a bit. TruServ was underfunded in recent years, and needed a change. How was the timing of the RONA acquisition?

BM: The thing that was fortuitous for TruServ – there was a “just-in-time” sense to the deal. TruServ might have limped along and possibly survived — but it would not have been successful. TruServ absolutely needed to be able to compete. RD: Yes, admittedly, we saw the benefits for TruServ. We saw an opportunity to help dealers.

When RONA took over TruServ, what were your expectations? How has the deal benefi ted the parent company? RD: Serving dealers has always been an important part of RONA’s culture and

Hardlines Home Improvement Quarterly

FIRST QUARTER / 2012

33


E X EC U T I V E IN T ER V IE W

ROBERT DUTTON & BILL MORRISON

Robert Dutton speaking to TruServ Canada dealers in Winnipeg.

What dealers can expect is a long-term commitment from RONA, with more products and more selection.

we have gained new insights into this from the acquisition. We’re learning what we can do better to ensure dealer satisfaction.

here. The money is spent by Canadians for Canadians — and that is an important message.

So RONA has learned a lot from TruServ. What can TruServ’s dealers expect in return?

With the TruServ deal, RONA is focusing on the smaller dealer like never before. What are the advantages for that independent?

RD: What dealers can expect is a longterm commitment from RONA, with more products and more selection. We are ready to listen. And, remember, RONA is investing in Canada, maintaining jobs

RD: It’s a small industry, so the more that independents can work together, the better it will be for all of us. One of the advantages of TruServ’s support is that it helps level the playing field. Independents

34

FIRST QUARTER / 2012

Hardlines Home Improvement Quarterly

need the same information and knowledge as large retailers. They compete in the same market. That’s the expertise TruServ offers. BM: We’re retailers. The focus of our company is how to help the dealer. The TruServ team has a deep understanding of what’s happening in the marketplace, and a deep understanding of what’s happening at retail.

As you indicated earlier, RONA is staying largely behind the scenes when it comes

www.hardlines.ca


TRU banner gives RONA and TruServ flexibility Not long after TruServ Canada was acquired by RONA, it unveiled its new retail banner program, TRU (UNIQ in Quebec). TRU supercedes the True Value banner in Canada, which will no longer be licensed from the True Value Company in the USA. Its acquisition of TruServ Canada gives RONA more flexibility in signing independent dealers. Now, there is a lower-commitment, “supply only” wholesale option for RONA’s customers, who may choose to stick with their own banner if they do not want to adopt the TRU program. Company officials have made it clear that RONA and TRU will be kept separate, since they serve distinctly different needs.

TruServ’s new banner, TRU (to be known as UNIQ in Quebec), has been designed to work for hardware stores, building supply stores, and garden centres. Most of the conversions (from True Value) so far have been in Western Canada.

s$ECORATEYOUR!46 TREESTAND BACKPACK le In vailab Now A CANOE KAYAK RImECASE HUNTINGBOOTS ANYTHING s'REATONCLOTH VINYL LEATHER PLASTIC METAL AND laminates s%ASYTEAR CONFORMSTO UNEVENANDTEXTUREDSURFACES s0ERFECTFORHUNTERSANDOUTDOOR ENTHUSIASTS s'REATFORHOCKEYSTICKS BASEBALLBATS ORANYCRAFTPROJECT

ZZZ&DPR'XFWFRP Scan me!

Toll Free: 800-474-8273 www.itape.com | E-mail: info@itape.com


E X EC U T I V E IN T ER V IE W

ROBERT DUTTON & BILL MORRISON

Bill Morrison at the launch of TRU.

We will compete fiercely and offer better products at better prices and with better service.

to the TRU banner. What’s the thinking there? RD: In RONA, it’s a different proposition. TRU will stay an independent business unit from RONA, managed by a completely different management team. BM: It allows the dealers to pick the level of engagement for themselves. The independent dealers, regardless of their banner affi liation, whether it’s Castle or Sexton or TRU, they want us to be a consistent, reliable hardware supplier — and that’s it.

36

FIRST QUARTER / 2012

The competitive landscape has changed dramatically over the last 18 months. How does TruServ fit into that evolution? BM: We recognize that Castle deals with Orgill. However, we will compete fiercely. We will compete fiercely and offer better products at better prices and with better service. I think that’s what independents need — and with Canadian suppliers. We’re 100 percent in support of Canadian vendors. I think vendors are encouraged by that. If there is a price difference, we’ll

Hardlines Home Improvement Quarterly

work with them on this.

RONA has approached groups like Home Hardware in the past with offers to band together. Does that offer still stand for other groups in the industry? RD: There’s no reason why we can’t work together, for sure. And honestly, I don’t know why it doesn’t happen. The big guys have big pockets, so the more diffuse Canadian retailers remain, the tougher it will be, especially as the big boxes start offering smaller stores.

www.hardlines.ca


Our most successful Conference ever. Thank You To Our

SPONSORS

Retail Sponsors:

Media Sponsor:

October 201

2

1

2

3

7

4

8

5

9

6

10

11

12

13

18

19

20

Please mark your calendars for next year’s conference:

14

15

16

17

21

22

23

October 25-26, 2012

24

28

29

30

31

25 26

27


SOCIAL MEDIA

F LE

MONITOR YOUR BRAND ONLINE: SOCIAL MEDIA AND YOUR BUSINESS BY STEPHEN PAYNE

hen it comes to the internet, everything is public. In other words, various opinions about your store (good, bad or indifferent; accurate or wildly unfair) are likely to be floating about in full public view, either right now or very soon. If you don’t believe this, says Neil Bearse, social media expert from the Queen’s University School of Business, visit www. search.twitter.com. Then, search something like “hardware” and the name of your city or town, or “building materials” or “paint,” etc., and see what a noisy conversation is probably going on right now — in your market. If you’re in a big city, the conversation will be intense. If you are in a small town, the conversation may be pretty quiet. If you’re really lucky, it is totally quiet. But you can start that conversation. Bearse addressed the pros and cons of social media marketing during the Hardlines Conference, held last fall in Toronto. He talked about the extent to which big corporations are monitoring those Twitter conversations with dedicated staff, or, in some cases, specialized “web reputation” agencies. But monitoring the internet to catch conversations about your business isn’t good enough on its own, Bearse said. “You can monitor Twitter streams endlessly, but the web is like a phone. You can plug it in and read blogs, web pages, tweets, etc., but if you don’t answer it, then your efforts are useless.”

W

38

FIRST QUARTER / 2012

Bearse showed some real-life examples, taken from Twitter in the days before the Hardlines Conference. A student tweeted to his friends that he had just dropped their collective Friday night case of beer on the ground, trying to put it in his trunk, and they were going to have to buy some more. “Hey, I just read about your broken case,” replied an eager Twitter monitor working for the Moosehead beer customer service department. The company rep was able to arrange a replacement case of beer, at no charge, within minutes. The reputation of the Moosehead brand got a Twitter-sphere jolt of love with a key target audience. How does this apply to your hardware or building supply store? You don’t have the endless resources of a major brewery to monitor web conversations about your brand around the clock. But every category of product in your store has conversations occurring, online, between real customers in the real world, some of whom live in

Hardlines Home Improvement Quarterly

your market and can be your customers. In addition to the opportunities, however, beware the customer interaction gone sour. It can end up killing your reputation on the internet. Bearse showed a video, recorded on a customer’s phone, of some seriously bad customer service occurring at a car rental counter at a U.S. airport. There were no staff at the counter and the line-up of disgruntled customers, presumably with reservations, was getting longer. When an employee finally did show up, she told the operator of the phone-camera, as she walked away from the counter, “I’m off the clock,” leaving dozens of customers standing there. Unfortunately for that company, however, the internet is always open.

Follow breaking news from HARDLINES at twitter.com/hardlinesnews

www.hardlines.ca


Got Product Knowledge? NRHA’s Basic Training Course in Hardware Retailing Can Help! This course is a comprehensive training tool designed to help both new and existing retail sales associates gain the confidence they need to be successful on the salesfloor. NRHA Members have unlimited access to this course at no additional cost.

The Online Course Includes: s#ORE(ARDWARE$EPARTMENT-ODULES s0RODUCT0HOTOS$ESCRIPTIONS s&REQUENTLY!SKED1UESTIONS

s5PSELLING!DD /N3ELLING4ECHNIQUES s3ELLING3KILLS s-ERCHANDISING4ECHNIQUES

How to Access the Program NRHA’s Basic Training Course in Hardware Retailing is now available to all NRHA members in the membersonly portion of www.nrha.org. It is also available to members of wholesalers that have established group membership agreements with NRHA, including all True Value, Ace and Home Hardware retailers.

!VAILABLEON CONNECTHOMEHARDWARECA

!VAILABLEON TIMBRUCA

To join NRHA Canada call 416-489-3396 or visit www.nrha.org


BUDGETING AND FORECASTING YOUR 2012 PROFIT BY BILL WILSON, RETAIL ADVISOR, NRHA CANADA t’s a new year, and time to plan how your store’s financials should look by year end. You are probably thinking, how am I going to forecast my sales, my gross margin, wage costs, and a multitude of other expenses? First, let us look at some of the numbers economists are projecting for 2012. Hardlines sales are being forecast at anywhere from -0.2 to +2.1 percent — basically flat over the next 12 months. Housing starts are also forecast as essentially flat in 2012. Inflation is forecast at 2 percent. Wage increases are forecast at 3 percent. Utilities, property and vehicle insurance, fuel, and many other expenses have already increased from last year. So I would suggest that you have two choices: One, you accept that sales will be flat and cut expenses so that profits will not erode into losses; or two, you plan for a sales increase and manage your expenses to improve profits. Let’s assume option number two and work through a forecast for 2012. (The

I

40

FIRST QUARTER / 2012

industry average numbers I will use are, as always, taken from the NRHA’s Cost of Doing Business Survey. See the end of the article for how to get your own copy of this important publication.)

ASSUMING A SALES INCREASE Given the above cost increases and inflation, our sales target has to be a minimum of 5 percent or profits will slide backwards. It’s important to key in certain areas for sales increases. The average sale for a typical building supply outlet is $127 per customer. Can you beat that number? In any case, you should be budgeting for a two dollar increase per average sale from your current number. How do you get there? Start with the fundamentals: Can you make better use of feature ends, clip strips and dump-bins to achieve additional impulse sales? Is your internet advertising as effective as it could be? Have you considered the power of social media? All can help to drive additional sales.

Hardlines Home Improvement Quarterly

Customer loyalty is key. You obviously need to keep your customers coming back and, ideally, you want them to increase their purchases. So, consider investing in your front line sales team. Give them the skills to improve their add-on selling skills, making certain that your customers have all the extras required to finish their projects. The NRHA Employee Training Program has modules that teach these skills (again, see the end of this article for information on how to get this training). Now, onto margins. In our example, gross margin after rebate has been forecast at 26.4 percent, representing a 1.6 percent increase over 2011. According to the NRHA survey, gross margins for LBM outlets range from 26.4 to 30.3 percent. The use of variable pricing, increasing prices on in-stock inventory as soon as new costs are known, making certain that sale product pricing is not started early — and removing sale pricing immediately when the promotion is over — will all help to improve margins. Are you introducing enough new products? A useful benchmark here, provided by buyers during a panel discussion at the recent Hardlines Conference, is that new products (i.e., those introduced in the past 12 months) should be at least 10 percent of your overall sales. If you are not achieving those numbers, you need to start looking at more new products or categories.

ASSUMPTIONS • A 1.6-percent margin increase with same sales equals an additional $80,000 in sales. • A $2.00 increase per average sale with 39,000 transactions equals $78,000 in additional sales. • Inflation/price increases of 1.5 to 2 percent with same sales equals $75,000 in additional sales. • Better use of internet and social media advertising. • More use of new products and categories to drive sales.

www.hardlines.ca


F LE EXPENSE TARGETS Your largest expense is payroll and it’s one of the few areas with flexibility to reduce. Total payroll cost, including owners, should be 13.6 to 14.3 percent. Sales per full-time equivalent employee should range from $249,000 to $268,000. To achieve the targeted payroll, review your POS, which will give you sales and customer count per hour. Match this against your employee count, and see if you can adjust hours as to when you require staff. Many retailers have cut full-time hours from 40 to 36 hours. Review your overall hours of operation: Are you open during too many times when you are not profitable?

ASSUMPTIONS USED FOR BUDGET • Occupancy costs have been increased by 5 percent for utilities. • Wage costs have been increased by 3 percent. • Sales have been increased by 5 percent. • Gross margin has been increased by 1.6 percent. This number has been validated with Canadian margin information. • Other operating expenses show no increase in dollars, as I believe this is an area that usually has opportunities for reducing costs. The key to working with forecasts and budgets is to ensure that you receive a monthly financial report and spend the time required to analyze it. Make certain that you are achieving your plan. If you are not hitting your plan, then adjustments should be made for future months. If you do not measure and manage your results, you will not achieve higher returns. Bill Wilson is Retail Advisor for the North American Retail Hardware Association Canada. He has a background of more than 40 years of experience in hardware and home improvement retailing and distribution and is committed to training for independents.

www.hardlines.ca

S T OR E M A N A GEMEN T

FINANCIAL STATEMENT 2012 2011 STATEMENT $ Total

2012 FORECAST BUDGET

% Sales

$ Total

% Sales

Net Sales

5,000,000

100.00%

5,250,000

100.00%

Cost of Goods

3,790,000

75.80%

3,895,500

74.20%

Gross Margin

1,210,000

24.20%

1,354,500

25.80%

Purchase Rebate

30,000

0.60%

31,500

0.60%

1,240,000

24.80%

1,386,000

26.40%

715,000

14.30%

760,000

13.90%

95,000

1.90%

99,900

1.90%

Other Operating Expenses

405,000

8.10%

405,000

7.71%

Total Operating Expenses

Gross Margin after Rebate Total Payroll Expenses Total Occupancy

1,215,000

24.30%

1,264,900

23.52%

Operating Profi t

25,000

0.50%

121,100

2.30%

Other Income & Expenses

40,000

0.80%

40,000

0.76%

Profi t Before Taxes

65,000

1.30%

161,100

3.06%

Assumptions Sales Increase: 5%, Gross Margin Increase: 1.60%, Salary Increase: 3%, Utilities Increase: 5%

KEY PROFITABILITY AND PRODUCTIVITY MEASUREMENTS* LBM OUTLETS Typical

High Profi t

Gross Margin After Rebate

26.40%

30.30%

Operating Expenses

27.20%

28.50%

Inventory Turnover

3.8x

3.4x

Average Collection Period (Days)

48.9

41.5

Consumer Sales

29%

20%

Sales per Customer

$127

$127

Return on Net Worth (Pre Tax )

-0.50%

7.30%

* Source NRHA Cost of Doing Business Report 2011

WHERE TO GET HELP • The NRHA Cost of Doing Business Survey is an essential benchmarking tool for any Canadian hardware store owner or manager. • The NRHA Employee Training Program provides vital training, in easy-to-understand modules, in all aspects of retail home improvement front line procedures. These tools to increase the profitability of your store are available free to NRHA Canada members. Annual NRHA membership costs only $295.00 per store, covering all of your staff! To join, please contact Brady Peever, NRHA Canada/Hardlines, 416-489-3396, brady@hardlines.ca.

Hardlines Home Improvement Quarterly

FIRST QUARTER / 2012

41


BY BRUCE SMITH

THE POWER OF GRAPHICS

Are you maximizing your customers’ in-store experience?

ew retail design tools have as much impact on shoppers’ behaviour as graphic communications. From the impact of large-scale photographs to the details of price item signage, effective graphics are key to creating a great shopping experience. Graphics are the medium for communicating many different messages including brand information, promotions, way-finding, and product and price information. They come in many different forms including word signs, colours, photographs, and illustrations. They can be twoor three-dimensional and static or digital. They can tug at our customers’ emotions or they can just download information. There is no denying that graphics are a versatile and powerful tool.

F

42

FIRST QUARTER / 2012

A key objective for TBaytel, the largest provider of telecom services in Northwestern Ontario, was to help connect its brand to its customers. Take, for example, TBaytel, the largest provider of telecom services in Northwestern Ontario. A key objective for this company’s single store in Thunder Bay was

Hardlines Home Improvement Quarterly

to help connect its brand to its customers, keeping in mind that the geographic reach of TBaytel covers an area twice the size of Great Britain.

On a single strip of custom wallpaper placed around the ceiling perimeter, TBaytel has depicted the names of every city, town, and village that it

www.hardlines.ca


F LE

serves. Customers can be seen seeking out the name of their hometown and appreciate the recognition. This graphic feature is augmented by photos of the region’s natural beauty. The good news is that these one-off graphics are very affordable through digital printing. The store attracts an average of 225 people a day and is a destination point for visitors to the city.

SEPARATING BRAND SIGNAGE FROM PROMOS Many retailers separate permanent brand signage from promotional material. The former should remain in place for years — delivering and affirming strategic brand messaging on an ongoing basis. Of course, a retailer must know what differentiates their brand and how to communicate it. Such messaging should include various elements of the brand vocabulary. For Loblaw’s general merchandise department, we used shapes, images, and colours that say more about the brand than an endless stream of words and tag lines. In contrast to permanent brand signage, promotional signage evolves on a weekly, monthly, or seasonal basis. It can include flyers, price item call outs, and posters. Control is key here. Developing a standardized template makes it easy for staff and agencies to develop creative material that will always suit the environ-

ment and speak consistently to shoppers. Standard 30” by 36” posters, for example, are a format that is easy to use and a known entity. Standardized frames with various clip-in-place systems help to strategically place these signs where customers will see them. Taking charge of promotions means that manufacturer-supplied POP and hand-made signs taped to fixtures are reduced, enhancing the brand experience.

DESIGN & MERCHANDISING

THE POWER OF PHOTOS Photographs are one of the most powerful graphic elements but are particularly challenging to get right. Retailers must consider their purpose. Is it to inform, to way-find, or to inspire? Good photography is effective, but the strategic purpose must be established and thought out carefully or it can become just more visual noise. In one recent project, we spent considerable time ensuring that the photos use consis-

tent subject matter, focal length, and depth of field. The result is an emotionally powerful collage of images that carries emotional impact and instantly relates the brand to the aspirations of the customer. Nothing more — but that can be enough. Bruce Smith of DMD Retail Design assists retailers by bringing design and business realities together to create great branded experiences.

NEW TECHNOLOGY, 3-D SIGNAGE AND PROPS With growing sophistication in all categories, many retailers are developing threedimensional signage. Raised or cut-out letters definitely attract the eye and communicate a higher level of sophistication and respect for the space than a characterless font on a vinyl background. However, attention to detail is critical; many of the benefits can be lost if care is not paid to trim and colour detailing. Props are also part of the communications vernacular. The I-beam that is part of Canadian Tire’s tool department is an example of such direction. Carefully assess, however, whether these kinds of innovations actually drive sales — or just add visual clutter and increase costs. Our experience says that there is a fine line between the two and retailers should err on the side of simplicity.

Dave Gillis Gillis Home Building Centre, Sydney River NS

home-owner.ca www.hardlines.ca

FIRST QUARTER / 2012

43


It started as a sidewalk sale and ended with customers...

Dancing

Street

IN THE

BY MARTIN LIVINGSTON

I never talk about sales goals. We discuss what shopping experience we’re going to provide to our customers.

—Frances Sologuk, Osoyoos Home Hardware

Sidewalk sales don’t usually become hallmark events on the community calendar. But at Osoyoos Home Hardware in British Columbia’s Okanagan Valley, some creative inspiration that added a bit of levity to an otherwise staid sales event has resulted in a 25-year community tradition.

S

44

FIRST QUARTER / 2012

Hardlines Home Improvement Quarterly

Twenty-five years later, the annual street dances held in the Home Hardware parking lot in July and August have become one of the most highly anticipated community events of the summer, attracting hundreds of participants and spectators. Local merchants donate prizes and provide food for the dances, which raise thousands of dollars for local organizations and projects. They

www.hardlines.ca

PHOTO: LIZA COSTA

hortly after buying the business in 1985, dealer-owners Frances and Larry Sologuk tried to liven up an unusually quiet summer sidewalk sale with a little music. “I ran into the store, grabbed a cassette tape and put some music on,” recalls Frances. “Within minutes, little kids started dancing, so I ran back into the store to select some items and started handing out prizes.”


F LE

COMMUNITY RELATIONS

We often get calls from out-of-town visitors who saw something in the store and want to know if we can ship it out. also manage to generate dozens of entertaining YouTube videos. “People book their holidays around the summer street dances,” laughs Frances. The summer street dance is just one of the many community events sponsored and promoted by Frances and Larry — and just one of the many ways they have made Osoyoos Home Hardware a respected fi xture in the Okanagan Valley. The landmark hardware store in the heart of British Columbia’s wine region has been in operation since 1942. The 13,000-square-foot retail space is well stocked with a soup-to-nuts selection of paint, hardware, housewares, gourmet foods, sporting goods, garden supplies, and appliances spread out over five levels, all backed by a knowledgeable staff dedicated to helping customers find what they’re looking for. Since taking the reins of the store, Frances has made it her personal mission to support the community and preserve the heritage of the town, while creating a unique “destination shopping experience.” Among the stocked shelves, a browser might come across a 1929 gas pump or an antique jail cell from an old B.C. mining town, adding an element of rustic serendipity to the store. The building’s exterior is adorned with a colourful mural painted by a local artist based on archival photos of the community. Thirty percent of the store’s sales take place in July and August. During this busy tourist season, Frances works tirelessly to bring in new and unusual merchandise that keeps people coming back. “Customers will drive from Kelowna, 96 km away, just to visit our store,” she says. “We often get calls from out-of-town visitors who saw something in the store and want to know if we can ship it out.” Coming up with fresh ideas and keeping the momentum going wouldn’t be possible without an enthusiastic and motivated staff dedicated to customer service. Every Monday, as part of her weekly staff meeting, Frances hands out her “Monday Morning Musings” newsletter, informing her 20-member team of upcoming events and seminars, new products, and any changes taking place at the store. The week’s newest products are also prominently displayed on a large white board hanging in the store serving as a constant reminder to customers of staff of the latest hot items. “In the staff meetings, I never talk about sales goals,” says Frances. “We discuss what shopping experience we’re going to provide to our customers, whether it’s a cooking class or a gardening seminar. For us, it’s all about the shopping experience. That’s what translates into sales.”

www.hardlines.ca

Numerous seminars and demonstrations are held at the store every month, ranging from cooking classes in the store’s fully equipped kitchen to interior decorating, floral arranging, and bass fishing lessons featuring local and visiting experts. To promote the expansion of the pet department, Frances recently hired a photographer to take photos of local pets, producing a “Lifestyles of the Furry and Fabulous” calendar, which is being sold to raise money for the SPCA. “Of everything we’ve done over the last 26 years, the one thing I’m proudest of is the team I’ve assembled,” says Frances. “When people call the store and ask what’s playing at the local movie theatre, you know you’re doing something right.”

charging, and more.

Hardlines Home Improvement Quarterly

FIRST QUARTER / 2012

45


TIM-BR MARTS HONOURED AS HARDLINES NEWSMAKER OF THE YEAR

E

worthy recipient of the 2011 HARDLINES Newsmaker of the Year Award,” said Michael McLarney, HARDLINES editor and managing director for Canada of the North American Retail Hardware Association (NRHA). Tim Urquhart, president and CEO of TIM-BR MARTS, accepted the award on behalf of his company at the HARDLINES Conference in October. “This award is a testament to what can happen when a group truly listens to what its members need,” he said. “Our activities throughout the past year are a reflection of our commitment to the entrepreneurial spirit, the success of the independent, and to the partnerships we have with our vendors.” Other efforts to enhance TIM-BR MARTS’ range of services have included the launch of its own dealer show in spring 2011. TIM-BR MARTS has been actively building its brand, as well. Leveraging its Hockey Canada sponsorship, the World Junior Hockey Video Challenge returned last year and let teams video their team

Tim Urquhart, president and CEO of TIM-BR MARTS Ltd., accepts the Newsmaker of the Year Award from HARDLINES’ publisher, Beverly Allen, at the 16th Annual Hardlines Conference. The award is sponsored by the National Hardware Show. spirit showing why they love hockey the most. The grand prize was a trip for the winning team to the recent World Junior Hockey Championship in Edmonton.

HARDLINES EDITOR RECEIVES INDUSTRY ACHIEVEMENT AWARD Renfrew, ON building supply dealer Bob Lockwood (left), chair of the LBMAO, presents that association’s Industry Achievement Award to Michael McLarney, editor of HARDLINES.

46

FIRST QUARTER / 2012

Michael McLarney, editor of both the HARDLINES e-newsletter and this magazine, was thrilled to receive the 2011 Industry Achievement Award. The award is given by the Lumber and Building Materials Association of Ontario to recognize “long-standing commitment to product and service excellence and ... significant contribution to the LBM industry.” “My sincere thanks to the LBMAO board and committee for selecting me. I was surprised, honoured and humbled by this award,” said McLarney. “Even though we’ve endured a slow economy, we have not been short on savvy dealers and suppliers alike who have endured the slowdown and overcome the odds. But instead of awarding one of those many great stories that occurred over the past year, you chose to award this storyteller. So, again, thank you.”

Hardlines Home Improvement Quarterly

www.hardlines.ca

PHOTO: CALLUM PINKNEY

ach year, HARDLINES, the information service for the retail home improvement industry, presents its Newsmaker Award to a company that has made a significant, newsworthy impact on the industry. The 2011 winner is TIM-BR MARTS Ltd., the Calgary-based buying group. TIM-BR MARTS has been expanding rapidly, with growth among both traditional yards and commercial dealers, and now boasts more than 700 members nationwide. Its major impact on the industry last year was its acquisition of CanWel Hardware Division from CanWel Building Materials. TIM-BR MARTS quickly renamed the business Chalifour Canada, creating its own hardware distribution business. To complete Chalifour’s reach across the country, TIM-BR MARTS later acquired the distribution business of its group member, IRLY Distributors Ltd., making that Surrey, BC-based facility the Western arm of Chalifour Canada. “The acquisition of CanWel Hardware marked the tipping point in a series of bold initiatives that made TIM-BR MARTS a


F LE

AWA R D S & S HO W S

JOHNS MANVILLE DEALER CONFERENCE A HIGHLIGHT AT LBMAO SHOW The Canadian Home Improvement Show, held in Toronto last November, was not just the scene of a two-day buying show hosted by the LBMAO (Lumber and Building Materials Association of Ontario). The event also played host to the fourth annual Johns Manville Dealer Conference, presented by HARDLINES. The conference featured two keynote speakers who spoke on the morning of day one of the show. Roy Prevost is a Vancouver-based customer service guru who energized the audience with tips on how to maximize the customer service potential in a store. He was followed by Mark Scherer, a prominent building supply dealer from the Minneapolis area, who shared how he’s toughed it out in a market that was cut in half during the recession.

Gino Allegro (r), Canadian sales manager for Johns Manville, and Marty Hawthorn, market development manager for Johns Manville, showed their support for independents at the fourth annual JM Dealer Conference.

INCREASE YOUR EFFECTIVENESS invites you to the

International Hardware Fair 2012 Canada Night International Reception Hardlines and Koelnmesse will once again host a very special reception in Cologne. Please join us for a buffet, kolsch beer and networking with fellow retailers and vendors from around the world.

Sunday, March 4, 2012  6:00-9:00 p.m. At Deutzer 2 in the KOLN-DEUTZ railway station, adjoining the Messe Fairgrounds. (Same place as last time for you Canada Night veterans.) Questions or to attend, please call Beverly Allen, 416-489-3396, bev@hardlines.ca

RDTS opens new doors with: t nationwide coverage t over 200 employees at your service t 24/7 access to online reporting t ISO 9001 certification Team up with RDTS for scheduled maintenance, special projects, training and POS installation.

1 888 385-7387

www.rdts.ca


AD INDEX

ADVERTISERS: FIRST QUARTER / 2012 BMR www.bmr.co CanWelBroadLeaf www.canwelbroadleaf.com

2

North American Retail Hardware Association Canada, www.nrha.org

39

Insert

NRHA Convention 2012 www.rethinkretailconference.com

49

Castle Building Centres Group Limited www.castle.ca

52

Orgill www.orgill.com

51

CSA www.csa.ca

45

RDTS www.rdts.ca

47

Grip Rite Fastening Systems www.grip-rite.com

20

RONA inc. www.rona.ca

26, 27

Seljax www.seljax.com

Insert

Hardlines Inc. www.hardlines.ca

37, 47

Home Hardware Stores Limited www.homehardware.ca

4, 43

IPG www.itape.com

35

National Hardware Show www.nationalhardwareshow.com/hl

IN THE

NEXT ISSUE OF HHIQ:

Steel-Craft www.steel-craft.ca

31

TruServ Canada www.truserv.ca

17

6

Spotlight on the independents. Find out who’s driving the industry — and why! PLUS: The Top 10: Canada’s leading home improvement retailers; Lowe’s Canada president shares leadership lessons; product spotlight on siding, roofing and power tools — and much more!

Publication Date: «ÀˆÊÓÈ]ÊÓä£ÓÊÊUÊÊAd Reservations:Ê>ÀV…Ê£x]ÊÓä£ÓÊ­Vœ˜Ì>VÌÊLiÛJ…>À`ˆ˜iðV>®ÊÊUÊÊAd Material Due: April 5, 2012

48

FIRST QUARTER / 2012

Hardlines Home Improvement Quarterly

www.hardlines.ca


Your future Your Business Your Success

Rethink lage

N R HA

age St

V il

NRHA A o r ks h o

NRHA Ret

RAMS

k Retai

lW

hin

RDS PR

OG

WA

ps

Rethink Retail

Powered by

Conference MAY 1-3, 2012

AT THE NATIONAL HARDWARE SHOW速 IN LAS VEGAS Free for all retailers!

www.rethinkretailconference.com SPONSORED BY:

The Industry Advantage.


GINA SCHAEFER

ENDCAP

GINA SCHAEFER INDEPENDENT ACE DEALER BY STEPHEN PAYNE

Gina Schaefer shared her urban hardware secrets with Canadian retailers and vendors at the 16th Annual Hardlines Conference last fall.

T

50

FIRST QUARTER / 2012

northwest Washington. “He asked me if I was on crack,” Gina recalls. “I replied that I thought the commutes were getting to me.” But for some time, Gina and Marc had been frustrated by the need to get in the car to go buy basic hardware items at inconvenient big boxes.

We realized there was an enormous opportunity to differentiate ourselves from the big boxes.

Yet urban hardware stores remain scarce across North America. Ace’s own development people told her that only 350 Ace hardware stores were serving city environments, out of almost 4,500 Ace stores nationwide. “And I was told that, of those, about 225 of

Hardlines Home Improvement Quarterly

if you are a new store, is to invite your first waves of customers to be a part of a select club. “We invited our founding customers to a private party.” In retail, the genius is in the detail — no matter how large or small your format.

www.hardlines.ca

PHOTO: CALLUM PINKNEY

he recent rise of the shop local movement across North America is clearly a reaction to the big box explosion of the past 20 years. Gina Schaefer, owner of seven Ace Hardware stores in Washington, DC, Baltimore and Takoma Park, Maryland, has capitalized on this trend. We spoke with her when she came to Toronto to share her urban hardware secrets with Canadian retailers and vendors at the 16th Annual Hardlines Conference last fall. In 2003, wearying of her high-tech job in Bethesda, Maryland, Gina told her husband and business partner, Marc Friedman, that she wanted to quit the corporate world and open a hardware store in Logan Circle, their residential neighbourhood in

them should be closed,” Gina says. “So we realized there was an enormous opportunity to differentiate ourselves from the big boxes, and a chance as small business owners to help rebuild our local community.” Gina’s unique selling proposition throughout her seven stores — which total 54,000 square feet — is easy to understand. “Convenience is what we sell,” she explains. “People don’t want to drive 15 to 20 minutes to buy a gallon of milk in [American big box grocery chain] Wegmans.” What about price? In tough times, will people pay to shop locally? Unequivocally yes, Gina says. One way to develop a realistic pricing strategy is to look at sales per square foot. As a benchmark, she mentions an average turnover of $160 to $180 per square foot across the U.S. “Obviously, for smaller stores, that number goes up. I believe you need $200 to $250 for an urban hardware store.” Finally, Gina urges city hardware store operators in Canada to get involved with their neighbourhood’s shop local movement (or to start one). Newsletters, publicity and events can be orchestrated with other merchants. “You can cultivate ‘evangelists’ for your business, among your customers, early on.” A great way to do that,


ORGILL CUSTOMER INSIGHTS

Now, Orgill Gives All Dealers A Choice.

There’s No Catch

Retailers who do business with Orgill have access to thousands of products, industry-leading retail programs and a world-class team of distribution professionals. But the best part is, there is no catch. Retailers only pay for the products, programs and services that they feel are right for their business.

THERE ARE NO ADVERTISING FEES, NO PROGRAM MANDATES, NO CO-OP CHARGES OR MEMBERSHIP DUES—EVER. You Don’t Pick up the Tab As a privately owned company, we constantly make investments in our product lines, distribution enhancements and our infrastructure to better serve our customers, because we know that our customers ultimately make the decision about who they choose to do business with. Unlike other distributors, however, when we want to improve our services and efficiencies, we don’t ask our customers to pay the price for it.

A Unique System for Unique Retailers With thousands of SKUs in stock, Orgill can deliver unique assortments to customers of all shapes and

sizes throughout Canada. With more than 160 years of distribution experience, you know you can count on Orgill to deliver when you need it.

A Simple Mission As Orgill has emerged as the world’s largest independent hardlines distributor, our mission hasn’t changed. Like our way of doing business, our mission is simple and to the point… “help our customers be successful.” Everything we do at Orgill focuses on fulfilling that mission and ensuring our customers’ success.

Now, Retailers Throughout Canada Have A Choice! To find out how Orgill can help you be more successful, call Phillip Walker

1-800-347-2860 Worldwide Distribution & Retail Services

EXT. 6780sWWW Orgill, Inc. P.O. Box 140, Memphis TN 38101-0140

.ORGILL.COM


Name: Vicki Hagel Occupation: Owner of Cook Street Castle Building Centre. Successful, independent business woman. Revolutionary behaviour: Embraces change. People oriented. Free to run our business our way. We deliver knowledge, solutions, hardware and lumber – every day. M.O.: Service. Service. Service. Our staff is knowledgeable and experienced. Our store is a city-block long with a drive-thru lumberyard, located in the heart of downtown Victoria. Fears: Losing our freedom. Losing our independence. On being a Revolutionary: We buy whatever we want from any vendor we choose. Since our store has a large hardware footprint, the Castle/Orgill focus on “North American Pricing” has been beneficial to us. Our buying group does not dictate what we do, or how we do it. It’s our free will, business acumen and independence that have made us successful. For more detailed information: www.Castle.ca/Revolution

Warning: Independence is not for everyone. Do you have the passion to lead?

& hardware

Your trusted building supply partner

®

Retail. Commercial. Specialty.

Contact your Business Development Manager West Alan Schoemperlen (204) 771-1509 BC Les Gillespie (250) 469-4744 Ontario Bruce Holman (647) 228-1414 Quebec Robert Legault (514) 208-4158 Atlantic Sandy Welsh (902) 471-7113

aschoemperlen@castle.ca lgillespie@castle.ca bholman@castle.ca rlegault@castle.ca swelsh@castle.ca

castle.ca/freedom

Hardlines Home Improvement Quarterly 1Q 2012  

Hardlines Home Improvement Quarterly 1Q 2012