HHIQ Q2 2024

THE TURNAROUND TEAM

How MITCH WILE and TYLER PALKO remade their Calgary building supply store from a pauper to a prince

Z

They are coming for your jobs.

Why this is good news for everyone

SKU ANALYSIS 101

Why aren’t you doing it? A primer on the basic science of retailing

ROBOT TO AISLE 7

How a 13-store home improvement chain embraced robotics

Mitch Wile and Tyler Palko

THE CEDAR SHOP, CALGARY, ALBERTA Winners, Best Contractor Specialist Store

SMART START PROGRAMS

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• Freshen up merchandise & implement the industry’s most innovative POP materials

Ask your Orgill Sales Rep about Smart Start or email retailprogram@orgill.com to learn more.

At Castle, we do things differently.

Our primary focus is to empower our independent dealers by delivering the lowest cost-of-goods partnered with the lowest cost-of-buying-group-affiliation. Castle gives you the liberty to run your business your way.

This is why Castle is the fastest-growing buying group in Canada. Learn what Castle can do for your business!

“Castle has been behind us every step of the way as our business evolved into what it is today.

Being part of Castle means your brand your way, with no cost of affiliation.

In all my years with Castle, it really hasn’t cost us a cent to be a member of the group.

We are so proud of what our team, and the Castle team has been able to accomplish together over years.

We never could have imagined our growth, and we couldn’t have done it without Castle.”

Jamie Adams, Adams Building Centre Woodstock, ON

HOME IMPROVEMENT QUARTERLY

SECOND QUARTER / 2024 • VOLUME 14, NO. 2

330 Bay Street, Suite 1400, Toronto, ON M5H 2S8 • 416-489-3396

@Hardlinesnews • www.hardlines.ca

PRESIDENT

McLarney mike@hardlines.ca

EDITOR

Steve Payne steve@hardlines.ca

ASSOCIATE EDITOR

Geoff McLarney geoff@hardlines.ca

CONTRIBUTING EDITORS

Rob Blackstien, John Caulfield

ADMINISTRATIVE & SALES ASSISTANT

Jillian MacLeod jillian@hardlines.ca

VICE-PRESIDENT & PUBLISHER

David Chestnut david@hardlines.ca

MARKETING & EVENTS MANAGER

Michelle Porter michelle@hardlines.ca

ART DIRECTOR

Shawn Samson TwoCreative.ca

ACCOUNTING accounting@hardlines.ca

COVER PHOTOGRAPHY

Colin Way Photography colinway.com

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ONE IN THE HOME

ONLINE AND PRINT.

HHIQ is just one facet of the Hardlines Information Network. Since 1995, we’ve been delivering the most up-to-date information directly to you online, in print, and in person. Find out how you can get your message out with us. Contact:

David Chestnut, Vice-President & Publisher 416-425-7992 • david@hardlines.ca

An interview with MITCH WILE, president of The Cedar Shop

NEWSROUNDUP

FCL’s Home and Building Solutions boss explains the group’s success

Home Hardware’s chief marketing officer talks branding, dealers

Kent becomes second Canadian member of European buying group

RONA converts its remaining Lowe’s stores to RONA+

TIMBER MART’s second hybrid dealer show takes place in Toronto

Sexton’s newest member is a pre-fab home builder

Canadian independents flock to Orgill dealer market in Orlando

Why all store redesigns stem from a fresh look at the core customer

DEPARTMENTS

EDITOR’S MESSAGE

The frontline workers issue

PRODUCT SPOTLIGHT What’s new in power tools

HR MANAGEMENT Pierre Battah on ‘checking in’ ENDCAP Making your vision a reality

Facts versus fiction about the new kids on the block

How Stine LLC is deploying automation in Louisiana

How multi-outlet yards are centralizing their distribution

Marika Demers Home Store Owner Saint-Honore-de-Shenley, Qc

STEVE PAYNE, EDITOR

THE FRONTLINE WORKERS ISSUE

Who is walking the floor at your store—and what skills they have—is fundamental to your bottom line. This edition looks at staffing from three perspectives.

Immediately after Canadian Tire released its lower-than-expected year-end numbers for fiscal 2023, online forums were filled with comments about a perceived lack of service at CTR.

“Part of the problem is customer service,” one Toronto Star reader posted. “Has anybody had a positive shopping experience at Canadian Tire?” another asked.

The customer does know the difference between Canadian Tire’s usual frontline staff—try as hard as they might— and highly-motivated, long-standing, independent hardware store employees. Canadian Tire suffered a 16.8 percent drop in fourth quarter revenues—and while many blame inflation and the economy, some people are blaming the Tire’s customer service experience, as unfair as that might be.

This issue looks at frontline workers from three perspectives. First, we look at the “next generation” training internships at The Cedar Shop in Calgary. This store won our Outstanding Retailer Award for Best Contractor Specialist last year. My

interview with store president Mitch Wile begins on page 46.

The majority of that “next generation” of home improvement industry workers is going to come from Generation Z—also known as Zoomers. This generation is the first in history to grow up never having known a world without digital tech. Geoff McLarney’s feature on what makes Gen Z different—and how they can bring your store to life—begins on page 36.

Finally, we look at how technology can enhance, rather than detract from, the human touch in retailing. Our story on Stine, a 13-store home improvement retailer in Louisiana and Mississippi, was written by Rob Blackstien. Stine has deployed robots to free-up its employees from time-consuming inventory checks, enabling real people to help customers, face-to-face. The story starts on page 60.

If you’re interested in more HR content, don’t forget that our monthly Hardlines HR Advisor e-newsletter is free. Sign up at hardlines.ca.

Generation Z can bring your store to life. “ ”

NEWSROUNDUP

CODY SMITH SAYS INFRASTRUCTURE AND COMMUNITY FUEL FCL’S SUCCESS

Abig part of Federated Co-operatives’ business is its retail home improvement stores. Its hardlines division, Home and Building Solutions, provides significant returns to FCL. Cody Smith is director of HABS. He sat down with Hardlines to talk about the value of the co-op retail system to Canadians in general, and local farm communities in particular.

FCL supports 160 local co-op organizations in 600 communities serving 2.2 million members across western Canada with a vision of “building sustainable communities together.” A big part of the co-op model is its patronage dividends, which are paid back to retail associations—something, Smith says, that sets the co-ops apart from other businesses. “A significant portion of our profits go back to the 160 local co-op associations across western Canada in the form of patronage.” Over the past five years, FCL has returned $2.3 billion in patronage to communities in the west.

In 2023, FCL had $12.46 billion in sales, $781 million in net earnings, and $399 million in patronage allocation. Those results put FCL in the upper echelons of revenuegenerating organizations in Canada.

The HABS division accounted for $379 million in revenues last year, having experienced a slight dip in sales versus 2022.

Smith’s HABS division in turn represents about $560 million at retail through 104 home centres—88 of them with lumberyards. The balance of the stores are ag centres that are “hybrids” and carry LBM. HABS also feeds some hardlines into the co-op grocery and C-stores.

Growth for the home improvement business has included adding more focus to LBM sales in recent years, as well as increasing the distribution network. That includes a distribution centre that opened near Calgary in late 2022, and the opening of another DC in Fort Saskatchewan toward the end of 2023.

The newest DC “is going to be mainly for LBM and allied products,” says Smith. “What we’re trying to do there is to meet the retailers where they’re doing business today. They’re heavily invested in the LBM side so we thought we’d better provide access to products. Then we can consolidate some inventories across the system.”

The improved distribution network will support the procurement function so dealers

can spend more time with their customers, he notes.

In addition, the business has rolled out an electronic shelf label system and new order management system. “It puts us in the upper echelon and reflects the power of the shop local concept,” Smith says.

The co-op dealers are doing more business on the LBM side with their DIY customers, “and some of our retailers are doing a great job on that.” But focusing on the B2B side is increasingly important.

OF THE HOME IMPROVEMENT INDUSTRY Visit Hardlines.ca for breaking news in the Home Improvement Industry

Cody Smith is director of Home and Building Solutions at Saskatoon-based Federated Co-operatives.

HOME HARDWARE’S LAURA BAKER TALKS ABOUT BRANDING, FOCUS ON DEALERS

The industry is watching one of its top players go through several changes in recent years, as it evolves from its dealer-based roots into a national retail-focused entity. In an exclusive interview with Laura Baker, chief marketing officer at Home Hardware Stores Ltd., we dig into how the company is managing those changes while holding onto the values that made Home Hardware the retail powerhouse it is today.

Baker joined Home Hardware in 2021 as vice-president of marketing. Less than a year later, she got her new title as CMO. Looking at how the company goes to market, she shares what Home Hardware’s branding signifies, noting that it’s still built around the dealer network.

“It really is about our dealers and about our team members in the stores providing that amazing, friendly experience and customer advice to help get that project done. And we want to be that one-stop shop for consumers and pros to get everything they need to get those projects completed.”

The company continues to focus on supporting dealers as an integral part of the communities in which they serve: “That is who we are.” That mandate is more important than ever, Baker adds, as the company celebrates its 60th anniversary this year.

A lot of attention has been paid to the pro customer in this industry in recent years, and Home Hardware is no exception. Most recently, it launched a loyalty card especially for contractors and trades. But, says Baker, the DIY customer has not gotten lost in the shuffle. In fact, she calls them “essential to our business.” She and her team think

about the retail and contractor sides as both equally important.

For DIYers, however, there is still a big push on certain types of low-cost projects they can do themselves, especially in light of the high costs surrounding home ownership, including high interest rates and continued inflation. “You’re going to see a huge stress from us on painting, and our BeautiTone paint, on how you can rethink colour and change a space with a low-cost project you can do yourself in a couple of hours or over a weekend.”

One of the big announcements Baker shared was Home Hardware’s pending entry into the tiny homes market, a phenomenon that has been drawing attention in both small-town America and in laneways of major centres like Toronto and Vancouver.

“We’re launching access dwelling units in our Beaver Homes and Cottages and the Backyard Package Projects program,” says Baker.

BRIEFLY

PAYZANT OPENS FULFILMENT CENTRE

Payzant Building Products, a member of Home Hardware, has celebrated the “soft launch” of its 60,000-square-foot fulfilment centre in Fall River, N.S. On 18 acres of land, the fulfilment centre will serve the nine-outlet regional chain, which has eight stores in Nova Scotia and one in New Brunswick, and allow for potential expansion.

BRIAN WARR JOINS CASTLE AS BDM

Castle Building Centres Group has a new business development manager for the Newfoundland and Labrador regions. Brian Warr was the fourth-generation operator of George Warr Ltd., in Springdale, Nfld., where he spent 28 years operating Warr’s Castle Building Centre. He left the industry for almost a decade to hold various positions with the provincial government, including serving as the Newfoundland and Labrador MHA for Baie Verte-Green Bay and most recently as deputy Speaker of the House of Assembly.

WINDSOR PLYWOOD FOUNDER DIES

Randle Jones, the founder of Windsor Plywood, died in Coquitlam, B.C., on Dec. 19 at the age of 89. He purchased Windsor Building Supplies, a one-store operation in Surrey, B.C., in the 1950s. In 1969, the first franchised store under the Windsor Plywood banner opened. Today, under the leadership of its president, Curt Crego, the company has 58 Windsor Plywood stores, including five in the U.S. Pacific Northwest.

Laura Baker, chief marketing officer at Home Hardware Stores Ltd.

KENT BECOMES SECOND CANADIAN MEMBER OF EUROPEAN BUYING GROUP

Kent Building Supplies, the Saint John, N.B.-based building supply chain, has joined the A.R.E.N.A. Alliance. The move puts it in the company of the French franchisor Groupement Les Mousquetaires, Gruppo Bricofer in Italy, and Germany’s hagebau. BMR Group became a member of A.R.E.N.A. last June.

A.R.E.N.A. is an international alliance of hardware and home improvement retailers, which are generally called DIY stores in Europe. The group is focused on sourcing, negotiation, and quality benchmarks for hardware, garden, and home improvement products. It maintains offices in Paris, Shanghai, Ho Chi Minh City, Warsaw, and New Delhi.

Kent is the purchasing alliance’s ninth partner. Collectively, the nine retail companies represent groups of independent dealers like BMR, and also retail brands that have a mix of both corporate and dealer-owned stores. Kent

is a solely-owned chain, part of the J.D. Irving group of companies. A.R.E.N.A. members account for more than €16 billion ($23.2 billion) in sales, and are located in 12 European countries plus Canada.

“We are delighted to be able to join the A.R.E.N.A. Alliance. The opportunity for us to share best practices with some of the biggest and best home improvement leaders in the world will be transformative for our business,” said Michael Simms, VP retail at Kent parent J.D. Irving Ltd.

Like BMR, Kent is a member of the Canadian LBM buying group I.L.D.C. Both retail groups also buy hardlines through the hardware buying group, Spancan.

BRIEFLY

HOME HARDWARE LAUNCHES PRO CREDIT CARD

Home Hardware has launched a credit card for its contractor customers. Developed in partnership with Scotiabank, the Scotia Home Hardware Pro Visa Business Card has been designed to support entrepreneurs in the trades and construction industry to help them better manage and grow their businesses. The new card will tie in with Home Hardware’s existing Scene+ loyalty program.

PATRICK MORIN ENLARGES DC

Patrick Morin has doubled the footprint of its distribution centre in order to support the growth of its store network. The addition of 150,000 square feet brings the facility’s total surface to more than 340,000 square feet. It includes 52 loading docks and a 400,000-square-foot lumber yard.

CANADIAN TIRE REPORTS SOFT YEAR

Canadian Tire Corp. reported annual consolidated retail sales of $18.50 billion, down 3.9 percent. Those sales, excluding petroleum, decreased 3.1 percent and consolidated comp sales were down 2.9 percent. Consolidated revenue for the company declined 6.5 percent to $16.66 billion. Revenue, excluding petroleum, decreased by 6.1 percent.

QUEBEC DEALER JOINS HOME HARDWARE

Quincaillerie B.L. in Mont-Louis, Que., has joined the Home Hardware banner. Dealerowner Bernardin Lemieux and his wife, Louise Côté-Lemieux, founded the business 50 years ago. The co-owners’ sons, David and Louis, work at the store and will take the reins of the business one day.

Michael Simms (right), VP of retail at J.D. Irving Ltd., and Frank Staffeld, chairman of the board of A.R.E.N.A. and general manager of procurement and category management at hagebau, signing the deal that brought Kent into the group.

PHOTO: A.R.E.N.A.

RONA CONVERTS ITS REMAINING LOWE’S STORES, PLUS THREE RÉNO-DÉPÔTS CONVERTING TO RONA+

RONA has declared the “sunset of the Lowe’s banner in Canada,” with its announcement earlier this year that the remaining 15 Lowe’s stores in Alberta and British Columbia held grand openings as RONA+ outlets. Six are in Calgary, five are in the Edmonton area, and one each are in Red Deer and Lethbridge, Alta., and Abbotsford and Vancouver (Grandview), B.C.

In total, 62 stores in Canada carried the Lowe’s banner. They have all been rebranded RONA+, except for a handful that were closed.

Also, RONA has made major news in Quebec with the decision to convert another two Réno-Dépôt big boxes to the RONA+ banner. The conversions, in Sherbrooke and Charlemagne, join the previouslyannounced “pilot project” that converted

the Réno-Dépôt in Hull, Que., to RONA+ in March. The timing of the Sherbrooke and Charlemagne conversions is set for April.

The Hull store, located in Gatineau across the Ottawa River, and part of the National Capital Region, is one of 21 stores that carried the Réno-Dépôt banner, which exists only in Quebec. Réno-Dépôt was acquired by RONA in 2003.

“The conversions to the RONA+ banner that took place in other Canadian provinces had a very positive impact on store performance,” said the spokesperson from RONA. Réno-Dépôt is a banner that targets decorators, contractors and knowledgeable DIY customers. “We are confident that this pilot project at the Réno-Dépôt store in Hull will bring positive results and lead the way for the upcoming arrival of this new banner in Quebec.”

BRIEFLY

ONTARIO COUPLE CHARGED WITH FRAUD AT HOME DEPOT

A Whitby, Ont., couple have been arrested and are facing 28 charges of fraud, theft, and possession of stolen property. They had allegedly targeted area Home Depot stores since July 2023. Police say the suspects would make a purchase and then return to the store with the receipt and walk out with a similar stolen item. They would also switch price tags on items to defraud the stores, police say.

NEW OWNERS FOR QUEBEC RONA STORE

The RONA corporate store in Sainte-Thérèse, Que., has been acquired by a group of RONA’s affiliated dealers. Eddy Calderon and Karl Tremblay, affiliated dealers from the Calderon Group, took over the location, adding it to their other two stores, both in Quebec: RONA Quincaillerie Métro in Laval and RONA Pincourt. Danny Lewis, a former RONA employee, joins Calderon and Tremblay as a partner in Sainte-Thérèse.

CASTLE ADDS MEMBER IN ONTARIO

Castle Building Centres Group has signed Lumberville Co. Ltd., a former independent in Milton, Ont. Founded by Maria and Pasquale Mercurio Sr. 40 years ago, it’s now managed by their son Pasquale Jr. Another Castle member has added a new location in Quebec. Produits Boréal, a pre-fab home builder, has taken over Boréal Rive Nord Inc. in Chertsey.

ESCORTED SHOPPING TO COMBAT THEFT

Trying to cope with “rampant shoplifting,” a San Francisco hardware store is using a novel technique to cut down on its shrink. It has employees escort customers while they shop. Customers must wait at the entrance of the store until an employee is available.

Sixty-two stores in Canada once carried the Lowe’s banner. They’ve all been rebranded RONA+, except for a handful that were closed permanently.

‘‘We would not be able to open as many stores at such a pace if it wasn’t for RONA’s corporate support. It really allows us to grow at the speed we want.’’

Discover the advantages of RONA, rona.ca/becomeRONA

Be part of something bigger, contact : becomeRONA@rona.ca

WESTERN CANADA

Tony Perillo \ 204-218-5805

NATIONAL

Josée Desrosiers \ 418-391-7101

ONTARIO & MARITIMES

S cott Wilson \ 519-281-1824

Ray Cyr, RONA Mission, Hope, Nelson, Trail, Abbotsford, Terrace, British Columbia

RONA dealer since 2015

TIMBER MART’S SECOND HYBRID DEALER SHOW DRAWS DEALERS TO TORONTO

For the second year in a row, TIMBER MART held its national buying show with a traditional in-person event, which was held at the Toronto Congress Centre in mid-February, supported by a virtual online version.

“Once again this year, we’re seeing very strong attendance and support for our show thanks to the virtual convenience it has to offer alongside the member-exclusive deals and great networking opportunities available,” said Bernie Owens, president and CEO of TIMBER MART. “The hybrid show format is proving to be a valuable and cost-effective option for dealers and vendors alike and is likely one that is here to stay.”

The physical show drew hundreds of TIMBER MART dealers and staff from across the country, who were able to check out 227 vendor booths on the 70,000-squarefoot show floor. Highlights of the show included displays and attractions such as a pallet-buy area, with a wide range of products for sale in pallet quantities.

At the centre of the floor, the TIMBER MART area encompassed hubs for all of TIMBER MART’s services and programs, including TIMBER MART LBM distribution, dealer marketing, merchandising, and banner support.

Owens pointed out that the majority of TIMBER MART dealers don’t fly the TIMBER MART banner, preferring to rely on their own brand in their respective markets. On the other hand, many dealers embrace the TIMBER MART banner, making them “part of something bigger.” He sees this flexibility as a strength of the buying group, adding that the group can offer varied options to its dealers, depending on how each of them chooses

Bernie Owens, president and CEO of TIMBER MART: “It’s about adding value for the independent.”

to go to market. “It’s about adding value to the independent dealer without adding a heavy cost to them,” he told Hardlines.

Owens says he is positive overall about the year ahead, but tempers that outlook with caution. “Looking at the first half of the year, we’ll feel the lull for the first six months,” he said, and doesn’t expect things to get any worse than they are now. “But I don’t anticipate any major [hitting of] the brakes and activity overall is stronger than it was pre-Covid.”

TIMBER MART is a buying group representing some 600-plus stores. About 200 of those locations fly the TIMBER

MART banner. Members are in all 10 provinces and the Northwest Territories and represent estimated sales of more than $4 billion.

SEXTON’S NEWEST MEMBER IS A PRE-FAB HOME BUILDER

Sexton Group has added a modular home builder, Maison Nordique, as its newest member. The family-run business in Abitibi-Témiscamingue, Que., has been manufacturing prefabricated homes in the region for over 50 years.

But Maison Nordique is not the first modular home builder to join the Winnipegbased group. In fact, Sexton has had a strong representation by modular and prefab home builders for years.

“Manufactured home builders are not traditional building supply dealers, but they are big consumers of LBM,” says Eric Palmer, president of Sexton Group. He adds that both sides see the opportunities that

exist by aligning with the group. “At the end of the day, they’re trying to buy their LBM products at the best position—and that’s where we come in.”

The influx of pre-fab home builders really gained momentum when Suzanne Walsh joined Sexton Group seven years ago. Before her move to Sexton, Walsh had been doing sales of exterior building products for a major supplier. Among her key customers were a number of modular home builders across western Canada. Collectively, those companies were part of a co-operative of modular builders called BNBC. When Walsh became a business development manager for Sexton in 2017, she identified

that this group of dealers would be a good fit to add to Sexton’s ranks.

Over time, Walsh, who was promoted earlier this year to director of business development for the entire country, succeeded in bringing most of the members over to Sexton, as these dealers, she said, recognized they needed more product support and better terms.

“We’re a lot less retail-oriented than the other groups,” says Palmer, “which is where we fit in.”

BMR’S PARENT COMPANY SOLLIO REPORTS 2023 GAINS

Sollio Cooperative Group held its annual general meeting at the end of February in Montreal. The parent of BMR Group announced its net earnings totalled $115.4 million in the fiscal year ending Oct. 28, 2023. That followed a net loss of $336.9 million in the previous year.

Sales declined from $8.4 billion to $8.3 billion. At the same time, the company announced the buyback of $28 million in shares.

Sollio’s retail division, BMR Group, earned

net income of $34.5 million in 2023, compared to $41 million the previous year, due in part to a “historic drop” in housing starts, particularly in its home province of Quebec. Total BMR sales came to $1.46 billion, where the division had reported net sales of $1.57 billion for 2022.

The fiscal year saw major upgrades to 12 BMR stores in Quebec and Ontario, acccording to Sollio’s 2023 annual report. BMR also launched a new Vendor Excellence Program and marked the return of its in-person buying

show in Quebec City, where it welcomed almost 1,200 participants.

Asked about BMR’s expansion plans, CEO Alexandre Lefebvre underlined the addition of a VP of business development, Simon Gouin, at the end of last year, which he described as “central to our growth strategy.” Lefebvre noted that BMR was atttracting media attention as “ the grouping for independent dealers throughout eastern Canada, so we’re canvassing across all banners.” He also noted that BMR did not lose a single dealer last year.

Sexton Group has added a modular home builder, Maison Nordique, as its newest member.

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ORGILL HOSTS NEW IDEAS AT ORLANDO MARKET

Acouple of hundred Canadians were among the thousands of attendees at Orgill’s 2024 Spring Dealer Market, held Feb. 22 to 24 at the Orange County Convention Center in Orlando, Fla.

The event brought together retailers from around the world to connect with vendors that were represented in more than 1,200 booths throughout the show floor. The market also included model stores, support services, and special buys, plus a stage that hosted a range of educational sessions.

“Now, more than ever, retailers in this industry need to be proactive about finding ways to compete and succeed, and our market is designed to provide them with the tools they need to do just that,” said Boyden Moore, president and CEO of Orgill. “We are very thankful to all the retailers who are here and all of our vendor partners who step up to make the event the best in the industry.”

One area that drew lots of attention was a brand new one: the Farm and Pet

showcase. This area featured products for both household pets and agricultural applications. In addition, an adjacent “Pet Oasis” gave attendees a spot to unwind and interact with rescue dogs—which were all available for adoption.

Orgill’s Online Buying Event ran concurrently with the live show. There, retailers could access promotional buying opportunities, shop for seasonal merchandise, and browse the thousands of new products.

WRLA SHOW DRAWS DELEGATES FROM ACROSS THE WEST

The Western Retail Lumber Association held its annual Building & Hardware Showcase at the Winnipeg Convention Centre from Jan. 17 to 19. According to WRLA president Liz Kovach, “It was probably our best show ever.”

The show’s attendance was up over last year, Kovach added, despite weather challenges, especially for people flying in from British Columbia, which was hit by a huge snowstorm a couple of days prior.

Pre-registration reached almost 700 before the doors even opened this year, as dealers converged on Winnipeg to check out the products and services of close to 200 vendors.

While shows have given way to online technology as the best way to access the latest pricing, the retailers Hardlines spoke with found value at the show. Whether from head office or from the stores, big commercial dealers or local building centres, they all found it a valuable forum to meet existing suppliers, form connections with new contacts, and get information and product knowledge.

The show was preceded by a day-long series of workshops to help dealers manage and grow their businesses, under the theme of “Build, Hire, and Plan.” On the first morning of the show proper, before the floor opened,

delegates enjoyed a breakfast and keynote from Lauren Johnson, a business coach and expert in mental conditioning.

At the close of day one, a gala reception was held next door at the Delta Hotel. During the festivities, Murray Finkbiner, the former president and COO of AFA Forest Products, took to the stage as the WRLA’s 2023 Industry Achievement Award recipient. “Winning the Industry Achievement Award is, for me, an industry pinnacle,” he told the crowd.

The Hardware & Building Showcase will relocate in 2025 and 2026, when it will move to Edmonton.

Orgill’s 2024 Spring Dealer Market, held in Orlando, Fla., drew retailers from around the world to connect with vendors.

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P werTools SPOTLIGHT

Powerful cutting with less noise

Massive cutting capacity and battery innovation combine to produce the 80V Max Brushless 355mm Power Cut, powered by two 40V Max XGT batteries. Makita’s technology provides a cordless option, eliminating the noise and fumes of petrol alternatives. Safety features include active feedback sensors that automatically shut down the tool in the event of kickback. An integrated water delivery system boosts water protection.

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Pruning saw makes it easy to replace chain

Makita’s 18V 6-inch Pruning Saw makes chopping green waste and small cutting jobs in the garden easy. A moveable guard covers the upper side of guide bar and opens gradually wider as the saw chain cuts deeper in the branch. The saw is equipped with a 100mm bar and tool-less chain and bar tensioning, allowing for quick and easy changing of the chain. Automatic chain lubrication minimizes the chance of stall due to lack of chain oil.

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Lantern Radio illuminates in all directions

The 40V max XGT Lantern Radio combines bright illumination with premium sound quality. With 360-degree illumination, the user can see in all directions. The push-button digital tuner has nine programmable AM and FM stations, plus Bluetooth to connect mobile devices. A metal hang hook is durable enough for the job site illumination. www.makita.ca

Cleanup is easy with these rivet tools

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BY STEVE PAYNE

SKU ANALYSIS 101

Retail legend Jim Inglis, one of the pioneers at Home Depot in the early years, teaches that the point of upgraded merchandising is not to elevate the store’s overall gross margin but to improve GMROI—Gross Margin Return on Inventory. In this article, we take a look at the basics of improving GMROI: starting with the role of SKU analysis.

The cover story for this issue is about a turnaround. In 2015, when Mitch Wile was hired as president of The Cedar Shop, the Calgary-based building centre was in sorry shape. What had once been an extremely successful store had gone deeply into the red. The new president’s first task was to stop the bleeding. But where to begin?

As Wile describes in the HHIQ interview (see page 46), “Twenty-five percent of our SKUs were being sold at a viewable loss.” The new boss ordered a SKU analysis of everything in the store. And the findings were the basis of everything that happened next—including a move, a redesign, and a return to profitability.

Rob Wilbrink is CEO of Burlington, Ont.-based BMF, a prominent store design

Bill Wilson is a former head merchant at both Sodisco-Howden and TSC Stores, and a 2012 inductee into the CHPTA’s Industry Hall of Fame. He has good advice for managing inventory.

customer. Ultimately, the assortment planning decisions are intended to attract and satsify that customer profile.

“Typically, when we get called in, it’s like when you’re going to renovate your house,” Wilbrink says. “It’s time to clean out the closets and the basement. And you’ll find you’ve accumulated all of this stuff over the years. In a store, a variety of people that have worked for you over the years have made various decisions. Vendors have come in and convinced them to take

“ ”Before long, I said to the owners of this new TSC store: ‘We have us a problem!’

—Bill Wilson

and merchandising firm which has served our industry since 2003. He says the starting point for most of BMF’s store design work is to focus on the needs of the core

Jim Inglis’s book Breakthrough Retailing: How a Bleeding Orange Culture Changes Everything.

on their lines—and add their SKUs—and there’s just a whole bunch of stuff that’s not turning.”

Jim Inglis, who was a senior merchandising VP with Home Depot in its formative years, calls ignoring SKUs that aren’t turning an “inventory sin” if left unaddressed. “This is often done to avoid making necessary markdowns that impact margin. But such myopia fails,” Inglis writes in his book, Breakthrough Retailing: How a Bleeding Orange Culture Changes Everything.

“You see the negative impact of dead merchandise on the GMROI of the stores and the expense of storing and handling non-selling products. Precious working capital needs to be invested in productive turning inventory, not inventory collecting dust.”

ABC ANALYSIS AND SKU CREEP

Bill Wilson, a former executive with TSC Stores and, before that, Sodisco-Howden, once Canada’s largest hardlines distribution firm, talked about the role of SKU analysis in his career. Howden, Wilson said, relied on an ABC analysis that is still widespread today. Products designated “A” were high-value SKUs that contributed the most revenue. The distributor expected those SKUs to generate “50 percent of our sales dollars,” Wilson said. “B” items were those SKUs that generated 25 to 30 percent of sales, and “C” items were those relied on to drive 15 percent of revenues. Then there were “D” items which were “must have” items, in spite of their minimal contribution to profitability. Seasonal items were not on the ABC analysis but were treated as a separate category.

This worked to sort out the distributor’s SKUs, to know which product categories were generating the most sales. The analysis also dictated what resources and service levels should be put into which products. But it couldn’t make the final decisions on SKU choices at the dealer level, which

would be based on assessments of the customer base.

Buying groups will suggest the SKU choices through planograms, Wilson says, but ultimately, it’s up to the dealer to “decide who they want to be.”

When Wilson moved to TSC, he found the limitations of an ABC analysis in a newly built TSC store in Ontario. Chief among them: SKU creep.

“We had just built a new TSC store in Goderich, and everything we had in the warehouse went into it,” Wilson recalls. “But before long, I said to the owners, ‘We have us a problem.’”

“You could see it in our tape measures, for example—which I think a lot of dealers have a problem with. Every time a wholesaler put them on sale, or had a special buy, we’d picked them up. We had 26 different types of tape measures in the tool section. I went into that store with the category manager for tools and asked him, ‘How many tape measures should we have?’

GM’s good-better-best model featured five brands of increasing price: Chevrolet, Pontiac, Oldsmobile, Buick, and Cadillac.

GOOD-BETTER-BEST

SKU analysis is useless without considering the role of pricing. Retailers have traditionally featured good-better-best price tiers—a theory which is a century old this year. It was invented in 1924 by General Motors boss Alfred Sloan, whose “ladder of success” featured five different brands, from the least expensive to the most: Chevrolet, Pontiac, Oldsmobile, Buick, and Cadillac. GM used this pricing strategy to overtake Ford, making Sloan an automotive industry legend.

For home improvement retailers, sometimes better-best is more effective than good-better-best, says Rob Wilbrink, CEO of store-design company BMF. “Let Canadian Tire have the good and focus on the products your core customer really wants,” he counsels. “When I was at Lansing (a Toronto-area home centre chain that was acquired by RONA in 2001), we got rid of all the Black & Decker, for example. We got rid of the ‘cheap and cheerful’ paint brushes—we went to all high-end product like Purdy—and our contractors loved what we were doing. And guess what? We differentiated our business from Home Depot, which was putting up stores in the same neighbourhoods as ours. And our retail business went up, not down, because by eliminating the cheap and cheerful we had an offering that Home Depot didn’t have.”

But SKU proliferation is always a temptation. According to Jim Inglis, former senior merchant at The Home Depot. “Merchants need to avoid racing to have more items that the competitor simply for bragging rights. It is particularly grievous with regard to the internet and e-commerce assortments. There seems to be a race to out-SKU Amazon, without understanding the high cost of warehousing and logistics. The rule must be to offer items that customers truly want to buy and then be able to deliver in a timely manner.”

Rob Wilbrink is CEO of Burlington, Ont.based BMF, a prominent store design and merchandising firm which has served our industry since 2003.

HAVE YOU MET OGASYS?

2

4

3

He replied: ‘Six! A 16-foot one, a 25-foot one, a 50-foot one, and then both narrowand wide-blade versions.’”

Wilson promptly put ‘do not buy’ notices on the superfluous 20 tape measures in the TSC warehouse. He repeated that process for thousands of other SKU categories that were over-represented. The problem was solved: sales and margins rose.

“The best part of SKU reduction is, it’s so simple. You don’t have to think your way through it,” Wilson said. But you do have to look at the real needs of your core customers. This can only happen when you put yourself in your customers’ shoes and look at your store from their point of view—not an easy thing to do.

Having too many SKUs hurts a retail business in three ways, according to Inglis in Breakthrough Retailing :

• The store is harder to stock. “Salespeople are busy moving merchandise and stocking shelves instead of assisting customers.”

• The store is harder to sell. “When there is too much redundancy in the product mix, the salespeople cannot understand

aren’t confident in their own product knowledge.”

• The store is harder to buy. “Having too many SKUs in the space available prevents the customer from quickly finding the product display, getting good pointof-sale information, and easily obtaining

—Bill Wilson “ ”

Put yourself in your customers’ shoes and look at your store from their point of view.

all variations and, therefore, can’t help to the customer trying to make a decision. In fact, a confused salesperson will avoid helping a customer if they

the product for purchase. In addition, it often forces needed inventory of the better sellers off the sales floor and into storage areas, where they are not readily available to customers. Even more likely is an out-of-stock situation, as display space and inventory dollars are tied up in slow-moving items.”

The natural tendency of retailers to constantly add more items to their stores is a mistaken notion of what retailing is. It is fundamentally an oversimplification, Inglis says. “The customers do not really want more items, they simply want the right item for their need. The easier you can make it for the customer to zero in on the right products for their project, whether in the store or on the internet, the more you become the customer’s first choice to shop.”

“When the merchant tries to jam 50 pounds of stuff into a 25-pound bag, something has to give,” Inglis states succinctly.

“High-tech” methods of calculating mark-ups and margins certainly looked different 25 years ago. But whatever form they take, their value remains important for dealers to manage inventory effectively. (D.H. Howden margin calculators courtesy of Bill Wilson)

WHO IS YOUR CORE CUSTOMER?

“When you renovate your store—or build a new store—it’s a great opportunity to get back to basics and have a fresh start,” Wilbrink says. “And the very first decision a dealer needs to make is, ‘Who is your core customer?’ And sometimes they decide that their core customer is not who they want it to be! And they want a different profile of customer. And they end up trying to have a little bit of everything for everyone.”

“But that’s very difficult when you’re a building centre and you’re up against Home Depot or a RONA big box that does tend to have a ‘little bit of everything for everyone.’ So you need to be really good at what you do and really satisfy that core customer. Because that core customer is likely to be your most profitable customer. Your real objective should be to get more of that customer profile, and for most building centres, that’s the general contractor. That’s the customer that’s going to bring you the most business—and be most loyal.”

Once the core customer has been defined, BMF goes through an exercise to assign strategies to each of the key categories, like LBM, plumbing, electrical, and paint.

“We start with 17 or 18 categories and decide whether you want to be dominant, competitive, or convenient in them—or not be in that category at all,” Wilbrink says. “And quite often the decision on what not to sell is at least as important as the decision on what to sell.

“Once we’ve determined at the category level what businesses the dealer needs to be in—that really satisfy their core customer— then we drill into about 200 subcategories and assign a strategy to each.”

The BMF team doesn’t go to the SKU level. They leave it to the dealer, the buying group, and the distributors to detail their merchandising sets, based on the available space.

SHOPPING THE COMPETITION

In its early years, Home Depot was known as a brash upstart. As former Home Depot exec Jim Inglis related during a presentation at the Hardlines Conference in Whistler, B.C., last fall, that take-no-prisoners attitude to its competitors quickly became famous.

One such competitor was the venerable Scotty’s Builders Supply, which once had roughly 150 stores in the southeastern part of the U.S. when Home Depot was starting out in Atlanta.

Scotty’s was proud of its extensive catalogue, which it published yearly. Home Depot rounded up some Scotty’s catalogues and displayed them on the end aisles of its stores, declaring in magic marker that it would offer a 20 percent discount on any item found to be cheaper at Scotty’s than Home Depot. It was the last time Scotty’s published a catalogue.

Shopping the competition has a role in SKU analysis, at least at the level of convenient-competitive-dominant, if not at the level of actual prices. “I would have a little hidden microphone and I would walk through a store recording all the linear footages in whatever competitive stores there were,” Inglis said. “And then we’d put the linear footages up side by side. But over time, we’ve realized that a Home Depot is basically a Home Depot. Whereas, if you’re going up against an independent building supply store, it’s much more meaningful to have that sort of analysis.”

Obviously, when it comes to pricing, the “right price” is solely determined by customer perception. “Many books are written about how to properly price products and services. This is perhaps the most controversial issue in developing a business strategy. Retailers often search for the magic formula to maximize sales and profits.”

But formulas that may have worked in the past but are not relevant today can hamper a retailer’s growth, Inglis says. What worked for The Home Depot during its period of its most phenomenal growth was “smart pricing” strategies measured against gross margin dollar contributions.”

“GMROI is a great tool to evaluate the effectiveness of a pricing strategy.” Inglis said.

Jim Inglis, Home Depot’s former executive VP of merchandising, has also held executive roles at global home improvement powers Sodimac, in South America, and Hornbach, in Germany.

THE MODEL STOCK AND GMROI

The ideal model stock, according to Inglis, is a SKU matrix that satisfies the core customer (broader for independent retailers than in the Home Depot model) and, over time, increases GMROI.

It’s not simply a question of loading up your store with higher-margin product—as Walmart has shown for decades. Walmart’s model was lower margin, faster-turning stock that upturned all the rules of the retail game in North America.

The interplay between the two major categories in the home improvement retail industry—the front and back ends—is instructive.

Inglis gives the example of LBM products selling at, say, 25 percent gross margin. If $1 million is invested in inventory that turns 12 times per year, annual sales through the back end will be $16 million. GMROI is gross margin divided by average inventory at cost, which is $4 million divided by $1 million— or 4.00 (sometimes expressed as $4.00).

Inglis then turns to the hardware department. In our theoretical example, imagine that the gross margin is 50 percent. If $1

million is invested in inventory that turns twice per year, annual sales through the front end will be $4 million. GMROI is gross margin divided by average inventory at cost, which is $2 million divided by $1 million— or 2.00 (sometimes expressed as $2.00).

Wilbrink repeats the retailing adage: “You can’t take margin to the bank.”

Should you get out of hardware and solely focus on LBM, then? While some dealers have done that, the symbiotic relationship between front and back ends is

When the merchant tries to jam fifty pounds of stuff into a twenty-five pound bag, something has to give.

—Jim Inglis “ ”

In these fictional examples, LBM provides twice the return on invested dollars than the front end does, while providing only half of the margin per SKU. Slower-moving, higher-margin SKUs can tie up space and cash and present an opportunity cost that is very expensive to owners and investors.

a unique feature of this industry. In fact, Inglis notes that product selection is both an art and a science—and Bernie Marcus, founder of Home Depot, once argued that it’s closer to an art. But it’s an art where the results can be measured mathematically, through GMROI.

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MAKE TIME TO ‘CHECK IN’ WITH YOUR TEAM MEMBERS: BATTAH

Arecent Hardlines What’s in Store Podcast featured Michael McLarney talking to Pierre Battah, a leading HR advisor in Canada. Battah has also written a great book: Humanity at Work: Leading for Relationships and Results. He’s also a broadcast journalist, frequently featured on CBC and Radio Canada. In their half-hour conversation, McLarney and Battah focused on the realities of managing teams in the retail home improvement environment. HR management has to be done through “check-ins” on the fly, because stores are very busy places, Battah said. And the whole point of the check-in process is to increase an employee’s engagement.

What is engagement? Employee engagement describes the level of enthusiasm and dedication a worker feels toward their job. Employee engagement can be critical to a company’s success, given its links to job satisfaction and employee morale. Engaged employees are more likely to be productive and higher performing. Battah gave some statistics on employee engagement.

“We know that a third of our folks are born engaged,” Battah said. “They are our owners and managers—they are our leaders. Twenty percent of our employees are involved in a transactional relationship. They have the attitude of ‘you pay me, I’ll do my job.’ But it’s a job. The other 50 percent, if we do a few things, including management by walking around, we have a shot at affecting them—and engaging them.”

Check-ins with staff are important to increase employee engagement, Battah counselled. They ideally are done one-onone, between the manager and the employee. And, ideally, they are done daily. Checking in doesn’t have to take very long—a few minutes if that’s all you have time for.

“It’s these small little connections,” Battah says. Do check-ins at the beginning of a shift. Or while you are walking through the store. Take time to check in with each employee. “There’s not a lot of magic bullets on leading people,” Battah confessed. “But checking in is one of them!”

DON’T BE AFRAID TO DITCH YOUR

OLD WAYS OF THINKING: JOHNSON

The Western Retail Lumber Association’s latest annual Building & Hardware Showcase, held in Winnipeg in January, featured a dynamic keynote speaker based out of Sacramento, Calif. Lauren Johnson is a mental performance coach and public speaker who has worked with top professional athletes, including the New York Yankees baseball team.

Her presentation at a morning breakfast event was titled, “Achieving Extraordinary Results.” It focused on one’s ability to turn plans into decisive actions through high-level decision making.

One of the things that keeps people from reaching the next level of empowerment and decision making is the impulse to hold onto old ways of thinking. Johnson challenged her audience to look at their own “maps” and question how to change that map to better confront change.

“You have to apply change to your old map,” she told the audience. If you’re not adjusting and not asking how everything is changing day to day, then your attitudes toward coping become out of date.

Often, people will stand by and let change happen without them. Even people who are willing to confront that change often hold off until the need is too great. “Don’t wait until there’s a big gap in where you are and where you should be,” she said. Ask yourself: “What did I do well? How can I do better? And what did I learn?”

But you can’t wait for someone to instill these attitudes in you. “You have to own these. Do them for yourself.” If you’re trying to please someone else or simply go through the motions, your efforts won’t succeed. “Development will only happen if you choose to do it.”

Johnson concluded by urging the audience to take responsibility for making change happen themselves. “If you want to be unstoppable, you have to be accountable,” she said. “Mindset is everything.”

You can listen free to the monthly Hardlines Podcast by going to hardlines.ca/hardlines-podcast-series. Scroll down at this page to see our complete library of episodes.

Pierre Battah Lauren Johnson

BY GEOFF M c LARNEY

GEN Z IS IN THE HOUSE

AND READY TO MAKE A DIFFERENCE

Despite the stereotypes, employers view Zoomers favourably, even if they’re a bit wary of Gen Z’s entry into the workforce. But HR experts say that, with the right support, they’re capable of great things.

Like Millennials, Gen Z values work-life balance and meaningful work, and has a reputation for changing jobs fairly easily.

”

The Millennial generation—and what makes them tick—has been making a buzz among journalists and academics for years. Also known as Generation Y, this cohort is defined as those born in the last two decades of the 20th century, beginning in the early 1980s and continuing through the late 1990s.

That means, of course, that the eldest Millennials have now turned 40 and are no longer the young upstarts in the labour force. Generation Z has now arrived. This group, also known as Zoomers, is defined as those born after 1997 (generational definitions vary) until about 2012. Generation Z is followed by the counterintuitively named Generation Alpha, the oldest of whom are just approaching high school.

But it’s definitely Gen Z which is on the minds of most managers today. Zoomers are now roughly 12 to 27 years of age—and they are entering the workforce en masse.

As Zaida Fazlic put it to the participants at last year’s Hardlines Conference: “Just as managers are starting to figure out Millennials, there’s a new kid on the block.” Fazlic is Taiga Building Products’ vice-president of people, culture, and change management.

Millennials may have grown up with digital technology from a young age, but Zoomers are “digital natives” who have never known a world without it. Fazlic calls them “purpose-driven,” adding they “prefer to work with organizations whose values align with their own.”

Gen Z is also impressively diverse. In the U.S., about half of them identify as people of colour and nearly a quarter of this generation have at least one immigrant parent.

Factoring in ongoing immigration, the U.S. Census Bureau projects that the majority of Zoomers will be members of visible minorities by 2026. Understandably, the cohort is attracted to workplaces that place a genuine emphasis on Diversity, Equity, and Inclusion initiatives.

Like Millennials, Gen Z values work-life balance and meaningful work, and has a

Just as managers are starting to figure out Millennials, there’s a new kid on the block.

—Zaida Fazlic, Taiga Building Products

reputation for changing jobs fairly easily. Employers can use this to their advantage by leveraging their strengths to attract young workers from the competition.

Members of Gen Z also share some common anxieties with Millennials, especially in this time of high inflation and rising prices, according to leadership coach Nicole Gallucci.

“Am I ever going to be able to afford a home? What kind of family am I going to

Zaida Fazlic is Taiga Building Products’ vice-president of people, culture, and change management.

be able to afford to raise in a dual-income environment? How are my partner and I going to figure that out?”

Gallucci, the author of Life Blueprint: a step-by-step guide for creating an extraordinary life, knows these generations well through her work teaching marketing at two Ontario colleges. She says Zoomers are “literally grappling with all of these challenges, and at the same time, they’re also trying to figure out, ‘what do I want to be when I grow up?’—as we all are!”

On the other hand, Gen Z exhibits a stronger preference for the community feeling of an office space, as opposed to the

This generation, they want to know that we’re listening to them.

—Nicole Gallucci, leadership coach

Millennial penchant for remote or hybrid setups. They also use professional networking websites like LinkedIn less than Millennials do, and their technology use overall is more mobile-centric.

Both generations are budget-conscious, but surveys have found that Gen Z tends to be thriftier and more willing to delay

”

purchases. That doesn’t mean they won’t splurge on things they value, but it does mean they are selective about where they put their money.

In a 2022 survey of U.S. managers, nearly three-quarters of respondents identified the cohort as the most “challenging” to work with. By contrast, about 45 percent said that Millennials are the “most productive” and boast “the best technological skills.”

In response, Zoomers have taken to social media to decry stereotypes, slamming poor pay and unrealistic demands. They point to previous generations who committed themselves to the grind while trusting in the promise of a reward that never came.

At the same time, money isn’t everything. A LinkedIn survey found that younger workers were the most willing to take a pay cut of up to five percent in some circumstances. Among Gen Z, 36 percent would do so in exchange for better work-life balance and 40 percent would if it meant stronger opportunities to grow in the role.

Retailers can ill afford not to listen. “When I look at the data that’s out there, the expectation is that most of the baby boomer generation will be entering retirement age in the next five to 10 years,” says Fazlic.

“What that means is that we need to invest in upskilling, mentoring, and coaching the next generation who will step in to make sure that the business remains an ongoing concern and is successful beyond any one generation.”

Nicole Gallucci

the author of Life Blueprint: a step-by-step guide for creating an extraordinary life

is

A GENERATIONS TIMELINE

It’s timely advice for an industry where questions about succession loom large on many dealers’ radars. In western Canada, some are already looking to bring this young generation aboard.

Mitch Wile is the president of The Cedar Shop, a Sexton-affiliated, contractor-oriented store in Calgary’s southeast quadrant. He’s spent more than 50 years in the home improvement retail industry.

With plans to retire next year, Wile decided to pay back the industry that has been so good to him. That’s why he provides mentoring for two high school students every year through the store’s innovative internship program. Developed by the Western Retail Lumber Association (WRLA), it has been recognized by the Calgary Board of Education under the aegis of the Alberta government’s careers program.

“We hear it all the time in our industry— businesses struggling to develop succession plans,” Wile says. “Retirement, hiring, and retention can all be scary words to hear or deal with. There is a solution to these

problems and it’s the upcoming generations. There are passionate, eager-to-learn, and talented individuals out there. Like many of us, these young people need support, belief, and encouragement to reach their potential.”

Having a younger perspective in the store has helped him to market to the next generation as well. “I’d never even heard

the government to finance this program for the next three years. I wish I had something like this when I was in high school.”

After Wile stumped for the program at Sexton’s Alberta regional meetings, six other members started looking to recruit students. Two students began the program earlier this year.

Generation Z, or Zoomers, is that age cohort born between about 1997 and 2012, meaning they are 12 to 27 years of age—and coming to work for you. “ ”

of TikTok!” Wile admits. Having been convinced by his mentees of the platform’s importance, he duly put them in charge of managing the store’s channel.

“The incredible success of our program with our two interns and the support of companies such as Metrie has convinced

Nicole Gallucci says that Gen Z is on the vanguard of confronting trends that will impact the workplace as a whole such as Artificial Intelligence, which she calls “a remarkable tool” but not “a replacement.”

The rapid development of AI, she says, is “amazing, but it’s also something to be a bit

apprehensive about for so many in this generation—I would say so many in every generation, but I think this generation is going to be the one who literally leads the charge on it, decides how it’s going to get used.”

While it may be daunting, Gallucci says we have been here before, pointing to the massive industrialization and technological advancements following the world wars, among other examples. “We’ve gone through these rises and falls of new technologies. Look at the dot-com explosion: everybody panicked when dot-com came in because, are we going to lose our jobs? And we didn’t. We just found other ways to work.”

Gallucci doesn’t shy away from the angst this process can induce, including for Zoomers. “They’re young, they’re still figuring out life, they’re still figuring out work and how work works. And on top of this, they’re trying to adopt and adapt this technology.” But she believes employers can support their younger workers through the

transition if they play their cards right.

“I think we’ve always said we have to give our people the opportunity to fail, and I think to a certain extent we pay lip service to that.” Now, Gallucci says, it’s important to go further than that. “As these technologies are coming in, we’ve got to give people

use it so I can replace you.’ Let’s figure out how we’re going to optimize this. I think the permission to fail and the permission to explore needs to really be part of the process in terms of managing our people.”

More generally, according to Gallucci, a holistic approach helps Gen Z workers thrive, and ultimately benefits the whole team. “This generation, they want to know that we’re listening to them. I see it in the students that I teach and the people that I work with: they realize that there are a lot of challenges in the world and they want to figure out their place in it.

“And so I think it is incumbent [on employers] to provide some of those health and wellbeing and development conversations that might not feel as if they’re part of the job, but they’re part of the human. And I think as employers we can provide that.

“And when you provide that and you develop their full potential, I think you’re honouring who they are. And at the same time, they’re going to be better humans obviously, but also what they’re contributing and bringing to the business and their loyalty will actually be stronger. It works for everybody.”

For Gallucci, maintaining the links between generations is a matter of paying it forward and a means of ensuring organizational continuity.

Zoomers are coming to the table looking up, but they’re also looking down to those that they’re hopefully going to try and help support. “ ”

the time to test and learn so we can see how useful these tools are and how we can apply them.”

That means recognizing that AI technologies are a tool for workers to use and not a pretext for their redundancy.

“I think we’ve got to share with people that ‘we’re going to figure this out together’ as opposed to ‘figure this out so that we can

“At the end of the day, the only way we’re all going to survive is if we actually help the next one in line.” Zoomers, she says, “are coming to the table looking up, but they’re also looking down to those that they’re hopefully going to try and help support. They are very community-minded and I think we’ve got to help them have the tools to serve.”

Putting our members first in everything we do.

The Cedar Shop has been a Sexton member since 1993. Having the Sexton Group on our side has permitted us to compete in a very volatile market for many years.

Today we are Canada’s largest Cedar showroom which would not be possible without access to the vendors and pricing that Sexton has made available. Rebates are timely and in our hands, allowing us to use the funds to grow and improve bottom line profitability. Joining the Sexton Group is a sound business decision for your future.

Driven by our members’ success.

Mitch Wile, President; Tyler Palko, Owner, The Cedar Shop

Time For A Change.

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MITCH WILE, The Cedar Shop

TURNAROUND

An interview with MITCH WILE, president of The Cedar Shop, which last fall won the Outstanding Retailer Award in the category of Best Contractor Specialist. Mitch’s arrival at the Calgary store—a member of the Sexton group—was the beginning of a remarkable turnaround at the once ailing business under the ownership of second-generation TYLER PALKO and other family members.

I found out when I arrived that they were spending it as fast as it was coming in the door. There was no profit here to be shown.

Photo: Colin Way Photography

INTERVIEW BY STEVE PAYNE

Mitch Wile (left) and Tyler Palko

MITCH WILE, The Cedar Shop

Founded in Calgary by Jerry and Beverly (Bev) Palko in 1978, The Cedar Shop had many prosperous years. But within years of Jerry passing away in 2007—and the business fell to the ownership of Bev—The Cedar Shop hit rock bottom. By the time LBM industry veteran Mitch Wile was headhunted, all the way from Halifax, to perform life support on the business, in 2015, 25 percent of the SKUs were being sold at a viewable loss. It cost some $500,000 in bad debts and severance to turn the business around, Mitch recalls. Bev passed away in 2019—but not before she saw that the turnaround of the family business was going to be a success. Including a brand-new location for the business, across the street.

Mitch, you’ve said in your winning Outstanding Retailer Award entry last year: “The decisions I make today affect the families of all the people under my employ.” Where did that come from?

That’s mine, I claim it (laughs). Whether I heard it somewhere in the past, I’m not sure.

The late Beverly Palko, owner when she brought you in as GM in 2015, gave you a mandate. It said you would “nurture a well-managed, highlymotivated, safe work environment that would last for another 40 years. Bev passed away in 2019 but she’d seen the turnaround begin.

The Cedar Shop was in trouble, as you’ve seen from the numbers. It wasn’t just the numbers, though. There was poor morale. There was really poor management. There was a lot of things here that needed to be adjusted. But the biggest issue, I found out when I arrived, was they were spending it as fast as it was coming in the door. There was no profit here to be shown.

How was the business even surviving?

Every time they needed money they would go to “The Bank of Bev.” And she would bail out the company in the winter months when it was slow. So, the very first winter I was here, Bev asked me, “How much do

you think you’ll need from me this winter?” And I replied: “Nothing. That’s not the way I run a business.” We were going to operate within our means. And that’s what we started doing. The very first year I was occupied with getting control of our operating expenses. We pulled back about $700,000 of expenses that first year. Then we were more stable.

The Cedar Shop was founded in 1978 by Jerry and Beverly Palko. Over 46 years, it’s become a Calgary institution.

Then what?

The next thing we had to address was critical thinking. How would we get this business to compete with Home Depot, RONA, and the big boys? Number one, we had to find a new facility. That was key. And that took a while. We looked at many facilities. We had been in the same location for 36 years—and to leave that location, that’s tough. And I was just about ready to make the decision to move, when across the street a piece of property became available! But it took a year to get into it because it was the old Safeway bakery. And we had to decommission the bakery, clean it all out, and then rebuild The Cedar Shop to where we are today.

That wasn’t the only challenge you had in moving across the street, right?

We had a competitor who had a facility outside the area. And they thought it was smart to move into our old building directly opposite our new building. He thought the customers would go there.

Photo: Joanna Jensen Photography

That must have been disappointing. Oh, I loved it! Some people here were panicking and my comment was, “Well, welcome to the jungle!” We’re just going to eat them up. And we have!

MITCH WILE, The Cedar Shop

“dad” was gone, they left us. We had virtually no contractor sales—to speak of—when I started here. We are doing about five times the business in contractor sales. We needed to realize the value of that second generation.

free city-wide delivery? After two weeks, I realized, we are never going to get rid of this. Because it just went crazy.

For the second year in a row, you’ve taken on two “next generation” interns from local high schools. It’s a program involving the WRLA, Careers Alberta, and the Calgary Board of Education. How does it work?

”

When a competitor moved into our old location across the street, I said, ‘Well, welcome to the jungle!’

Another problem you’ve talked about was former employees, prior to your arrival, not paying enough attention to the needs of the second generation of contractors. What had changed from one generation of customers to another?

There wasn’t really a change in the client. It was how they were being treated by our staff: “Oh, you’re the son of a long-standing customer and I don’t need to talk to you; I’ll talk to your dad.” That type of thing. But when

Can you tell us about your Business Roundtable Sessions and how they helped during Covid?

When Covid hit, everyone was thinking, what are we going to do? I saw a quote from a Sobeys guy: “Strong teams will survive: It’s not as bad as everybody thinks.” At one of our Business Roundtable Sessions, we were discussing the problems we were having with curbside pickup. We sell 16-foot, 20-foot pieces of lumber. And one of our sales guys, Randy, said: Why don’t we have

Using the BRT (Business Round Table) that I offer to clients and business associates, I do eight sessions, three hours in the morning. The second-last one is a review. And the last session, I give them my form that they can keep, and I give them $2 million in paper money, and I say, “Build me a business.” And they do it together. We’re teaching them to actually run a lumberyard, but the skills are transferable. When I look at this, I think: I wish someone had given me this when I was 30 years old and starting my first GM job. I share this program with the high school interns to pique their interest in our business.

Free city-wide delivery was an experiment at The Cedar Shop during Covid. It has proven wildly successful.

Photo: Colin Way Photography

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Shop

What parts of The Cedar Shop do they get training in?

We’re exposing them to the lumber industry, to the mill, to delivery, to the sales counter, lots of areas. And we have basically 10 weeks to get this done. And after they were done last year, they both came to work for us for the summer—and one of them is still with us, taking a gap year prior to going back to school.

They attend our Business Roundtable Sessions and contribute like anyone else. Our TikTok program came from them. One of the female interns asked, “Can I say something? If you want to get people from our generation into The Cedar Shop, you need to be on TikTok.” I replied: “What the heck is TikTok?” (Laughs.) I know nothing about it; I’m 64! And we’re getting better. For the month of December,

“ ”

I’ll be honest with you: When I came here, we were known as the worst customer to deal with in the city.

we had 770 views and now that we’ve got the e-commerce program up and running, it’s all contributing.

You’ve talked about the importance of great supplier relationships. Can you expand on that?

I’ll be honest with you, when I came here, we were known as the worst customer to deal with in the city. That’s because we had lost our reputation of trust, and had no reputation at all other than the dollar. So, when I came here, I’d always believed in the value of strong supplier relationships, being a partner with them. When I started dealing with our four main suppliers, there were still difficulties. It wasn’t me. They didn’t even know me. I had a couple of meetings where I had to establish, “This is who I am. Forget what happened in the past.” We had to start fresh. And it was growing pains at first, but we now have an incredible relationship with our suppliers. There are two reasons for this. One, we are probably one

One of the unique aspects of The Cedar Shop is its Business Round Table (BRT) sessions, in which everyone, including student interns, is invited to contribute.

Photos: Joanna Jensen Photography

of their biggest clients in the city. And two, we pay our bill—and that is key.

Our main supplier has called me up and said, ‘Mitch, can you slide me a payment early?’ because he’s got payroll to make. And I say, not a problem. And there’s times when I’ll call him and I’ll say, like last April when we lost $600,000 in sales because of the weather, ‘We’re not going to be able to make that end-of-April payment until May.’ And he’ll say it’s not a problem. That’s the importance of a great supplier relationship.

Let’s go back to the beginning, to your career path. You are a native of Windsor, Nova Scotia?

I started out when I was in high school in Windsor, with Wilcox Brothers Hardware Ltd. They eventually joined Home Hardware and that business is now one of the Payzant Home Hardware stores. After university, I then worked for about seven years in Nova Scotia for Arrow Construction Products. But the Nova Scotia industry, at that time

WRLA AND THE NEXT GENERATION

The Cedar Shop’s internship program —in which the business takes two students from Calgary high schools and puts them through a training program—has its roots dating back to 2019 when conversations began between Liz Kovach, president of the Western Retail Lumber Association (WRLA), and Eddie Choe, director of business development at Trimlite Doors, Calgary.

“We wanted to introduce this industry to the younger generation,” Kovach recalls. “They go to career fairs, but it’s very difficult to know what kind of a career you might have, walking through the booths. I thought there’s got to be a better way. Eddie said he had a colleague at the Calgary Board of Education and we started talking to them.”

Covid interrupted, unfortunately, but in the spring of 2023, the first internships were in place, with mouldings giant Metrie Inc. taking on interns for the vendor side, and The Cedar Shop taking on interns for the retailer side.

“At the same time the WRLA was introducing our Let’s Go Build public awareness campaign,” Kovach says. “The Calgary Board of Education had some criteria. The students need to come out with some skills,” they said. They didn’t want to offer internships where the interns didn’t learn anything.

The WRLA has recently done an Alberta Labour Market Study for the sector. “It sorted out a lot of misconceptions. We think that once you enter the industry you never leave. But in fact 63 percent of the people that enter our industry leave. We can’t afford to have that many people leave. We have to have some sort of introductory course. We used to refer to it as Lumber and Building Materials 101, but we’re now calling it Building Materials Fundamentals. There has to be a way where everyone that comes into our industry can learn the lingo of our industry.”

Liz Kovach, president of the WRLA, was instrumental in getting an industry internship under way.

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WILE, The Cedar Shop

(the 1980s), there was nothing going on. I was sitting on the desk and there was no future for me. So, my wife, Ann, and another couple, we decided to just pack up and move to Calgary. We knew nothing about it, knew nobody, and my friend Sid and I just moved out there early, to look for work. Our wives came out three months later. I worked for Kenroc in Calgary, until 1998, and then I got promoted to GM at the Kenroc in Winnipeg, looking after business in Manitoba and Northern Ontario.

And you worked in the U.S., when Kenroc had GSDs there?

Yes, Kenroc had a branch in Minneapolis and I went to try to save that branch for them. But it was right in the middle of

the sub-prime mortgage crisis in the U.S.—and we sold it to Winroc. The latter offered me a position, but I had a contract to work with the Kenroc and I completed it before accepting their offer, going back to Atlantic Canada. I opened up three facilities for Winroc, in Halifax, Moncton, and St. John’s. Winroc ended up selling to Foundation Building Materials and they didn’t want anything east of Toronto. So, they closed us!

Which brings us back to today. You were actually headhunted by The Cedar Shop? How did that work?

Yes, Bev was looking for someone to run The Cedar Shop, as I explained, so that’s how I got involved—through a headhunter (Steven Borer of DMC). At the time, I was back in Halifax with my wife. I said to Ann, “They want someone in my role, but they won’t tell me who the firm is!” She was curious. So, we decided, I’d got

The Cedar Shop calls itself the largest dedicated cedar showroom in Canada. It has a 53,000 square foot building footprint and a 15,000 square foot showroom in southeast Calgary.

Photos: Colin Way Photography

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MITCH WILE, The Cedar Shop

some old friends in Calgary, so I decided to go meet with the firm, whoever it was, and visit my friends at the same time. And if it wasn’t for me then nothing would be lost. I walked into a boardroom at a hotel and there was a lady sitting there, who turned out to be Beverly, and a consultant who was helping her out. Anyway, I was hired. Sometimes you just have to have an instinct for something. I wasn’t happy down east, and wanted to be back in Calgary, and it’s worked out great.

Before we wrap up, I wanted to ask you about something you brought up: “critical thinking.” You had to do critical thinking to turn The Cedar Shop around when you got hired by Bev in 2015—but how do you actually do it?

Before we relocated the business across the street, there were 53 major things I needed to think about. And critical thinking involves closing your door, getting quiet, and pulling out your notebook to look at the list of things you’ve decided you need to get done. You need to ask yourself, “Why is this item still undone?” But sitting with your

plans and your lists needs to be a priority. It can be done in as little as 15 minutes—but you have to do it. There’s no such thing as saying, “Well, this got in the way.” No! In that case, you let something get in the way of what you wanted to accomplish!

Now, you can’t budget for the unforeseen—and sometimes emergencies come up that you can’t avoid. But if there’s something you need to accomplish, and if you

can’t budget 15 minutes a week to think it through, you are in trouble. So, every day, usually when I’m eating my lunch, I’ll pull out my notebook and it’s got everything I’m trying to accomplish, and I highlight the next items. And I work through them and tick them off. If you aren’t doing an item, sometimes you don’t really want to do it. So, you need to delegate it, or get rid of it. That’s my version of critical thinking.

Photo: Joanna Jensen Photography

Photo: Colin Way Photography

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BY ROB BLACKSTIEN

THE ROBOTS ARE COMING

One of the first independent home improvement chains to deploy robots is headquartered in Louisiana. But it’s just a matter of time before hardware and building supply retailers in this country start enjoying the benefits of robotics.

The global retail robotics market is expected to reach over $100 billion by 2029, five years from now.

Thank you very much, Mr. Roboto, For doing the jobs that nobody wants to

—Styx, “Mr. Roboto” (1983)

The answer to some of life’s most challenging questions can often be found in the lyrics of Styx songs. So, for those hardware retailers pondering an investment in robotics, look no further than that song made famous by the Chicago-based rock band— especially the second line.

Robots really can help with the jobs that no one enjoys. In fact, that’s an integral component of the Fourth Industrial Revolution (a business buzzword coined in 2016 to reflect the vast leap in technological proficiency we are experiencing).

With robots taking over repetitive tasks,

real human employees are freed up for higher-value duties, like serving your customers. That’s the theory, anyway. We are in uncharted territory here. The first retail robot that interacted with customers was introduced in Japan in 2015.

Retailers that have invested in robotics in recent years have enjoyed dramatic improvements in terms of detection of out-of-stock (OOS) products and increased price-tag accuracy. Robots can also help with planogram compliance, data analytics, and slip-and-fall hazard detection—with a world of possibilities for future applications.

Given that robot deployments are already common worldwide (according to Stratview Research, the global retail robotics market was just over US$15 billion in 2022) and

growing rapidly (expected to reach over US$105 billion by 2029), success stories can be found in every country. But robots are not as commonly encountered in Canada.

Robots in retail stores are not entirely absent in this country, but we aren’t keeping up. Sanctuary AI, a Vancouver-based firm, deployed a humanoid robot in a Mark’s Work Wearhouse in British Columbia in March of last year. But robotics in Canadian retail is lagging behind.

South of the border, surprisingly, it’s not the big box stores that have been taking the plunge. Rather, it’s mostly regional retailers who are deploying robotics, according to Georges Mirza, founder of Phoenix-based ComTask, a consultancy with a focus on robotics in retail.

Badger Technologies’ Retail InSight autonomous robot in action at one of the 13 locations of Stine LLC, a home improvement retailer in Louisiana and Mississippi.

STINE IS A PIONEER

That backdrop ultimately leads us to the Deep South to uncover a robotics-related retail hardware success story. Sulphur, La.based Stine LLC, a home improvement retail chain with 13 locations across Louisiana and Mississippi, became interested in the technology in mid-2022.

Stine CIO Robert Spears first heard about Nicholsville, Ky.-based retail automation provider Badger Technologies and their robots from a colleague at Busy Beaver, which operates 25 home centres in Pennsylvania, Ohio, and West Virginia. The more Spears heard, the more he was convinced this technology was right for Stine.

“It really piqued our interest, so we started looking, and it turns out it’s exactly what we needed,” Spears told HHIQ. Stine was seeking help in two areas, primarily peg-out scans and bin tag pricing.

The peg-out scans were being done “very inconsistently,” once or twice per week, he

Retail pricing accuracy is a big deal in Louisiana, where the Department of Agriculture and Forestry does periodic price verification inspections of retailers. If the 98 percent accuracy threshold is not met, increasingly punitive action is taken, ultimately leading to fines.

While stock-out and price scans are the two main functions the robots perform for Stine, there’s a third: creating what Badger calls a “realagram.” As retailers know all too well, paper-only planograms don’t always get set properly. The robots create a giant photograph of the entire aisle, and buyers can use that to compare with other stores and the planogram itself, then contact the store if changes are required.

Since starting to deploy robots in four of its stores in 2023, Stine has quickly gotten a sense of the benefits it will reap.

For instance, Spears says, in one store they put the robot in on a Monday, which scanned the store for a week. Then, the

Stine’s pricing accuracy has been improved by Badger’s robots, in a state where stores can be fined for not meeting a 98 percent accuracy threshold.

said. Peg-out scans are designed to ensure a product is stocked where it is supposed to be (and not, for instance, on the next peg, where customers may not see it).

“We didn’t want them to see empty space; we want them to see a product,” Spears said.

Stine’s other issue was that they didn’t have a good way to check bin tag pricing. For example, one store had “a pricing clerk that just decided they really didn’t want to do that,” Spears says. They would get all the tags printed for price changes and just stick them in a drawer. “And you don’t know how many times other people do that or just throw them away.”

”

robot produced a report with hundreds of pages of price corrections that all needed to be fixed. The following week, the state came in to do a price check. “The manager called me and said ‘I can tell you there is absolutely no way we would have passed that state test’” without the robot’s report, Spears says.

After all, he adds, “these pricing clerks are just people; they’re not hardware experts,” so it doesn’t take much for the store to get off track, pricing wise, especially considering that if employees don’t know what the product is, they probably won’t change the bin tag.

For Stine, the quantifiable benefits of the robots have been staggering:

• Over 95 per cent accuracy of detection of OOS products;

• OOS products have been decreased by up to 50 percent; and

• Price-tag accuracy has improved by over 97 percent.

Spears, who says Stine did not reduce staff at all in the wake of the robot deployment, estimates a three-year return on investment. Badger CEO BJ Santiago says most customers are experiencing ROI within nine to 13 months.

Of course, the intangible benefits are also immense.

“You really can’t put a number on the empty pegs,” Spears says. How often does a customer walk to the peg and find it empty, yet you actually have the product somewhere in overstock?

“But the customer doesn’t know that, so they just walk away.”

That frustration—both from the customer’s perspective and the store’s, in terms of potential lost sales—would be difficult to quantify.

ANALYTICS IS NEXT

Stine has yet to avail itself of the data analytics the robots can supply, but does plan to have them help with an ongoing struggle: location codes.

By differentiating between a four-foot gondola and an eight-foot warehouse rack, the robot can label the aisles, so it will know if something’s been moved and update that information.

“So, in the very near future we’ll add those location codes into our system,” Spears says. “And then we’ll be able to run analytics based on a four-foot section and say ‘is this four feet performing the way we expected it to?’”

Stine is using Badger’s Retail InSight model, which performs shelf evaluations to seek out-of-stocks or wrong prices or products. It can check store layouts and planogram compliance and has an estimated eight-hour battery life.

Santiago says setting up the docking station is a breeze. It takes only four screws, needs only a 36-inch x 36-inch space, runs via Wi-Fi, and plugs directly into a 110volt outlet, so no infrastructure changes are required.

Badger has been providing this technology since 2018. The company is a robotics division of Jabil Inc., a St. Petersburg, Fla.-based global manufacturing company which reported US$33.48 billion in sales in 2022 from 30 countries.

One of the biggest potential benefits robots can offer—data analytics—is mostly being underemployed at this point. As data—and the ability to analyze it to maximize profits and efficiencies—becomes

other half will be smarter and open the door to many new solutions.”

The increased demand from retailers to have the most current shelf and store condition data is one of the biggest drivers of this

Stock out and price accuracy scans are two of the main functions of the robots at Stine. “ ”

more pervasive, having the means to collect as much as possible is huge. And robotics allows just that.

“Near real-time shelf data is a critical component to facilitate smart category management,” Mirza says. “This would make half of the current processes redundant, and the

technology, but retailers still need to be able to leverage this information without having to recruit staff from M.I.T.

Santiago explains that this is one of Badger’s “value-adds”—breaking down data analytically and offering it to both retailers and vendors through its portal. He says

Stine expects a three-year return on investment on its robots, but the vendor says it can be as quick as nine to 13 months.

they can dissect data by district, store, item, time, or category, “so we’re getting pretty granular on the reports that we’re sending people.”

Too much data can be overwhelming without the resources to analyze it, but Santiago says Badger’s reports are filtered in a way that stores can actually use them.

FUTURE POSSIBILITIES

We’ve already seen that these robots can tackle multiple functions, but what will be possible in the future?

“There’s tons that you can do,” Santiago suggests. “Just think of the robot as a chassis that can go around with a lot of different technologies around it.”

Okay, so we’re only limited by our own imaginations? In theory, yes. But in practice, market demand will dictate what comes next in terms of applications.

“The robot can do a lot today; we just don’t do it,” he explains.

While Spears says he’d love to add vacuum capability to his robot, Santiago says the two requests that Badger most often receives are ordering functionality and adding arms.

Yes, robots are great at identifying outages, but the store system still has to do the ordering. Santiago says retailers would like their robot to be integrated into the supply chain.

He says the desire for robots with arms is so they can perform the actual physical replenishment of the shelves, but Santiago doesn’t believe this will happen soon.

“Personally, I don’t think the industry is ready for that. I think we’re still in the [first stage of] crawl, walk, run.”

One possible future application is marketing: using the robot to advertise products, which would be a brilliant way to recoup your investment quicker.

For retailers considering robotics, there are concerns such as customer and employee safety (and employee backlash) but vendors can address these worries.

WALMART

ROBOTS CLEAN UP

While the big retail players have mostly dabbled with robotics on the warehouse/logistics side (Amazon being a leader in this regard), we have seen some examples of in-store deployments.

For instance, last year Lowe’s launched a pilot project to employ robots to help curb theft. The security robots—which bear an uncanny resemblance to the Daleks from Doctor Who—patrol Lowe’s parking lots, seeking known threats (those who have been issued criminal trespass warnings, terminated employees, or domestic abusers). And no, the robots are not armed with tasers or lasers or any other weapons.

For the past year, Walmart stores in Canada have been using robots to clean floors.

Customer safety from robots was a hot-button issue in 2016 after a security robot ran over a toddler in a Silicon Valley shopping centre in what developer Knightscope described as a “freakish accident.”

Fortunately, this really was an isolated

incident, and a non-factor with the current era of technology. Spears says he even did a safety test with one of Stine’s robots.

“I’ve tested it. If you’re moving in front of it, it stops.” He says if the robot detects continuous movement for 10 or 15 seconds, it will actually turn around and find a

Lowe’s launched a pilot project to employ robots to help curb increasing losses from theft.

different path to complete its tasks. The robot has a little bumper, and “if it bumps into anything, it will actually stop completely. And that robot won’t move again until someone goes and resets it.”

EMPLOYEE BUY-IN

For those retailers considering going down this path, they’ll still have to navigate around the 800-pound gorilla in the room: getting employee buy-in.

At first, Spears says, he didn’t get that many store-level calls about the robot one way or the other. But now, Stine’s employees have learned to depend on, and perhaps even have an affection (or at least appreciation) for the robots.

After all, he adds “as you can imagine, walking up and down an aisle, looking for empty peg hooks is not the most glamourous job in the world.” Removing such a mundane task is welcomed.

And once employees get used to the robot generating daily reports, it becomes an issue if they don’t get them. Spears says he now gets calls in the morning saying, “Hey, our robot did not run last night and we’ve got to have these reports.”

Shop, for instance, took an aggressive tack to humanize their robot, naming it Marty, and having it act as a de facto mascot for the Massachusetts-based chain.

Marty is involved in community and charity events and attends industry conferences where visitors can take selfies with it. They can even purchase Marty dolls and lollipops.

Badger assists its customers with the transition by offering an ambassador program because “we understood in the marketplace the misconception that it’s taking jobs.”

Under this initiative, Badger sends out a team to stores that are deploying robots, where they’ll spend a couple of weeks educating the store manager and associates. By scripting associates with answers to frequently asked questions that customers and employees may ask, Badger helps ensure retailers have a smoother deployment.

After all, Santiago says, “the wrong answer by an associate can kill you.”

It’s unclear if any Canadian hardware retailers are exploring robotics now, but Santiago says he has talked to a major southern Ontario grocery chain, so at least there is burgeoning interest here.

“ ”

While smaller countries like Panama and the Dominican Republic have autonomous robots in retail stores, Canada is lagging behind.

“I think without a doubt, in the next 12 to 18 months, Canada will be there,” Santiago predicts.

Clearly, the employee fear factor about being “replaced” by robots has diminished. Santiago says that Badger—which does sell into union shops—is hearing less backlash.

He adds that retailers have taken a proactive approach to change management to help ease the evolution into retail robotics.

Unionized supermarket retailer Stop &

Get ready, Canadian home improvement retailers. The robots are coming.

Stock out and price accuracy scans are two of the main functions of the Stine robots.

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De plus, la reconnaissance des gens de notre milieu fût impressionnante et nous a touché énormément. ”

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• Best Hardware Store (any size)

• Best Building Supply/Home Centre (under 15,000 square feet)

• Best Building Supply/Home Centre (over 15,000 square feet)

• Young Retailer Award (a store owner or manager 35 or under)

• Marc Robichaud Community Leader

• Best Large Surface Retailer (over 65,000 square feet)

• Best Contractor Specialist Store

Visit www.oras.ca for more information.

DEADLINE FOR ENTRIES IS JUNE 14, 2024

Mathieu Moisan and Marianne Moisan, Owners, BMR Paulin Moisan

BY JOHN CAULFIELD

OPTIMIZING

JOBSITE

Centralization is driven by equipment and drivers getting much more expensive post-pandemic.

”

More and more multi-outlet yards are centralizing their distribution points to better serve their contractor customers

Up until last year, each of Turkstra Lumber’s 11 locations managed its own jobsite delivery service. But in 2023, the Ontario-based dealer switched to a central dispatch system that ties in with Enterprise Resource Planning (ERP) software that Turkstra had installed a year earlier.

Dealers like Turkstra Lumber have been tweaking their delivery services for greater efficiency. That often translates into centralized distribution and inventory management. For example, Fraser Valley Building Supplies’ six locations in British Columbia use the company’s biggest yard in Mission, B.C., as their Lower Mainland distribution point.

That yard is stocked with higher levels of

building materials, says Ray Cyr, president of the independent RONA dealer.

Three of Doidge Building Centres’ 11 locations—in Welland, Port Hope, and Kincardine, Ont.—serve as distribution and delivery hubs for the other yards, with their respective yard managers handling the logistics, says Brad Bartlett, Doidge’s regional manager, whose responsibilities include sales and fleet management.

Turkstra’s director of operations, Tim Zabransky, explains that his company went the centralized route to streamline delivery services that were often too “siloed.” There were occasions, he says, when yards made deliveries to jobsites that were geographically closer to other Turkstra locations. Along with centralizing dispatch, Turkstra has also consolidated its inventory, with four of its yards having beefed up their building materials for that purpose.

CONSOLIDATING DELIVERY POINTS

Consolidating and centralizing inventory and delivery services aren’t new ideas. But dealers’ approaches to them can still vary. For example, McMunn & Yates Building Supplies’ 22 locations offer a host of services through the yards and

the dealer’s commercial division: rooftop delivery from seven of its yards, Moffett truck delivery from 10, boom truck delivery from selected yards, so-called “mule” delivery for prebuilt sheds from three yards, home and cottage delivery from all locations.

The dealer’s delivery services are also coordinated with its distribution centre in Headlingly, Man., as well as its wall panel, floor joist, and roof truss manufacturing plant, according to McMunn & Yates’ website.

Centralization saves time and money at a

time when equipment and drivers are more expensive, and as dealers are considering where technology might fit into their delivery services and fleet management.

Delivery can be a sizable expense, and what dealers charge their pro customers for the service is, at best, ancillary to the overall cost. In 2022, Fraser Valley spent $1.2 million to add to its fleet, which now consists of 25 vehicles, many of them boom trucks with arms up to 45 feet long for second-floor drops and up to 105 feet to reach higher elevations. Cyr says that four of those vehicles are owned and operated by independent

drivers, some of whom were once Fraser Valley employees.

Fraser Valley charges for delivery by zones, and the charges range from $55 to $155 per trip, plus $3 per minute for crane time, which typically averages around 20 minutes.

Until the second quarter of 2023, some of Doidge’s yards weren’t even charging for delivery. Then the management mandated that the group of lumberyards tack on at least $49 for the service; some now charge up to $79, which is the standard fee recommended by RONA, the banner for 10 of Doidge’s locations.

Fraser Valley Building Supplies’ multiple locations in British Columbia’s Lower Mainland use the company’s Mission, B.C., yard as their distribution point.

LEASE-TO-OWN RATIOS

Doidge has 41 delivery vehicles that include 19 Ford F-550 cabs, cube vans and pickups, 12 Moffetts, and 10 crane trucks. Bartlett says the ratio of lease-to-own vehicles, now at 80 to 20, has been shifting toward 70 to 30 so that Doidge has more asset flexibility to downsize during slower business cycles.

In the past, the dealer would drive its vehicles “until they died,” says Bartlett.

But that strategy led to a lot of downtime for maintenance, so now Doidge replaces trucks after five to seven years. (Its vehicles average around 50,000 kilometres per year.)

In Calgary, Double R Building Products, a single-yard dealer and Sexton Group member, owns 12 delivery vehicles, including four with cranes, and the others with mounted forklifts. The company just

bought a couple of five-ton tandem-axle trucks that it took possession of in February. Double R charges a flat rate for delivery, ranging from $40 to $100, based on the size of the package and distance, with most trips averaging between 40 and 50 kilometres. But like most other dealers, Double R will deliver farther out for favoured pro customers, says Glenn Daigle, this dealer’s director of operations.

Delivery vehicles have almost doubled in price since Covid, laments one dealer. “ ”

33-vehicle fleet

relatively young, having been purchased between 2012 and 2023 and averaging 6.69 years of service.

Turkstra Lumber’s

is

Another Sexton member, Lumber One Building Supplies in Falcon Lake, Man., will deliver as far out as 100 kilometres. It bases its service fees, which range from $95 to $150, partly on the vehicle being used.

At one time, Lumber One was replacing vehicles in its delivery fleet once their warranties expired. But since the coronavirus pandemic, vehicles “have gotten terribly expensive; double since Covid,” laments Greg Nichol, Lumber One’s owner, who’s now looking to get more wear and tear out of a fleet that includes four F-550s, a semi trailer, and a tandem with a Moffett, all of them purchased in 2016 or later. Nichol says his company’s next purchase is likely to be another tandem with a Moffett, which he estimates will cost around $400,000 fully equipped.

VEHICLE DURABILITY

Of the dealers interviewed for this article, Turkstra Lumber had the most optimistic expectations about vehicle durability. Zabransky says that, with regular maintenance, his vehicles can be on the road for between 500,000 and 750,000 kilometres before they need replacing. Turkstra’s 33-vehicle fleet is relatively young, having been purchased between 2012 and 2023 and averaging 6.69 years.

Turkstra’s deliveries usually fall within 50 kilometres of its yards, and the dealer is likely to charge extra for trips that exceed 80 kilometres. Zabransky says his company’s biggest challenge in managing its fleet and deliveries is “understanding our cost breakdown on a granular level,” from tire replacement to transmission maintenance. The goal, he says, is to get “cleaner, more organized reporting” from trips.

By centralizing its delivery services, Turkstra can do more with fewer vehicles. It is also looking ahead to later this year, when the company will launch its e-commerce program—and the delivery of

Ray Cyr is president of Fraser Valley Building Supplies, a six-unit RONA affiliate which spent $1.2 million to add to its fleet in 2022. FVBS now has 25 vehicles, many of them boom trucks.

Zabransky sees Amazon as setting the bar for customer expectations about delivery.

CONTINUING DRIVER SHORTAGES

When he was interviewed in January, Cyr of Fraser Valley was looking to hire a parttime fleet manager, partly to keep scheduled maintenance from falling through the cracks.

Fraser Valley has 22 drivers, ranging in tenure from two to 30 years. Cyr says driver shortages in his market had abated somewhat over the past 18 months. But other dealers are still struggling to hire and replace drivers when they leave or retire.

“It’s an ongoing battle,” says Nichol of Lumber One, which employs four drivers. “It’s one of the toughest positions to

fill, at all times of the year,” adds Bartlett of Doidge Building Centres, which has 30 drivers. Bartlett explains that insurance providers have put a “stranglehold” on hiring new drivers, especially those under 25 years old. Daigle of Double R notes that a driver applicant’s accident claims history has also become a hiring obstacle.

Drivers, says Bartlett, are attracted to companies with newer equipment, and those that follow maintenance and safety protocols. “And there’s also the almighty dollar,” he says: Moffett drivers with commercial licenses now command between $25 and $27 per hour; a boom truck driver can fetch $27 to $30 per hour.

Turkstra’s “best defence” against driver scarcity, says Zabransky, has been to develop talent from within. Last year, the company took advantage of government

grants for driver training. Turkstra has also paid for upgrading its drivers’ certifications, so they are able to drive different commercial vehicles. Turkstra’s 22 drivers—whose tenures average 7.39 years—benefit from an internal safe-driver program that offers them cash rewards based on accident-free kilometres driven.

TECH-ENHANCED FLEET MANAGEMENT

As driver availability ebbs and flows, more dealers appear to be exploring how technology can improve their delivery services and fleet management.

Fraser Valley’s three Lower Mainland yards use has been uploading images and letting customers know when their orders have been delivered, which Cyr says helps pros with their crew management.

Turkstra’s ERP software has the ability to take whole-house orders and break them down into several deliveries. To do this, the dealer asks its customers for produc-

Three of Doidge Building Centres’ 11 locations serve as delivery hubs.

For example, Double R uses fleet management software from a supplier called Fleetio. All of Double R’s trucks are equipped with GPS systems. Doidge deploys automation to plot its vehicles’ routes, as well what Bartlett describes as an electronic log book. For the past two years, the Epicor ERP system that

”

tion schedules for their projects. This kind of staged fulfilment also coordinates with Turkstra’s production from its truss, joist, and panel plant, says Zabransky.

Dealers concede, however, that their industry is still playing catch-up with some technology. They confirm that there

currently are no electric delivery vehicles available to meet their services’ needs. “EVs are part of our roadmap, and we’re keeping an eye on the market’s support structure” in terms of charging stations and technicians, says Zabransky.

The buzz around artificial intelligence has some dealers curious, but not quite ready to engage just yet, “unless you can find something that can drive a truck,” quips Bartlett.

Other dealers, however, are starting the kick AI’s tires. When he was interviewed in January, Daigle said Double R was about to install AI-enhanced cameras into its fleet that would use machine learning to spot patterns in drivers’ activities, such hard braking or acceleration.

Cyr envisions the possible application of AI for improving Fraser Valley’s route efficiencies, sizing loads, and identifying delivery and ordering patterns.

Brad Bartlett, Doidge Building Centres’ regional manager, whose responsibilities include sales and fleet management for the RONA affiliate.

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ADVERTISERS: SECOND QUARTER / 2024

BY GEOFF M c LARNEY

MAKING YOUR VISION A REALITY

Joel Seibert and his partners turned to a business coach for training in communications. It’s made all the difference to the teamwork at Mountainview Building Materials.

We had all the aspirations in the world and the goals as a company to get to where we wanted to be, but we just didn’t know the necessary steps on how to get there.”

That’s how Joel Seibert describes the state of affairs at Mountainview Building Materials in Calgary almost four years ago. The third-generation lumberman had gone into business with partners Sheila Carr and Brad Pettifor. They had big plans for the Sexton-affiliated business but needed guidance on the implementation.

“Our vision was clear on the direction that we wanted to go, but it just seemed so far off and somewhat unattainable. So, we needed some help in filling in the blanks on how to get there.

“We recognized that we needed some leadership training, and the training we embarked on was leadership communication training,” Seibert recalls.

“It was not so much on how to say things, but it was to get an understanding of the type of people that we are. And how we needed to give the communications to our partners so that it was received effectively.”

“

bring in a second truck or a third truck this week to make sure we’re getting all of the orders out,’ we don’t need to have a decision meeting about that. The logistics department can just hire the truck.”

At the same time, some decisions span the business. “If it’s like, ‘Hey, this is happening quite consistently, we need to invest

” Our vision was clear on the direction that we wanted to go, but it just seemed so far off and somewhat unattainable.

Fine-tuning that communication meant discerning which discussions needed to take place across departments, and which could be left to each partner’s domain. “We’re not interested in micromanaging each other’s departments.”

Department leads were thus empowered to make decisions. “If it’s, ‘Hey, we need to

a quarter of a million dollars and buy a new truck,’ then that’s all three of us.”

The learning also involved distinguishing between topics that could be discussed by email from those requiring a face-to-face conversation. Notably, the lack of verbal tone in email means it’s best reserved for straightforward factual matters.

“If something is for opinion or if it’s something for discussion, or it’s something that we need to share, then notes are made and we talk about that in our management meetings on Mondays.”

Seibert thinks other businesses could benefit from similar clarity around communication.

“My advice to business owners is to talk with your team and understand which ways they appreciate being communicated with, and make sure they understand the way that you would like to receive communication as well.”

Joel Seibert gave a seminar at the 2023 WRLA Buying Show on how he got his sales team excited to sell.

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