HHIQ 4Q 2011

C O N N E C T I N G T H E H O M E I M P R O V E M E N T I N D U S T R YH A R D L I N E S . C A

HOME IMPROVEMENT QUARTERLY

The large surface retailers refocus on customer service

CAN THE BIG BOXSTILL DELIVER?

F E A T U R E S T O R Y

FOURTH QUARTER / 2011

PLUS: Retail business conditions

Building your front end

Interior store design

Managing operating expenses

Highland TIM-BR MART

MARTHAKONANTZAn interview withNorth AmericanLumber’spresident

SIX TRENDSTO WATCHA look at someunstoppablemarket forcesthat will affect you

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H A R D W A R E

Hardlines Home Improvement Quarterlywww.hardlines.ca 3SECOND QUARTER / 2011

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

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

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

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

VOLUME I, NO. 3

416-489-3396

EDITORMichael McLarney, [email protected]

CONTRIBUTING EDITORSJohn Caulfi eldStephen Payne

CONTRIBUTING WRITERSCarl DuguayDonald O’Hara Bruce SmithBill Wilson

ART DIRECTIONMitre Design

PUBLISHERBeverly Allen, [email protected]

PRODUCTION MANAGER/CIRCULATION DIRECTORBrady Peever, [email protected]

ACCOUNTINGMargaret Wulff

OFFICE MANAGERKatherine Yager

EDITORIAL OFFICES360 Dupont St., Toronto ON Canada M5R 1V9

Hardlines Home Improvement Quarterly is published four times a year by Hardlines Inc., 360 Dupont St., Toronto, Ontario Canada M5R 1V9. $25 per issue or $90 per year for Canada. Subscriptions to the Continental United States: $105 per year and $35 per issue. All other countries: $130 per year. (Air mail $60 per year additional)

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All editorial contents copyrighted 2011 by Hardlines Inc. No editorial may be reproduced without prior permission of the publisher.

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Hardlines Home Improvement Quarterly 5FOURTH QUARTER / 2011


SPECIAL FEATURE

SIX TRENDS TO WATCH

COVER FEATURE

DEPARTMENTS

7

8

10

17

40

42

44

EDITOR’S MESSAGE

Buying groups re-invent themselves

BUSINESS CONDITIONS

Dealers report a slight improvement

MARKET REPORT

Weather, low consumer confi dence, hamper growth

CATEGORY SPOTLIGHT

Hand tools, housewares, and outdoor living

STORE MANAGEMENT

Your fi nancial statement: Operating costs

DESIGN & MERCHANDISING

Inside the doors, how does your store present itself?

EXPANSION FILE

Downtown dealer talks strategy

ENDCAP

Executive break with Brian Macey

NEWSROUNDUP

True Value dealers begin the switch to TRU

Home Hardware surpasses 100 stores in Quebec

RONA renames Pierceys stores

Lowe’s opens fi rst store in Regina

Canadian Tire puts focus on projects, installations

Weather, consumer confi dence hold back RONA

TIM-BR-MARTS reprises hockey video challenge

McMunn & Yates acquires Weber’s Building Centre

12

CAN THE BIG BOX STILL DELIVER?

C O N T E N T S

30 A look at some unstoppable market forces that will impact your store

How to get both sides of the business, paying strict attention to product mix

STORE DESIGN

DOES YOUR STORE NEED A FRONT END?46

V O L U M E I , N O . 3

The large surface retailers refocus

on customer service33

EXECUTIVE INTERVIEW

VALUE DRIVEN 22

50

An interview with North American Lumber’s dynamic president, Martha Konantz

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Hardlines Home Improvement Quarterlywww.hardlines.ca 7FOURTH QUARTER / 2011

[email protected]

E D I T O R ’ S ME S S A G E

ong ago, the industry fell into neat, tidy divisions among retailers, wholesalers, and buying groups. But no longer.

The lines have been blurring for years, as wholesalers take on more retail services and some buying groups now provide their own distribution.

This blurring refl ects in HARDLINES’ own ranking of the major players. For more than two decades, I’ve been studying the industry — how much it grows each year, which retail formats, whether hardware, building centre, or big box, get the most growth, and which retail groups stand at the top of the hill.

But like some giant shell game, the hills are moving around on me. Once the buying groups were easily ranked, with ILDC invariably at the top, always maintaining a membership of the industry’s largest independent chains. When TIM-BR MARTS began re-inventing itself as a meaningful consolidator, it assumed the number-one spot in the list of buying groups. Then, ILDC added two buying groups to its own membership: Delroc and Sexton Group, plus two co-ops, Federated Co-operatives and La Coop fédérée. With this combined pur-chasing power, ILDC rose to the top again.

But now, how to measure the size of the industry fairly, counting ILDC’s sales without

double-counting its group members, who are ranked on their own?

And when it comes to retail groups, RONA, Home Depot, Home Hardware, and Canadian Tire rank at the top of the top 10. But isn’t Home Hardware really a big whole-saler, serving 1,084 independents? And if it is, surely BMR, which has historically been ranked as a buying group, must be included in the same list. After all, it too provides a full wholesale offering in both lumber and hardware to its 186 member dealers.

While all these evolving roles certainly make my job challenging, they refl ect well on the dynamic nature and the resilience of the retail organizations in this industry. They continue to take up the challenge to re-invent themselves, and never cease to look for ways to stay meaningful to you, their customers.

Confusing? Yes. But that kind of fl exibility is the secret to the success of any business, whether it’s a wholesale supplier, a hardware manufacturer, or a retailer.

Make it yours, as well.

BUYING GROUPSRE-INVENT THEMSELVESMICHAEL MCLARNEY, EDITOR

L

Flexibility is the secret to the success of any business.“ ”

Hardlines Home Improvement Quarterly www.hardlines.ca8 FOURTH QUARTER / 2011

ot only was the fi rst quarter of the year slow, it was in fact a non-starter. But the second quarter

showed some glimmers of improvement for dealers. According to the latest HARDLINES Business Conditions Survey, done in con-junction with the North American Retail Hardware Association Canada, exactly one-third of responding dealers said business was up compared with the same quarter a year earlier.

This compares with just 19.2 percent of dealers who reported an improvement in the fi rst quarter.

Close to half (48.1 percent) of the deal-ers reported that their sales were down in

the second quarter, as bad weather per-sisted into the fi rst part of the period. However, once again the industry is trend-ing upward; in the fi rst quarter, more than two-thirds of dealers (68.0 percent) indi-cated their sales were down year-over-year.

DEALERS ADAPTDespite a challenging marketplace, dealers continue to display innovativeness. Fully 65.9 percent said they offered new products during the second quarter, down only slightly from 67.7 percent who did so in the fi rst quarter.

Staffi ng levels refl ect the business pulse as more than half of dealers responding (54.3 percent) indicated their staff levels remained

constant during the quarter. While one-quar-ter of dealers actually increased their staff lev-els in the fi rst quarter, that amount rose to 27.2 percent in the second quarter, refl ecting a slight improvement in customer activity.

LOOKING AHEADFollowing a slow fi rst half of the year, dealer optimism eroded somewhat in the second quarter. While 61.3 percent of dealers said they expect their sales to rise in the next six months, that response is down slightly from 63.3 percent who expected a six-month rise back in the fi rst quarter of the year.

Another 16.2 percent of dealers said they did not expect sales to rise (vs. 13.9 percent

QUARTERLY BUSINESS CONDITIONS

N

According to the results of HARDLINES’ Second Quarter Business Conditions Survey, hardware and building centre dealers across Canada began showing a slight improvement in their situation compared with the previous quarter, but signs of a recovery are still gradual.

DEALERS REPORT A SLIGHT IMPROVEMENT IN THE SECOND QUARTER


B U S IN E S S C O N D I T I O N SSECOND QUARTER

in the first quarter); 22.5 percent were not sure (compared with 22.8 percent in the previous quarter).

Looking out 12 months, dealers become more cautious in their outlook, however, with 60.5 percent saying they expect their sales to rise over that period, vs. 61.3 per-cent who expect a rise over six months. That response is also down slightly from the first quarter, when 64.1 percent felt sales would take a positive turn.

VENDORS WORSE OFF?Just under half of dealers responding to the Quarterly Business Conditions Survey saw their sales drop in the second quarter, but the news was worse for vendors, with 58.9 percent saying sales were down com-pared with the same quarter in 2010. That indicates a worsening for vendors from the previous quarter, when 56.6 percent said their sales were down compared with the same month a year ago.

Vendors were slightly more pessimis-tic about the prospects for the near future. Although 60.7 percent expected sales to increase over the next six months, that’s down from the 63.3 percent who indicated the same positive outlook in the first quarter. Of the remaining vendors, 27.0 percent said they did not expect sales to increase over the next six months and 12.4 percent were not sure.

OUTLOOK IMPROVINGWhile only one-third of dealers saw their sales increase in the second quarter, this is a marked increase over the first quar-ter, where less than 20 percent cited an increase. And while retailers’ expectations for the next six months slipped slightly from the first quarter to the second, that positive outlook is nevertheless shared by almost two-thirds of dealers, indicating an overall expectation that the market will improve. This aligns with HARDLINES forecasts of a slight increase of up to 1 per-cent for the entire industry for 2011.

RETAILERS: 2Q SALES 2011 VS. 2010

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

RETAILERS: Do you expect your sales to increase over 12 months?

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

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

VENDORS: 2Q SALES 2011 VS. 2010

Source: HARDLINES Quarterly Business Conditions Survey

18.5%SAME

33.3%UP

48.1%DOWN

18.9%SAME 22.2%

UP

58.9%DOWN

61.3%YES

16.2%NO

22.5%NOT SURE

60.5%YES14.8%

NO

24.7%NOT SURE

60.7%YES

27%NO

12.4%NOT

SURE

65.9%YES

34.1%NO


he retail home improvement indus-try had sales of $39.18 billion in 2010, up only 0.2 percent from sales of

$39.12 billion in 2009. This marked essen-tially fl at growth in 2010, following two years of combined negative growth of 3.4 percent.

The stall in the market over the past three years follows a decade of tremen-dous growth for the sector. The fi rst signs of a slowdown began in 2007. While the industry bottomed out in mid-2009, the anticipated recovery of 2010 never mate-

rialized as positive growth that surged in the fi rst half of 2010 evaporated through the second half of the year.

Following a very slow fi rst half of 2011, a full recovery remains elusive for the year. As a result, HARDLINES forecasts that sales will increase modestly by less than 1 percent.

GROWTH VARIES BY STORE FORMAT Traditional hardware stores, down 9.4 per-cent in 2010, continue to feel the brunt of the slowed economy, especially as many

of them are in larger urban markets or the downtown areas of smaller communities, where they have been more vulnerable to fl agging consumer confi dence.

Their ranks are also shrinking as many of them are also expanding to become building centres.

The big boxes also had a drop in their sales, again due to their reliance on sub-urban markets, considered most hard-hit by the effects of the slowdown on jobs and on the stock market.

T

WEATHER, CONSUMER CONFIDENCE HAMPER INDUSTRY GROWTH

Dealers faced a slow fi rst half of the year, with business fi nally rebounding only as the weather improved by mid-summer. As dealers try to catch up in the remaining months of 2011, the year looks to be another one of almost fl at growth.


M A R K E T R E P O R TINDUSTRY GROWTH UPDATE

Once, again, their slip was offset by the rapid expansion of Lowe’s Canada. Sales by traditional home centre and building centre dealers were up 3.1 percent in 2010, following two years of declines.

Canadian Tire Retail’s sales were also up in 2010, by 2.0 percent, after dropping by almost 3 percent in 2009. Once again, sales of consumables were strong for this company, and it enjoyed stronger sales in seasonal and power tool categories.

Estimated sales by mass merchants on the hardlines side stayed fl at for another year, as Walmart, the largest component of this segment, posted its strongest gains in grocery and discount clothing last year.

With the closing of six Sam’s Club stores at the end of 2008 by Walmart, Costco is the only retailer in the warehouse club format in Canada. With hardlines sales up an estimated 11.0 percent, it remained a destination for cost-conscious shoppers during the downturn.

REGIONAL DIFFERENCESNegative sales growth among the provinces was restricted to Central Canada in 2010.

Ontario, which accounts for almost one-third of the Canadian market, saw sales shrink for the third consecutive year, with its market share slipping to 32.7 percent. After growing in 2009, Quebec’s market share fell in 2010, from 26.7 percent to 25.7 percent of the Canadian market.

Atlantic Canada is perennially resistant to economic highs and lows. Growth in Nova Scotia and prosperity in Newfoundland helped offset slower growth in P.E.I. and New Brunswick. As a result, the Atlantic region’s sales grew from $3.42 billion in 2009 to $3.54 billion in 2010.

Thanks to stability in Manitoba and Saskatchewan, and some revival of growth in British Columbia and Saskatchewan, the market share of the Western provinces grew by 3.4 percent in 2010.

CANADA’S TOP FOUR RETAIL GROUPSConsolidation continues in this indus-try, with four companies, RONA, Home Depot, Home Hardware, and Canadian Tire, accounting for more than half the industry’s sales.

Sales by the top four grew by 1.5 per-cent in 2010, ahead of the industry’s overall growth of 0.2 percent.

RONA’s market share in 2010 increased to 15.8 percent of the overall retail home improvement market, up from 15.3 percent in 2009. Canadian Tire also saw a healthy increase in market share, to 12.2 percent from 11.9 percent (sales do not include non-

related product sales, such as automotive and sporting goods). Home Hardware’s share grew to 12.4 percent of the market from 12.1 percent. Because of a drop in sales in 2010, Home Depot’s market share fell to 13.3 percent from 14.2 percent.

The top four will continue to grow, but at a much slower rate than they achieved before the recession took hold in 2008.

Source: HARDLINES Retail Home Improvement Report, 2011-2012 Edition. The Annual Report on Canada’s Retail Hardware/Home Improvement Industry. For more information, visit hardlines.ca and click on “Publications and Reports.”

Rest of the industry

79.5%

Home Depot Canada13.3%

RONA*5.7%

Kent*0.6%

Lowe’s Canada0.9%

Big box share of retail home improvement

* Big box stores only

Sales of Canada’s big box home improvement retailersCompany 2009 2010 Change

Home Depot Canada $5,565 $5,192 -6.7%

RONA* $2,231 $2,231 0.0%

Kent* $244 $251 2.9%

Lowe’s Canada $239 $371 55.2%

TOTAL $8,279 $8,045 -2.8%* Big box stores only


ruServ Canada is busy rolling out its new retail banner, “TRU Hardware,” with the first True

Value store conversions having now been completed. The Winnipeg-based com-pany, acquired last year by RONA, has also launched its first flyer for the new banner, along with a new website.

TRU, which has been developed for hardware, building centre, and country and garden formats, was a major focus at TruServ Canada’s recent Fall Market. “Over the summer months the company has been working with independent

dealers who were previously True Value to convert their stores to the new banner,” said Bill Morrison, president of TruServ Canada.

Shirley Highfield was so anxious to get the program that she became one of the first dealers to convert. Her store, in Killarney, MB – a town of 900 – generated

$10,000 in sales on the day of its grand reopening. “We are getting positive feedback from our cus-tomers,” she says.

The other openings, all conversions from True Value, were in La Ronge, SK; Meadow Lake, SK; Manning, AB; and Neepawa, MB.

The new look features prominent iden-tification of the dealer’s name or town, ref lecting a focus by the new banner on

the local merchant operating within his or her own community. It’s supported by a new consumer website, www.truhard-ware.ca, which features a product search feature, a store locator and a viewer for f lyers, as well as community stories.

The TRU program, which TruServ bills as “proudly using the true Canadian red of our national f lag” consists of simple, strong elements that the company says “will make it easy for customers to get fast answers, leading to faster shopping.” In Quebec, the brand will be known as UNIQ, since TRU does not translate well into French. UNIQ’s store identifica-tion program is, however, in all respects identical to TRU’s. “It is a perfect retail look for a modern Canadian hardware store, adaptable to each dealer’s needs,” Morrison adds.

TRUE VALUE DEALERS BEGIN THE SWITCH TO TRU BANNER

T

NEWSROUNDUPO F T H E H O M E I M P R O V E M E N T I N D U S T R Y Visit Hardlines.ca for breaking news in the Home Improvement Industry

“We are getting positive feedback from our customers.”

Shirley Highfield’s store, in Killarney, MB – a town of 900 – generated $10,000 in sales on the day of its grand reopening.


BRIEFLY

Twenty-two Home Hardware dealers rep-

resenting close to 20 stores headed to

Niagara Falls for a strategic planning mini-

conference earlier this fall. The dealers and

potential future dealers, mainly under the age

of 35, were participating in Home’s first-ever

Young Retailers retreat, spending three days

sharing experiences and concerns related

to the issues of succession and building

the business.

Peavey Industries has relocated and

expanded one of its Peavey Mart stores.

The new store in Grande Prairie, AB opened

at the corner of 99th Ave. and 120th St. in

September. It is 28,800 square feet in size,

up from 16,800 square feet.

RONA inc. has forged a three-year partner-

ship with Canucks Sports & Entertainment.

With this deal, the RONA brand will be a per-

manent fixture during Vancouver Canucks

home games and will appear in locations vis-

ible to TV cameras, with one logo on the ice

and a second on the boards near the home

team’s net. The RONA name will also be on

the players’ practice jerseys.

Lowe’s opened its first store in Regina on

Sept. 12 — its 28th in Canada. The open-

ing, in South Regina, came after a delay

of about nine months partly due to wet

weather that plagued much of the Prairies in

the early spring. The 103,000-square-foot

outlet sports a 32,000-square-foot gar-

den centre and carries about 40,000 SKUs.

Another Lowe’s store, in South Etobicoke, in

Toronto’s west end, opened its doors just a

few days earlier.

HOME HARDWARE SURPASSES 100 STORES IN QUEBEC

ome Hardware Stores Limited recently announced the signing of its 100th store in Quebec – Tho

Val Trem Inc. in Ste-Brigitte-de-Laval. But the co-op was barely able to get the word out on this milestone before that number had grown to 103 stores.

Home signed its first dealer in Quebec – Gabriel Rocheleau of Rocheleau Hardware in Rouyn-Noranda – in 1965. However, further penetration of Canada’s second-largest province was deterred for decades by a “gentleman’s agreement” with then-ally RONA, which kept its expansion efforts inside Quebec. Both retail groups were members at the time of the hardware buying group, Alliance LLC. With RONA’s rapid expansion beyond Quebec’s borders since 2000, Home in turn has become more aggressive there, playing “catch up” in the province that represents, according to the HARDLINES Market Share Report, almost 25 percent of retail home improve-

ment sales in this country.“Quebec is an important market and

our continual growth in the province is due to the strength of our program for independent dealers,” said Paul Straus, president and CEO, Home Hardware, which now boasts more than 1,080 deal-ers from coast to coast.

The newest Quebec member, Tho-Val-Trem, has been in business for 25 years under another banner, and was bought by Jean-Marie Bégou who emigrated from France after owning and operating his own building and garden centre there for 15 years.

H

RONA renames Pierceys storesUnlike some of its previous acquisitions, RONA has wasted little time rebranding its Pierceys stores in Nova Scotia. Canada’s largest home improvement retailer renovated and officially re-named three stores in Halifax this past month, reflecting a $4 million investment in locations in Tantallon, Elmsdale, and Cole Harbour. Besides the RONA name out front, the stores now carry a full line of RONA private-label and proprietary brands, including RONA Eco, Haussmann, Uberhaus, and Facto. Each new store has increased its product offering by 70 percent to more than 30,000 SKUs.

“The Pierceys chain of stores had a great reputation and enjoyed a strong customer base. We are very excited to build and expand on this as the stores transition to the RONA brand,” said Gordon Kennedy, RONA’s vp retail - Atlantic Canada.

RONA is committed to establishing its name as the main brand for most of its stores across the country. With the exception of its Réno-Dépôt big boxes in Quebec and the Totem building centre chain in Alberta, even RONA’s “Home and Garden” stores are being rebranded solely as “RONA.”

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

Paul Straus, Home Hardware president, pledges “continual growth” in la belle province.


NEWSROUNDUP

CANADIAN TIRE PUTS FOCUS ON PROJECTS, INSTALLATIONS

anadian Tire is trying to reinvent the project approach to hardware sales, with a focus on smaller proj-

ects. This strategy, tried by other retailers to varying degrees, is an attempt to simplify shopping for the accessories and extra bits that are so important to a project sale.

“We’re changing the way the store is laid out,” says Rob Shields, vp marketing for Canadian Tire Corp. “It’s being laid out according to the project. For example, if you want to change a faucet, you’ll find everything to do that with in one spot.” Whereas décor items such as faucets would traditionally have been located in a different department from the stuff needed to install them, CTR’s new strategy rethinks that approach. “Instead of putting the flux, solder and pipe in another location, now everything is in one spot.” It’s all part of an effort by the giant retailer to

get more customer-centric. “That’s what we mean by innovation,” Shields adds.

The program is being tested at 20 stores across the country in three categories: auto performance chemicals, including fuel additives; household cleaning; and plumb-ing. The pilot program is already turning in positive results, so it’s going to be rolled out at some point in the future.

Canadian Tire has also begun offering a range of installed services in its stores.

Canadian Tire Home Services provides installation of garage door openers and, in some stores, hot water tank and central vac installation. Following an in-store pur-chase, customers can call a toll-free number to arrange for installation. The work is done by authorized contractors.

C

UFA supports “Up from the Ashes” benefit concert for Slave LakeUFA Co-operative Limited was a key sponsor of a benefit concert in support of the commu-nity of Slave Lake, which was devastated by fires back in May. Almost half of the town of 6,800 was destroyed.

The concert, entitled “Up from the Ashes,” took place in Edmonton on Sept. 14 and featured award-winning country music performer Paul Brandt and special guests, High Valley. Proceeds from the event will be directed towards a spe-cific building initiative in Slave Lake.

“UFA was founded on the principal that we can accomplish more together than we can indi-

vidually,” said Bob Nelson, president and CEO of UFA. “Helping our fellow Albertans re-build their town is simply the right thing to do. This special benefit concert celebrated the deep-rooted spirit of Alberta and paid tribute to those who fought tirelessly to save Slave Lake.”

UFA has more than 300 members in the Slave Lake area.

“Roughly 40 percent of Slave Lake was destroyed by fires, and residents are struggling to re-build their community and their lives. In using my music, I wanted to acknowledge their challenges, celebrate

their courage, and raise funds for an impor-tant cause,” said Brandt.

“If you want to change a faucet, you’ll find everything to do that with in one spot.”

Barb Hopper has been

appointed chief strat-

egy officer and acting

CFO at TIM-BR MARTS

Ltd. As a key mem-

ber of the executive team, she will be

instrumental in shaping the future of

and providing support for the 700-plus

TIM-BR MART members. A chartered

accountant and Master of Business

Administration, Hopper has had a num-

ber of leadership roles, including vice-

president, finance at Canada Goose,

and CFO and vp finance at Nine West.

She has completed and participated in

mergers and acquisitions, integrations,

financing, restructuring, and new tech-

nology implementations, and has devel-

oped and executed growth strategies.

New chief strategy officer and acting CFO at TIM-BR MARTS

UFA joined forces with singer Paul Brandt to help raise funds for the fire-stricken community


ONA’s second-quarter results reflected the bad weather that plagued the country, especially in

April and May, as well as continued weak consumer confidence.

Sales in the quarter were $1.37 bil-lion, down 2.4 percent, or $34.2 million, while same-store sales fell 9.6 percent. The slowdown in same-store sales was partially offset by acquisitions, which added $98.6 million in sales to consoli-dated revenues, for growth of 7.0 percent. Net income fell 40 percent from $66.3 million to $39.5 million.

On a positive note, RONA managed to grow its penetration of private and con-trolled brands from 24 percent to 28 per-cent. It also managed to grow its points

of sale, with the recruitment of seven new affiliated dealer stores and 45 new TruServ Canada customers since the start of the year. In its commercial and professional market division, RONA opened five Noble plumbing wholesale locations.

Robert Dutton, president and CEO of RONA, said the company “reduced our same-store administrative expenses by 10 percent on an annualized basis, reduced our same-store retail and dis-tribution inventories by $15 million, and [we have] been very disciplined in our capital investments, reducing them to less than the corporation’s depreciation expense. These measures will definitely have a positive impact on results in com-ing quarters.”

WEATHER, CONSUMER CONFIDENCE HOLD BACK RONA

R

BRIEFLY

Canadian Tire Corp. reported a 5.1 percent

increase in consolidated retail sales in its

second quarter. Consolidated net income was

$105.8 million and basic earnings per share

were $1.30, compared with $122.8 million

and $1.51 respectively last year. Lower net

income was largely due to planned increases

in marketing and advertising expenditures,

expenses related to strategic initiatives,

lower than expected sales in certain sea-

sonal categories, and costs associated with

the purchase of the Forzani Group. Canadian

Tire Retail’s sales were up 1.9 percent, driven

by automotive, kitchen, and backyard living.

Growth was partially offset by a decline in

sales of outdoor tools and gardening.

McMunn & Yates Building Supplies Ltd., the

Dauphin, MB-based building centre chain, has

signed an agreement with Weber Construction

Ltd. to acquire the retail assets of Weber’s

Building Centre and Weber Furniture and

Appliance Centre in Yorkton and Kamsack,

SK. Brothers Brent and Brian Weber will end

their involvement in the building supply and

furniture industry, but they will continue to

operate their construction division.

At RONA inc., Dominique Boies has been

appointed executive vp and CFO, effective Sept.

30. Most recently a senior vp at Caisse de dépôt

et placement du Québec, he will be a member

of RONA’s management committee, reporting

directly to RONA CEO Robert Dutton. Boies, who

holds a Master degree in Science (specializing

in finance) from the Université du Quebec à

Montréal, will be responsible for RONA’s finan-

cial orientation and will be in charge of investor

relations, accounting, financing, treasury, and

legal affairs. Boies replaces Claude Guévin, who

left the company earlier this year.

TIM-BR MARTS reprises minor league hockey video challenge

Minor league hockey teams in communities across Canada will have the chance to

demonstrate their love for the game as TIM-BR MARTS Ltd. repeats its “World Junior

Hockey Video Challenge.” Eligible teams can video their team spirit showing why they

love hockey the most. The grand prize is a trip for the entire winning team to this

December’s World Junior tournament in Edmonton.

Videos can be uploaded to www.timbrtube.ca. Canadians will vote for their favourite

team between Nov. 13 and Nov. 27. The winning team, including parents or guardians

and coaches, will enjoy round-trip transportation to Edmonton, plus accommodations,

meals, and tickets to World Juniors games over Dec. 27-30.

The prize, says TIM-BR MARTS, is worth up to $60,000, depending on where the team

travels from. Other prizes are Source for Sports gift cards as second, third and wild-card

prizes ($5,000, $2,500 and $2,000 respectively).

TIM-BR MART dealers across Canada will be supporting the contest with in-store

signage, ongoing promotions in their flyers, and community outreach efforts to cus-

tomers, hockey parents, coaches, and teams.


ith economic uncertainty continu-ing to encourage homeowners to tackle more of their own projects,

hand tool sales are expected to remain relatively healthy. And the technical inno-vation that manufacturers have built into their recent hand tool product launches is impressive.

The much anticipated Stanley Sweetheart chisels have arrived. Based on the classic 750 design – considered by many to be the most well-designed cabinetmaking chisel ever made – these bevel-edged socket chis-els, manufactured in the UK, are machined from high carbon steel and feature horn-beam handles. They are available individu-ally or in sets of four or eight chisels with a leather pouch.

DeWALT enters the hand tool market with over 100 high-performance hand tools and storage products. Five of the most innova-tive tools include a 15-ounce framing ham-mer, a 25-foot measuring tape with 1.25” blade, a power tool case with tote, a folding retractable utility knife, and a set of 6” to 25” heavy-duty adjustable wrenches.

Leatherman is introducing two under $40 multi-tools aimed at fi rst time buyers – the Sidekick and Wingman. These USA-made tools, which come with a 25-year warranty, are feature-packed with 11 tool functions, including saw, fi le, scissors and screwdrivers. They are made of 420 grade stainless steel and feature sprung jaws with Leatherman’s popular outside-accessibility design for one-handed opening of the knife blade.

Manufacturers continue to innovate in the cutting cools category. The new Irwin Universal Handsaw is available in 15” and 20” blade lengths and features an ergonomic positioning of the handle in relation to the blade. With its triple-ground tooth design, the saw gives super fast, easy to control cuts.

LED Lenser fl ashlights and headlamps are among the most advanced lighting tools available. One-handed focusing makes it easy to switch between close-up and maxi-mum distance illumination, and for any point in-between, while an advanced focus system provides maximum brightness at all times. Dynamic switching provides almost simultaneous conversion between full and low power. The P7 provides 175

lumens, a beam distance of up to 630 feet, and up to 13 hours of run-time in low power mode. The P5R uses a unique fl oating charge system. The LED battery can be recharged via a USB port or a stan-dard wall plug. It provides 225 lumens up to 633 feet and can run up to 9 hours on low power mode.

In fastening tools, the Arrow T50 Elitefi res T50 staples and up to 1” brad nails. Its redesigned drive provides 60 percent more power than the previous T50 model, set-ting staples and nails fl ush on virtually any surface. It includes a built-in wire guide for installing low voltage wiring, and a high and low power switch to adjust drive depth to accommodate hard or soft surfaces.

Rulers, protractors and bevels are indis-pensible tools in the shop and around the house. The iGaging Digital Protractor & Rulerfeatures stainless steel blades with mm, 16ths, 32nds and 64th scales, a clear, easy-to-read digital display that is accurate to +/- .2 degrees over a 360 degree measure-ment range, and a knurled knob that fi rmly locks the blades in place. It is available in 8” and 12” models.

C AT E G O R Y S P O T L I G H T

NEW HAND TOOLS AT THE CUTTING EDGE

W

HAND TOOLS

BY CARL DUGUAY

The P5R LED Lenser fl ashlight uses a unique fl oating charge system. The LED battery can be recharged via a USB port or a standard wall plug.

The General Tools & Instruments Digital Sliding T-Bevel operates as both

a digital T-bevel and a protractor.


The General Tools & Instruments Digital Sliding T-Bevel operates as both a digital T-bevel and a protractor. It offers easy-to-read angle measurements via a large LCD display and integrates an 8-inch stainless steel blade with locking knob. Features include a resolution of +/-0.05° over 360° in any plane to an accuracy of +/-0.3°, zero calibration, hold/reverse and flip buttons, auto shut-off and a two-year battery life.

Anyone who likes multi-tools will appre-ciate the Swanson’s Speed Bevel. It converts easily to sliding T-bevel, framing/rafter square, tri-square, miter square, and angle finder/protractor. Its composite nylon body is ultra durable and won’t mar wallpaper, paint or other wall surfaces, and it folds to just over one inch high, so it fits easily in a toolbox, tool belt or even a pocket. This product is distributed by Tizzard Marketing.

Hole saws are super convenient to use, but inconvenient when it comes to remov-ing the cut plug from the saw. Not so with the Lenox Speed Slot hole saws. A wide slot with multiple leverage points milled into the side of the saw enables the user to eject the plug with a standard screwdriver. The slot also serves as an exit for saw dust and chips, which helps to prevent the plug from getting stuck in the saw, and reduces heat build-up. An enhanced tooth form, thin kerf design, and advanced coating provide up to twice

the life of previous models for metal and wood cutting. Sizes range from 9/16” to 6”.

The innovative Bessey Auto Adjust Toggle Clamps are ideal for quick set-up and secure holding of work that needs to be drilled, sawed or routed. The clamps automatically adjust to variations in work piece dimen-sions, while maintaining constant clamping force, which can be quickly adjusted from 25 to 550 pounds. They are a superb improve-ment over traditional toggle clamps. Also new from Bessey are the K Body REVO JR clamps. These more compact, lighter config-uration sized counterparts to the premium full-sized K Body REVO parallel clamps are available in 12” to 50” lengths.

The safety product category continues to grow. 3M has some interesting new prod-ucts for users to choose from. 3M TEKK Sanding/Fiberglass Cool Flow respirators protect lungs from sanding, grinding, sawing and insulating parti-cles. The filter provides at least 95 percent efficiency to remove particles, while the Cool Flow valve provides heat reduction and easier breathing. 3M TEKK

Forceflex safety eyewear have flexible resil-ient frames for a customizable fit and soft rubber pads for long-wearing comfort. The impact-resistant lenses absorb 99.9% of ultraviolet radiation in the UV, UVA and UVB bands and are available in clear or gray lenses. Other 3M TEKK products include disposable earplugs, earmuffs, dual cartridge respirators and nitrile gloves.

The WrightGrip SB Ratchet is an all-inclu-sive tool ideal for DIYers or renovators who work on scaffolding. It consists of a 1/2” drive, 7/8” open-head ratchet that is interchangeable with a 2” deep, 7/8” open-end wrench, a replaceable hammer on the other side of the ratchet that accepts brass or steel inserts, and a lanyard ring for extra security.

HAND TOOLS & HOUSEWARESC AT E G O R Y S P O T L I G H T

COOL NEW HOUSEWARES FOR HARDWARE STORES

ith consumers shifting their atten-tion back towards home and family, innovative new housewares have

never been a more interesting opportunity for Canadian hardware stores. Here are some recent product launches to help you excite your customers who are looking to acces-sorize their kitchens and bathrooms.

Products that serve multiple functions are welcome in any kitchen. The Cuisinart

Breakfast Central WAF-600C makes waffles, omelettes, pancakes, frittatas, fried eggs, English muffins and pita bread. A rotary design makes for even baking on top and bottom, while LED lights and audible beep tones let you know when the baking is done.

The Perfect Masher whips potatoes, tex-tures vegetables, prepares fruit for canning and even purées food for babies, while the Perfect Blender makes perfect pastry in 60

W

3M TEKK Sanding/Fiberglass Cool Flow respirators protect lungs from sanding, grinding, sawing and insulating particles.

The WrightGrip SB Ratchet is an all-inclusive tool ideal for DIYers or renovators who work on scaffolding.


seconds without the need to pre-sift dry ingredients or pre-cube butter. Both prod-ucts have a patented stainless steel diamond shaped cutting blade, and a soft ergonomic handle suitable for right or left hand use.

It’s easy to blend the perfect vinegar and oil dressing mixture each time with the Trudeau Perfect Mix. It automatically pours six portions of oil for one portion of vin-egar. There are separate buttons for pouring only oil or only vinegar, or both together.

Salter’s Slim Nutritional Scale #1406 weighs and tracks daily food intake. It calculates and displays all the critical nutritional information needed to keep track of calo-ries, cholesterol, fibre, protein, sodium and carbohydrates from a built-in database of over 900 foods. The easy-to-read scale has a capacity of up to 6 lbs, 10 oz and is accurate up to .1 oz increments. It comes with a ten year warranty.

Featuring Black & Decker’s SmartSelect technology, the Steam Mop SM1610 kills 99.9 per cent of germs, mites, and bacteria on hardwood, laminate, tile, vinyl, stone, or marble floors. No harsh chemicals, no hand scrubbing on your knees. Also from B&D is the stylish Orb Vac, an ultra compact vacuum for those small nuisance spills. The

flip open handle and nozzle are unobtrusive when not in use and an easy-to-empty dirt bowl makes for quick cleanup. It operates on a 4.8V battery and comes with a two-year warranty.

The Rubbermaid Filter Fresh bottle has a carbon-based filter on the inside of the bottle cap that removes chlorine and other large sediment particles from tap water. The replaceable filter lasts about three months. The 20-ounce dishwasher-safe bottles, available in four colours, are BPA (bisphenol-A) free.

After water, one of the favourite beverages among Canadian adults is coffee. Single cup espresso brewers are gaining in popularity because each cup can be customized, the coffee beans are fresh ground just before being consumed, there is minimal clean-up, and you never brew more than you need. The Breville Barista Express BES860XL has a host of advanced features including an integrated conical burr grinder, a 15-bar Triple-Prime pump, Thermacoil heat-ing, Auto-Purge, and a die-cast stainless steel body. It grinds, steams and froths an espresso in just 60 seconds.

Hang & Level simplifies picture hanging – there is no measuring or calculating involved, and no more unsightly holes in the wall.

Taymor has partnered with the Canadian Breast Cancer Foundation on a Limited Edition Bath Set packaged in the Foundation’s

signature pink. The set consists of towel bar, towel ring, and paper towel holder in satin nickel, along with a 69g high quality hand towel embroidered with the Foundation’s pink ribbon logo.

Those who love fried foods, but are con-cerned about the amount of fatty oils used, will love the T-Fal Actifry. Its unique patented technology ensures perfect crispy results with a minimum amount of cooking oil. For example, one tablespoon of oil makes over 2 lbs of French fries. The technology is recog-nized by the Canadian Diabetes Association as a method to encourage healthy eating.

The Cuisinart Breakfast Central WAF-600C makes waffles, omelettes, pancakes, frittatas, fried eggs, English muffins and pita bread.

T-Fal Actifry’s unique patented technology ensures perfect crispy results with a minimum amount of cooking oil.

Taymor has partnered with the Canadian Breast Cancer Foundation on a Limited Edition Bath Set packaged in the Foundation’s signature pink.


onsumers looking to extend oppor-tunities to enjoy the fall outdoor season with family and friends, and

those who want to undertake last minute home maintenance chores before winter sets in, have lots of new products to choose from.

The Napoleon Prestige PRO600 gas grill provides a whopping 922 square inches of cooking surface and delivers 56,000 BTUs on 4 main burners, plus 26,500 BTUs on a rear rotisserie burner. Features include a space saving roll top, infrared rotisserie burner with commercial rotisserie and counter balance, integrated side burner, premium stainless steel side shelves with integrated beverage holders and cutting board, and a limited lifetime warranty.

The Quattro 4-Burner gas grill from Stokcomes with fi ve interchangeable cooking inserts that make it easier to cook just about anything on the grill, including piz-zas, kabobs, pies, stir frys, whole roasted chicken, and all the standard BBQ favou-rites. The Quattro delivers 48,000 BTU over its 450 square inches of cooking surface. It features porcelain-coated cast iron grates, a unique heat tent design that minimizes fl are-ups, stainless steel hood, built-in tem-perature gauge and electronic ignition.

Compact, portable and electric grills are popular with consumers confi ned to small balconies or patios, and those wanting to bring the grilling experience to the great outdoors. The Fuego Element gas grill fea-tures a 24,000 BTU dual-zone with a 21” diameter grilling surface, electronic igni-tion, stainless-steel burner tubes, tempera-ture gauge, swing out tray, and locking cast-ers. For something more portable there is the Fuego Element Portable, a mere 9” high, 13” wide and 19” long, with 159 square

inches of grill space and 8,000 BTU of heat. Coleman Roadtrip Fold N Go grills come in

two formats. The gas model generates 6,000 BTU and features instant start and a remov-able porcelain-coated stamped steel grate. The charcoal version provides 150 square inches of cooking surface and fast preheat using a unique chimney design.

The EcoQue Portable Grill is available in a 12” and 15” format. Made of stainless steel, the grill consume up to 75 percent less fuel than similar sized grills thanks to a unique patented energy-effi cient design that focuses heat up toward the cooking surface for optimal performance.

The Bellagio Patio Torch is a great way to keep warm on a cool fall evening. It’s approved for use on wooden decks, stone or brick patios and concrete. The propane tank stores unobtrusively in the base of the commercial quality stainless steel torch. The unit is equipped with a battery oper-ated ignition button, safety tip switch, and a protective screen. It delivers from 16,000 to 31,000 BTU and has a four foot natural fl ame with a 360-degree view.

A low-cost way to enhance a patio or porch is with the Shinerich Cast Stone Fire Pit. The unit has a 35-inch diameter base and a 30-inch porcelain baked steel fi re bowl, and comes with a charcoal grid with high heat paint, protective wire mesh screen, and screen lift tool.

Homeowners with small lawns have two new reel mowers to choose from. According to the company, InertiaDrive technology on the Fiskar Momentum mower gives twice the cutting power of standard reel mowers, while a StaySharp system eliminates the cost and inconvenience of annual blade sharpening. The Momentum has an 18-inch cut width

and comes with a limited 3-year warranty.A low cost mowing alternative, the Troy-

Bilt TB R16 offers a 3-position height adjust-able ERGO handle with foam grip, 5 hard-ened steel cutting blades, 9-position dual lever deck height adjustment, 16-inch cut width, and a limited 2-year warranty.

For homeowners with medium to large size lawns who want to do without the mess and hassles of gas or power cords there is the Black & Decker 36-volt Self-Propelled Rechargeable Mower. B&D claim that a single charge deliv-ers enough run-time and power to cut up to a one-third of an acre (roughly 14,520 square feet). Highlights include soft start, variable speed, one-touch height adjustment, a fold-up frame that collapses for convenient storage, a durable and lightweight polymer cutting deck that never rusts, a 19-inch cut width, and a 2-year machine warranty.

Ryobi’s Cordless String Trimmer RY24201is powered by a 24-volt high-capacity lith-ium-ion battery. Pivoting the trimmer head turns it into a dedicated edger. The cutting swath is adjustable from 11 to 13 inches, and features an automatic line feed. Weighing only 7.8 pounds, the trimmer comes with a 3-year warranty.

Carl Duguay is a freelance writer with over two decades of experience reporting on the home improve-ment and woodworking sectors.

OUTDOOR PRODUCTSC AT E G O R Y S P O T L I G H T

C

HOT NEW PRODUCTS FOR OUTDOOR LIVING

The Napoleon Prestige PRO600 gas grill provides a whopping 922 square inches of cooking surface.

“Ever since we joined Home Hardware, we’ve had more recognition in our market; access to much more product and more product categories; more customers every day, and that’s all added up to way more profits. This is a switch I wish we’d made a lot more than two years ago.”

Don LileyLangford Lumber Home Building Centre

Clinton & Lucan ON

To find out how you can benefit by joining Home, visit home-owner.ca - or talk to one of us.Dunc Wilson, National, 519.498.1302 Georgette Carriere, Ontario, 519.501.5988 Luc Martin, Quebec, 819.357.0203

Andrew Parkhill, Western Canada, 604.751.3853 Kevin MacDonald, Atlantic Canada, 902.368.1620


artha Konantz had more than a business to manage

when fi rst asked by her father to join his company. It was, in fact, the

fi rst step in passing along the 100-year legacy of North American

Lumber to a new generation. “I came on the scene in 2001 when my dad was 76,”

Konantz says. “There was an opening in the company as a corporate secretary

and offi cer manager. Although I had limited background in the lumber industry,

I did have strong sales and administrative experience — and I was the only

family member living in Winnipeg.”

MAN INTERVIEW WITH MARTHA KONANTZ,

PRESIDENT OF NORTH AMERICAN LUMBER

VALUE DRIVEN


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M A R T H A K O N A N T ZEXECUTIVE INTERVIEW

Unlike so many other next-generation owners, Konantz did not grow up in the business. Rather, North American Lumber had evolved since its inception in 1906 without her help — until she joined in 2001. Nevertheless, her timing turned out to be both fortuitous and emotionally charged. Within a couple of years of joining, her father, William Konantz, who had been at the helm of North American for 50 years, began to show early signs of what was later diagnosed as Alzheimer’s disease.

“He stopped making executive decisions in 2004. By then, I was vice-president and began taking over more of the decision-making at that time — and I was acting as my dad’s power of attorney.”

Martha Konantz became president in 2005, overseeing 20 retail outlets, which makes North American Lumber the largest member of the TIM-BR MART buying group by number of outlets, if not by sales. The company specializes in stores that average about 4,500 square feet of selling space in smaller markets throughout Saskatchewan, Manitoba, and Northwestern Ontario. The company also has a truss operation, two ready-mix concrete plants and seven modular home locations operating as Midway Homes.

Today, Konantz speaks with ease and authority about the price of lumber, the penetration of regional markets and the oppor-tunities for transforming her business. She is a member of the


Winnipeg Executives Association, sits with 72 other CEOs on the Business Council of Manitoba, is a member of TIM-BR MARTS’ national retail board, and is a board member of the Western Retail Lumber Association.

But she might never have been a candidate for a position at North American Lumber in the first place. Because of the generation he came from, for a long time Bill Konantz had never even considered her for a job. “Dad always said this was no industry for a woman.” But she had an advocate. “Dan Gibson [who retired last year after 15 years as general manager of the company] was instrumental in encouraging dad to consider me. He said to my dad, ‘There might be someone right under your nose.’ This was something I only found out about Dan many years later.”

Her ties to the company, then, are both personal and professional. She is proud of the legacy of North American Lumber, and readily recounts its growth over the past century. The company had grown rapidly in its early years, reaching 70 locations before the depres-sion hit in the 1930s. Following World War 2, with the retail side of the business rationalized to 50 outlets, a new business opportunity emerged. “During and after the war in the ’40s and ’50s, the demand for housing started to increase and we got into garage packages, cot-tages, homes, and farm buildings,” says Konantz.

The next step was a ready-mix concrete busi-ness, which helped North American Lumber increase its construction business. The move to modular homes in the 1960s seems almost inevi-table in hindsight, and Midway Homes was cre-ated. “We’ve now got seven locations where we’re into home building to serve rural locations.”

A commitment to those rural markets keeps North American Lumber focused on smaller stores. Growth has been gradual and deliberate. The home building business and the lumberyards work in tandem, creating a vertical integration.

Konantz is committed to running the company according to principles laid out by her prede-cessors. “Coming up to our 100th anniversary, I really wanted to understand why we’d been here so long.” She set up meetings with her front-line managers for feedback. The key points that came through repeatedly were qualities of loyalty, con-venience, long-term knowledgeable staff, and the stores’ role in the community.

“So all of these really ‘old fashioned’ values were how the man-agers defined us.” The result was a new logo and a new slogan that distilled those values: “Service, Knowledge and Trust.”

“Service is that aspect of our business that is important. We have a family atmosphere and the staff think of us as a family. We firmly believe this and it works for us.”

But she also knew that tired old stores would not draw customers, or, for that matter, good staff — a realization she made soon after joining the company. She remembers going with her father into the store in Stonewall, MB, which had suffered from neglect. She told him either to fix the store or sell it. “It was an embarrassment. To hire good managers and keep good people, we’d need to raise the bar and improve our stores.”

Those improvements have included a new retail system to tie all the stores together. In the past, the stores were using a number of different POS systems. The company finally went with a Richmond, BC-based outfit called Progressive Solutions, which has a system called bisTrack.

With a new look and a well-defined mission statement, Konantz says her team was “re-energized” and renewed its efforts to expand. In recent years, Konantz’s team has replaced stores in Red Lake, ON and Radville, SK, and completed the expansion of an existing store

this spring in Esterhazy, SK. A number of prop-erties are in development for either new stores or expansions of existing locations, all clustered in those smaller communities in northwestern Ontario, central and southeastern Saskatchewan, and southern Manitoba.

Those opportunities are not just for ground-up stores, but for acquisitions as well. “We’re looking for people who need a succession plan for their business,” she points out.

Given the challenges of taking over the reins at North American Lumber, Martha Konantz is well aware of how important succession is. She recalls again her first years with her com-pany, and the steep learning curve she faced. “Back then, I sometimes felt that, if dad were here, he would know what to do and could help. So I’m grateful that we had some time to overlap, which helped me to understand the business and prepare to lead the company into the next century.”

So all of these really ‘old fashioned’ values were how the managers defined us.”“EXECUTIVE INTERVIEWM A R T H A K O N A N T Z

FAST FACTSNorth American Lumber

Head Office: Winnipeg, MBYear Founded: 1906

BUSINESS UNITS

Building Supply Stores: 20Pre-Fab Home Locations: 7

Concrete Plant: 1Truss Plant: 1

POINTS-OF-SALE BY PROVINCESaskatchewan: 10

Manitoba: 10Ontario: 4

AFFILIATION

TIM-BR MARTS Ltd.

CONFERENCE SERIES 2011Hardlines Conference

Make this the year to join us at the 16th66 Annual

Sheraton Toronto Airport Hotel & Conference Centre801 DIXON ROAD, TORONTO, ONTARIO

October 27-28, 2011

Learn• How the “shop local” movement is taking the country by storm.

• The latest changes that are rocking the retail world.

• How – and why – Castle is forging alliances with U.S. wholesaler Orgill.

• How urban hardware stores are surviving in this era of big Boxes.

• Why independent dealers are focusing on “better” and “best” assortments and leave the entry level products to Walmart.

• How global economic issues and effects of economic, demographic, and social trends will affect you.

SAVE ALMOST

$400!Special pricing for

hardware & building centre dealers!

www.hardlinesconference.ca

Sponsored by

CONFERENCE SERIES 2011

Join more than 200 innovative retailers and vendor executives from across Canada and the U.S. This two day program provides unparalleled opportunities to network with industry decision makers and gain information about the trends changing the world of retail.

Thursday, Oct. 27 Day One7:30-8:30 Registration/Breakfast

8:30-8:45 Beverly Allen, Michael McLarneyHardlines

8:45-9:30 Terry DavisHome HardwareTargeting the upscale consumer

9:30-10:15Ira KalishDeloitteGlobal economy

10:15-10:45 Networking Break

10:45-11:30 Danny KarchSFIGreen building

11:30-12:30BREAKOUT #1

Sustainability panel: Maximize your buyer relationsExchange a Blade, Boomerang, RONA.

BREAKOUT #2

How to Connect with BuyersBill Wilson, NRHA Canada, Quest Plastics, Home Hardware, Castle Building Centres

12:30-1:30 Lunch Bev and Mike/SIRE

1:30-2:00 Lunch Speaker: Hazel McCallionMayor of Mississauga


2:30-3:15 Gina SchaeferAce HardwareShop local/urban stores

3:15-4:00 Ken JenkinsCastle Reinventing the independent

4:00-5:00 RONA Reception

5:30-6:30 ORA Reception

6:30 - 9:30 Outstanding Retailer Awards GalaPresented by Hardware Merchandising

Friday, Oct. 28 Day Two8:00-8:30 Registration/Breakfast

8:30-9:00 Newsmaker of the Year Awards Breakfast

9:00-9:45 Ed StrapagielKubas Prime Media

9:45-10:30 Frank TurcoHome Depot CanadaHot product trends


11:00-11:45Neil BearseGrow your business through social media

11:45-12:45 Lunch

12:45-1:30 Alan HugginsLowe’s CanadaOutside of the box

1:30 - 2:30 Anthony StokanHot retail trends

AgendaSheraton Toronto Airport Hotel & Conference Centre801 DIXON ROAD, TORONTO, ONTARIOOctober 27-28, 2011



It’s Time to Target the Upscale Consumer

Terry Davis, Vice-President and COO of Home Hardware Stores Ltd.How – and why – some

independent retailers are focusing on “better” and “best” assortments, and leaving the “good” or entry level prod-ucts to Walmart and the dollar stores.

Profi les in Leadership #1: Hazel McCallion, Mayor of MississaugaAt the age of 90, Her Wor-ship is the longest-serving

mayor in Canada. Over more than three decades, she has built debt-free Missis-sauga into one of the country’s largest cities, all the while surviving toxic spills, police standoffs and scandals. Her mes-sage of how business and government should work together is a compelling one that you don’t want to miss!

How The Shop Local Movement is Winning Over Consumers

Gina Schaefer, owner of seven Ace Hardware stores in the U.S.First it was shopping green,

now it’s “Shop Local”. Learn how to pro-mote your business to your local custom-ers while increasing customer loyalty and connecting with your community.

Re-Inventing the Role of the Independent

Ken Jenkins, President, Castle Building CentresThe age of the big box chains is giving way. Find out

how independents play a pivitol role in home improvement retailing. And see how the challenges and triumphs of Castle’s recent alliance with Orgill has changed how independent retailers do business in Canada.

Retail Trends That Will Change Our Industry

Anthony Stokan, Principal at Anthony Russell and Associates.From cell phones with credit

card and QR readers to social media and mass coupons, whether you are a vendor or a retailer you need to stay on top of current trends in retail in order to stay competitive. In this presentation, Anothony Stokan will give you an edge on the competition by showing you what’s happening, what’s outdated and most importantly, what’s going to happen in the world of retail trends. Three years ago, when Anthony Stokan spoke at our conference, he closed it with a standing ovation. This is a must see presentation.

Product Trends You Need to Know About

Frank Turco, Trends Expert, The Home DepotYou need to stay on top of product trends in order

to keep your products fl ying off the shelves and keep customers in your stores. This presentation will bring you a product trend guru from our industry who knows what customers are looking for and will show you some of the hottest products on the market.

Profi les in Leadership #2: Alan Huggins, President of Lowe’s CanadaHuggins came to Canada with the launch of Lowe’s in

this country more than four years ago. During that time, he was put in charge of the entire Canadian operation, which now has 26 stores. His devotion to the Lowe’s operating process, while showing the fl exibility and innovation to adapt to new markets and new business conditions, has fi rmly established Huggins as one of the industry’s true retail leaders.

3M Canada, ABSDA, Alexandria Moulding, AQMAT, B&D, BMR, Castle Building Centres, Garant, Goodfellow, Home Depot Canada, Home Hardware, ILDC, ITW, JELD-WEN, Lowe’s Companies, Orgill, Philips Lighting, RONA, Sexton Group, TIM-BR MARTs Ltd., TruServ Canada, TSC Stores, WRLA…

Speakers include

Attendees include...

Sheraton Toronto Airport Hotel & Conference Centre801 DIXON ROAD, TORONTO, ONTARIOOctober 27-28, 2011


Sponsored by

Join us!Sheraton Toronto Airport Hotel & Conference Centre801 DIXON ROAD, TORONTO, ONTARIOOctober 27-28, 2011


Register online at www.hardlinesconference.caOr, call 416-489-3396 or email to [email protected]

HELPING DEALERS

SELL SMARTER>> The 4th Annual Johns Manville Hardlines Dealer Conference

in Conjunction with the Canadian Home Improvement Show.

TURBO CHARGE YOUR RETAIL BUSINESS: HOW TO OUTMANEUVER

AND OUTPERFORM THE BIG GUYSRoy Prevost, Customer Service Activist and Futurist

WHAT YOU WILL LEARN: Mr. Prevost will map out how you can set

yourself apart from your large-surface competitors. He will inspire

innovative thinking that will re-energize your customer service.

You’ll get solid examples of outstanding service and inspiring

insights into today’s customer.

TO HELL AND BACK: MANAGING SUCCESSFULLY IN A DOWN ECONOMY

Mark Scherer, CEO, Scherer Bros. Lumber,

Brooklyn Park, MN

WHAT YOU WILL LEARN: A prominent dealer in the Minneapolis market,

Mark Scherer’s company was hit hard by the U.S. housing crash.

The bold and often unorthodox steps he took to survive — and

succeed — provide specifi c, actionable lessons for every dealer in Canada.

TOPICS:

To register, visit www.canadianhomeimprovementshow.com or call 1.866.535.0520

Thursday, November 17, 2011Hilton Toronto Airport Hotel

All-Industry Breakfast: 7:30am – 9:30am

Tickets: $49


6TRENDS

The store, the bricks and mortar of the business, has historically been the heart and soul of retail. More than ever that paradigm is being challenged — and threatened. The forces at work are monumental — and the results will present a sea change for anyone who makes their living through retail.

BY MICHAEL MCLARNEY


T R E N D SFEATURE

1. RETAIL AND THE INTERNETInternet sales in Canada between 2007 and 2009 grew by 18 percent to total $15.1 billion.

During that time, the number of online orders by Canadians grew from 69,866 to 95,669. In the U.S., online spending jumped 14 percent in the second quarter,

compared with the same period last year.Retailers in our industry continue to try

and fi gure out how best to increase their sales with an online presence. Some have backed off. Canadian Tire, for example, famously stopped selling online last year. Considering

the company boasts a store within 20 min-utes of 90 percent of Canadians, that decision made sense — especially in light of the massive costs involved in main-taining an online fulfi llment infrastruc-ture. Recently, however, the Tire has done

an about-face, with a re-entry into online sales, beginning with tires. Even online pio-neers such as RONA are treating the internet more as a research tool for consumers than an actual selling tool.

But this, too, will change. A 2010 study of Canadian consumer habits by American Express showed that 54 percent of 55-64 year-olds reported that the internet was affecting their shopping habits. Meanwhile, younger consumers are much more knowledgeable — and comfortable — shopping online.

2. CREATING A MARKET FOR YOUNGER CUSTOMERS Disney has launched a new line, Disney Baby. It consists of a free introductory kit of baby sleepers which it sends to new moms — right in the hospital. Trying to fi nd — and eventu-ally sell to — the next generation of consum-ers is already happening in our own industry. Home Depot, for example, has long offered in-store clinics for kids to help them learn how to build birdfeeders and other small projects.

Ikea is another master of capturing the attention of young consumers, with very kid-friendly furniture and bedding. And Home Hardware’s paint division has made a deal to sell a line of Sesame Street branded paint. It features bright, fun colours that are perfect for children.

3. CATERING TO THE OLDER GENERATIONBy the year 2050, the number of people worldwide aged 65 and older is expected to double. As boomers age, they need differ-ent products, but they often don’t care to be reminded about that fact. So companies are quietly making typefaces larger and lowering retail shelves to make products more acces-sible. Packaging is being redesigned with colours and instructions to suit older eyes.

Solutions can be simple: Sherwin-Williams stores in the U.S. have been adjust-ing to boomer traffi c just by adding more places to sit down — and offering free coffee.

4. MORE SERVICES FOR CUSTOMERSWhat else can a retailer offer besides prod-ucts? In an era where the focus is increas-ingly on services, retailers are getting smart about what works for their customers. Kmart in the U.S. is introducing cheque cashing, money transfers, and prepaid cards at cer-tain stores. In June 2010, Wal-Mart Canada launched Walmart Canada Bank.

Grand & Toy has launched business centres in fi ve locations in downtown Toronto. It’s part of a strategy to offer more than just products to

its customers. The new outlets offer a range of business tools and resources for local business owners, such as on-site business advisors, free Wi-Fi, and mini work stations. The new busi-ness centres also offer a full-service copy and print centre and on-site document shredding.

5. SMALLER STORES, MORE FOCUSWhen Ray Gork wanted to double the size of his Home Hardware store in midtown Toronto six years ago, he considered mov-ing to a larger location. Instead, he ended up cutting the existing premises in half. Since about 50 percent of his sales were coming from paint, he decided to exit the hardware and housewares side altogether to focus on paint and sundries. The newly re-sized store became a Benjamin Moore outlet, and Gork never looked back.

Cutting costs in a post-recession economy has made other retailers think small: Anchor Blue, a clothing chain aimed at teenagers, took a store in California and cut it in half. It’s a way to cut costs, thin out slow-moving inventory, and provide a more focused retail environment for shoppers in a hurry.

6. MORE FOREIGN COMPETITIONIn 1994, retail in Canada changed forever with the arrival of two key players, Walmart and Home Depot. Now, 17 years later, the beleaguered economy in the U.S. is causing an ever-growing number of retailers to con-sider expanding north of the border. In fact, a cottage industry has sprung up in the U.S. providing information and seminars to busi-nesses about the opportunities in Canada.

About half of retail in Canada is foreign owned; that rate is expected to rise to 75 per-cent by 2015.

Crate & Barrel, Restoration Hardware and Lowe’s are just a few of the American hard-lines chains that have entered the Canadian market. And the arrival of Target in 2012, following that company’s purchase of Zellers in Canada, is the latest wakeup call for Canadian retailers.


In a period of slower growth and reluctant shoppers, big-box dealers re-emphasize customer service.

B I G B O X E SCOVER STORY

CREATESIZZLECAN SIZE AND SUBSTANCE STILL

?BY JOHN CAULFIELD


COVER STORYB I G B O X E S

Is big-box retailing losing its appeal?That was the theme of a humorous TV

ad campaign that Ace Hardware, the U.S. dealer-owned co-op, ran in this summer. “We shouldn’t need a GPS to fi nd the fer-tilizer,” shouts a frustrated homeowner to his neighbours in one of Ace’s spots. The pros and cons of super-sized stores were also debated among home centre deal-ers attending the DIY Global Summit in Brussels, Belgium, last June.

Big-box angst is hardly new, and has ample justifi cation. Walmart, Target, Home Depot, Costco, and Lowe’s — all operat-ing stores ranging from 90,000 to 260,000 square feet — ranked fi rst, third, fi fth, sixth, and eighth on STORES magazine’s latest list of the top 100 retailers in North America.

But warehouse fatigue is to be expected

as customers’ shopping habits change, espe-cially during this period of economic tur-moil. And when Lowe’s closed seven U.S. stores on Aug. 14, it accentuated how big-box dealers in general are reacting to new realities by scaling back their store expan-sion in pursuit of higher productivity gains.

Acquisitions and attrition have thinned Canada’s big-box herd over the years, and some of those left don’t seem all that committed to the concept. Kent Building Supplies, for one, shows no signs of want-ing to open more warehouses beyond the seven it operates. Canadian Tire, which has dabbled in the big-box realm, is focusing on smaller stores and sharper merchandising displays.

Even RONA — which has freely absorbed warehouse competitors, and currently has 84 big boxes in its stable — has no startup

large-format stores in the works. In fact, the company is “rethinking and re-invent-ing” that concept, says Philippe Krivicky, RONA’s senior director of emerging busi-ness strategies.

For now, he says, future big-box RONA L’Entrepôt stores will be conversions of RONA’s Régional format. In late August, one of RONA’s Quebec dealers stated that he would spend $4 million to add 15,000 square feet to a Régional store in Notre-Dame-des-Prairies. When completed, this store will have 91,300 square feet of retail space, a 10,000-square-foot garden centre, and a 25,000-square-foot outdoor lum-beryard. This conversion, though, is one of only two Régionals that are being trans-formed in 2011.

RONA has long contended that its mix of small, medium, and large stores posi-tions its dealers to serve different customer niches. But Krivicky also admits that fi nd-ing 15 to 20 acres of land needed for a big-box store is

RONA has long contended that its mix of small, medium, and large stores positions its dealers to serve different customer niches.“ ”

Hardlines Home Improvement Quarterly 35FOURTH QUARTER / 2011

getting harder and more expensive. That’s particularly true in urban centres, which explains why other big-box dealers con-tinue to test smaller formats. This summer, Walmart debuted its 15,000-square-foot Express concept in Houston and Chicago, and has pledged to open 20 Expresses by January 2012.

PUTTING CUSTOMERS FIRSTOne of the tweaks that RONA has made to its big boxes is the addition of service desks specifi cally for homeowners doing

medium-to-large home improvement projects. At a time when retail

demand is soft and store expansion is less of

an option, the battle that Canada’s ware-house retailers are waging for the hearts and minds of customers is being won by the levels and quality of service each company can offer inside their existing stores.

In the second quarter of this year, Home Depot Canada’s same-store sales were fl at, and its gross margins were down margin-ally. In April, the retailer, with 180 stores in Canada, opened its fi rst and only new outlet of the year in Chilliwack, BC. More than ever, its success, says its president Bill Lennie, rests squarely on customer service, which is “our top priority.”

Lennie notes that last year, Home Depot Canada’s customer service improved in all fi ve categories tracked by its “Voice of the Customer” survey. He attributes those gains in large measure to the 2009 introduction of Home Depot’s Customers FIRST service model, which “calls on asso-ciates to fi nd every customer who enters our stores and help them fi nd the products that meet their needs,” says Lennie. The company has rolled out a similar program for its contractor customers, called First for Pros.

Home Depot Canada’s customer service

improved in all fi ve categories tracked by its “Voice of the Customer” survey.

“”



Another key to Home Depot Canada’s growth is improvements to its in-stock posi-tion. Frank Blake, chairman of the Atlanta-based fi rm, stated in August that the com-pany is “beginning the process of optimizing our supply chain in Canada,” meaning that more of its Canadian stores’ inventory will fl ow through Home Depot’s massive Rapid Deployment Centres. The 19 RDCs currently in operation handle 63 percent of the inven-tory shipped to the U.S. stores.

Lennie says the “fi nal piece” to his divi-sion’s “customer-focused strategy” is to ensure its stores are well merchandising and easy to shop. The formation of its 1,000-person Merchandising Execution Team to handle that task has resulted in “a tangible improvement” that “offers a con-sistent coast-to-coast approach to in-store merchandising service.”

The retailer is also banking on Home Depot Canada’s website, which gets 45 million visits annually, to become a dif-ferentiator. By the end of the third quarter, Home Depot will complete its chain-wide rollout of its “Buy Online Pickup In-Store” program. Blake noted that 30 percent of his company’s website visitors who use its “check inventory” function make a purchase in the store within two days, and a signifi -cant number make an additional purchase on the day of the pickup.

LOWE’S LEADS IN EXPANSIONLowe’s is no slouch, either, when it comes to applying technology to its competitive advantage. By the end of this year, the North Carolina-based retailer will deploy 42,000 handheld devises to its U.S. and Canada stores, which will allow employees to check inventory availability, access how-to videos, and tap into the company’s website from the store aisles. Alan Huggins, president of Lowe’s Canada, says fl at screen terminals

are replacing old CRT terminals in its Canadian stores, which are being

made Wi-Fi accessible.

Lowe’s is practically alone among Canadian retailers that are adding new stores. In 2011, it will open fi ve — in Etobicoke, Sarnia and Niagara Falls, ON; Regina, SK, and New Westminster, BC — bringing its total to 31 in four provinces. “Our initial plans to have 100 stores in Canada are well under way,” says Huggins.

Still, his division is prepared to operate effectively in a slower-growth environment. Its strategy resembles its competitors’: win with customer service that “ensures we make each interaction with custom-ers productive, and they have a desire to come back.” Huggins says each Lowe’s store devotes more than 10,000 hours to customer service and product knowledge training for

Lowe’s is practically alone among Canadian retailers that are

adding new stores.

“”

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employees before it opens. And he points to Kubas Primedia’s 2011 Major Markets Retailing Report, which rated Lowe’s sec-ond among all retailers in Canada on met-rics that include shopping levels, drawing power, and customer loyalty.

Like other dealers, Lowe’s is honing its in-store merchandising, abetted by a 50,000-square-foot planogram centre where it test-drives merchandising concepts and resets before they get into the store. Planograms are designed for “solutions-based merchandis-ing,” says Lowe’s Cos.’ executive vice-presi-dent of merchandise, Robert Gfeller.

The Canadian division’s merchandising team, says Huggins, focuses on providing the right brands to customers in different mar-kets. That team also utilizes best practices from stores in the U.S. But Huggins is quick to assert the Canadian division’s operational autonomy. “We run our own distribution centres, have a regional offi ce/distribution network in Calgary, a web team in Windsor, and a real estate team in Vancouver.”

However, it remains to be seen how the Canadian division is affected, if at all, by a major restructuring of Lowe’s operations and merchandising, which the company announced suddenly in late August. In an effort to get new products and services to market quicker, Lowe’s is reorganizing its U.S. stores into three geographic divisions, and is reducing its national regions by one-third to 14.

Its U.S. merchandising departments are now separated into two divisions as well: building and outdoor products; and kitchen, bath and home décor, all of which now report to Gfeller. As a result of this shakeup, two senior-level operations execu-tives and two senior-level merchants left the company or have retired.

PRICE DRIVES SALESThe economy on both sides of the border will dictate how, where, and at what pace big-box dealers expand.

RONA’s Krivicky anticipates warehouse competitors will push aggressively into urban markets, possibly with different sized stores. He and other observers also expect price to remain a strong factor in where customers choose to shop. To that end, Lowe’s has been expanding its list of benchmark items “to sharpen our everyday low pricing on the most visible items, and to lessen the frequency of special advertising promotions,” says Gfeller.

Krivicky points to the supermarket retailer ALDI, whose urban stores offer a “controlled limited assortment,” which price-sensitive customers are embracing. He also speaks admiringly of Costco’s low-price business model, which other big boxes could emulate. “It’s offering something that consumers need,” he says.


Kent Building Supplies shows no signs of wanting to open more warehouses

beyond the seven it operates.“ ”

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reviously, we reviewed key controllable financial measurements and how they can improve your bottom line, how to

manage your gross margin after rebates, and how controlling operating expenses affects profitability. In this issue, we will look more closely at operating expenses and how small changes can improve your profitability.

TYPICAL OPERATING EXPENSESOperating expenses are defined as current expenses that are associated to the opera-tion of the business in one fiscal year. The

ranges shown below are taken from the NRHA Cost of Doing Business Survey. The percentages are, of course, of net sales.• Payroll expenses. These range from 13.8

percent to 17.5 percent of gross sales, including taxes and benefits.

• Occupancy expenses. They range from 1.9 percent to 3.5 percent and leave very little room for changes, except if you can use some energy-saving products or systems to reduce your HVAC and elec-trical costs.

• Other operating expenses. They will typi-

cally range from 7.1 percent to 8.5 percent and can be a bottomless pit. These costs should be frequently reviewed item by item.

OPPORTUNITIES FOR REDUCING COSTS• Payroll expenses. Employee wages will

be your largest cost. Your POS will give you sales and customer count per hour. Match this against your employee count, and possibly you can adjust hours as to when you require your staff. The most recent NRHA Cost of Doing Business

UNDERSTANDING YOUR FINANCIAL STATEMENT

P

BY BILL WILSON, RETAIL ADVISOR, NRHA CANADA

Survey showed that sales per employee ranged from $148,749 to $162,319. You may fi nd opportunities for adjusting staff to shorter work hours, such as changing some staff to four- or six-hour shifts.

• Advertising & promotion. The average cost of advertising in lumberyards is approxi-mately one percent of sales. Creating impulse sales out of your merchandising by employing special feature ends, clip strips and dump bins is a cost-effective way to run an in-store promotion without ramping up your advertising and promotion costs.

• Interest expense. These costs average 0.5 percent with receivable collection averag-ing 63 days. Reducing this to just 60 days will free up some cash fl ow and reduce your interest expense. Another way to lower interest expenses is to improve your inventory turnover, which, in the NRHA survey, runs from 4.2 to 5.0 turns annually. An increase of one turn can substantially reduce your accounts pay-able and working capital loan. Duplicate inventory, slow-moving inventory, sea-sonal carry-over, and incorrect min/max quantities all affect inventory turnover.

• Bad debt losses. These can be signifi cant, if not managed properly. The average in the NRHA survey is 0.3 percent.

• Delivery costs. These can add up. Charging even a small delivery fee can help here.

WHAT YOU CAN MEASURE,YOU CAN MANAGESet yourself some goals. Make them small and achievable. I would suggest you set a target of 1.0 percent increase in gross mar-gin and a 1.5 percent decrease in operating expenses, depending on what your operat-ing statement is showing compared to the NRHA industry averages.

KEY MEASUREMENT RATIOSHere are some samples for an average lum-ber outlet, based, once again, on the NRHA study, percentages of net sales…

• Gross margin after rebate: 24.8 percent to 30.3 percent.

• Total operating expenses: 23.3 percent to 25.2 percent.

• Payroll expenses: 14.3 percent to 17.5 percent.

• Return on net worth: 4.4 percent to 17.4 percent.

• Profi t before taxes: 1.4 percent to 1.8 percent.

• Average customer sale: $86 to $98.• Sales per employee: $148,749 to

$162,319.

The chart on this page is an exercise that shows us how small improvements can make a major different on your bottom line. Reviewing your monthly statements can help you to make certain there are no surprises at year-end.

Bill Wilson is Retail Advisor for the North American Retail Hardware Association Canada. He has a background of more

than 40 years of experience in hardware and home improvement retailing and distribution and is committed to training for independents.

S T O R E M A N A G E ME N TF LE

The middle columns show gross margin at 24.8 percent and operating expenses at 24.3 percent. The right hand columns show the benefi ts of increasing margin by 1 percent and decreasing operating expense by 1.5 percent — an increase of $125,000 in profi t before taxes! The left columns show the effect of margin decline by 1 percent and operating expense increase by 1.5 percent — a decrease in net profi t before taxes of $125,000!

INCOME STATEMENT: Effects of Operating Expenses Changes on Bottom Line

Gross Margin after Rebate Down 1% At 24.8% Up 1%

Total Operating Expenses Up 1.5% At 24.3% Down 1.5%

$ Total % Sales $ Total % Sales $ Total % Sales

Net Sales 5,000,000 100.00% 5,000,000 100.00% 5,000,000 100.00%

Cost of Goods 3,840,000 76.80% 3,790,000 75.80% 3,740,000 74.80%

Gross Margin 1,160,000 23.20% 1,210,000 24.20% 1,260,000 25.20%

Purchase Rebate 30,000 0.60% 30,000 0.60% 30,000 0.60%

Gross Margin after Rebate 1,190,000 23.80% 1,240,000 24.80% 1,290,000 25.80%

Total Payroll Expenses 740,000 14.80% 715,000 14.30% 690,000 13.80%

Total Occupancy 95,000 1.90% 95,000 1.90% 95,000 1.90%

Other Operating Expenses 455,000 9.10% 405,000 8.10% 355,000 7.10%

Total Operating Expenses 1,290,000 25.80% 1,215,000 24.30% 1,140,000 22.80%

Operating Profi t -100,000 -2.00% 25,000 0.50% 150,000 3.00%

Other Income & Expenses 40,000 0.80% 40,000 0.80% 40,000 0.80%

Profi t Before Taxes -60,000 -1.20% 65,000 1.30% 190,000 3.80%


Source: NRHA Cost of Doing Business Survey


e call the first 10 feet inside the store the “decompression zone.” Here, your customer should shift

gears and set aside the world outside. This is the point where they should be engag-ing with your brand, seeking out solutions to their needs and, ideally, expanding their shopping list as they encounter new prod-ucts or remember forgotten items.

Your store’s decompression zone is your chance to tell a story. What makes you different? What are you great at? How do you help a customer? If your store’s brand is built on low prices, this is where you should promote sale items. If it is built on innovation, use the space to display new products. And if you have a large store, this is where your customers can find their way.

Once inside, your customer needs to find the merchandise that brought them to you in the first place. Gondolas and racking have become the industry standard here for good reason — they work. It is important that they be accessible and easy to shop. This is best achieved by minimizing stockouts and keeping products orderly.

To more thoroughly engage your cus-tomer, you should take advantage of displays such as risers and end caps that promote and inform. Using seasonal or project-oriented themes will drive sales.

Certain categories deserve unusual fix-tures. For example, tables and chairs make

good sense in paint stores because custom-ers aren’t just buying products. They need time to find a design-related solution.

MAKE SIGHTLINES WORKLong sightlines at the point of entry make your store more inviting and draw cus-tomers inside. Depending on the layout, a well-designed store will have a power aisle that can merchandise promotional sale items, or a racetrack-type “main street” that can engage your customer with innova-tive products.

We often refer to lighting as “the new paint.” Once the domain of the fashion

INSIDE THE DOORS,HOW DOES YOUR STORE PERFORM?

BY BRUCE SMITH

In the last issue we discussed the store exterior. Now let’s examine what happens after the customer has made that important decision to walk through your front door.

WYour store’s decompression zone is your chance to tell a story. What makes you different? What are you great at? How do you help a customer?

DESIGN & MERCHANDISINGF LE

industry, all sorts of retailers are using fea-ture lighting to raise the profile of a prod-uct or product zone — and reduce energy costs. Ambient light levels entice customers to stay longer.

JOURNEY’S ENDIt’s the end of the customer’s journey and last impressions count. A single checkout line serving all cashiers is the fastest for mov-ing customers, but since that line can get long, customers may get the perception that they’re in for a long wait. Slowly this percep-tion is changing, however, as more and more major retailers, including Best Buy, Ikea, and Mountain Equipment Co-op, adopt it.

And, of course, a good store design will take advantage of the line-up area to con-tinue to merchandise impulse products.

But avoid overdoing it. Cluttering the counter at checkout with cheap impulse

items can be a real annoyance when it interferes with the transaction. Yes, they offer incremental sales, but are key chains and mini-flashlights that important to your business?

Take time to walk through your store — and your competitors’ stores — as if you are a customer. What messages do you get? How hard is it to find a product and pick it off the rack? Is the store dirty and messy, or neat and tidy?

Most retailers can find areas of improve-ment during these “walkabouts” — and today’s discerning customer will reward them with increased sales and return visits.

Bruce Smith of DMD RetailDesign assists retailers bybringing design and businessrealities together to create greatbranded experiences.

DON’T MISUSE THE COMPRESSION ZONEToo often retailers treat the entrance

to their stores as a point of intercep-

tion for items that are not core to the

brand. For example, one large chain

aggressively confronts its customers

by attempting to sign them up for credit

cards. Another places low margin clear-

ance items in this prime piece of real

estate. That may be a great idea if you

are a liquidator or a discount merchan-

diser, but is it the right message for a

knowledgeable specialist to send?

The Wild West at its Best

January 19-20, 2012Saskatoon, SK

2012


alcolm Firkser is scouting for space for his fourth Home Hardware store in Toronto, reassured of its

potential viability by his recent experiences at two department stores. His next location will be compact, like his existing stores, with narrow aisles and sales assistance a whisper away.

“The key to success will be location, loca-tion, location and service, service, service,” vows Firkser, driving home his message with an anecdote. He and his son recently shopped for a wallet at two department stores. They found numerous wallets, but no price stickers — and no one to offer advice.

“I asked my son: How do these places survive?” recalls the lanky 51-year-old native of South Africa. “There was zero ser-vice. I think they are chasing money away.”

Firkser admired the larger Home

Hardware stores he saw in smaller cit-ies during a recent vacation in Atlantic Canada. But he knows smaller stores best after three decades in the business.

Shortly after arriving in Canada in 1979, his father took over a hardware store in a

strip mall in the toney mid-town neigh-bourhood of Leaside. Firkser started as young employee, taking over in 1988.

Much has changed around Sunnybrook Home Hardware since then. Yet it remains a neighbourhood fixture, where many a customer will spend $150 to $200 on sev-eral items in less time than it would take to

drive or ride the bus 10 minutes east to the newer and larger Canadian Tire and Home Depot stores.

Firkser opened a second store 11 km north in the late 1990s, but closed it after five years and a severe recession. So he was cautious when he looked even farther into the city to open two more stores in the past five years.

“I took nine months to decide about the first store,” he recalls. “I like to make sure I feel good about a place.”

He rented vacant space formerly occupied by a dollar store on Danforth Avenue in the city’s traditional Greek neighbourhood, an area that’s now home to both affluent pro-fessionals and working class families.

He negotiated a short lease with a long renewal option. Two and half years after posting a help-wanted sign in the window, he says East Toronto Home Hardware “won’t be a great store, but it will be a good business.”

This past spring, Firkser opened Beaches Home Hardware on Queen St. East, again choosing a neighbourhood with a mix of incomes and lots of walk-by traffic. That store is in a 3,000-square-foot space under a modern, low-rise apartment building.

Next he hopes to find another space in downtown Toronto. As the business grows, experienced staff at his family’s original store will keep the books for all of the loca-tions and offer a custom ordering service, as well as repairs to screens, lamps, and small motors.

Today, a young female employee at the Beaches store is working with Firkser to expand the service offerings. They are testing an extermination service for the bed bugs, ter-mites, and cockroaches that can be a problem in this part of Toronto. “I’m a strong believer that, if you give young people a chance, they will really rise to it,” says Firkser.

PHO

TO: JAM

ES DAW

M

E X P A N S I O N F LE

The key to success will be location, location, location and service, service, service.“ ”

STAY SMALL, STAY DOWNTOWN

Malcolm Firkser is looking for the right location for his fourth Home Hardware store in Toronto. In three decades as a dealer, he has mastered the fine art of making a neighbourhood hardware store very profitable.

BY JAMES DAW

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NRHA’s Basic Training Course in Hardware Retailing Can Help!

NRHA Members have unlimited access to this course at no additional cost.

The Online Course Includes:• 9 Core Hardware Department Modules• Product Photos & Descriptions• Frequently Asked Questions

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or some retailers, contractor sales is the way to go. Contractors, being generally more knowledgeable than

consumers when it comes to building materi-als, have less need of advice from special-ized staff, while consumers will look for that same quality in sales associates. Sometimes however, because of evolving markets or competition, contractor driven building cen-tres have to consider the consumer market to keep or increase market share.

Jean-Pierre Brunet, second-generation owner-operator of Matériaux J.C. Brunet, a BMR dealer in St-Joseph-du-Lac, QC, a growing municipality 30 km northwest of Montreal, was faced with that very prob-lem. “My father acquired the store in 1979 and joined the BMR ranks in 1980 as a contractor driven store,” Brunet relates. “The surrounding population being very

small at the time [5,500], forced us to con-centrate on the contractor sales market. But as the market changed, we needed to attract a new customer base.”

In 2009, BMR unveiled “Boutique Inspiration,” a modern in-store home staging and decoration boutique concept aimed at a more upscale type of clien-tele. “We attended the BMR presentation

of the concept at the annual convention and immediately saw the opportunity to solidify our position within our local market,” says Brunet. “This new concept was a major help in diversifying our prod-uct, as well as our marketing mix, and for optimizing floor space sales. We are now

better equipped to offer high-end quality products to our local customers.”

In 2000, the Brunet family acquired a second store in St-Jérôme, another con-tractor-driven operation, consolidating the market. But the commercial environ-ment was evolving. “It was obvious that we had to increase our presence within the consumer market. With competition

growing, market shares were at stake,” Brunet says.

However, a change in marketing strat-egy seemed easier said than done: “The fear of change was the biggest obsta-cle,” Brunet says. “The St-Jérôme store was not open on Sundays and used to

How an LBM-oriented dealer built his

FRONT ENDBY DONALD O’HARA

Jean-Pierre Brunet’s BMR building supply stores north of Montreal have always been contractor-oriented. But their customer bases have changed dramatically over the years. A look at how one entrepreneur is going after the consumer.

F

“ ”The fear of change was the biggest obstacle.


STORE DESIGNF LE

close at noon on Saturdays — hardly the kind of service consumers have the right to expect.”

Changing the store hours was only a start. Realizing that they needed to dif-ferentiate themselves to attract more con-sumer business, Brunet and his colleagues created a project planning service, where clients can bring their plans or blueprints to the store where specialized staff will advise them on how to realize those proj-ects. To this day, says Brunet, his is the only store in the area to offer this service.

The consumer-oriented strategy appears to be bearing fruit. While the St-Jérôme store has an almost even split between con-tractors and consumers, about 35 percent of sales at the Saint-Joseph-du-Lac store are already going to consumers — and the gap is closing fast.

Jean-Pierre Brunet has given his business a new lease on life by bringing in a consumer strategy to complement his well-established contractor services.

CHOOSE YOUR PRODUCT MIX WISELY“Consumer-driven service and a great product mix are the keys to a successful

front end,” says Rob Wilbrink of BMF Merchandising. “But a common mistake is to

think that your product mix can be everything to everybody. It is better to have

fewer, solid and complete departments than to try to offer small selections of

everything and run the risk of disappointing clients.”

BMF provides category strategy, store layout and design, assortment

planning, store fixturing, and signage to retailers. And Wilbrink stresses the need

to begin all merchandising decisions with category strategy.

“If, for example, your store offers a small paint department and a small

assortment of wallpaper, clients might not find what they need in either category

and end up going to the competition. However, if you offer a strong paint

department and no wallpaper, clients will seek you out because of your paint

expertise. And you can build tremendous customer loyalty.”


ADVERTISERS: FOURTH QUARTER / 2011

IN THE NEXT ISSUE OF HHIQ:

A D I N D E X

BMR www.bmr.co IFC

Canadian Home Improvement Showwww.canadianhomeimprovementshow.com 32

Castle Building Centres Group Limited www.castle.ca OBC

Hardlines Conferencewww.hardlinesconference.ca 25-28

Hardlines Inc.www.hardlines.ca 3

Home Hardware Stores Limitedwww.homehardware.ca 21

National Hardware Show www.nationalhardwareshow.com 16

North American Retail Hardware Association Canada, www.nrha.org 45

Orgill www.orgill.com 37

Philipswww.philips.com 6

Renovation Contractorwww.renocontractor.ca 49

RONA inc.www.rona.ca 51

RustOleumwww.rustoleum.ca 39

Steel-Craftwww.steel-craft.ca 4

Western Retail Lumber Associationwww.wrla.org 43

How Canada’s wholesale distributors are making a difference. PLUS: Ken Jenkins’ vision for Castle, how Home Hardware is going upscale, retail trends that will rock your world, spotlight on building materials, lawn & garden, and cleaning products — and much more!

Publication Date: January 19, 2012 • Ad Reservations: December 8, 2011 (contact [email protected]) • Ad Material Due: December 19, 2011

After 37 years in the business, I’d gotten to the point of wondering, why wasn’t there a Canadian publication dedicated solely to the renovator that was actually written and published by the people, like me, who actually DO this stuff, every day. — Jim Caruk, Editor-in-Chief, Renovation Contractor

RENOCONTRACTOR.CATo be a part of Renovation Contractor, contact David Chestnut at [email protected] or 647-367-0073 Ext. 106.

In its fi rst year of publication, Renovation Contractor magazine

has raised the bar for all other trade magazines. Quickly becoming the

VOICE of the Canadian Renovation and Custom Homebuilder industry,

Renovation Contractor’s unmatched content, superior design, and

overall quality create a new standard for how a magazine

should be produced.

”“

THE MAGAZINE FOR CANADIAN RENOVATION CONTRACTORS

Effectively Marketing to the $80 Billion Canadian Renovation

and Custom Homebuilding Market?


rian Macey is precise and thor-ough in his communication. He’s articulate, courteous and gets right

to the point. He sounds like the kind of guy who can make things happen.

Which he’s been doing for a while now. Building a regional lumberyard chain from scratch in a struggling economy, when you haven’t been a dealer before, takes courage. Going from zero to five stores between 2009 and today, in the teeth of one of the tough-est economies in memory, couldn’t have been easy. Yet Brian has done it.

His fledgling group, Highland TIM-BR-MART, is now one of Ontario’s fastest-grow-ing building supply chains. Starting from a single store in Havelock, ON, in 2009, Brian has since added four other satellite stores (Harcourt, Gooderham, Kinmount and

Pembroke) which are all in rural markets in south-central and eastern Ontario.

All of this has been quite a leap from working on the wholesale side for many years, for BPB Westroc, where Brian was vice-president of sales and marketing, western operations. Three years ago, the Kitchener, ON, native decided to get into the retail game, and today Highland TIM-BR-MART is becoming a leader in the lat-est wave of regional consolidation among dealers nationwide.

And Brian sees room to expand further. “We’re looking to grow the business in our five stores, but we’re looking for other acquisitions, as well,” he says.

He admits that today’s market may not be so conducive to strong sales, especially as Ontario seems to lag behind other parts of

the country in its recovery. “Today’s market is a tougher market than we had in the past, but more recently we’re seeing that contrac-tors are asking for estimates,” Brian says. “And a lot of land development is going on, especially around Pembroke.”

It was during his Westroc days that Brian first met Steve Stremecki. The outgoing and upbeat former vice president at TIM-BR MARTS Ltd. had spent the last seven years helping build that organization into one of the country’s largest building materials buying groups. Now, he’s joined Highland TIM-BR-MART as a partner. “Steve’s lead-ership will raise the bar in marketing and sales,” says Brian.

Steve Stremecki is also someone Brian can share ideas and challenges with. “Sometimes it gets a bit lonely being a single owner,” Brian admits. “Steve knows where I’m coming from and I’m looking to him to help bring a corporate perspective to this business.”

Brian talks about the tremendous oppor-tunity for buying new stores as other dealers look for a succession plan that lets them retire and get value for their business. “We’re in a position to take their businesses under our own wing and our leadership.” And, he notes, those stores would stand to benefit from shared best practices and increased buying power.

At the end of the day, however, Brian says his stores find their strength in their local niche. “We focus on service and on taking care of customers when they come into our stores. We see ourselves getting more and more business — and Steve’s going to be a big part of that.”

“Good teamwork,” he concludes, “is the key to success.”

We’re in a position to take other stores under

our own wing.“

”

EXECUTIVE BREAK WITH BRIAN MACEY, HIGHLAND TIM-BR-MARTBY MICHAEL MCLARNEY

B

B R I A N M A C E Y ENDCAP

After less than three years as a dealer, former BPB Westroc executive Brian Macey has built up an impressive five-unit chain of building supply stores in Eastern Ontario.

How to build a great relationship.

DELIVER MORE THAN THE COMPETITION ON EVERY LEVEL.

• Strategic expertise to grow your business

• Increased traffi c

• Improved sales

• A succession plan that’s unique in the industry

• The most complete marketing plan in the industry

• 90% Canadian suppliers

• Dedicated teams to support you every step of the way

TrulyCanadian

Jean-Luc Meunier, National 1-800-670-1250 | Glenn Duczek, Altantic Canada and Ontario 416-553-9566

John Penner, Western Canada 403-235-7672 | René Cloutier, Quebec 514-220-7490

Doing it right for your business

How to build a g

• Strategic expertise to grow y

• Increased traffi c

• Improved sales

• A succession plan that’s uniq

• The most complete marketin

• 90% Canadian suppliers

• Dedicated teams to support

Jean-Luc Meunier, National 1-800-670-1250 | Glenn Duczek, Altan

|

Doing it right fo

Name: Henry Zacharias

Occupation: Successful businessman. Independent Castle dealer.

Revolutionary behaviour: Fiercely independent. Demands maximum freedom. Failure is not part of his vocabulary.

M.O.: Tenacious. Man of action. Demands that his buying group stays out of his way, but maximizes his freedom and profits. Committed to his customers and his business. Fixated on providing both service and competitive products and pricing. Knows his target audience. Keeps things simple and efficient, and expects his buying group to do the same. Believes he’s part of the Revolution.

Fears: Being controlled. Corporate interference.

On being a Revolutionary: I don’t have time to support corporate baggage. I need a buying group that runs very lean and puts dollars back in mypocket, not theirs. Castle does this better than any other buying group out there today! That’s why we switched to Castle.

Warning: Not everyone wants freedom. Do you have the passion to lead?

For more detailed information: www.Castle.ca/Revolution

Contact your Business Development ManagerWest Alan Schoemperlen (204) 771-1509 [email protected]

BC Les Gillespie (250) 469-4744 [email protected]

Ontario Bruce Holman (647) 228-1414 [email protected] Quebec Robert Legault (514) 208-4158 [email protected] Atlantic Sandy Welsh (902) 471-7113 [email protected]

Your trusted building supply partner

castle.ca/freedom

& hardware®

Retail. Commercial. Specialty.

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