C O N N E C T I N G T H E H O M E I M P R O V E M E N T I N D U S T R Y HARDLINES.CA FOURTH QUARTER / 2012 PLUS: n Young retailers speak out n Industry shows growth at last n Marc Robichaud, retail innovator n Make your brand re-markable n Alf Curtis Lumber adds hardlines BIG BOX REPORT How the retail giants are adjusting strategies — and store sizes — to stay connected to customers DRIVE SALES WITH RENTALS Interview with Dan McAreavey, the man who started Home Depot Rentals HOME IMPROVEMENT QUARTERLY The right personnel and products can make farm and feed a sales winner for hardlines dealers. Canadian Publications Mail Agreement # 42175020. POSTMASTER: Send address changes to Hardlines Home Improvement Quarterly, 360 Dupont St., Toronto ON Canada M5R 1V9 BUMPER CROP
Transcript
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
fourth Quarter / 2012
pLus:n Young retailers speak outn Industry shows growth at lastn Marc Robichaud, retail innovatorn Make your brand re-markablen Alf Curtis Lumber adds hardlines
Big BoX reportHow the retail giants are adjusting strategies — and store sizes — to stay connected to customers
drive sALes With rentALsInterview with Dan McAreavey, the man who started Home Depot Rentals
home Improvement Quarterly
the right personnel and products can make farm and feed a sales winner for hardlines dealers.
Canadian Publications Mail Agreement # 42175020. POSTMASTER: Send address changes to Hardlines Home Improvement Quarterly, 360 Dupont St., Toronto ON Canada M5R 1V9
Bumper crop
35,0005,000
18545
751
Products in our warehouses
emPloyees
stores
years of exPerience
Private brands
hardware and building materi-al warehouses
great Purchasing
THE POWER OF RENOVATION
For more information, contact Jean falardeau, executive vice-president, téléphone : 1 800 361-0885
HIQ BMR octobre 2012.indd 1 12-09-14 5:03 PM
35,0005,000
18545
751
Products in our warehouses
emPloyees
stores
years of exPerience
Private brands
hardware and building materi-al warehouses
great Purchasing
THE POWER OF RENOVATION
For more information, contact Jean falardeau, executive vice-president, téléphone : 1 800 361-0885
HIQ BMR octobre 2012.indd 112-09-14 5:03 PM
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.
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)
Subscriber Services: To subscribe, renew your subscription, or change your address or contact information, please contact our Circulation Depart-ment at 289-997-5408; [email protected].
Canadian Publications Mail Agreement # 42175020
POSTMASTER: Send address changes to Hardlines Home Improvement Quarterly, 360 Dupont St., Toronto ON Canada M5R 1V9.
All editorial contents copyrighted 2012 by Hardlines Inc. No editorial may be reproduced without prior permission of the publisher.
www.hardlines.ca
Fourth Quarter / 2012
Contact Beverly Allen, Publisher, Hardlines Inc. for more information: Phone: 416.489.3396; Mobile: [email protected]
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EDITOR’S MESSAGE
Growth must come from within
BUSINESS CONDITIONS
Consistency is the message
MARKET REPORT
Two years of growth put industry back on solid ground
PRODUCT SPOTLIGHT
Tools, stools, and compost deodorizer
NEWS SPOTLIGHT
Lowe’s bid for rona hits thin ice
INDUSTRY AWARD
Marc robichaud: Innovator, retailer, and Pioneer
COMMUNITY RELATIONS
Dealer carves niche with ladies’ night
STORE MANAGEMENT
are you maximizing your productivity?
MERCHANDISING
Dealers expand front end with wholesaler support
ENDCAP
Brand guru affirms power of consistency in marketing
Hardlines Home Improvement Quarterly 5fourth Quarter / 2012
EXECUTIVE PROFILE
RENT – To SELL
COVER FEATURE
DEPARTMENTS
7
8
12
22
44
53
46
56
NEWSroundup
Leadership front and centre at hardlines Conference
home hardware among Canada’s most valuable brands
departure of Sexton and delroc opens up options for iLdC
Canucks find new formats, expanded assortments at orgill show
torbSa members find strength in diversity
Mastercraft gets major brand relaunch
new format stores replace rona big boxes
16
BUMPER CroP
C o n t e n t S
35 Dan Mcareavey is the former vice president of Contract Sales at Home Depot
Learning what resonates for the next generation of home improvement dealers is a major challenge for the entire industry
YOUNG LEADERS
A FRESH PERSPECTIVE: YounG rETaILErS SPEak ouT40
the right personnel and products can make farm and feed a sales winner for hardlines dealers.
26 With physical expansion barely an option, warehouse home centres look inward for growth.
fourth Quarter / 2012V o L u M e 2 , n o . 4
FEATURE
BOXED In
58
62
46
BUMPER CROP
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Hardlines Home Improvement Quarterlywww.hardlines.ca 7fourth Quarter / 2012
hile there are many positive signs of recovery emerging across the country, some of the indicators a dealer could
typically count on in the past to drive business are not looking so positive. Don’t expect housing starts to grow much. Don’t expect consumer confidence to remain anything less than cautious. And do expect that competitors will remain — with new ones coming along all the time.
As John Locke of Orillia Home Hardware says, “You just used to have to open the doors. But now consumers have so many options” (see p. 56). Stores like Locke’s have learned to create opportunities of their own, through innovation. Innovation is the heart and soul of any successful business, whether it’s selling hardware, selling cupcakes, or selling news. As the external factors that typically drive this industry remain less than robust, dealers must turn, more than ever, inwardly, for ways to create growth. That requires innovative thinking.
One dealer who epitomized innovation was Marc Robichaud. This TIM-BR Mart dealer from Metaghan Centre, NS, was a leader in using social media to generate customer involvement. He was also a pioneer of sus-tainable retail practices. Yet he died young: earlier this year he left us at the age of just 36.
That’s why we’ve decided to create a new retail award to recognize and encourage innovation. We chose further to establish the award in honour of Marc Robichaud. The first annual Marc Robichaud Award for Retail Innovation will be presented at the Hardlines Conference in Toronto on Oct. 25.
I remember Robichaud explaining to me how he would sell hot tubs on eBay and cre-ate “flash” sales via Facebook. When I told Tim Urquhart, the head of TIM-BR MARTS,
that HARDLINES wanted to establish this award for innovation, he paused soberly, then looked up at me and said, “Marc was the most innovative dealer I ever met.”
The importance of innovation needs to be fostered — and its successes demand celebration. The memory of one of this industry’s most innovative leaders deserves preserving, as well. The Marc Robichaud Award for Retail Innovation will do all those things.
growth Must coMe froM withinMichAel MclArney, EDITOR
W
Marc Robichaud epitomized innovation.“ ”
Hardlines Home Improvement Quarterly www.hardlines.ca8 fourth Quarter / 2012
he great optimism of the first quarter of 2012 is disappearing. Expectations for growth among
retailers and vendors in the second quarter remained strong but not as positive as last quarter. Compared with the same time last year, 55.3 percent of retailers responded that sales had increased. However, last quarter (1Q 2012) 62.5 percent of retailers responded that they saw sales increase compared with the same time the year before. The continuing, if somewhat diminished optimism, becomes clear when compared
the second quarter of 2011, where only 33.3 percent of retailers had positive sales compared with the year before. Vendors are following the same trend with 61.3 percent reporting sales increases from last year, slightly down from 65 percent last quarter but significantly higher than 22.2 percent in the second quarter of 2011.
HiringThe confidence in the market can be seen through an increase in hiring. Throughout 2011, the number of employees mainly
Quarterly Business Conditions
Consistency is the message that runs throughout the second quarter of this year. according the latest harDLINeS Business Conditions Survey, done in conjunction with Nrha Canada, the optimistic outlook from the beginning of 2012 is subsiding, but a positive attitude remains among retailers and vendors.
retail Conditions –
2Q 2012
*Dealers were allowed to select more than one option for this question, so percentages do not equal 100 percent.
t
Hardlines Home Improvement Quarterlywww.hardlines.ca 9fourth Quarter / 2012
Bu sine s s C ondi t ionssecond quarter
retailers: 2q sales 2012 vs. 2011
retailers: do you expect sales to increase during the next 6 months?
20.4%SAME
55.3%UP24.3%
DOWN
18.3%SAME
61.3%UP
20.4%DOWN
55.8%YES23.1%
NO
21.2%NOT SURE
66.7%YES
15.0%NO
18.3%NOT SURE
57.7%YES19.2%
NO
23.1%NOT SURE
20.4%SAME
55.3%UP24.3%
DOWN
18.3%SAME
61.3%UP
20.4%DOWN
55.8%YES23.1%
NO
21.2%NOT SURE
66.7%YES
15.0%NO
18.3%NOT SURE
57.7%YES19.2%
NO
23.1%NOT SURE
retailers: do you expect sales to increase during the next 12 months?
20.4%SAME
55.3%UP24.3%
DOWN
18.3%SAME
61.3%UP
20.4%DOWN
55.8%YES23.1%
NO
21.2%NOT SURE
66.7%YES
15.0%NO
18.3%NOT SURE
57.7%YES19.2%
NO
23.1%NOT SURE
*Dealers were allowed to select more than one option for this question, so percentages do not equal 100 percent.Source: HARDLINES Quarterly Business Conditions Survey
held constant or decreased. In the second quarter of this year, 36.9 percent of retail-ers increased their number of employees, up from 27.2 percent in the second quar-ter of last year. Vendors also saw increas-ing employee numbers with 33.3 percent reporting increased hiring, up over 10 percent from the 20.5 percent reported at this time last year.
new productsThe introduction of new products in 2011 is paying off in 2012 with increased sales ; however, that may not be the
case next year as the introduction of new products has slowed. In the second quarter of 2011, 73.2 percent of vendors introduced new products and by the first quarter of 2012, this number had remained consistent at 72.7 percent introducing new product. However, by the second quarter of 2012, 66.3 percent of vendors were offering new products. Retailers also experienced a drop, from 65.9 percent offering new products in the 2Q 2011, compared with 57.3 percent in the second quarter of 2012.
The looming ThreaT of The U.S.The top two concerns that continually appear in the HARDLINES Business Conditions Survey are the presence of U.S. retailers, and for vendors, parity with the U.S. dollar. The threat of American retailers is cemented by industry shakers such as Lowe’s trying to acquire RONA inc. in August of this year. Furthermore, American retail giants, such as Target, entering the Canadian market bring the threat to the forefront.
The vendors’ concern hit a high point last quarter with 55 percent (down to 39 percent in 2Q) worried about parity with the U.S. dollar and 37.5 percent (up to 37.9 percent in 2Q) concerned about the increased presence of American retailers.
reTailerS worry aboUT online reTailingWith trends across the industry pushing towards social media, increasing one’s online presence has been the focus for years. But online retailing is increasingly a threat. With consumers having access to instant comparisons, keeping pace with
technology and having a full gambit of offers online is becoming a necessity. In 1Q of this year, 50 percent of retailers were concerned about the rise of online retailing — this has risen to 52.9 percent by the second quarter.
more conSiSTencyFor the second quarter in a row, retailers are concerned about staffing (73.1 percent), customer retention (53.9 percent), and increased competition (52.9 percent)*. Customer retention is a natural consequence to the increasing presence of not only American companies but also the availability of online retail options. These changes in the market also lead to increased vulnerability to competition. The most important issue for retailers in the first half of 2012 has been staffing. Although with hiring on the rise and continually positive sales, this concern may wane in the near future.
*Totals equal more than 100 percent because respondents were allowed to check all options that applied.
conclUSionStrong economic growth has allowed retailers and vendors to remain positive about growth for the remainder of 2012 and into 2013. The looming threat of American companies entering the Canadian market may become more salient as Target begins to open its new Canadian stores in 2013. Housing starts in the second quarter of 2012 remained strong, which should cement an optimistic outlook for the rest of the year. Overall, the second quarter demonstrates that economic recovery and stabilization are well underway.
Hardlines Home Improvement Quarterly www.hardlines.ca10 fourth Quarter / 2012
Second qUarTerBu sine s s C ondi t ions
Staffing 73.1%
customer retention 53.9%
increased competition 52.9%
Training 48.1%
expanding products 36.5%
Succession 32.7%
increased raw material/shipping costs 60%
increased retailer demands 56.7%
falling consumer confidence 39%
housing market 27.4%
reTailerS: Top issues in the second quarter*
VendorS: Top issues in the second quarter*VendorS: do you expect sales to increase during the next 6 months?
VendorS: 2q sales 2012 VS. 2011
20.4%SAME
55.3%UP24.3%
DOWN
18.3%SAME
61.3%UP
20.4%DOWN
55.8%YES23.1%
NO
21.2%NOT SURE
66.7%YES
15.0%NO
18.3%NOT SURE
57.7%YES19.2%
NO
23.1%NOT SURE
20.4%SAME
55.3%UP24.3%
DOWN
18.3%SAME
61.3%UP
20.4%DOWN
55.8%YES23.1%
NO
21.2%NOT SURE
66.7%YES
15.0%NO
18.3%NOT SURE
57.7%YES19.2%
NO
23.1%NOT SURE
Source: HARDLINES Quarterly Business Conditions Survey results*Totals equal more than 100 percent because respon-dents were allowed to check all options that applied.
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Hardlines Home Improvement Quarterly www.hardlines.ca12 fourth Quarter / 2012
he Retail home improvement indus-try has now enjoyed two consecu-tive years of modest, but neverthe-
less positive growth with 2011 exceeding initial forecasts to grow by 2.4 percent. That follows two percent growth in 2010 — and marks a significant turnaround after two years of negative growth in 2008 and 2009.
That negative growth, a result of the worldwide recession at the end of 2007, dragged on for two years, as Canadian con-sumers remained cautious in their spend-ing and the housing market remained slow. Even the federal Renovation Tax Credit,
which injected an estimated $500 mil-lion into the industry by the end of 2009, was not enough to prevent sales that year from dropping by almost three percent. However, by 2010, some stability had returned, with positive sales growth again, even though it was slight at 0.2 percent.
The following year was marred by pessi-mism, as dealers looked for a recovery that was slow to materialize. However, 2011 ended strong, aided by unusually good weather through most of the country in November and December, which carried on into half of the first quarter of 2012.
GETTING THROUGH THIS YEARConditions in 2012 were off to a healthy start with housing starts recovering and the weather co-operating to drive sales. A strong start to 2012 injected a lot of optimism into the industry, even as many areas remained flat. And while many dealers are expect-ing modest growth this year, they are see-ing some growth nevertheless, with slightly more than 55 percent of all dealers reporting that sales in the second quarter were up over the same period last year (See our Business Conditions Survey Report, page 8).
Housing starts are expected to slow down
T
Canada’s retail home improvement slump may finally be over, with two years of growth behind us, and modest growth forecast for this year and next.
TwO YEARS Of GROwTH pUT INdUSTRY bAck ON SOlId GROUNd
Hardlines Home Improvement Quarterlywww.hardlines.ca 13fourth Quarter / 2012
M a r K e t r e P o r tRETAIL SEGMENT ANALYSIS
0
10%
20%
30%
40%
50%
60%
FOURTH QUARTERFIRST QUARTER
UP DOW
N
SAM
E
65.4
15.419.2
SECOND QUARTER
SAM
E
DOW
N
UP
53.3
16.7
30.0
THIRD QUARTER
SAM
E
DOW
N
UP
37.1
25.7
37.1
SAM
E
DOW
N
UP
12.3
57.9
29.8
RETAILERS: 2010 quarterly business conditions vs. 2009
for the remainder of the year, however, according to Canada Mortgage and Housing Corp. housing starts reached 223,800 units seasonally adjusted in August, up 7.6 percent following a 6.3 decline in July. Much of that activity has been from multiple starts, but these are expected to moderate during the rest of the year. As a result, CMHC forecasts that housing starts for 2012 will come in at 207,200 units (up from 193,950 starts in 2011), then shrink in 2013 to just 193,100 units.
As in recent years, much of the activ-ity in home improvement retailing will come from renovations and remodels. As interest rates remain low, Canadians will be encouraged to buy homes and invest in their existing ones. The trend among a number of dealers to expand their front ends to capture more ancillary contractor sales as well as more DIY business reflects a response by the industry to pursue more of those renovation dollars and round out their contractor and builder business.
However, factors including the slow recovery in the U.S. and uncertainty about European currency issues, are dampen-ing consumer confidence. Elevated levels of household debt and soaring housing prices in some major urban markets will put pressure on homeowners’ liquid-ity. With the outlook mixed, dealers will be challenged to hang on to whatever growth they’ve achieved so far this year. That growth should be enough, however, overall, to drive the industry up by as much as two percent in 2012, according to HARDLINES estimates.
GROWTH VARIED BY RETAIL SECTORSlight changes in the market share of each retail category indicate the struggle going on right now to compete. The retailers in each sector have honed their skills through the tough economy of the past few years — and as a result they are much better retailers.
Sales by hardware stores grew from $4.77 billion in 2010 to $4.84 billion in 2011, a 1.5 percent increase. While a healthy increase, it was slightly below the industry’s overall growth of 2.4 percent, meaning that hardware stores lost just less than one percent of their share of the home improvement industry pie. Sales by build-ing centres grew almost at par with the overall industry to $18.58 billion, account-ing for 46.43 percent of sales in the indus-try, up from 46.32 percent in 2010.
The category to watch is the big boxes. While their sales were up by 2.2 percent, their share of home improvement retail sales remained steady at 20.53 percent of the total market, despite the addition of new stores by Lowe’s Canada. With RONA’s emphasis on smaller stores in urban mar-kets and expansion through proximity and satellite stores rather than more traditional big boxes, the question is whether these changes will help them in a market where gas prices continue to rise and the economy continues a slow rebound.
Buying Group Sales 2009-2010 ($millions)Buying group 2009 2010 Change
ILDC† $1,716 $1,743 1.6%
Tim-BR MARTS** $3,000 $3,300 10.0%
Home Hardware*** $2,810 $2,918 3.8%
BMR $1,400 $1,400 0.0%
Castle $1,067 $1,100 3.1%
Sexton Group $1,191 $1,300 9.2%
Allroc* $630 $615 -2.4%
Delroc $603 $567 -6.0%
TORBSA $342 $400 17.0%
IRLY Distributors $183 $183 0.0%
TOTAL $11,226 $11,783 5.0%
* Estimated sales ** Does not include IRLY *** Building centre and home centre sales only† ILDC’s comprises membership by Sexton Group, Delroc, La coop, and FCL for total sales of $4.4 billion
TWO YEARS Of GROWTH puT INDuSTRY BACk ON SOLID GROuND
Market share by retail format
Estimated market share of the Top four Retailers
Regional shift in salesAtlantic Canada 2009 2010 Change
New Brunswick $1,109 $1,120 1.0%
Nova Scotia $1,266 $1,329 5.0%
Newfoundland $887 $936 5.5%
p.E.I. $155 $157 1.3%
TOTAL $3,417 $3,542 3.7%
Western provinces 2009 2010 Change
British Columbia $3,568 $3,799 6.5%
Alberta $4,073 $4,089 0.4%
Saskatchewan $1,534 $1,634 6.5%
Manitoba $1,539 $1,551 0.8%
TOTAL $10,714 $11,073 3.4%
Home improvement industry growthYear 2011 2012* 2013*
Sales $40.13 $40.93 $41.50
y-o-y change 2.1% 2.0% 1.4%
Comprises sales at retail by all hardware stores, building centres and home centres in Canada, including related hardware/home improvement/seasonal sales by Canadian Tire, club stores, co-ops and mass merchants ; *Forecast
Sales by retail format ($ millions)Store format 2009 2010 2011 Change
Hardware stores $5,264 $4,769 $4,841 1.5%
Building centres $17,608 $18,147 $18,579 2.3%
Big boxes $8,279 $8,045 $8,214 2.2%
Canadian Tire* $4,690 $4,783 $4,860 1.6%
Mass merchants* $1,821 $1,821 $1,857 1.9%
Club stores* $1,454 $1,614 $1,662 2.9%
TOTAL $39,116 $39,179 $40,013 2.1% *Estimated related hardware, décor and home improvement sales only
46.4%Building centres
20.5%Big boxes
12.2%Canadian
Tire*
4.6% Mass merchants*
4.2% Club stores*
12.1%Hardware
stores
15.2%RONA
13.1%Home Depot
Canada
12.3%Home
Hardware12.1%
CanadianTire*
47.3%Rest of
Industry
*Estimated related hardware, décor and home improvement sales only
* Excludes automotive, sporting goods, and other non-related products
The 17th Annual Hardlines ConferenceOctober 25-26, 2012Sheraton Toronto Airport Hotel and Conference Centre
It’s all about the customer!
Foreign retailers
Online retailing
Lessons in leadership
Consumer trends
www.hardlines.ca
It’s all about the customer!
The New RONA: Why it’s All About the Customer Luc Rodier, Executive Vice President of Retail, RONA
Profiles in Leadership: Paul StrausPaul Straus, President & CEO, Home Hardware Stores Limited
The Future of Online RetailDrew Green, President & CEO of Shop.ca
Profiles in Leadership: Dennis NykoliationDennis Nykoliation, Building Materials Executive. Formerly President & CEO of CanWel Building Materials, President & General Manager of Black & Decker Canada, President of GSW Building Products & CEO Cambridge Towel Corporation.
Housing and Renovation UpdateTed Tsiakoupolis, Senior Economist, Canada Mortgage and Housing Corporation
Retail Lessons from the Euro ZoneJohn Herbert, General Secretary, EDRA, the European-DIY Retail Association
Sustainable Retail Means Bigger Sales Geneviève Gagnon, CEO, Le Groupe Yves Gagnon
Changing Tastes in Consumer TrendsJosette Buisson, President and Creative Director at Alias Color
What’s New in Store MerchandisingBeverly Allen, Publisher, Hardlines
What’s New in Product InnovationMichael McLarney, Editor, Hardlines
Young Retailer Panel
2012 Outstanding Retailer Awards and Gala DinnerPresented by Hardware Merchandising Magazine
HARDLINES Newsmaker of the Year AwardsPresented by Michael McLarney, Hardlines
For more information and to register, go to www.HardlinesConference.ca
Join us at the leading symposium for business leaders in home improvement retailing in North America
The HARDLINES Conference is your two-day opportunity to gain invaluable information and network with over 200 executives and managers from North America’s leading retail companies, suppliers and vendors. Register now and save a ton of cash with our early bird pricing! Our two day agenda includes:
Sponsored by:
Co-located with the Outstanding Retailer Awards:
Retail Sponsors:
The 17th Annual Hardlines ConferenceOctober 25-26, 2012Sheraton Toronto Airport Hotel and Conference Centre
It’s all about the customer!
Foreign retailers
Online retailing
Lessons in leadership
Consumer trends
www.hardlines.ca
It’s all about the customer!
The New RONA: Why it’s All About the Customer Luc Rodier, Executive Vice President of Retail, RONA
Profiles in Leadership: Paul StrausPaul Straus, President & CEO, Home Hardware Stores Limited
The Future of Online RetailDrew Green, President & CEO of Shop.ca
Profiles in Leadership: Dennis NykoliationDennis Nykoliation, Building Materials Executive. Formerly President & CEO of CanWel Building Materials, President & General Manager of Black & Decker Canada, President of GSW Building Products & CEO Cambridge Towel Corporation.
Housing and Renovation UpdateTed Tsiakoupolis, Senior Economist, Canada Mortgage and Housing Corporation
Retail Lessons from the Euro ZoneJohn Herbert, General Secretary, EDRA, the European-DIY Retail Association
Sustainable Retail Means Bigger Sales Geneviève Gagnon, CEO, Le Groupe Yves Gagnon
Changing Tastes in Consumer TrendsJosette Buisson, President and Creative Director at Alias Color
What’s New in Store MerchandisingBeverly Allen, Publisher, Hardlines
What’s New in Product InnovationMichael McLarney, Editor, Hardlines
Young Retailer Panel
2012 Outstanding Retailer Awards and Gala DinnerPresented by Hardware Merchandising Magazine
HARDLINES Newsmaker of the Year AwardsPresented by Michael McLarney, Hardlines
For more information and to register, go to www.HardlinesConference.ca
Join us at the leading symposium for business leaders in home improvement retailing in North America
The HARDLINES Conference is your two-day opportunity to gain invaluable information and network with over 200 executives and managers from North America’s leading retail companies, suppliers and vendors. Register now and save a ton of cash with our early bird pricing! Our two day agenda includes:
Sponsored by:
Co-located with the Outstanding Retailer Awards:
Retail Sponsors:
Hardlines Home Improvement Quarterly www.hardlines.ca16 fourth Quarter / 2012
he 17th Annual Hardlines Conference will play host to some of the top retail minds in Canada — and the world —
in Toronto Oct. 25 to 26. The event is expected to attract more than 200 dealers, executives, and managers from the vendor, wholesaler, and retail segments of the home improve-ment industry in North America. With a focus on the changing consumer landscape, the theme of the conference is “It’s all about the customer.”
But the focus on the qualities that make a strong leader will be spearheaded by two industry leaders in the conference’s “Profiles in Leadership” Series. Paul Straus, president and CEO, Home Hardware Stores Ltd., has in recent years managed the country’s larg-est dealer co-op with a firm, steady hand that continues to build on Home’s legacy that spans nearly half a century.
Dennis Nykoliation is the past president and CEO of CanWel Building Materials.
But his cv is a stellar one that includes serv-ing as president and general manager of Black & Decker Canada, president of GSW Building Products, and CEO at Cambridge Towel Corp.
In addition, the conference will feature a panel discussion with four young retail-ers from TIM-BR MART, RONA, Home Hardware, and Home Depot. Networking, an important part of the conference every year, will be further facilitated by a confer-ence reception at the end of day one, spon-sored by RONA inc.
The 17th Annual Hardlines Conference will be held Oct. 25 to 26 at the Toronto Sheraton Airport Hotel and Conference Centre. Once again this year, it will feature the Outstanding Retailer Awards Gala on the evening of October 25, presented by Hardware Merchandising. (For more infor-mation about the entire event, visit www.hardlinesconference.ca.)
LeaDerShIP froNt aND CeNtre at harDLINeS CoNfereNCe
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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
Home Hardware stores Ltd. has been ranked one of Canada’s Most Valuable Brands by Brand Finance, an independent brand valuation consultancy. Shown (l-r): Paul Straus, president and CEO, Home Hardware Stores Ltd.; David Haigh, CEO and founder, Brand Finance; Christine Hand, chairman of the board of Home Hardware; and Edgar Baum, managing director, Brand Finance Canada.
hoMe harDWare aMoNG CaNaDa’S MoSt VaLuaBLe BraNDS
Hardlines Home Improvement Quarterlywww.hardlines.ca 17fourth Quarter / 2012
BRIEFLY
EARNINGS INCREASE FOR RONA IN SECOND QUARTER RONA inc. reported second-quarter consoli-
dated sales of $1.4 billion, up 3.4 percent,
stemming from an increase of 8.7 percent in
distribution segment sales and a 1.8 percent
rise in retail and commercial segment sales. Net
earnings before unusual items of $43.6 million,
reflecting the cost of closing and downsizing a
number of its big boxes, were up 17.7 percent,
thanks in part to a 23.5 percent decrease in
financial costs. Same-store sales increased
by one percent for RONA’s network as a whole,
including retail, commercial, and distribution.
RONA’s affiliate dealer-owners now account for
more than 25 percent of total sales.
HOME DEPOT RESULTS EDGE UP IN SECOND QUARTERThe Home Depot reported sales of $20.6 bil-
lion for the second quarter of fiscal 2012, a 1.7
percent increase from 2Q 2011. Same-store
sales were positive 2.1 percent, with same-
store sales for U.S. stores positive 2.6 percent.
Net earnings for the second quarter were $1.5
billion, compared with net earnings of $1.4 bil-
lion, in the same period a year earlier.
LOWE’S EARNINGS FALL SHORT OF EXPECTATIONSIn its second quarter, Lowe’s net earnings fell
to $747 million, a 10.0 percent decrease over
the same period a year ago. The poor perfor-
mance in the second quarter was attributed
to a timing shift and one-time charges related
to job cuts which had been announced previ-
ously. Sales for the second quarter decreased
2.0 percent to $14.2 billion. Same-store sales
decreased 0.4 percent.
DeParture of SeXtoN aND DeLroC oPeNS uP oPtIoNS for ILDC
wo large members of the Independent Lumber Dealers Co-operative (ILDC) have formed
their own buying group, resulting in their departure from ILDC. Winnipeg-based Sexton Group, which has 285 mem-bers and about $1.3 billion in sales, and Delroc Industries, a $600 million group with more than 100 members in seven provinces and the U.S., headquartered in Langley, BC, have partnered with Allroc in Calgary to form Byco. The new group will focus on purchases of gyp-sum, insulation, and metal framing and will be administered out of Sexton’s office in Winnipeg.
Delroc and Sexton both joined ILDC in 2009, when that organization expanded drastically to accommodate the two buying groups as individual members in their own right, along with the addition of two co-ops: Federated Co-operatives Ltd. and La Coop fédérée. ILDC is part of the Spancan hardware buying group and FCL and La Coop are also direct members of Spancan.
Through their membership in ILDC, Sexton and Delroc had access to hard-ware programs negotiated with Spancan. However, another member of Spancan is rival buying group TIM-BR MARTS Ltd., which sits at the table with its own hard-ware distribution company, Chalifour Canada. Warehouse shipments negotiated through Spancan would go to members — including Sexton and Delroc — from Chalifour’s distribution centres.
While ILDC is faced with the depar-ture of two key members, the outcome will only make the remaining group stronger, as its membership is more aligned, says Andrew Battagliotti, gen-eral manager of ILDC.
“They went forward with their own business model,” says Battagliotti, “but it didn’t fit in with our own model.”
However, he notes, the changes in ILDC’s membership will only be a posi-tive for the future. “In the long run, it just clears the table for further growth for our group,” he says. That includes the potential for additional membership down the road.
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KNOWLEDGE IS POWER. Stay in the know every single week with harDLINeS. Subscribe online at hardlines.ca
CaStLe WeLCoMeS oLYMPIC hero the city of Victoria hosted a fete for local cyclists
including guest of honour ryder hesjedal, back
from the 2012 olympic Games in London. hesjedal
was the champion of this year’s Giro d’Italia race
in Milan. Castle Building Centres, along with local
Castle dealer Vicki hagel of Cook Street Castle
Building Centre, sponsored a parade for the cyclists
that ended in a ceremony and photo op at Victoria’s
Centennial Square.
Hardlines Home Improvement Quarterly www.hardlines.ca18 fourth Quarter / 2012
Newsroundup
CanuCKS fInd neW forMatS, eXpanded aSSortMentS at orGILL ShoW
ore than 140 Canadian dealers headed to Las Vegas in mid-August at the invitation of Orgill, to attend
the Memphis, TN-based hardware whole-saler’s summer buying show. While most Canucks were Castle dealers, a number of other independents were there as well, many of them “kicking tires” as Orgill keeps adding Canadian-compliant prod-ucts to its inventory.
Orgill also continues to add programs. At this show, three new model stores were merchandised right on the show floor: a maintenance, repair, and operations (MRO)-oriented store for project man-agers and property managers called Four Corners Hardware, a store that took a page from Target to focus on female customers called Copper Canyon Hardware, and one for the agro market called Frontier Farm and Hardware.
There was also an expanded version of Orgill’s offering for Canadian dealers, North Lake Hardware. It featured 8,000 products, reflecting almost 44,000 SKUs that Orgill says are now fully Canadian-compliant for customers north of the border.
Ron Beal, president and CEO of Orgill, says the Canadian compliance is coming along a point of pride for him and his com-pany as it attempts to become a full-line sup-plier to Canadian independents. And while many dealers are upping their orders, some dealers down at this show admitted they still cherry pick, ordering the special buys and promotional items first and foremost.
M
torBSa MeMBerS fInd StrenGth In dIVerSItYAs the country’s smallest buying group by volume, TORBsA is a “boutique” group that has found strength in the diversity of its members, who range from traditional deal-ers to heavy commercial suppliers and block and cement yards.
For example, Bernardi Building Supply in Weston, ON, recently did an extensive expan-sion of its front end, adding more retail, while Kelly Lake Building Supplies in Sudbury, ON,
had its sales counter re-merchandised. Both stores used the Burlington, ON-based mer-chandising design firm BMF to upgrade their stores. Other, more commercially focused members, says Bob Holmes, general manager of TORBSA, may work from nothing more elabo-rate than an office with a phone, relying instead on their sales people on the road and their local contacts in their respective markets.
While each member may have their own way
of going to market, they share the ability to buy better through their group affiliation. That strength goes beyond the group itself; TORBSA is also part of an umbrella organization, The Epic Alliance, which has Castle Building Centres as its other member. There’s an advantage for both sides with this larger arrangement, says Holmes. “It lets us go back to the vendors with a national perspective, putting together pro-grams that will benefit both parties.”
ron Beal, president and Ceo of orgill, shows off Canadian-compliant products (above) and a new program for female shoppers at his company’s summer buying show (below).
Hardlines Home Improvement Quarterlywww.hardlines.ca 19fourth Quarter / 2012
anadian Tire’s Mastercraft name is undergoing a major rebranding effort this year, one that includes
a new look, new colours, and new tech-nologies.
The relaunch, which began slowly in fall 2011 with the introduction of some rebranded power-tool accessories, will feature a number of product introduc-tions in time for Christmas 2012. For example, new line of Mastercraft power tools features a 20-volt lithium battery that is half the weight of its older counterparts, says Canadian Tire’s Michelle Pilon, category business manager for power and stationary tools.
Colour plays a role in the new tools. The Mastercraft signature colour takes on a deeper Pantone shade of blue. Even a socket set will be available in black chrome. “Mastercraft has been around since 1946,” says Pilon, “and it’s the number-one selling tool brand in Canada.”
MaSterCraft GetS MaJor BraND reLauNCh
C
CANADIAN TIRE ENJOYS INCREASED 2Q REVENUEConsolidated revenue for Canadian
Tire Corporation in its second quarter
reached $2.99 billion, up 16.4 percent,
thanks largely to the inclusion of rev-
enue from the acquisition of FGL Sports.
Consolidated net income increased 26.4
percent to $133.7 million from the same
period in 2011. On Canadian Tire’s retail
side, sales were up one percent and
same-store sales were up 0.4 percent.
IMPROVED CONDITIONS LIFT CANWEL RESULTS CanWel Building Materials Group Ltd.
had revenues of $207 million in its sec-
ond quarter, up one percent from $205
million in the same period in 2011. The
increase relates primarily to improved
market conditions for construction mate-
rials, as well as additional treated wood
sales volumes. Net earnings for the quar-
ter doubled to $5.3 million.
PEOPLE ON THE MOVEGreg Hicks has departed from TSC Stores
Ltd., where he’d served as COO and head
of TSC’s wholesale farm and hardware
division, Country Pro Services. He has
joined Lowe’s Canada. Darryl Jenkins is
now chief merchandising officer there.
He was formerly TSC’s vice president of
merchandising and marketing.
Murray Kush is the new buyer for
plumbing and heating at Federated
Co-operatives Limited. He was formerly
a category manager at Peavey Industries
Limited.
KeNt’S NeWeSt Store foCuSeS oN CoNtraCtorSKent has opened a store in St. John’s that caters strictly to contractors, responding to the construction boom in Newfoundland.
In recent years, Kent has stepped up its expansion plans, focusing especially on
Newfoundland, whose economy has been red hot thanks to its natural resources sector.
as a result, housing starts are strong, especially in the Northeastern avalon Peninsula
where the store is located.
Called Kent Contractor Supply, located on Kelsey Drive, it is the fourth store Kent has opened
in Newfoundland since January, bringing the company’s store count to 37. Kent, which is owned
by the Irving family in New Brunswick, is a market leader in atlantic Canada. With sales estimated
at almost $500 million in 2011, it is the 15th largest home improvement group in the country.
Canadian Tire’s Michelle Pilon, category busi-ness manager for power and stationary tools.
BRIEFLY
Hardlines Home Improvement Quarterly www.hardlines.ca20 fourth Quarter / 2012
Newsroundup
ith the announcement earlier this year that it would close or down-size up to two dozen of its big box
stores, RONA began rolling out new for-mats recently that will replace the large sur-face stores with smaller, more community oriented operations.
Its first proximity store opened on Aug. 6 at the Edmonton West location — the first of 15 that are slated to open by 2014. The proximity store, modelled after the success of RONA’s Totem chain in Alberta, offers 35,000 square feet retail space and 17,000 products, plus access to more than 30,000 SKUs online. Additional proxim-ity store locations are planned in major markets such in Ontario, Nova Scotia, and other cities in Alberta.
Besides proximity, RONA has been test-ing a much smaller “satellite” store. The official rollout was held just a few weeks earlier in Calgary’s Douglasdale neigh-bourhood, after being tested in 2011 in Georgetown, ON, and Granby, QC. Like the proximity stores, the 5,400-square-
foot satellite stores will provide customers with services such as installation, project design, and financing, but will work in a hub-and-spoke relationship with larger RONA stores nearby for larger products, such as doors and windows and some building materials, which are available on special order.
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tarGet ConfIrMS fIrSt CanadIan LoCatIonSTarget Corporation has confirmed the locations of its first stores here, which it intends to open in 2013. Target, which had taken over the leasehold interests of Zellers sites across the country, plans to open 125 and 135 stores in Canada starting in March and April 2013.
The first 125 stores will open in 2013, and later this year Target will confirm additional store locations that will open starting in early 2014 and beyond. While most of the
sites have been announced already, the lat-est additions are Morrison Street in Niagara Falls, ON, and Centre Laval in Laval, QC, both of which are scheduled to open next year.
Target will spend at least $10 million remodeling each location. It expects to employ 150 to 200 team members at each store and has already started hir-ing its store leadership positions. Hourly recruitment will begin towards the end of 2012 and into 2013.
The word is getting out about HHIQ. Brendan rodd, marketing manager and CIo at BMr Windsor Building Centre in Windsor, on, reports that his daughter Sophie hijacked his copy of the maga-zine over breakfast. “She was really get-ting into it,” he tells us. “I may be able to retire earlier than I first expected.”
Good readInG for the neXt-Gen deaLer
neW forMat StoreS repLaCe rona BIG BoXeS
rona’s first proximity store opened on aug. 6 at the edmonton West location.
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ProductSPotlight BY JoN StollER
Hardlines Home Improvement Quarterly www.hardlines.ca22 fourth Quarter / 2012
Delta heavy Duty Disc Sander
Features a convenient top-mounted
manual brake that stops the sanding
disc in seconds. The 12-inch diameter
heavy duty steel disc makes for fast
and accurate sanding.
Bosch Die grindersMore efficient, more durable, and
more versatile than previous Bosch
die grinders. These three new models
boast an extended battery life, and
an improved grommet design that
increases cord flexibility.
Product SPotlight
Hardlines Home Improvement Quarterlywww.hardlines.ca 23fourth Quarter / 2012
EcocompoThis made in Canada compost deodorizer from Earth
Innovations creates nutrient-rich soil from food
waste, while also eliminating odours. All natural,
environmentally friendly, and easily affordable.
iPg home, Ventilation, and Air conditioning (hVAc) ProductsIPG claims many of its new line of durable HVAC products –
from soft aluminum foil tape to duct tape – can help system
designers meet sustainability goals established by LEED,
Energy Star, and other certifications.
realcomfort BarstoolThis 30” seat from Adams Manufacturing Corp.
incorporates an innovative and ergonomic patent-
pending seating design for maximum comfort.
Affordable, stackable, and weather resilient.
Exact color Sealant This easy to use colour caulking product
from Sashco has nearly unlimited colour
tinting options, and can be used with metallic
paints. It’s crack and tear resistant, with a
unique stop-flow plunger. The water-based
acrylic makes for easy tooling and clean up.
Hardlines Home Improvement Quarterly www.hardlines.ca26 fourth Quarter / 2012
BoxedInWIth physIcal
expansIon Barely an optIon, Warehouse home centres look InWard for groWth
By John caulfIeld
Hardlines Home Improvement Quarterlywww.hardlines.ca 27fourth Quarter / 2012
BoxedIn
big box retailing FeATURe
hat conclusion came from frank blake, chairman and Ceo of home Depot, north america’s largest warehouse home-improvement retailer, whose expansion until a few years
ago contributed mightily to the threshold at which big box retailing now finds itself standing.
As if Blake’s pronouncement last June needed further elaboration, Lowe’s Cos.’ $1.8 billion takeover offer for RONA this summer, which the latter spurned, accentuated how the big box players are realizing that opening more warehouses has reached the point of diminishing return.
The bid can be interpreted as Lowe’s reconciliation with market and real estate realities in a crowded market that has been crowded even further by the imminent arrival of Target in Canada, and by Wal-mart’s efforts to accelerate its own expansion here. Prior to its RONA bid, Lowe’s had announced it would open only 15 stores in North America through 2015, four of which in Canada.
But if building new stores isn’t an option, and if acquiring market
share remains expensive and uncertain, how can these three giants meet their ambitious financial objectives?
The partial answer lies online, as all three companies are in hot pursuit of customers via the internet, and are retooling their busi-nesses to accommodate those shoppers, who currently represent a sliver of their respective revenues and therefore present lots of growth opportunities. “We are in the third phase of retail, with the customer in control,” said Greg Menear, Home Depot’s executive vice president of merchandising. “And our efforts align around allowing customers to shop when, where, and how they want.”
Robert Dutton, RONA’s chief, put a finer point on this imperative when he stated “We want our customers to be 10 minutes or one click away from their relationships with RONA.”
Here we’ll break down each retailer’s game plan to show how technology is driving operational and marketing decisions that are intended to help these dealers react quicker and more efficiently to their customers’ shopping preferences.
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“the u.S. and Canadian markets are effectively saturated.”
Hardlines Home Improvement Quarterly www.hardlines.ca28 fourth Quarter / 2012
RONAAs part of its “New Realities, New Solutions” business plan, RONA this year is “redeploying” 10 of its 79 corporate-owned big boxes. That’s shorthand for closing stores or rescaling them to fit the com-pany’s new “proximity” format, which will average 52,000 square feet. At least 15 RONA stores will be reopened to that format’s specifications, along with 17 Totem Building Supplies lumberyards that RONA acquired in 2004. The company is also in the process of opening eight “satellite” stores that will average around 8,000 square feet, the first of which debuted in Calgary in August.
RONA’s Regional stores, which are 50,000 to 60,000 square feet, will be retrofitted with an interior racetrack configuration that leads to centralized service desks.
“We believe the proximity format can work anywhere, but when real estate is a challenge that’s where the satellites come in,” said executive vice president of retail Luc Rodier.
RONA is trying to recapture market value that has eroded sig-nificantly over the past five years. Its goal is to increase its cash flow by $10 million this year, by $20 million in 2013, and by $40 mil-lion in 2014 and beyond. To help achieve those objectives, RONA committed more than $50 million in the first half of 2012 to dealer development, which translates into signing more dealer-members to its buying group and helping existing members expand.
The company is focusing as well on generating more business from its Commercial and Professional market divisions, which it has expanded through acquisitions over the past few years.
This summer, the company relaunched its website, rona.ca, and introduced a mobile app in an effort to attract more customers who prefer to shop online. More than 1.2 million people subscribe to RONA’s E-newsletter. And with a dealer network of more than 900 outlets nationwide, RONA is in an enviable position to provide online shoppers with speedy delivery options.
The company isn’t giving up on big-box retailing, either. “Warehouses may be less relevant in mature markets like Greater Toronto, but in Quebec larger stores still work for customers,” said Rodier. RONA now sees its warehouses as “hubs of service,” where project-minded shoppers go for kitchen design advice or other remodeling needs. “Big boxes still play a strategic role for us,” he insisted.
HOME DEPOTWith 180 warehouses in Canada, Home Depot is focusing on mak-ing this division and all of its stores better operators. This year, the Canadian stores started using Home Depot’s forecasting and scheduling tools. In 2014, the division will open its first Rapid Deployment Centre (RDC) in Toronto, with a second planned for Vancouver the following year.
RDCs are the “cornerstone” of Home Depot’s inventory man-agement. In 2007, only 25 percent of its stores’ inventory flowed through distribution; now more than 70 percent goes through 18 RDCs, 12 Stocking DCs and 24 Bulk DCs. Home Depot uses three Reverse Logistics Centers to handle merchandise returns and Transload centers, located in four port cities, as arrival points for imports. The retailer is developing a state-of-the-art one-million-square-foot “direct fulfillment” center in Georgia, with another planned for California, to co-ordinate online order shipments.
Online sales represent only two percent of Home Depot’s annual revenue. But one in every four shoppers begins at the company’s website, homedepot.com, before buying something in its stores, says Hal Lawton, Home Depot’s president of online. That site has 12.5 million registered users who can choose from more than 500,000 items. Since last February, Home Depot has made nearly 20 technical enhancements to its site. The company has also opened new call centers in Utah and Georgia.
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“Since joining Home, we have more customers than ever thanks to the endless range of products and services Home offers. Not only have our sales increased – our profits have, too. We’re proud to be a part of the Home Hardware cooperative system, where every Dealer is treated as an equal. It ’s the best decision we’ve made yet.”
Maxime BégouHome Hardware Centre de Rénovation Tho-Val-Trem
Ste-Brigitte-de-Laval QC
File: 28301_HHIQ_MaximeBegou_FP_ENDocket/Job: 28301Client: Home Hardware
Art Director: Mark Copywriter: RickMac Artist: Mike
Proof printed at 100 %
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 Kevin MacDonald, Atlantic Canada, 902.368.1620
Luc Martin, Quebec, 819.357.0203 Andrew Parkhill, Alberta, British Columbia, 604.751.3853 Georgette Carriere, Ontario, Manitoba, Saskatchewan, 519.501.5988
Hardlines Home Improvement Quarterlywww.hardlines.ca 31fourth Quarter / 2012
FEATURE big box retailing
Home Depot is striving for what executive vice president of U.S. stores Marvin Ellison called a “frictionless shopping experience,” regardless of what shopping platform customers prefer. That’s why the company spent six months this year retraining its store employees and equipping many of them with iPhones and apps that simplify replenishment and inventory management — so they can spend more time helping customers. And that’s why it rolled out its “First For Pros” program, with dedicated cash registers, parking spaces, and credit cards for professional contractors who make up only three percent of Home Depot’s customer database but nearly one third of its annual sales and are in its stores 15 times more than average shoppers.
Online is where Home Depot wants to establish “interconnectiv-ity,” in part by cultivating different customer groups. For example, it has more than five million members in its online Garden Clubs, and these customers are in its stores four times more than non-Garden Club shoppers.
This “portfolio” strategy, as Menear called it, aims at getting Depot’s bricks-and-mortar stores, website, and “brand” to work in unison, supported by an efficient operational infrastructure, to become virtually indistinguishable to customers. To that end, this year Home Depot is rolling out programs that co-ordinate online shopping with shipping and pickup at its stores.
So confident are Home Depot’s executives that they’ve raised their financial projections to 12 percent operating margin and 24 percent return on invested capital by 2015.
LOWE’SIn retrospect, Lowe’s bid for RONA shouldn’t have surprised any-one. The North Carolina-based company, with 31 stores in Canada, appears to be going through the most extensive transformation since it decided, in 1989, to become a big box retailer.
In four of its last five fiscal years, Lowe’s earnings have declined. To jolt his company’s metabolism and productivity, CEO Robert Niblock has been bringing on new personnel talent over the past few years. By the first quarter of 2012, 526 corporate employees had accepted severance packages.
Last year Lowe’s made the biggest annual investment in technol-ogy in its history, US$850 million, with another US$375 million earmarked for IT in 2012. Part of that investment went towards implementing Microsoft’s Office 365 tool to increase communica-tion among its stores and associates. Lowe’s also relies on iPhone technology with apps that allow store associates to answer custom-ers’ questions without leaving them.
One of Lowe’s goals is to increase its sales “close” rate by between three and five percentage points by 2015. It is also shooting to increase sales per square foot by 15 percent to US$292. There’s plenty of room for improvement, given that “eight million custom-
ers a week who shop our stores and another six million a week that shop lowes.com don’t buy,” said Thomas Lamb, senior vice presi-dent of marketing and advertising, in a presentation last December.
To instigate more buying, Lowe’s has repositioned itself as an Everyday Low Price dealer. And to ensure it has the right products and prices, the retailer has been conducting extensive line reviews; 500 last year and 900 this year, with about half so far resulting in store resets. The company has been identifying up to 10 customer clusters per line review. “This is dramatically different from where we were before,” says CFO Robert Hull.
Lowe’s is resetting a number of its stores to its Northlake model, which gives greater exposure to “innovation” and “value” products on endcaps, and is also intended to make a stronger impression on pro customers. Lowe’s is pressuring vendors for more “first to mar-ket” products. It also expects private label products to contribute 20 percent of its sales by 2015, from 16 percent today.
Lowe’s is targeting 10 percent operating margins and 15 per-cent return on invested capital by 2015. Its success could hinge on mylowes.com, its highly advertised online portal where shoppers can consolidate their spending with Lowe’s throughout the seven stages of home improvement projects during their lifetimes.
The site is like a giant file cabinet that keeps records of every pur-chase, warranty and product manual accessible in an easy-to-use online place. It also allows customers to set up calendar reminders for possible future purchases.
The retailer projects that 10 million customers will have started mylowes.com accounts by the end of this year. And since 60 per-cent of online shoppers pick up their products at the nearest store, Lowe’s is refining its flexible fulfillment distribution network so it can guarantee that any of the 260,000 items it offers online is avail-able for pickup 20 minutes after it’s ordered, or can be delivered to a person’s home within one day.
COMPRESSORS
AIR HOSES
COLLATED NAILS
FITTINGS & ACCESSORIES
PNEUMATIC TOOLS
grip-rite.com 800-676-7777
BUILT RIGHT. GRIP-Rite.
Projects this year: 22
Average work hours/week: 54
Personal: Married happily 12 years
Nails driven so far: 187,643
Community: 6 years youth footb
all coach
Satisfied customers: 496
Profile:
COMPRESSORS
AIR HOSES
COLLATED NAILS
FITTINGS & ACCESSORIES
PNEUMATIC TOOLS
grip-rite.com 800-676-7777
BUILT RIGHT. GRIP-Rite.
Projects this year: 22
Average work hours/week: 54
Personal: Married happily 12 years
Nails driven so far: 187,643
Community: 6 years youth footb
all coach
Satisfied customers: 496
Profile:
ORGILL CUSTOMER INSIGHTS
Now, Orgill Gives All Dealers A Choice.A World-Class
Opportunity!
Worldwide Distribution & Retail Services
Orgill, Inc. provides home improvement products and world-
class retail services to retailers throughout the United States
and Canada and in more than 60 countries around the world.
Orgill’s customers represent a broad spectrum of home
improvement retail models ranging from convenience
hardware stores to full-service home centers and pro-focused
lumber dealers.
Mark your calendars for Oct. 17. Orgill will have senior
members of its merchandising team in Toronto to meet with
select Canadian manufacturers to evaluate their product lines
and find vendor partners who will fit into Orgill’s worldwide
distribution offering.
Orgill’s merchandising team will be considering manufacturers
and product lines from across all categories including:
• Plumbing
• Electrical
• Hand and Power Tools
• Paint and Sundries
• Builders’ Hardware
• Heating and Cooling
• Lawn and Garden
• Housewares
• LBM
• Automotive
• Building Materials
• and more
www.orgill.com/canada
Orgill, Inc., the world’s largest independent hardlines distributor is looking for Canadian manufacturers to add to its product offerings.
We would like to encourage any and all Canadian-based manufacturers interested in presenting their product
lines to Orgill’s merchandising team to go to the website listed below for more information:
Mike Ferrell, v.p. of lumber and building materials; Delores Coble, v.p. of merchandising and Ken Post, chief merchandising officer will be on hand Oct. 17 in Toronto to find vendor partners and evaluate product lines.
Canadian Buyers.indd 1 7/2/12 8:55 AM
Hardlines Home Improvement Quarterlywww.hardlines.ca 35fourth Quarter / 2012
reNt – to SeLL
e x e c u t i v e iN t er v ie WDan Mcareavey
By MICHaeL McLarney
Dan Mcareavey is the former vice president of contract Sales at home Depot. Now he’s retired. But even in retirement, he can only fit me in for a meeting a 7 a.m. on a tuesday. it doesn’t matter. i want to hear his story — and what a story it is. You see, Dan Mcareavey started home Depot rentals. here’s how he did it...
The home improvement industry has turned the corner in 2012, and the timing couldn’t be better for IMPROVE, Canada’s fi rst home improvement supercentre. Set to open in 2013, the 310,000 square foot facility promises to revolutionize the way customers shop for their home improvement needs.
IMPROV E of fers an excit ingalternative to the traditional big box store. Instead of combining vastly different product lines into a single retail environment, it features a group of individual stores, each dedicated to a home improvement speciality, in a shopping mall format. This gives consumers the range of choice and expert help that they expect from specialty stores, and the convenience of a one-stop shop for all their reno needs. “This will create a complete paradigm shift in the way that homeowners shop for their home renovations,” says IMPROVE co-founder Oleg Chekhter. “Instead of going from one place to another, shopping for their home improvement needs, people will just come here, where everything’s under
one roof.” With hundreds of stores to choose from, customers are sure to fi nd what they’re looking for,. Located minutes from Highways 400 and 407 in Vaughan, the centre is perfectly situated to serve residents of the GTA, who spend $8.7 billion every year on home renovations, according to the Canada Mortgage and HousingCorporation. At any given time, 2.5 million Torontonians are renovating their homes, meaning IMPROVE retailers can expect a steady fl ow of business. IMPROVE leverages several retail concepts to ensure its success. First, the mall format is a powerful draw for customers, who can easily spend an afternoon browsing dozens of stores without having to worry about bad weather. “IMPROVE represents a win-win situation for retailers,” says Mr. Chekhter. “The biggest problem for home-oriented businesses is attracting buyers and getting them into their stores. What IMPROVE is offering is, instead of a dozen visitors a day, over 2,000 visitors a day. You just can’t argue with that fl ow. Can you imagine that, in one day you will have more visitors in one day than you do in a year?”This will also create an entrepreneurial environment where retailers who offer a wide and distinctive range of products will have the chance to fl ourish. This will encourage retailers to offer a wide
and distinctive range of high quality products to attract buyers. IMPROVE also recreates the excitement of home improvement trade shows, where thousands of Canadians fl ock every year to view a wide range of products under one roof. IMPROVE, though, is open year-round, meaning customers no longer have to wait months to start shopping for their next big home improvement project.
IMPROVE also operates under a unique condo arrangement whereby retailers own their stores. This allows them to build equity in their property, as well as share in a $1 million advertising budget.
There are more than 20,000 home improvement businesses scattered across the GTA, meaning customers have to drive for hours to fi nd the products and services they want. The one-stop shop that IMPROVE offers is sure to be a huge draw, meaning no business can afford to miss out.For more information on IMPROVE, visit w w w. improveca nada .comor phone 416-417-7507.
IMPROVE offers an exciting alternative to the traditional big box store
ADVERTORIAL
Hardlines Home Improvement Quarterlywww.hardlines.ca 37fourth Quarter / 2012
Dan Mcareavey e xecuti v e iNterv ie W
an Mcareavey already had an impressive resumé when he joined Home Depot in 1997. Before that,
he had spent eight years with Stephenson’s rental, a chain of rental outlets across across Southwestern Ontario. He also had experi-ence with Mattamy Homes, a home builder in Southern Ontario.
His road to Home Depot began when, back in the early 1990s, he and his busi-ness partner Tom McCormick, another Stephenson’s alumnus, joined forces with Steele Curry, the former head of Revelstoke before it was sold to RONA. McAreavey and McCormick wanted to buy Florida Taylor Rental, which was owned at the time by Stanley Tools. “Steele Curry had networked with Bernie Marcus [co-founder and CEO of Home Depot] back in the Revy days. Steele arranged a meet-ing for us with Jim Inglis, who at the time was an evp — Home Depot’s most senior merchant,” recalls McAreavey.
“So we pitched him on the notion of having tool rentals inside the stores.” With Curry, who became the third partner in the new venture, and support from Home Depot, McAreavey figured he had the per-fect arrangement for what he envisioned would be a license agreement inside the Home Depot stores. And that’s what he pitched at that executive meeting at Home Depot’s headquarters back in 1994. “And they loved it. They really wanted it.”
But Home Depot President Arthur Blank was having trouble making up his mind about the deal. As time went on, McAreavey and his partners got more and more concerned about his plan’s viability. Feeling he was getting down to the wire, McAreavey recalls Blank coming to them at last — with good news.
“So, finally, Arthur said finally he’d fund it for two years. Then, after that, he said to me, ‘We’ll do the right thing.’ That was the first time I heard him say that,” McAreavey recalls.
GeTTInG STarTeDThat first year, he says bluntly, was a tough one. The rental program was tested in four stores. But by the second year, “it took off like a rocket.”
Nevertheless, it was up to Blank to eval-uate the program and decide its fate. “He did something that stuck with me forever,” says McAreavey. “He went to the manager [of one of the test stores] and asked for 10 associates. He went right down to that level — he was fully engaged.”
Needless to say, the staff gave the rentals the thumbs’ up, which assured its role in Home Depot’s growth. In 1997, McAreavey
and his family, along with McCormick and his family, moved to Atlanta.
“From there, it was really a matter of building the business every step of the way. That included everything from rental agreements to the software to manage a business that was aimed at providing small light construction and renovation tools, with a low capital investment, high utili-zation rate and great rate of return,” says McAreavey. “The key was always a disci-plined replenishment program.”
He boils the rental supply business plan down in simple terms. “The market was basically anything that two people could
Hardlines Home Improvement Quarterly www.hardlines.ca38 fourth Quarter / 2012
Dan Mcareaveye x e c u t i v e iN t e r v ie W
pick up and put in the back of a pickup truck — that was our niche.”
He points out the difference between other rental operations, such as Stephenson’s, which was very focused, he says, on the DIY customer. Home Depot Rentals wanted to service the kind of cus-tomer that would come into a Home Depot store — including contractors and trades.
However, the program had other unan-ticipated benefits. By making expensive tools available on a short-term basis, it reduced shrink and it reduced returns. “Home Depot always had rentals. But before, they had been free — buy it on Friday, return it on Monday,” jokes McAreavey.
But rentals also increased Home Depot’s range of offerings, reducing the need for a DIYer or contractor to
go elsewhere. “We wanted to drive the notion of a one-stop shop, where you could get everything you need to com-plete the project.”
The service offered an important dif-ferentiation to set Home Depot apart from other big box retailers that did not have a similar program. It was seasonal, project driven, and generated customer loyalty.
“And it was very profitable,” McAreavey adds.
COMInG TO CanaDaIn 2006, McAreavey was asked to move to Canada and run HD Supply here. But a year later, under new management in
Atlanta, HD Supply got sold off — “and I got sold with it,” he jokes. While his stint there didn’t last long, he stayed in touch with Home Depot Canada President Annette Verschuren. “We stayed in touch during my time at HD Supply. I talked to her about the opportunity to join the Home Depot retail team.”
As a result of those discussions, McAreavey was installed as vice president of contract services, handing installation services, the pro business, and tool rentals.
His trajectory was a rapid one: a year later he took on the role of regional vice president for Western Canada (one of the division’s number-two positions under the president). And no, he didn’t relocate. “I just had a heck of a lot of flying time.” Two years later he was back in Toronto, with the rvp role for Eastern Canada.
“Home Depot really took care of me during this time,” says McAreavey. “It shows they really value their people.”
CHanGe OF COMManDDespite what appeared to be a groom-ing to become a contender for the top job at Home Depot Canada, fate intervened when, at the beginning of 2011, Verschuren announced her own retirement from the company. When the dust settled, Bill Lennie was installed from the U.S. as the new president. Considered one of the com-pany’s leading merchants, he had come
home Depot rentals was devised as a way to increase traffic — and profits — within home Depot’s stores. unlike some existing rental operations, that put their focus on DiYers, Dan Mcareavey’s vision was to service the kind of customer that would come into a home Depot store, including contractors and trades.
Here are five reasons to add rentals in your store:1. Making expensive tools available on a short-term basis reduces
shrink and returns.2. another service right in the store keeps customers from having to
go elsewhere for that service.3. Don’t offer delivery. it drives in-store traffic during the pickup and
return of the rentals.4. rentals can provide differentiation for a dealer in their own market.5. rentals benefit from seasonal boosts in sales, are project driven,
and generate customer loyalty.
The market was basically anything that two people could pick up and put
in the back of a pickup truck.“ ”
WHy a renTaL DeParTMenT IS a GOOD IDea
Hardlines Home Improvement Quarterlywww.hardlines.ca 39fourth Quarter / 2012
over from Home Depot’s international division in Atlanta.
Lennie soon began making changes to Home Depot Canada’s executive ranks, and with that came a re-evaluation of McAreavey’s role. “When it became clear it was time to leave, I talked to Bill Lennie and we decided there were some really good guys coming up — and it was their turn. Leadership is a privilege, so I thought I should step aside.”
ON THE FLOORWhen asked what most he misses about his time at Home Depot, McAreavey will say without hesitation that it was his time on the store floor. “What I’ll miss — I’ll miss the people. The best job I had was as regional vice president. That’s when I was going into the stores and talking to the associates.”
In that role, he explains, he regularly took time to walk the stores. “You’d hear day-to-day what these people were doing to take care of customers. You’d also get the unvarnished truth about operating and merchandise issues directly from the associates on the f loor. This was priceless.”
TODAYTwo, very personal, events helped focus his outlook on the future. “In April 2010, I was diagnosed with cancer. But I got the ‘good’ one — prostate — so we were able to treat it in time.” Then, in December 2011, his father passed away. “I was really devastated.”
These incidents forced a personal re-evaluation for McAreavey. As he takes some time enjoy his own health (he’s an avid cyclist), he also takes time each day to send a hand-written note to a friend or col-league. “People call them ‘Dan-o-grams,’” he chuckles.
Then he turns serious. “I want my legacy to be that I recognized people for what
they do,” he says. “It’s an important part of being a leader.” It goes back to the time he spent in the stores. “Being face-to-face gives you so many ways to recognize what associates have accomplished.”
With the range of personal and profes-sional experience he brings to bear, he looks forward to another gig — “likely in the retail/rental consulting world,” he adds.
McAreavey’s next steps also will likely include involvement in the not-for-profit sector. He was on the board of the Home
Depot Foundation during his time with the company and was also involved with the Girls and Boys Club.
When asked what he considers his greatest professional accomplishment, he barely misses a beat: “Starting a com-pany from scratch.” When asked what he’ll do differently next time around, he recalls the pressure of working in the corporate big-box environment and replies, “In the next chapter of my life, I’m going to be more balanced in my lifestyle.”
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Hardlines Home Improvement Quarterlywww.hardlines.ca 41fourth Quarter / 2012
YouNG LeaDerS
A FRESHPERSPECTIVE:
F LE
BY JON STOLLER
Just as home improvement retailers are trying to figure out how to attract young customers into their stores, learning what resonates for the next generation of home improvement dealers is a major challenge for the entire industry. HARDLINES spoke with three young retailers, to get their take on the challenges and changes facing the industry. Meet our young retail leaders...
Young Retailers Speak Out
DREw BEAuMONT At 29, Drew Beaumont of Lyons Tim-BR Mart in Sault St. Marie, ON, represents the third generation of the Beaumont family in the business. Drew’s grandfather, who originally bought the store, passed the business on to his son, who plans to do the same one day. The younger Beaumont, who has a degree in marketing and urban planning, is general sales manager, and is also active in the purchasing of materials.
MARC PALSSON When Palsson sold one of his two restau-rants to reopen the local hardware store in Arborg, MB, in 1999, he was able to get some excellent guidance — both of his parents had worked in the store as teenagers. In 2008, Palsson joined with RONA, eventually opening a 14,000 sq. ft. store in nearby Gimli in 2010. He was declared RONA’s Entrepeneur of the Year that same year.
TODD YOuNg Young began his career in retail in 1988 at the local Zehrs supermarket in Wasaga Beach, ON. He rose through management ranks over the next 19 years, eventually becoming labour director for Eastern and Central Canada for the parent organiza-tion, Loblaw Companies. In 2007, Young made the switch to retail hardware, becoming part owner of his family’s Home Hardware Building Centre.
Hardlines Home Improvement Quarterly www.hardlines.ca42 fourth Quarter / 2012
CHALLENGESThe purchase of a retail hardware business is not easy to finance, even when the organization has a solid transition plan in place, and this has made succession a major concern for owners. “The costs of capitalizing these operations are huge,” says RONA store owner Marc Palsson, “and getting new people involved, and financed, is going to be a big challenge.”
Beaumont from Lyons TIM-BR Mart agrees. “It’s not like cash is readily avail-able,” he says. “I think that buying groups for independents are going to have to come up with strategies to help people finance acquisitions.”
The next generation of customers also presents new challenges. “We’ve seen a larger increase in retail customers,” says Beaumont. “Ten years ago, we were prob-ably 80 to 85 percent contractor. Now, we’re more like 45 to 55 percent.”
Todd Young, who co-owns Wasaga Beach Home Hardware, and Beaumont both claim that this expanding customer base has less know-how about home reno-vation. The need to provide more hand-holding for customers means operators will have to continue to retrain and restock in order to meet their demands.
On the other hand, these customers tend to spend considerable time reading up on the web, and often arrive at the store with pre-conceived ideas. “People are researching a lot more at home, and com-ing in with products they already want,” says Beaumont. “Although you often have similar products, they’re often fixated on a product they found online.”
OPPORTUNITIESPalsson believes that current owners will likely step up to the plate on the financing issue “because the people in the industry are going to have to make concessions to get these young people involved.”
The smaller chains in particular may be on the lookout for entrepreneurial talent. “Consolidation has been going on and on, and the small groups are getting smaller,” he says, “but I think it might give people an opportunity to get involved in an industry where they may not have had the oppor-tunity before.”
Beaumont believes that inter-store net-working is key. “Multi-stores are going
to be a huge advantage,” he says. “I think POS systems are getting to the point where they’re really going to allow for some good multi-store operation.”
Young believes that customers with less knowledge about home renovation will be more reliant on their local retail store for help, and those who can provide it stand a much better chance of building strong, lasting relationships.
Those who embrace social media can start a conversation with customers before they even enter the store. “We’re embrac-
ing Facebook,” says Young. “We’re going to have computer savvy, handy people that can help people fix things, maybe by watching a video of somebody fixing it.”
THE MORE THINGS CHANGE...Regardless of the challenges and opportu-nities that young retailers face, the same fundamental issues apply. Customer ser-vice will always be critical. Unlike some other industries that have completely migrated to the digital world, retail hard-ware customers will continue to value inti-mate, face-to-face interactions with store employees.
“Online purchasing is growing every day, and RONA is moving in that direc-tion,” says Palsson, “but at the end of the day … we almost always see them in the store at some point.”
Young believes that face-to-face interac-tions are even more valuable in a digital world. “We still have stores with people that know our business,” he says, “and I think that’s going to be ever more important.”
LIFE IN THE RETAIL FAST LANEA minefield of challenges awaits the next generation of retail owners and manag-ers. The rapidly expanding role of the internet, continually changing customer demands, and increasing competition mean managers have to constantly think on their feet to keep customers coming in the door.
Fortunately, today’s young leaders see the opportunities in these new challenges.
YouNG LeaDerS
People are researching a lot more at home, and coming in with products they already want.
although you often have similar products, they’re often fixated on a product they found online.
“”
F LE
LEARN FROM THESE RETAIL LEADERS AT THE HARDLINES CONFERENCE
these young retailers will share their insights further in a panel discussion at the 17th annual hardlines Conference, oct. 25-26, 2012, in toronto. they will be joined by Jamal hamad, director of operations & sales for Pro/rental at the home Depot Canada. to learn more about the Conference, visit www.hardlinesconference.ca.
On behalf of the Manufacturers we represent, King Marketing delivers outstanding sales and merchandising programs to Canada’s leading home improvement retailers and distributors.
www.kingmkt.com TF 866 462 5810
Y o u r B r a n d C h a m p i o n
Give your brand the royal
treatment.
Hardlines Home Improvement Quarterly www.hardlines.ca44 fourth Quarter / 2012
owe’s bid to buy up the shares of RONA inc. caused nothing less than a national uproar, one that the
Mooresville, NC-big box giant did not antici-pate. The offer was announced in late July, on the eve of the announcement that Quebec would hold a provincial election. The possi-bility of selling off a Canadian company that is part of the fabric of Quebec life became a heated debate — and an election issue.
Doug Robinson, the senior vice presi-dent of international operations for Lowe’s Companies, Inc., was surprised by the resistance to what he called a “friendly” takeover bid by Lowe’s. Especially in light of the way his company is evolving its
attitude to international expansion —including a new store format for Canada.
“We’re disappointed with the response of the RONA board,” he says. “We’ve made an offer that addresses the concerns and the stakeholders.”
Despite the outcome of the RONA bid,
says Robinson, Lowe’s is introducing a new store format – and Canada will be the test-ing ground. “We’re pretty close to launch-ing our own version of a smaller format in Canada,” he told HARDLINES. While he wouldn’t put an exact date or location on the first of these new-style Lowe’s stores,
L
LOWE’S BID FOR RONA HITS THIN ICE
two affiliated roNa dealers sent out an email to their fellow roNa
dealers recently, asking them to sign a letter supporting roNa’s
resistance to the takeover offer from Lowe’s Cos.
those dealers then released that letter, complete with a list of
the dealers from 164 stores who signed it.
the lion’s share of signatories is from Quebec, and a number are
from British Columbia, reflecting the locations of the two dealers
who instigated the letter. Mike allen is from North Vancouver and
Stephane Gagnon is a high-profile Quebec dealer.
taking a cue from Lowe’s waning enthusiasm for the deal to
happen quickly following the release of its own disappointing
third-quarter results, the letter encourages Lowe’s chairman and
Ceo robert Niblock to step away from trying to buy roNa. the
dealers cite their affinity, not just to roNa, but to its culture and
its support of independent dealers.
“as independent entrepreneurs, we have made several business
and financial decisions over the years; they have been based
on our affinity with the roNa brand, business model and very
importantly the people that make up the roNa culture,” the letter
reads in part.
the letter concludes with unwavering support for roNa, noting
that they are both roNa dealers and roNa customers. “[We]
believe that the roNa product offering reflects local values across
the country. It is for all these reasons that we decided to become
part of roNa — above the other competition — and why we cannot
support your planned hostile takeover.”
RONA DEALERS SAY “NO THANKS” TO LOWE’S BID
NEWs sPOTLIGHTF LE
he said, “It will be close,” adding that this “unequivocally” reflects Lowe’s commit-ment to smaller stores.
One thing that many observers have questioned about a possible takeover of RONA by Lowe’s has been the range of stores, from small to big box, that are under the RONA umbrella. These stores are a mix of corporate and independently owned businesses. However, this is all part of Lowe’s strategy, Robinson says. “We think that the right way to go to the marketplace is with multiple formats and multiple forms of ownership.”
He refers to Lowe’s expansion in Australia, where, in partnership with Aussie retail giant Woolworths, the company has both opened greenfields big boxes and pur-chased a hardware wholesaler called Banks, which serves both corporately owned and independent stores. “Our strategy has been to adapt ourselves to local needs.”
LOWE’S RETREATS — FOR NOWIn the end, Lowe’s decided to withdraw its proposal to RONA’s board of directors to acquire Canada’s largest retail home improvement company.
Despite rounds of negotiations that began more than a year earlier, Lowe’s “friendly” bid was thwarted by a number of factors, not the least of which was the passionate resistance of the board — and CEO Robert Dutton in particular — to letting RONA be acquired, especially by a foreign company. The return to power of the Parti Quebecois in the recent Quebec provincial election no doubt dampened Lowe’s enthusiasm even further. That party had expressed strong opposition to the RONA acquisition from the outset.
In a release, Lowe’s says it continues to believe that a combination of Lowe’s and RONA makes business sense and would create significant value for all stakehold-ers. The release adds that Lowe’s remains
committed to growth in Canada.Does that mean it will come back with a
less-than-friendly bid in future? If it gets
its house in order back home, and gets Wall Street back on its side in the process, the answer could very well be “yes.”
www.hardlines.ca
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Hardlines Home Improvement Quarterly www.hardlines.ca46 fourth Quarter / 2012
BumperCropThe righT personnel and produCTs Can make farm
and feed a sales winner for hardlines dealers.
BY John Caulfield
Hardlines Home Improvement Quarterlywww.hardlines.ca 47fourth Quarter / 2012
BumperCrop
farM & harDWare SaLeSFeATure
o ver the past four years, Leitrim home hardware, which operates a 6,500-square-foot store in ottawa,
has seen its sales increase by 50 percent. Leitrim’s owner, omkar atwal, attributes some of that growth to the nexus of hard-lines with farm and feed products that he brought on during this period. that cat-egory now accounts for fully 20 percent of Leitrim’s annual revenue.
“Farmers will come in to buy feed, and will also purchase a gate or sliding barn door,” says Atwal. His 2,400-square-foot warehouse “is full of feed,” and has about 1,000 square feet of selling space devoted to animal health products.
Most independent hardware and build-ing supply dealers aren’t carrying farm and feed products. And don’t expect Canadian Tire or Lowe’s to jump into this category any time soon. But dealers that specialize or even dabble in farm and feed say the cat-egory gives them access to customers who otherwise might not come into their stores, and exposes those customers to a store’s wider array of merchandise.
A farmer buying animal feed, for example, might come into one of TSC Stores’ 46 out-lets in Ontario and Manitoba 25 to 30 times a year, says David Roussy, president and CEO of this London, ON-based retail chain. That’s why TSC was negotiating to add at least one national feed brand to its product mix this past summer. TSC is also looking to acquire independent feed stores and integrate them into its existing stores’ real estate. “We’ve already done this a few times, and we’ve noticed that sales in our other categories have increased, too,” says Roussy.
TAppING INTo A HeALTHY SeCTorWhile the hot summer weather cooled farmers’ purchases somewhat, dealers that can tap into this customer base are still ben-
efiting, as Canada’s farm sector rebounds from a couple of tepid seasons. “The ag business in Alberta, Saskatchewan, and Manitoba has been very good,” observes Rob Baergen, who manages the general merchandise division of Saskatoon-based Federated Co-Operatives Ltd. “Crop pro-duction has been strong, so we’re antici-pating a banner year” both in his divi-sion, which handles “in-store” ag products (including farm-related hardware and tools) and the division that handles crop input and production products. Baergen adds that seed, which FCL’s 170 stores started carry-ing three years ago, “is a huge growth area for us.”
In its latest Provincial Outlook, released in June, RBC Economics estimates that Canada’s agricultural output increased by 8.7 percent in 2011 from the year before — even when weather-related problems caused output to drop by 18 percent. RBC expects agricultural production in 2012 to rise by around 20 percent, partly through export-ing that capitalizes on drought conditions that have ravaged farms in the U.S.
But farming is always unpredictable, as is dealers’ business from farmers, especially when their numbers keep receding. In 2011 Statistics Canada counted 205,730 farms, 10.3 percent fewer than in 2006. The num-ber of farm operators also declined by 10.1 percent to 293,935. Farms with annual gross receipts exceeding $1 million may have rep-resented less than five percent of all farms in Canada last year, but they captured nearly half of total farm receipts.
Don Snider, Building Solutions category manager for Calgary-based UFA Limited, points specifically to double-digit reduc-tions in beef producers and herd sizes over the past five years as factors that have made selling agro products more challenging for his co-op’s 35 farm and ranch stores. “A
Hardlines Home Improvement Quarterly www.hardlines.ca48 fourth Quarter / 2012
larger farm with fewer cows will buy only so many gates and electric fences.”
Still, UFA’s dealers have been expanding their ag inventories in recent years, which they purchase almost exclusively through their co-op, as do most dealers affiliated with other buying groups that have been instrumental in getting more of their mem-bers into this category.
Home Hardware Stores Ltd. made the decision a few years ago to expand its farm products available out of warehouse. It now
offers a full range that includes livestock supplies, specialty hardware, tractor hitch, welding supplies, generators, and tools. Home also puts out a mini catalogue annually that focuses on equine and fence products, says the group’s product manager, Todd Crossman.
Since BMR introduced its Agrizone department in January 2010, 55 of the buying group and wholesaler’s 185 dealer-members have taken on the program and its more than 2,000 SKUs, which range from work clothes and farm hardware to dairy
brushes and forest equipment. “We defi-nitely see potential for growth in specific regions,” such as Quebec province’s out-lying areas, says Bruno Baldessari, BMR’s senior director of LBM purchasing.
FULL-TIME FARMERS VS. HOBBYISTSTSC Stores, whose services include wholesal-ing and a bulk commercial program, expects to open one full-line store this year and at least two or three more in 2013. Roussy says his company has identified 25 markets in Ontario where TSC could expand. “That should carry us for the next three or four years,” at which point TSC might consider opening stores in other provinces.
FEATUREfarM & harDWare SaLeS
(Clockwise from left:) Since introducing a new department devoted to farm two years ago, BMr’s agrizone has grown to include more than 2,000 products ranging from work clothes to dairy equipment. Dealers who venture into the agro category must be prepared to become experts in a very specialized field that products for animal husbandry. toys can play a big part in farm sales.
Hardlines Home Improvement Quarterlywww.hardlines.ca 49fourth Quarter / 2012
However, some dealers see limits to the farm-and-feed category’s growth poten-tial. “It’s a niche that probably won’t get larger” for Unimat’s 175 stores, says René Labrecque, general manager of the co-operative’s hardware division. Snider of UFA doesn’t see much crossover between customers buying farm products and other hardware and home-improvement fare, either. “Farmers are shopping us as ag pro-ducers” and aren’t necessarily coming to UFA’s stores for anything else, he explains.
When Snider worked for Home Depot, he recalls that the manager of its newly opened warehouse outlet in Regina, SK, insisted on stocking barbed wire. Two years later, “I think that same bale was in the store,” Snider quips. His point, which other deal-ers share, is that dealers must know their customers before they dive too deeply into a specialized category like farm and feed.
For example, full-time farmers account for only about 30 percent of TSC’s annual sales, the rest coming from hobby farmers and rural homeowners with large proper-ties, says Roussy. Atwal at Leitrim Home Hardware also does a lot of business with
hobby farmers, many of whom raise chick-ens. The store is near a racetrack, so he has beefed up the store’s inventory of fowl- and equine-related merchandise. At BMR, the wholesaler makes sure its member stores have the right mix of products to meet the needs of Quebec’s many horse and maple syrup farmers, says Baldessari.
SPECIALIZATION REQUIRES EXPERTISEAnother important component to selling farm and feed is having experts on the sales floor who can answer customers’ questions. That’s particularly true when a store is car-rying animal medicines whose ingredients aren’t always clearly stated on the package, say dealers.
About five years ago, Dean’s Home Hardware in Port Sydney, ON, in cottage country, started carrying farm and feed products in a bigger way. The category now accounts for 10 percent of annual sales,
much of which comes from vacationers during the summer months.
Its owner, Dean Smales, says he’s culti-vated local farmers as regular hardware cus-tomers during the off-season by “having the right people in our stores.” Two employees are hobby farmers, and one of them used to own a farm and feed store. “She brought all of her customers with her” when she came on board at Dean’s part-time, says Smales.
But what would happen to this dealer’s farm-and-feed business if this employee sud-denly left the company? Well, says Smales, she recently was recovering from a shoulder oper-ation and wasn’t able to work. “We haven’t lost any business,” he said. “But she also wasn’t against talking to customers on the phone.”
That’s the kind of relationship all retailers strive to have between their customers and store associates. And dealers selling farm and feed say it’s a benefit of providing those products and related services that has really taken root.
tSC Stores (above), now with 46 stores, exceeded $100 million in sales last year selling its distinct mix of hardware and farm supplies. u.S. hardware wholesaler orgill (right) responded to the growing importance of the farm category with a model store devoted to the category at its latest dealer market.
Hardlines Home Improvement Quarterly www.hardlines.ca50 fourth Quarter / 2012
Marc robichaud: innovator, retailer, and Pioneer
bY XXXXX XXXXXX
arc Robichaud was the owner of UJ Robichaud TIM-BR Mart, a fifth-generation family business
in Meteghan Centre, N.S. Marc excelled at identifying opportunities for growth. Beginning work at UJ Robichaud at 14, he was familiar with every facet of the busi-ness and what was required for a thriving business. His untimely death on January 10, 2012 at the age of 36, after a brief battle with lymphoma, was felt throughout the industry. To recognize his innovation and adaptability to the changing demands of retail among Canada’s hardware and home improvement dealers, HARDLINES has developed a new award to honour innova-tors like him: the Marc Robichaud Award for Retail Innovation.
In his too-short career, Marc estab-
lished himself as a true innovator, mas-tering online sales, using social media, and pioneering green retail practices.
He was ahead of the pack from the start, bringing the first computer system to UJ Robichaud in 1996 and continually work-
M
Marc robichaud was a retail pioneer and a true innovator who died too young. an award to recognize retail innovation has been created in his honour.
Marc robichaud died at the age of 36, but he had already, in his short lifetime, established a reputation for imaginative and innovative retail practices.
Hardlines Home Improvement Quarterlywww.hardlines.ca 51fourth Quarter / 2012
Marc robichaud
Marc robichaud: innovator, retailer, and Pioneer
F le
ing to improve the technology and infra-structure of his business. His efforts were recognized by NRHA in 2009 when he won the NRHA Retail Innovator Award for his green marketing.
He was actively involved in the com-munity beyond his store and beyond busi-ness as well. Marc served on the Board of Directors for the Atlantic Building Supply Dealers Association from 2002 to 2005. He was also enthusiastically involved in his community, serving as president of the Clare Chamber of Commerce from 2005 to 2010 and Vice President of the Conseil de Development de la Nouvelle-Écosse from 2008 to 2009. He was also fiercely proud
of his Acadian heritage, and an avid fan of Cape Breton music and step dancing.
“Marc Robichaud was one the most innovative dealers I’ve ever met,” says Tim
Urquhart, President and CEO of TIM-BR MARTS Ltd., the buying group of which Marc was a member. His death was felt by dealers and vendors across the country.
Marc left a legacy in the industry; he was a true innovator who was deeply involved
in every facet of his work. A dealer in Canada who has demonstrated
imagination, originality, and innovative practices in the operation of their store and
the growth of their business will be selected to receive the first Marc Robichaud Award for Retail Innovation. The award will be presented at the 17th Annual Hardlines Conference, Oct. 25, 2012 at the Sheraton Toronto Airport Hotel.
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E-mail or fax your completed form to: [email protected], or fax 289-997-8260
Marc Robichaud was one the most innovative dealers I’ve ever met.“ ”
DealerConference2012
Helping Dealers
sell smarter>> the 5th annual Johns manville Hardlines Dealer Conference
in Conjunction with the Canadian Home improvement show.
North AmericAN Lumber: brANdiNg for SucceSS iN the 21St ceNtury
martha Konantz, president, north american lumber
Learn how this 20-store chain has evolved since 1906 and stayed true to
its small town roots with knowledgeable staff and quality building materials.
That evolution included a comprehensive branding process.
So you doN’t hAve AN Army of oNLiNe mArketerS…
sacha Chua, social media Coach
Learn about small, simple steps you can use to connect with customers
through e-mail marketing, Facebook, Twitter, or your own blog. Be inspired
by other home improvement retailers and dealers, and get started!
uNderStANdiNg the ecoNomic fActorS thAt wiLL Affect your buSiNeSS
peter norman, m.a., Chief economist, research,
Valuation & advisory, economic Consulting, altus group
Peter will provide a critical review of economic factors and housing
performance measures and provide insight into how markets are likely
to perform over the short and medium term. He will review recent trends in regional
economic performance, strengths and weaknesses of regional economies and
interpret how these trends factor into business planning.
topiCs:
to register, visit www.canadianhomeimprovementshow.com or call 1.866.535.0520
Wednesday, november 28, 2012 8:00 am – 12:00 pm
Hilton Toronto Airport Hotel Tickets: $99
A full morning of power-packed seminars to help you build your business.
Precedes the Canadian Home Improvement Show.
Hardlines Home Improvement Quarterlywww.hardlines.ca 53fourth Quarter / 2012
ou have to work for your sales today,” says John Locke, who is co-owner with Bill ecklund. “You just used to have to open the
doors, but now consumers have so many options.”With that in mind, Locke and Ecklund
consistently take steps to make their store an attractive destination for female cus-tomers. This spring, the ladies’ only night attracted more than 300 people — who lined up across the parking lot for the doors to open on an evening of barbecue cooking, health and beauty demos, lawn and garden displays, and giveaways.
While there was lots of action in the aisles, the store’s cash registers remain closed. But in November, says Ecklund, a second ladies’ night is held. “The women bring their credit and debit cards. The emphasis then is on selling, with deals and bargains in-store.” The sales have a seasonal focus again, this time leading up to Christmas.
“It started local,” he explains. “Now, through word of mouth, we find that people come from as far away as Beaverton, Coldwater, and even Gravenhurst, up to 40 km away.”
While the ladies’ night is a great way to stay involved in the community, it also generates sales. Last November, the three-hour event resulted in between $15,000 and $20,000 in sales per hour. “It’s very lucrative for us,” says Ecklund.
“When we took over the store [in 2008], it was 80 percent contractor business,” Locke explains. Today, half the sales are to retail
customers, drawn to the expanded depart-ments. The formula seems to work: Orillia Home Hardware won the company’s Store of the Year award in 2010.
Locke says it was important for the store to increase its assortments of “soft” DIY products. It’s always adding new items, including extensive pet supplies and acces-sories. The store has just added a bedding department, ladies’ travel bags, and a whole line of scarves. “And we just took on a whole line of clothing for infants and children,” Locke adds. PH
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C o MM u NI t Y r e L at I o N SF LE
DeaLer CarveS NIChe wIth LaDIeS’ NIght BY MICHAEL McLARNEY
the store’s ladies only night started out as a local event, but now draws people from up to 40 km away.
Orillia Home Hardware Building Centre has created a product assortment that resonates with the female customers in this community about two hours north of Toronto. This niche is one that the company has worked hard to maximize — including an annual “ladies only night.”
“y
Hardlines Home Improvement Quarterly www.hardlines.ca54 fourth Quarter / 2012
n this issue, I will update you on retail productivity num-bers to help you find opportunities to improve profitability. You should be able to get your own store’s information from
your POS system. I have included the ratios for hardware stores, home centres — defined as having full hardlines assortments and selling commodity lumber and building materials in a minimum 10,000 square feet of selling space — and lumber and building materials outlets, which typically sell 70 to 80 percent back end and 20 to 30 percent front end.
Our numbers are based on the latest Cost of Doing Business Survey from the North American Retail Hardware Association. That data is collected from a sampling of stores in the U.S. Our Canadian numbers have been gathered from retailers showing ranges that we have received.
AVERAGE STORE SALES Typical High Profit Canada My Business
Hardware Store $1.29m $2.01m $600,000 – $1.8m
Home Centre $3.02m $5.63m
Lumber Outlet $2.22m $4.43m $2 – $5m
GROSS MARGIN – AFTER REBATE Typical High Profit Canada My Business
Hardware Store 42.1% 43.7% 35 – 38%
Home Centre 32.7% 30.8% 28.2 – 37%
Lumber Outlet 26.7% 22.2% 26 – 35%
Referring to these numbers, we look for ways to improve margin. Effective ways to do that are by:• updating pricing on a timely basis with price increases from supplier;• better use of a variable pricing strategy, recognizing that there are
approximately 500 core products that are price sensitive;• improving staff knowledge to upgrade their skills for add-on and
step-up selling of product.
OPERATING EXPENSE Typical High Profit Canada My Business
Hardware Store 41.09% 37.6% 29 – 34%
Home Centre 31.7% 26.6% 28.2 – 30.9%
Lumber Outlet 27.1% 20.1% 23.3 – 25.2%
These are the current expenses associated to the operation of your business in one fiscal year. You can lower your operating expense by:• maximizing sales with improved promotional merchandising and
more targeted advertising;• and managing the payroll expense using POS data to focus your
staff hours on the most productive retail hours.
INVENTORY TURNOVER Typical High Profit Canada My Business
Hardware Store 1.7X 2.1X 3.1X
Home Centre 2.3X 2.6X 2.2 –3.9X
Lumber Outlet 3.3X 5.8X 3.5 – 4.6X
This important ratio measures how fast inventory is sold over the year. It is calculated by taking your cost of goods and dividing by average monthly inventory (at cost). Improve your inventory turns by:• reducing the duplication of inventory (for example, in many stores
today, you will still find 20-plus types of tape measures when in real-ity you need, good, better, best in three or four sizes ― and that’s all);
ARE YOU MAXIMIZING YOUR PRODUCTIVITY?
BUDGETING AND FORECASTING Your 2012 ProfIt
BY BILL WILSON, RETAIL ADVISOR, NRHA CANADA
I
As we look back at the past five years, we have seen little business growth. The forecast for 2012 from HARDLINES runs at just over two percent growth for the retail hardware and building supply industry. During this time, smart retailers have already cut costs and tried to increase margins to maintain or improve profitability.
• running a seasonal clearance sale of merchandise before the end of season;
• running a report on items in stock with zero sales in the last 12 months from your POS (this is generally a shocker), then clear them out;
• having adequate inventory on the 25 percent of your SKUS that make up 70 percent of your sales, which will also help your sales.
AVERAGE COLLECTION PERIOD (DAYS) Typical High Profit Canada My Business
Hardware Store 40.2 36.5
Home Centre 61.1 75.1
Lumber Outlet 64.8 30.1 63–65
Improve your average collection period days by:• Setting a target for accounts receivable collection;• reviewing aging accounts weekly and taking action on past due accounts;• offering an incentive for paying accounts early.
INVENTORY PER SQUARE FOOT (SELLING AREA) Typical High Profit Canada My Business
Hardware Store $51 $46
Home Centre $84 $100
Lumber Outlet $82 $87
Inventory per square foot is calculated by dividing total inven-tory by the square footage of your selling area.
SALES PER SQUARE FOOT (SELLING AREA) Typical High Profit Canada My Business
Hardware Store $147 $167 $135–$180
Home Centre $284 $384 $300–$350
Lumber Outlet $369 $692 $125–$400
Sales per square foot is calculated by dividing total sales by the square footage of your selling area.
To improve your sales per square foot, ask yourself these questions:• Are you maintaining an in-stock position of 95 percent-plus on
the SKUS that account for 70 percent of your sales?• Are you updating product assortments and category merchandis-
ing to help to increase sales?
SALES PER FULL TIME EQUIVALENT EMPLOYEE Typical High Profit Canada My Business
Hardware Store $143,110 $154,607
Home Centre $183,304 $201,077
Lumber Outlet $221,632 $286,052
Full time equivalent (FTE) is a unit of measure of an employee’s productivity. An FTE of 1.0 means that the person, or group of people, is equivalent to a full-time worker. A person who works half-time is counted as 0.5 FTE. When compared to other compa-nies within same industry, it instantly gives a relative comparison of operational efficiency. Annual increase in revenue per FTE reveals the extent of productivity growth.
Opportunities to improve FTE:• From your POS verify your customer counts per hour versus the
number of employees. Are there times that you can reduce person-nel on the floor? Do you need as many store hours?
• Sales training will help to improve your sales techniques for improved customer service.
SALES PER CUSTOMER (AVERAGE SALE) Typical High Profit Canada My Business
Hardware Store $16 $17 $17–$20
Home Centre $35 $51 $35–$70
Lumber Outlet $103 $171 $80–$150
Have your staff take training that promotes selling step-up prod-ucts and add-on sales. It’s a great way to increase your average sale. An increase of just two dollars will drive additional net profit. NRHA offers a wide range of training in online product knowledge and sales skills.
Other tricks for increasing sales include clip strips, dump bins, and keeping feature ends updated at least monthly to drive impulse sales.
Over the years, I have seen stores that have far exceeded the averages by every employee — including the cashier who always asked for the add-on sale.
TOTAL PAYROLL EXPENSE Typical High Profit Canada My Business
Hardware Store 21.9% 19.7% 14.7–16.2%
Home Centre 19.1% 17.7% 15.3–19%
Lumber Outlet 15.3% 12.2% 13–16%
Payroll is any store’s largest operating expense. Areas that can be looked at for reductions are:• more use of part-time employees and adjusting their hours to
peak times;• improving productivity with an increase in average sales; • and using the measure of payroll expense as a percent of gross
margin dollars ― it should be in the range of 42 to 50 percent.
Hardlines Home Improvement Quarterly www.hardlines.ca56 fourth Quarter / 2012
TRUCKING/DELIVERY COSTS Typical High Profit Canada My Business
Hardware Store 0.4% 0.3% 0.3 – 1%
Home Centre 0.7% 0.5% 0.4 – 1.2%
Lumber Outlet 0.8% 2.2% 0.7 – 2%
You can recover some of these costs by charging for delivery. It has been proven that even a small delivery charge can recover 100 percent of fuel costs and 25 to 30 percent of total vehicle expense.
RETURN ON NET WORTH (OWNERS’ EQUITY) PRE-TAX Typical High Profit Canada My Business
Hardware Store 7.8% 20.9%
Home Centre 5.5% 12.8%
Lumber Outlet 3.5% 13.7% 4.4 – 17.4%
The rate of return on net worth (equity) is a measure of how well the net worth of a company is able to use its net worth to generate earnings. A good target for this is 20 percent. If you are thinking of selling your business, strive to achieve a minimum of 10 percent return on owner’s equity.
PROFIT MARGIN (PRE-TAX) Typical High Profit Canada My Business
Hardware Store 2.2% 6.2% 6.7%
Home Centre 2.1% 5.3% 5.9%
Lumber Outlet 0.9% 2.7% 5.7%
Profit margin is a primary measure of a company’s operating performance. It describes the operating efficiency of a company by showing how much of each dollar ends up as net income. The biggest
way to improve profit margin is by increasing sales and improving gross margins. Review your expense to find ways to reduce them — it will also contribute to a higher return on profit margin.
Finally, take a look at your insurance costs, including group insurance (medical, etc.) ben-efit plans (pension etc.) and insurance (liability and casualty). According to the NRHA study, these are in the range of two to 2.5 percent.
Use your financial statement to chart your business’s performance against these industry averages. Review the opportunities for improve-ment in your productivity numbers. Your target should be the “High Profit Stores” category. This information is a good tool to use as you are set-ting up your budgeting and forecasting for 2013.
If you are an NRHA member, go to nrha.org access the Cost of Doing Business Report right online. Included with the CODB are several financial calculators that allow you to plug your own numbers into the report format to see what kind of impact even minor changes can have on your business. NRHA membership is a great tool to help train your staff and also supplies many tools to help better serve your customer.
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 improve-ment retailing and distribution and is committed to training for independents.
S t o r e M a n a g e Me n t F LE
2013
January 23, 24 & 25, 2013Saskatoon, SK
Engage & Experience the Excitement at the
Wednesday, January 23 * Opening Night Meet & GreetThursday, January 24 * Show Day 1 * Gala Evening with Natalie MacMasterFriday, January 25 * Show Day 2 * Closing Night Party with Johnny Reid
Go to www.wrla.org for complete details
Platinum Sponsors
Hardlines Home Improvement Quarterly www.hardlines.ca58 fourth Quarter / 2012
or Brent Perry, one of the owners of alf Curtis Lumber, adding more hardware products to his business was aided by
the offerings of u.S. hardware wholesaler orgill. “the introduction of orgill has been huge in allow-ing us to better service our business,” he says.
Before using Orgill, says Perry, Alf Curtis Lumber felt it could not compete effectively against the nearby big boxes for retail cus-tomers, so it kept its focus on contractors. Perry explains that the store even stopped carrying power tools a decade ago because the margins were too low to be profitable.
Based in Memphis, TN, Orgill has entered Canada in recent years through a partner-ship with Castle Building Centres Group Ltd. Himself a Castle dealer, Perry has used that arrangement to buy hardware prod-ucts cost-effectively — opening the door to expanded product lines. And with the decreased cost of goods, Perry says he can now compete against the big boxes — and
better service his contractor base, which is still 90 percent of his business.
“We will not lose focus on our contractor customers. We built our business on con-tractors,” Perry says. However, his growing hardlines assortments allow him to com-pete for retail customers as well, with every-thing from electric and plumbing to paint.
Kim Emmerson, general manager of Emmerson Lumber in Haliburton, ON, agrees that access to products from Orgill has allowed his store to carry differ-ent assortments and increase its product differentiation.
Orgill has even introduced its ad flyer program to Canada. Perry explains that distributing the Orgill flyer has increased his sales and drawn in more contractor and retail customers. He started by posting the flyer in-store. The program attracted enough attention that he put the flyer in the local newspaper a month later, and included
it with all his customers’ statements. Due to the great response to this increased adver-tising, Perry is planning on using radio advertising in the coming months.
Emmerson, with a larger retail customer mix than Perry’s operation, inserts the Orgill flyer inside his own flyer but explains that soon he may also start sending out just the Orgill flyer.
“There are a lot more opportunities to grow the business and there are a multitude of lines to specialize in,” he adds.
What both dealers emphasized most about their use of Orgill is the range of opportunities that have become available to them. “Orgill has opened up a ton of doors, allowing us to open our offerings to our customers,” says Perry. In fact, his business has grown enough to support an expansion from his current 1,400-square-foot store to 3,200 square feet by convert-ing his current warehouse.
Me r C h a ND I S IN G F LE
DeaLerS eXPaND froNt eND WIth WhoLeSaLer SuPPort BY KATHERINE YAGER
(Left) Kim emmerson, emmerson Lumber, recognized multiple opportunities to grow his business with specialized lines. (Above) Brent Perry, owner of alf Curtis Lumber, will not lose focus on what he built his business on – contractors.
An enhanced hardware assortment is an effective way to evolve one’s business and increase margins. The entry of new players in hardware distribution to the Canadian market has made that evolution easier for a growing number of dealers.
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The ORAs are owned and produced by The ORAs are supported by
The 2012 OuTsTanding ReTaileR awaRds (ORa) gala dinneR
CelebratingThe home improvement industry’s best dealers
October 25, 2012Cocktails @ 5:00 p.m.
Dinner and Awards @ 6:00 p.m.Toronto Sheraton Airport Hotel & Conference Centre
Get your tickets now!Special discount to Hardlines conference attendees!
For more information visit www.hardwaremagazine.ca/ORAGala Purchase tickets @ www.hardlines.ca
GOOD FOODGOOD Wine
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Hardlines Home Improvement Quarterly www.hardlines.ca60 fourth Quarter / 2012
advertisers: fourth Quarter / 2012
in the next issue of hhiQ:
a d i n d e X
BMr 2www.bmr.co
Castle Building Centres Group Limited 64www.castle.ca
Canadian home improvement show 24, 25www.canadianhomeimprovementshow.com
Csa Group 56www.shop.csa.ca
Grip rite fastening systems 32, 33www.grip-rite.com
hardlines inc. 3, 14, 15, 61www.hardlines.ca
home hardware stores Limited 30, 37, 39www.homehardware.ca
What are the latest retail trends that will affect how you do business in 2013? Find out how the customer experience is changing.
PLus: Our annual review of home improvement
wholesalers; online sales: friend of foe?; profiles
in retail leadership; 2012 — the year in review;
and the latest in new products.
Publication Date: January 7, 2013 • Ad Reservations: November 26, 2012 (contact [email protected]) • Ad Material Due: December 7, 2012
What You Get for Your MembershipAs a member of the North American Retail Hardware Association you have unlimited access to a number of valuable training and information resources provided through the members-only portion of NRHA.org. These include:
CODB STUDYCost of Doing Business Study Benchmark your own financial performance against this annual study that provides industry income statements, balance sheets and various performance ratios for both average and high-performance stores.
With the online calculator, you can plug in your numbers and compare your own performance by line item against industry benchmarks for hardware stores, home centers and lumberyards.
HUman ReSOURCeS HiRing TOOl: FORTé Forté is an interpersonal communications system that identifies a person’s natural communication style, preferences and strengths, how they have been adapting to a specific individual or environment and how they are most likely coming across to others. Designed to enhance interpersonal relationships, Forté identifies and maximizes the positive strengths of individuals and teams and minimizes their chances for misunderstandings and conflicts. Forté helps you identify the individual’s communication style and shows you how to work with each person most effectively.
PlaniTDIY (neW) - YOUR HOmeTOWn HaRDWaRe ReSOURCePlanitDIY.com is yours: add it to your website today. Give your customers the most complete home repair and maintenance how-to information available anywhere. This is a program of 80 how-to videos. Designed for your customer with a link on your
store website. This can be added with a special link so that your customers will not see other stores.Check out PlanitDIY.com.
THRee PennieS OF PROFiTThis instructional video course “Three Pennies of Profit” educates your employees on the real impacts of shrinkage, breakage and inventory mistakes on your bottom line. As an added benefit
for NRHA members, you can test your employees on what they learned in the video to be sure they retain this valuable information. This is a great tool for staff meetings.
HOW-TO SeRieS OnlineThis series of 71 online printable project brochures shows how to do various popular home improvement projects. Many titles contain animated modules to help both customers and employees better understand these projects. Each title also contains a complete checklist of tools and materials to make sure customers don’t leave your store without need to complete the project.
nRHa’S BaSiC TRaining SeRieSNRHA’s new Basic Training Course in Hardware Retailing and Basic Training Course in Building Materials Retailing are comprehensive product
knowledge training programs that include coursework, testing, instant grading feedback and a complete progress report for each student enrolled from your business. You get a fully administered training program up and running with
very little effort. And, best of all, you can train an unlimited number of students at no additional cost. These courses are designed to help both new and existing retail sales associates gain the confidence they need to be successful on the sales floor or out in the lumberyard.
NRHA’s Basic Training Courses Include:•11 Core Hardlines and 9
Building Materials Chapters•Product Photos &
Descriptions•Frequently Asked Questions
•Upselling & Add-On Selling Techniques
•Selling Skills•Merchandising Techniques
loss Prevention / Three Pennies of Profit / How-to Series Online / Project Selling Webinars /Project Pro / Cost of Doing Business Study / Human Resources Hiring Tool: Forté
all available at an affordable price.Contact nRHa Canada
416.489.3396 / www.nrha.org
lOSS PRevenTiOnThe series covers topics on Internal Theft Prevention, External Theft Prevention and Store Safety & Security.
PROjeCT SellingWe will also be launching a new program for project selling, which will feature videos from planitdiy and be set up as training with testing at the completion of the course.
Hardlines Home Improvement Quarterly www.hardlines.ca62 fourth Quarter / 2012
e meet for fish and chips in mid-town toronto. It’s a place that makes halibut and chips the same way now as it did
when it opened in 1950. and it’s just two doors down from the storefront above which ted had his first office in the 1970s, fresh out of art college.
His first brush with advertising was in an era when audiences were less fragmented and messages changed at the whim of the newest creative team. But over time, Ted got this gut feeling that the new people, no mat-ter how creative, couldn’t properly under-stand the legacy of a company’s brand. It wasn’t, he realized, just about a new jingle or a new logo.
He loves to tell the story about sitting down with the executives from a major battery company. “Do we have to keep the bunny?” one executive would invariably lament. Ted stood on the side of consistency — a clear message that resonates with the consumer.
Just how important is a well-managed brand? “If RIM [Research in Motion] could go down, anybody can lose a company.” If the Blackberry brand hadn’t begun eroding before the company’s fortunes did, he says, even the banks would be more respectful of what the company stands for.
“A good company builds the brand from the inside out,” he said. “Branding is not just marketing. It’s everything.”
He emphasizes that there are “rules and tools” for maintaining a brand. Every com-pany should use them. Here are Ted’s three “tools” for branding:
1. Be remark-able. “Have a product or ser-vice that’s so good that people will remark about it.” That’s especially important as online product reviews have become pow-erful guides for other consumers’ decisions.
2. Position. “You need to be not just dif-ferent, but your product has to make a
difference.” He cites Volvo, a car maker renowned for its attention to safety. Or Steam Whistle Breweries, a local Toronto beer maker, whose motto is “Do one thing really, really well.”
3. Experiences. “Make your place a great one to work at,” says Matthews. “It needs to come from the top. The CEO needs to become the chief branding officer.” Execution is vital and the secret, he says, is consistency of the brand. “When Tropicana spent $35 million to change the label, with the distinctive picture of the orange with the straw in it, it lost 25 percent of its market.”
“I want you to make sure the brand is installed as the operating principle of your company,” he adds emphatically.
As we walk out of the restaurant, I pause to watch the woman behind the counter care-fully wrap a takeout order of fish and chips in newspaper. I think I get what he means.
Brand guru affIrms power of consIstency In marketIng BY MICHAEL McLARNEY
W
ted m at the w s ENdCAP
ted matthews believes, “branding is not just marketing. It’s everything.”
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Ted Matthews is something of a legend in the marketing world. Labelled a “brand coach” by one of his own clients many years ago, his message has remained unchanged for years — be consistent.
ORGILL CUSTOMER INSIGHTS
Now, Orgill Gives All Dealers A Choice.PROVIDING
Worldwide Distribution & Retail Services
SOLUTIONS“Orgill is just a good company to deal with. Because of the large assortment of SKUs it carries, we are finding unique and different products that we just couldn’t get from domestic sources.”
Kim EmmersonEmmerson Lumber Ltd.Haliburton, Ontario
Emmerson Lumber Ltd.Since 1957, Emmerson Lumber has been serving the people of Haliburton, Ontario. The business grew out of a veneer mill first opened in Haliburton in 1945 by W.O. Bailey. In 1953, Bailey’s daughter Lois married William Emmerson. Four years later Emmerson Lumber was born.
Today, Emmerson Lumber provides a full range of products and services to its customers with an eye toward service. With products ranging from a full selection of windows, doors and building materials to tools and power equipment, Emmerson has a long history of meeting its customers’ needs.
Orgill Provides More than Just Products, It Provides Support for Your Success
Reliable Delivery“Since we started working with Orgill, our order fulfillment has been excellent. Our delivery comes when it is supposed to with what we ordered—exactly as promised.”
Operational Support“We wanted to be able to communicate with our supplier as effectively as possible, so that meant communicating electronically. We were able to get that set up with Orgill. Now the communications are running smoothly.”
The Products We Need“Orgill has a large selection of products, which allows us to offer more than we could in the past from any of our other suppliers.”
A Safe Bet“Orgill has been great to work with. I would definitely recommend
them as a supplier.”
“Orgill is a good company to deal with. I get follow-up calls and sales rep visits. Orgill doesn’t forget about you once you start doing business with them.”
—Kim Emmerson
For more information about how Orgill can help you grow your business, please contact:
“We’re a rapidly growing store in Northern Ontario. Our profits are phenomenal and our margins are through the roof! In some cases, we’ve lowered our pricing while increasing our margins. We have the freedom to do what we want. And, we don’t have to participate in low-margin flyers. In our second year, we’re already halfway to our five-year goal: to double sales. Castle has momentum; joining them was ano-brainer.”
Trevor RonchinPinehill Lumber Lively, ON
Get the facts. Contact the Business Development Manager in your area:Western Canada Alan Schoemperlen (204) 771-1509 [email protected] Columbia Les Gillespie (250) 469-4744 [email protected] Bruce Holman (647) 228-1414 [email protected] & NB Robert Legault (514) 208-4158 [email protected] Canada Sandy Welsh (902) 471-7113 [email protected]
Freedom of one. Strength of many.
castle.ca/freedom
To hear more from Trevor,scan the QR code or go to
