Hardware Merchandising July/August 2011 by Annex Business Media

n ’s io ry at st lic du ub In P e ad Th Re t os M

JULY/AUGUST 2011 $12

The Top 100 Issue

BOUNCING BACK Our annual ranking of the industry’s top retailers, buying groups and distributors

ALSO INSIDE: Las Vegas report Contractor roundtable Mobile retailing

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No, you’re Not seeiNg Double! Yes, it’s the second show of the year but it’s bigger, better and building for the future! Plus a new date! Last show’s success called for an encore! With a new November date moving forward, and an expanded industry focus and product showcase, the Canadian Home Improvement Show offers you a chance to jumpstart your 2012 sales. Hundreds of exhibitors and retailers, thousands of sales to be made. This true buying show is the place you want to be come November. Build partnerships, boost sales, develop networks and start building for your future today! book your booth! limiteD space is available aND filliNg up fast! early birD special oN booth rates uNtil July 31st.

DoN’t thiNk twice! mark your caleNDars toDay!

November 17 & 18, 2011 Toronto Congress Centre – South Building

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visit www.canadianhomeimprovementshow.com

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contents

Cover Photo: Stephen Ferrie

page

features 24 CONTRACTOR ROUNDTABLE

Ever wonder what your contractor customers really think about the service you provide? Or whether or not they shop around to compare prices? We sit down with a group of professional renovation contractors to discuss what they like, and donâ&#x20AC;&#x2122;t like, about the hardware/home improvement retailers they deal with every day

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28 COVER STORY: 2011 TOP 100 REPORT Hardware Merchandisingâ&#x20AC;&#x2122;s annual ranking of the top retailers, buying groups and distributors in the Canadian hardware/home improvement retailing industry, plus in-depth profiles of the major players

49 Top 20 Retailers and Buying Groups 50 Top 50 Dealers and Retail Chains 52 Top Buying Groups and Co-ops 53 Top Distributors/Big Box map of Canada

July/August 2011

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Rely on Windsor® Salt’s complete line-up of high performance ice melters for ﬁrm winter sales ﬁgures! Windsor® melts away the snow and ice with ice melt products for your different needs. Convenient ergonomic jugs are easy to hold and store and are made from recycled materials. Count on our winning product line and dependable nationwide distribution service when the going gets tough this winter!

For winning proﬁts go with Windsor ! ®

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ALSO AVAILABLE!

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Las Vegas Report We check out the latest product developments and talk to industry professionals about their impressions of the 2011 National Hardware Show in Las Vegas, North America’s largest trade show dedicated to the hardware/home improvement retailing industry

TruServ Canada rolls out new banners; National Home Show and Canada Blooms co-locate to create the country’s largest home improvement show

21 Briefly – Dulux, Lowe’s, All Weather Windows, King Marketing, HD Supply Canada, Moen Canada

departments 11 Editor’s Comment Mobile retailing: the next, next thing 12

New Products Sansin Corp., General Tools, Moen Canada, Milwaukee, Wooster Brush, HILTI, BOSCH, IDEAL, MidWest Glove & Gear, DriTac

Retro Hardware 1991 – Barrie, Ont.-based distributors Larry and Cully Coza celebrate 20 years of the CanSave Expo

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July/August 2011

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

Hardlines Conference

CONFERENCE SERIES 2011

Learn • How the “shop local” movement is taking the country by storm. • The latest changes that are rocking the retail world. • How – and why – Castle is forging alliances with U.S. wholesaler Orgill. • How urban hardware stores are surviving in this era of big Boxes. • Why independent dealers are focusing on “better” and “best” assortments and leave the entry level products to Walmart. • How global economic issues and effects of economic, demographic, and social trends will affect you.

Early Bird Special on now Special pricing for SAVE ALMOST hardware & building centre dealers!

$400!

October 27-28, 2011 Sheraton Toronto Airport

Hotel & Conference Centre

801 DIXON ROAD, TORONTO, ONTARIO

www.hardlinesconference.ca

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JULY/AUGUST 2011 Volume 123, Number 4

Fax: 416-510-514 Editor: Frank Condron 416-442-5600 x3238 FCondron@bizinfogroup.ca Associate Editor: Robert Koci 416-442-5600 x3023 RKoci@canadiancontractor.ca Art Director: Stephen Ferrie 416-442-5600 x3239 SFerrie@bizinfogroup.ca Editorial Director: Corinne Lynds 416-510-6821 CLynds@bizinfogroup.ca Associate Publisher: Lynne LeBlanc 416-510-6780 LLeblanc@bizinfogroup.ca Account Manager: Gillian Thomas 416-510-6784 GThomas@bizinfogroup.ca Director of Sales: Peter Leonard 416-764-1510 PLeonard@bizinfogroup.ca Production Manager: Jessica Jubb 416-510-5194 JJubb@bizinfogroup.ca Circulation Manager: Beata Olechnowicz 416-442-5600 x3543 BOlechnowicz@bizinfogroup.ca BIG MAGAZINES LP Alex Papanou, Vice-President of Canadian Publishing Bruce Creighton, President of Business Information Group HOW TO REACH US: Hardware Merchandising, established in 1888, is published 6 times a year by BIG Magazines LP, a division of Glacier BIG Holdings Company Ltd. 80 Valleybrook Drive, North York, ON, M3B 2S9; Tel: (416) 442-5600; Fax (416) 510-5140. Editorial and Advertising Offices : 80 Valleybrook Drive, North York, ON, M3B 2S9; Tel: (416) 442-5600; Fax (416) 510-5140. SUBSCRIBER SERVICES: To subscribe, renew your subscription or to change your address or information, contact us at 1-866-236-0608 (English), or 1-866-236-2125 (French) SUBSCRIPTION PRICE PER YEAR: Canada $62.00 per year, Outside Canada $90.00 US per year, Single Copy Canada $12.00. ©Contents of this publication are protected by copyright and must not be reprinted in whole or in part without permission of the publisher. DISCLAIMER: This publication is for informational purposes only. The content and “expert” advice presented are not intended as a substitute for informed professional engineering advice. You should not act on information contained in this publication without seeking specific advice from qualified engineering professionals. Canadian Packaging accepts no responsibility or liability for claims made for any product or service reported or advertised in this issue. Canadian Packaging receives unsolicited materials, (including letters to the editor, press releases, promotional items and images) from time to time. Canadian Packaging, its affiliates and assignees may use, reproduce, publish, re-publish, distribute, store and archive such unsolicited submissions in whole or in part in any form or medium whatsoever, without compensation of any sort. PRIVACY NOTICE: From time to time we make our subscription list available to select companies and organizations whose product or service may interest you. If you do not wish your contact information to be made available, please contact us via one of the following methods: Phone: 1-800-668-2374 Fax: 416-442-2191 Email: privacyofficer@businessinformationgroup.ca MAIL TO: Privacy Office, 80 Valleybrook Drive, North York, ON M3B 2S9 Printed in Canada PUBLICATIONS MAIL AGREEMENT NO. 40069240, ISSN 1199-2786 We acknowledge the financial support of the Government of Canada through the Canada Periodical Fund (CPF) for our publishing activities.

July/August 2011

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HARDWARE MERCHANDISING

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“Changing banners after more than 30 years is always a major decision. But we quickly learned that Home Hardware could meet – and exceed – all our expectations. They provide an excellent program for building materials, and they make it easy to order non-stocked products so we can offer a broader range of products for our customers. It’s definitely been a positive change – for us and our clientele.” Luc Grenon Centre de Rénovation FDS Inc. Saguenay (Jonquière) QC

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

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Editor’s comment

The next, next wave

Mobile apps are creating a whole new retail process

“It’s a series of tubes.” That’s how the late Senator Ted Stevens (R-Alaska), then 83, described the Internet in 2006 in a senate subcommittee hearing on Net neutrality. That statement is remarkable not only for its almost comical ignorance of the Internet, but also for the shocking disconnect it reveals between the world as it use to be, embodied by the good senator, and the world the way it is going to be. The explosion in computer technology that has occurred in the last quarter century has altered the way we live on this planet as significantly as the invention of the telephone, the automobile and the airplane did more than a century ago. While those inventions succeeded in making the world a much smaller place, the personal computer and the Internet have made access to the world, and all the information available in it, instantaneous. The next stage, mobile technology, is putting that world of information in the palm of your hand. Computers and the Internet have forever altered the way we do business, including how we buy and sell consumer goods. While online shopping never managed to eliminate the need for a trip to the mall or to the grocery store, as many experts thought it would, it is also true that there are many companies thriving today that maintain no retail footprint at all. You only have to look as far as online storefronts like Amazon and iTunes, which have virtually wiped out the neighbourhood bookstore and record store. One retail category, however, that has managed to stay mostly immune to the effects of online shopping has been home improvement. While buying a book online or downloading the latest U2 CD lends itself to the technology, buying building materials and products for the home, especially décor products, is a much more tactile experience. Contractors will always want to pick the straightest, knot-free 2x4s off the pile, and renovation customers will always want to see and touch the merchandise before they shell out thousands for new kitchen cabinets. But this doesn’t mean new technology doesn’t have a role to play in hardware/home improvement retailing. In fact, being tech savvy has never been more important to these retailers. That was the message delivered at a seminar entitled “Mobile Retail Case Studies” at the Retail Council of Canada’s recent Store 2011 conference in Toronto. To set the parameters of the discussion, the moderator started by pointing out that there are currently 25 million mobile devices in use in Canada. Recent statistics show that the number of consumers who say they have used two or more tech devices to make a product purchase rose 65 per cent in 2010 alone. Another 75 July/August 2011

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per cent say they usually use some tech device before making a purchase decision. Some 77 percent of consumers who own a smart phone say they have used it in a retail store before making a purchase, usually to check prices or availability at another store. “The future is mobile,” said panelist Jason Reilly, director of marketing for The Home Depot Canada, who was on hand to talk about that retailer’s efforts to leverage mobile technology. “Because of the access to information the technology gives them, the consumer is more educated than ever. It’s our job to give them as much information as possible so the interaction is smooth when they come into the store.” Reilly said The Home Depot recently launched a mobile app for the iPhone that allows the user to scan the bar code on any product and find out instantly whether or not their local Home Depot location has that product in stock; and if not, where the nearest store is where they can get it. He says the Depot has seen good uptake on the app among consumers, especially contractors, who like the fact they can check availability and order supplies in advance for pick up. In the traditional retail process, the customer would come in to the store to be educated by the sales associate about things like selection, price and availability for specific products. “Now the customer is coming in to the store knowing as much, or more, about selection, price and availability as the associate,” said Reilly. And because so much information is now available to consumers before they enter the store, and even while they are in the store, retailers will have to stay competitive on price. “That’s why detailed product knowledge and project know-how are critical now; home improvement is one category where knowhow is a differentiator,” Reilly said. Clearly, information is the key to success in the mobile retail marketplace. Consumers will demand it, and retailers who don’t lay their cards on the table via the Internet or, more recently, via a downloadable app, will lose the battle for the customer by default. Older consumers might be willing to just go to the closest store to try to get what they want, or to drive around to several different stores to compare selection and price, but younger ones will do their research at home on their computer, or in the parking lot, or even in the store on their mobile device. Says Reilly: “Back in 1995, people were asking, ‘What’s the Web?’ Well, look where that went.”

— Frank condron, editor frank.condron@rci.rogers.com HARDWARE MERCHANDISING

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New Products

3. Milwaukee

Milwaukeeâ&#x20AC;&#x2122;s third-generation lithium-ion batteries, called REDLITHIUM, are fully compatible with all M12 and M18 cordless products, require less frequent charging and can perform in temperatures as low as minus-18C. According to the company, REDLITHIUM batteries deliver 40 per cent more run time, 20% more power and 50 per cent more recharge cycles. And because these batteries last longer than previous generations of lithium-ion batteries, they do not need to be replaced as often. Visit www.milwaukeetool.com.

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July/August 2011

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1. HILTI

HILTI has launched the SCW 18-A CPC Cordless Circular Saw. Designed to allow for maximum movement around the job site, the SCW 18-A circ saw offers corded RPM, base plate design and optimum air flow management for smooth operation. This saw incorporates Hilti’s Cordless Power Care battery system and an electric blade brake. Visit www.hilti.ca.

2. Sansin Corporation

Sansin has introduced Foundation, a concentrated, penetrating, water-borne primer for both interior and exterior wood surfaces, such as timbers, logs and dimensional lumber. This product is designed to stabilize the wood tissue and keeps the wood surfaces from weathering for up to six months during the construction phase. Foundation primer is designed to safeguard wood’s natural resistance to moisture and ensures the finishing coats adhere and penetrate. Visit www.sansin.com.

4. General Tools

9. DriTac

DriTac Flooring Products has launched a full line of adhesives and concrete sealers that have been certified by the Carpet and Rug Institute’s (CRI) Green Label Plus Program for Indoor Air Quality. The Green Label Plus Program is a voluntary testing program for carpet and adhesive products that is conducted by an independent laboratory and is designed to set strict standards for low chemical emissions. The DriTac line of Green Label Plus adhesives and sealers all offer zero VOCs and zero solvents and contribute to LEED credits. Visit www.DriTac.com.

10. Moen

Moen Home Care Grab Bars with Integrated Accessories are designed to combine the safety benefits of a shower/bath support bar with three common bath essentials—a towel bar, a paper holder and a shelf. Each of the Grab Bars with Integrated Accessories for the bathroom offers a 113-kilogram weight capacity and is available in a brushed nickel finish. Each grab bar includes one or two SecureMount anchors to allow for quick and easy installation anywhere on the wall, with one stud or no studs. Visit www.moen.ca.

The Pin/Pinless Deep Sensing Moisture Meter from General Tools & Instruments is designed to measure the moisture content of wood, masonry and other construction materials and has many practical applications for contractors, woodworkers and homeowners. This tools can be used to detect moisture damage under tiling and to locate moisture pockets beneath carpet, wood floors and masonry floors. Readings are displayed in LCD and LED modes. Visit www.generaltools.com.

5. MidWest Glove & Gear

MidWest Glove & Gear has introduced an interesting new product ideal for serious gardeners or those just looking to add a unique element to their garden. MidWest Garden Markers are strong, 10-inch high markers that feature steel wire construction and rustproof copper indentification panels. Each package of six markers comes with a black waterproof pencil for filling in plant names. Visit www.midwestglove.com.

6. BOSCH

Bosch Measuring Tools recently introduced the GLM 80, a Li-ion battery-powered combination laser distance and angle measurer. An integrated two-axis tilt sensor allows the GLM 80 to read angles when the unit is handled either horizontally or vertically. The Li-ion battery is rechargeable via standard micro-USB and measurement modes include length, area, volume and multi-surface area and the unit can store up to 20 measurements at a time. Visit www.boschtools.com.

7. IDEAL

IDEAL has launched the Tri-Bore multi-purpose hole saw that features a set of three large Tungsten Carbide teeth that provide extra-aggressive cutting action for heavy duty boring applications. The Tri-Bore hole saw is compatible with standard batterypowered tools or fixed stationary machines and is ideal for use in HVAC, electrical, plumbing and maintenance/repair applications. Contractors and serious DIYers can make faster cuts through almost any building material, including nailed wood, cement, plasterboard and composite material. Visit www.idealindustries.com.

8. Wooster Brush

Chinex FTP brushes from The Wooster Brush Company combine added stiffness with a fuller and softer tip for better results in any painting application. According to the company, the brush’s firmness allows paint to be pushed farther along a surface with better distribution and increased paint release. The softer brush tip on the Chinex brush is designed to create a smoother finish and leave more precise edges for improved cutting-in. It is seven times more durable than China bristle and it stays wetter to make brush cleaning easier. Visit www.woosterbrush.com.

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strike up the band Attendees at this year’s National Hardware Show were determined to put the recession behind them and think positive. By Frank Condron

Las Vegas – While it’s true Canadian hardware/home improvement dealers and companies involved in the industry took a hit on the bottom line during the worst of the recent recession, it is probably fair to say their American counterparts endured much worse. Indeed, while the Canadian recovery is now back in full swing, the U.S. economy is still struggling to get out of the gate. In May, the Canadian unemployment rate stood at 7.4 per cent (well below its 1976-2010 average rate of 8.53 per cent) while the unemployment rate in the U.S. for the same month topped out at 9.1 per cent (far above their 1948 to 2010 average of 5.7 per cent). Given the way things have gone for the U.S. consumer in the last couple of years, it is not surprising that the home improvement retailers who depend on that consumer are more than ready to start feeling good about their industry again. Toward that end, this year’s National Hardware Show in Las Vegas in May started with a bang. Quite a lot of bangs actually, in the form of a marching band crashing through a paper wall to open the show. “We said last year that when the economy began to pick up we’d send in the band and we did not want to disappoint you,” said Ed Several, senior vice-president and general manager of the show, at the opening ceremony. “With the recently released April jobs report showing an increase in hiring, and the long-awaited start to those delayed home renovation and repair projects driving more homeowners to our stores, we thought that nothing could be more appropriate than to celebrate in style and to help us kick off the 66th annual National Hardware Show.” And even though the U.S. economy may still be sputtering

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back to life, it seems the hardware/home improvement industry south of the border is determined to act like things are back to normal. According to Reed Exhibitions, organizer of the show, attendance at this year’s event was up four per cent, building on last year’s 20 per cent increase over a dismal year in 2009. This year’s event featured more than 2,300 exhibitors across nine product categories: Hardware & Tools; Homewares; Paint & Accessories; Plumbing & Electrical; Storage & Organization; Lawn, Garden and Outdoor Living and Tailgating & Outdoor Recreation. The exhibitors in attendance at the event represented almost US$240 billion in combined sales revenue. The mood at the show was generally upbeat, especially when compared to just two years ago when the global financial meltdown in the fall of 2008 cast a pall over the show and drove attendance to an all-time low. Cautious optimism was the theme of the annual “State of the industry” address, delivered by Dan Tratensek, vice president of publishing for the North American Retail Hardware Association (NRHA). “Overall, things are getting better… Home maintenance and repair is going to sustain the industry, although we won’t expect pre-recession-type growth until we see housing and remodeling activity rebound,” Tratensek said. The NRHA co-located its All-Industry Convention with the National Hardware Show for the first time this year. The convention featured three days of industry related seminars, featured speakers and experts. Mike Frame of Burlington, Ont.-based Burlington Merchandising and Fixtures attended the trade show and the convention and was impressed by the turnout for both July/August 2011

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Vegas Report events. “I thought the National Hardware Show was everything I expected it to be, having not attended in a few years. And the conference was a great experience,” said Frame. “I got to meet with quite a few of our customers and met some new vendors, so it was very productive from a networking standpoint.” Attending the National Hardware Show for the first time this year were Allen and Lucy Miller and their son Josh, owners of Invermere Home Hardware in Invermere, B.C. The Millers attended the show as guests of Reed Exhibitions in recognition of their 2010 Hardware Merchandising Outstanding Retailer Award for Outstanding Building Supply/Home Centre (over 25,000 sq. ft.). “It was awesome; it was a really neat experience to see the new product innovations and the manufacturers from all over

Innovation takes center stage in Vegas

ny first-time visitor to the National Hardware Show can’t help but be impressed by the number of new products for the home improvement market debuted at the show. You can treasure hunt up and down the aisles looking for interesting items at the booths, but, for convenience sake, the show organizers gather them all together in a New Product Showcase area. This year’s display featured hundreds of new products from manufacturers around the world, and awards were presented for new product innovation in a variety of categories. Here are some of the winners:

Gold—New Product Spotlight Awards

Minute Key (automated key-cutting machine) Minute Key, Menlo Park, Calif. The Minute Key is marketed as the world’s first self-service key-cutting machine. The company says this proprietary technology is 20 times more accurate than manual key-cutting devices, and it only takes about a minute. Visit www.minutekey.com.

Silver—New Product Spotlight Awards

LP3250 Portable Propane Power Generator Generac Power, Waukesma, WI. The LP3250 is a portable propane power generator that is designed for ease of mobility in a variety of applications. Lightweight and powerful, the LP3250 is equally suited to the jobsite, events, camping, commercial and home use. Visit www.generac.com.

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the world,” said Lucy. “There is lots of ground to cover, and I would recommend it to other dealers if they ever have the opportunity to go.” Josh Miller said the he was “quite impressed” by the size and scope of the show, and added that he and his father are currently trying to import a product they found at the show from a U.S. manufacturer. “It’s a truck roof rack that would be ideal for contractors,” said Josh. Another Canadian home improvement dealer who clearly enjoyed this year’s National Hardware Show was Conrad LeBlanc, owner of Tediche Home Hardware Building Centre in Cap-Pelé, N.B., who was honoured at the show as an NRHA Young Retailer of the Year. HM

Bronze—New Product Spotlight Awards UFO Infrared Heater with Remote

Bell Hudson LLC, Los Angeles, Calif. The UFO Infrared Heater heats up to full power in 30 seconds and transfers 94 per cent of its electric power into heat. It can be wall or ceiling mounted in both indoor and outdoor applications.

Best Product Concept— Inventor’s Spotlight Awards One-Step Caulk

New Way Concepts, Kremmling, CO. One-Step Caulk is a specially designed attachment that fits on the end of any standard tube of caulking and allows the user to create a smooth, straight professionalgrade bead in one step. The patented One-Step Caulk tip redistributes the caulking evenly, cutting down on the amount needed to complete the job.

Editor’s Choice Award from Popular Mechanics Swanson Speed Bevel

Swanson Tool Co., Frankfort, Ill. Designed with professional carpenters, framers and builders in mind, the Swanson Speed Bevel transforms instantly from a square into a sliding T-bevel. It is actually five tools in one: a framing/rafter square, a try square, a miter square, an angle finder/protractor and a T-square.

HARDWARE MERCHANDISING

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Trained Service Technicians Energy Efficient Quality Products Extensive Training Programs Order Quotation System Dedicated Sales Team Owned & Operated Shipping Fleet Outstanding Dealer Support Program

There’s more to us than meets the eye We’re more than just a full range of award winning, energy efficient window and door products. We bring over 30 years of superior service, a consummate knowledge of the Canadian marketplace, and an outstanding dealer support program to the table. Discover what the nation’s largest Canadian-owned and operated window and door manufacturer has to offer.

All Canadian made for all Canadian weather All Weather Windows is a CSA Certified Manufacturer

Visit us at allweatherwindows.com

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retailnews TruServ Canada

rolls out

new banners By Myron Love

Winnipeg — The hardware business is changing rapidly and TruServ Canada is changing with it. Last November, the dealer-owned distributor accepted an offer to sell all its shares to RONA. Then, at the Winnipeg-based company’s bi-annual dealers market in Winnipeg in April, TruServ President Bill Morrison announced the establishment of three new retail banners. Work to upgrade existing TruServ member-stores to the new banner format began in June and is expected to be complete by October. TruServ supplies about 750 retailers operating under the True Value, V&S and Country Depot banners as well as some independents. The company operates mainly in small and mediumsized communities across the country. The new banners are TRU Hardware, TRU Building Centres and TRU Farm & Garden. Morrison describes the TRU Hardware concept as a new brand that will compete in the same category as the company’s current True Value stores. TRU Hardware will offer 100 per cent Canadian-made products, Morrison says. And under the TRU Building Centre label, the True Value stores will be carrying lumber and building materials for the first time. TruServ Canada will be paying for the exterior and interior upgrades and new signage. “Our TRU Farm & Garden concept combines our expertise we have developed in our Ontario stores with RONA’s farm and garden products,” Morrison says. “We will be offering programs for greenhouse owners and farm specialty stores. Our new programs allow us to offer a more comprehensive variety of products.” Morrison reports that the new banners were introduced following some extensive research that involved customer focus groups and surveys. “We also spoke with many dealers,” he says. “We wanted to get a clear understanding of customer expectations as to what a store and brand should be. We also wanted to find out what motivated customers in choosing where they go to shop.” At the April meetings, Morrison reports, the dealers applauded the introduction of the new brands. “The feedback we got July/August 2011

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from our dealer networks is that there is a strong appetite for change,” he says. “They were pleased with the emphasis on Canadian content, our new red and white colours and the prospect of having their stores refreshed.” HM

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HARDWARE MERCHANDISING

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retailnews National Home Show/Canada Blooms join forces Toronto – Two of the leading consumer trade shows in Canada aimed at homeowners are teaming up to create what promises to be a must-see event for anyone looking to spruce up their living space. The National Home Show and Canada Blooms: The Flower and Garden Festival have signed an agreement that will see the two shows take place side by side at Toronto’s Direct Energy Centre next year. The combined events will comprise the single largest home and garden experience in North America. “Guests attending the National Home Show love the event but consistently tell us they want to see bigger and better gardens and floral displays,” said Tom Baugh, CEO of Marketplace Events, organizer of the National Home Show. “Guests attending Canada Blooms love their garden festival and will be thrilled in seeing its growth in stature under this new arrangement.” The management teams behind the two shows were quick to point out that this agreement to co-locate is not a merger, and that Marketplace Events is not purchasing Canada Blooms. Under the terms of the arrangement, both events will maintain their own identity and operate separately. “Putting these events side by side creates a situation where the whole is greater than the sum of its parts,” said Gerry Ginsberg, general manager of Canada Blooms. “We strongly believe this co-location will allow us to achieve a new standard of excellence and significantly enhance the customer experience for hundreds of thousands of garden and home enthusiasts throughout Ontario that visit these events each year.” The two events will run from March 16 to 25, 2012, and with a combined footprint in excess of 600,000 sq. ft., will constitute Canada’s largest consumer event under one roof. A single ticket purchased for either event will allow attendees to attend both events. A recent audience survey found that 47 per cent of respondents have attended both events in the past, and 62 per cent indicated that the opportunity to see both events for one ticket price would make it more likely that they would attend.

that JELD-WEN’s competitive position and well-known brands in markets around the world position the company very well to take advantage of the eventual recovery in global housing markets,” said Anthony Munk, an Onex managing director. Mr. Rod Wendt, chief executive officer of JELD-WEN, commented, “This is an exciting time in our company’s history and we’re pleased to be partnering with Onex, who shares our vision for the company’s future.” Under the terms of the deal, JELD-WEN’s management, workforce and corporate culture will remain firmly rooted and intact. JELD-WEN will continue to operate as a private company headquartered in Klamath Falls, Oregon, while also maintaining its employee stock ownership plan and its vast workforce. In 1996, JELD-WEN established a Canadian division, JELDWEN of Canada, headquartered in Winnipeg. Today, JELD-WEN operates design centres in Winnipeg, Burnaby, B.C., Calgary, Edmonton and Ville Sainte-Laurent, PQ; distribution centres in Winnipeg, Amherst, N.S., Saskatoon, Edmonton, Calgary and Langley, B.C.; and manufacturing facilities in Winnipeg, Vaughan, Ont., and the towns of Saint-Apollinaire and SaintHenri in Quebec. HM

Onex to Invest $675 Million in JELD-WEN Onex Corporation, a Toronto-based private equity firm and holding company, announced recently that it has agreed to invest $675 million and acquire a significant minority interest in JELD-WEN Holding, Inc. Founded in 1960, JELD-WEN is one of the world’s leading manufacturers of interior and exterior doors, windows and related products for use primarily in the residential and light commercial new construction and remodel markets. “We believe July/August 2011

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retailnews »»»»»»»»»»»»»» briefly «««««««««««««« Dulux Paint manufacturer Dulux recently completed the rebranding of 230 of its retail stores across Canada. The stores, which previously operated as ICI Paints, Glidden and Color Your World outlets, will now operate under one common Dulux Paints name. The company’s Bétonel stores will become Bénotel Dulux outlets.

The new store is Lowe’s fourth in Alberta and the first located in Edmonton; the other three Lowe’s are located in and around Calgary. With the Alberta economy still strong due to resource development in the north, Edmonton was a prime market for Lowe’s to enter. According to the Colliers International 2011 Canadian Retail Report, Edmonton currently has the fourthfastest growing municipal market in Canada, trailing only Surrey, B.C., Brampton, Ont. and Calgary. Lowe’s is also planning to open stores in Regina and New Westminster, B.C. this fiscal year. With the opening of the Edmonton location, Lowe’s now has 25 stores in Canada. The company opened its first Canadian stores in December of 2007.

All Weather Windows All Weather Windows has found itself in the news quite a bit recently. In May, the Edmonton-based window and door manufacturer announced its acquisition of Winnipeg-based Allan’s

“All that is changing is the name of our retail outlets and the labels on our paint cans; the store staff and operations, and high quality of our products will remain the same,” said Vince Rea, senior vice-president of Dulux Paints Stores. “While the ICI Paints, Glidden and Color Your World store banners will cease to exist, Glidden remains an important paint brand for the new Dulux Paint Stores and will be sold along with the Dulux brand.” Dulux is celebrating the launch of its new banner stores with an infusion of what else—colour. The company has launched a program called “Adding Colour to People’s Lives” that will see each Dulux location across Canada receive a share of $1 million in paint that they can use to brighten lives in the communities they serve. Each Dulux banner store can make use of the paint by selecting a public structure or local organization to support. The store can then hold neighbourhood painting events where civic leaders and community members can come together to transform public spaces in need of an upgrade. “By reviving communities and demonstrating what can be done with colour, Dulux hopes to inspire Canadians to reinvent the familiar and transform not only their public spaces, but also their personal spaces, with shades that feel good,” Rea said.

Lowe’s Lowe’s Canada opened a new big box location in Edmonton in June. The new South Edmonton Common store is located along busy Hwy. 2 and the 23rd Avenue interchange in a growing area of the city full of new housing and young families. The 103,000-sq.-ft. store was built at a cost of more than $20 million and will employ about 150 people. July/August 2011

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retailnews »»»»»»»»»»»»»» briefly «««««««««««««« Glass and Aluminum products, a manufacturer and installer of commercial glazing systems. Allan’s has been in the commercial window business in Western Canada for over 28 years and has worked on a number of award-winning construction projects. “This acquisition will complement our current commercial operations and strengthen our ability to serve our clients with one of the most innovative and competitive portfolios in the glass industry,” said All Weather Windows president Richard Scott. Scott said Allan’s will maintain its well-established brand name under the ownership of All Weather Windows, and the company’s 30 employees will be staying on. All Weather Windows broke news again on June 3 when it was named the 2011 Energy Star Manufacturer of the Year for the second consecutive year. The award was presented to the company by the Government of Canada at a gala event in Ottawa in recognition of the exceptional work done by All Weather Windows in producing and promoting energy-efficient products. “Being recognized for producing environmentally friendly products validates our commitment to the Canadian consumers in making their homes and businesses more energy efficient and reducing their overall carbon footprint,” said Aaron Latimer, vice-president of marketing for All Weather Windows. The Energy Star Manufacture of the Year award is one of the manufacturing industry’s highest honours, recognizing products that meet or exceed Canadian energy efficiency standards. The Energy Star program was created to help consumers easily identify products, homes and buildings that save energy and money and help protect the environment. More than 95 per cent of All Weather Windows’ products currently on the market are Energy Star qualified.

Moen Canada Oakville, Ont.-based bathroom fixture manufacturer Moen Canada recently made several additions to its national sales team. John Farina, Tony Hogan and Ryan Wright have joined the company as Senior Territory Managers, Wholesale. John Farina has more than 20 years of sales experience. He joined Moen in 2002 as a sales and service representative and helped Moen attain The Home Depot’s ‘Vendor of the Year’ award for six consecutive years. Prior to joining Moen, Tony Hogan was the vice president of operations and the North American director of business development at Seabridge Bathing Ltd. Most recently Hogan served as an account manager at Axford Agencies. Before joining Moen, Ryan Wright served as sales manager at Axford Agencies and as a sales representative at Western Supplies. He brings more than 20 years of sales experience to Moen. HM

HD Supply Canada HD Supply Canada, a national wholesale distribution company serving the maintenance, repair and specialty construction markets, recently opened its first retail showroom. Located in the town of Vaughan, just outside Toronto, the showroom combines the product offerings from the company’s HD Supply Litemor and HD Supply Brafasco stores. HD Supply Litemor is Canada’s largest commercial lighting distributor and HD Supply Brafasco is a well-known distributor of fasteners, tools, safety supplies, abrasives, paint and other specialty building supplies. These two suppliers have more than 80 years of combined experience serving professional customers across Canada. The flagship HD Supply Canada location features 16,000-sq.ft. of retail showroom space displaying more than 15,000 product SKUs. Additional services offered at the location include delivery to jobsite, tool repair and tool rental. The facility also features an attached, fully stocked distribution centre with an inventory of more than 20,000 SKUs. July/August 2011

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Contractor

Roundtable Ever wonder what contractor customers really think about the hardware/home improvement retailers they have to deal with practically every day? We decided to ask them. By Frank Condron

egardless of the focus of your hardware/home improvement retailing business, contractor customers are likely pretty important to your ongoing success. In the case of a traditional lumberyard or building supply dealer, it is possible for contractors to account for in excess of three-quarters of total sales. But even soft lines-focused home centres—where things like home décor, flooring, lighting and fixtures account for the bulk of sales—count on contractors to bring their renovation customers in to choose their finishing products. The bottom line is, contractors are one group of customers the hardware/home improvement dealer simply can’t do without, mostly because they are the customers who are always in the market for what you are selling, season after season, year-in and year-out Given their importance to the business, it’s is no surprise that hardware/home improvement dealers spend a lot of time and effort trying to attract contractor customers to their store, and, more importantly, keep them coming back. If only the dealer could read the contractor’s mind so they could provide exactly the kind of products and services the contractor was looking for. Well, the editors at Hardware Merchandising can’t read minds either, but we can do the next best thing: we can ask. And ask we did, at our first contractor customer roundtable discussion. Working in conjunction with our sister publication, Canadian Contractor, we gathered a group of professional contractors together this past spring to get their thoughts and opinions on the hardware/home improvement retailers they interact with on a daily basis. Our panel of contractors included Steve Barkhouse, Amsted Construction Ltd. Ottawa; Pawel Matonog, Archer Construction Group Ltd., Mississauga, Ont.; Dennis Bryant, Bryant Renovations, Toronto; Mark Hofstee, Rammik Construction Inc., Guelph, Ont.; David Litwiller, Litwiller Developments Inc., Calgary; and John Friswell, CCI Renovations, Vancouver. The following is a transcription of that discussion, chaired by Hardware Merchandising editor Frank Condron. Read on...

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Hardware: Encouraging customer loyalty is vital for hardware/home improvement and building supply retailers, especially when it comes to contractor customers. Are you loyal to one retailer or do you move your business around, maybe depending on the specific product? And if you are loyal to one dealer, how long have you been with that dealer and what is it that makes you keep coming back? John Frisswell: We pretty much shop around. We’re a costplus contractor as well, so we owe it to our clients. Tool-wise, there are a couple of places that we’re loyal to. Material-wise, I would say there’s always a minimum of three on our list for any kind of category. So while we’re always trying to shop for the best price, service comes into it too depending on what we’re looking for. The lumber companies are getting a little bit better: they’re giving us better product and stuff, so we’ll sway ourselves to one that way. But we’re still always checking them. Mark Hofstee: We are, as far as lumber and the majority of our building materials, pretty loyal to one dealer. There’s a couple of reasons for that: first, the owner is my neighbour; he lives in my neighbourhood—as opposed to the big box guy who lives down in Atlanta, I think. And, also, they give us the better pricing. Every time we price them against the big boxes or the other suppliers, we’re always getting a better price with our local guy. When I call in, they know who I am by the sound of my voice. It’s hard to beat that kind of service and loyalty, as well as trying to support our own local economy. Steve Barkhouse: We’re loyal, 20 years. We do price check, but we just want to check things. And, absolutely, the service is very important to us. If we want quick delivery or a boom truck or something like that, it’s not a problem. We get our lumber and tools from the same supplier; he does everything. We also use a local chain. He’s been around here for a long time, not one of the bigger chains. We find that that works really well for us. We do use the other big chain guys on occasion, and if they could make the billing and accounting easier, that would be a nice thing for us. David Litwiller: Generally, we’re loyal to our suppliers. We do check prices twice yearly; just blanket everything to maintain our pricing. We call it our cheat sheet, our estimating thing. Some of our suppliers have been with us for over 14 years. Our electrical supplier is actually over 25 years. But poor service does trigger price checking for sure. Pawel Matonog: For the bigger purchases, we’re loyal to one or two suppliers. For the everyday things that need to be picked up in the morning before a project, it’s usually the most convenient locations, so the big boxes. But I think service and price are key, so we’ve tended to be loyal to the same dealer. They’re great with free deliveries and same-day deliveries and the prices have been great. But we do shop around. Dennis Bryant: I would say some of the same things.

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Although when we’re buying lumber, or finished lumber, we have our favourite supplier who has higher quality than the big chains. The other thing is that we’re becoming involved in a buyer’s group that should bring us lower prices, a group of contractors working together. Hardware: Can you give me an example of a time when a retailer really helped you out and how they did it? Or, conversely, when they really messed you up? Dennis Bryant: We were working with a retailer, a big-box store, and we had a large kitchen order that came from the United States. Somewhere along the line, one of the panels in the kitchen had been ripped down incorrectly, so it didn’t fit. We told them and they said, “Well, it’s correct here.” It went on and on, and three times they sent us the replacement but it was always the wrong one. Finally, somebody figured out that something was written down wrong. It cost us an incredible amount of money to finally get it resolved. Pawel Matonog: Sometimes, when you call the suppliers, I’ve learned that it’s probably better if you e-mail the order as opposed to phone it in. The guys on the other end of the phone, if they’re rushed, can make simple mistakes. And these simple mistakes, when the delivery is done, can cost us a day or two of lost labour. We just had a case when the wrong size insulation was delivered: instead of 24-inch, 16-inch insulation was delivered. The guys were ready to work but the insulation wasn’t correct. Back it went, and we just lost a few days. It was a simple mistake that they punched into the computer wrong. I really feel that e-mailing and more faxing orders is probably the key to preventing this from happening. David Litwiller: I’ve got a good news story. We were working on a typical 1950s bungalow that needed a truss package with a 2-3/8-heel height. Our truss supplier sent out the wrong heel height. The next day we got the package sent out again. They came and brought the new package and took the old one away. Steve Barkhouse: For us, it’s very much how quickly they respond. Are we going to spend a week talking about the problem and whose responsibility it was, or is the order sent back out right away and we’ll figure it out afterwards? That shows respect for our costs and their costs. Often it’s our fault; either we’ve ordered something wrong or we’ve written it down wrong. We order by fax or on the Internet and sometimes the guys hit the wrong button or punch the wrong number in and, yeah, it comes wrong. But if it’s fixed right away, you know, you can always work that out at the end. It’s better for everybody. Mark Hofstee: We have had it a number of times where we’ve signed an order and faxed it in and the fax got lost. Those are the kinds of things that really annoy us. You are waiting for an order that’s suppose to take three weeks and when the three weeks is up you call them and say, “Where is it?” and they say, “Well, you never ordered it.” So that’s been a problem. Some of the dealers don’t seem to want to switch to e-mail for some July/August 2011

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reason. So pieces of paper are getting shredded or lost and no one is sure what’s happening. Hardware: Obviously, contractors purchase a lot of building supplies. Do you find a difference in price between the warehouse stores and the small independent building supply dealers and home centres? Mark Hofstee: Last fall we were doing a trim order, so we were replacing all the doors, casings and baseboards in a house, and I priced it at both the local home centre and the big box, because the big box was constantly calling us asking for our business. At the end of the day, when the quotes came back, the big box was about 35 per cent higher. I nearly fell off my chair when I saw the difference because they claim to be the lowest price all the time. When I called them and asked about it, they had no explanation. So we tend to stay away from them, except they have a larger selection of tools. So we buy some tools from the big box, but otherwise we tend to buy everything from the local home centre or lumberyard. Steve Barkhouse: Framing materials, insulation and drywall are all pretty close on price between the small guys and the big boxes. Beyond that, on things like house packages or anything that’s custom—windows, doors—we find that you will see some variances in price.

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David Litwiller: We are finding minimal variances. Mind you, we’re Calgary-centric, so the large population has an effect. I really don’t shop around much. We used a regional chain around here, Totem Building Supplies, for years that has about eight or 10 stores in Calgary. (The owners just sold it a couple of years ago to RONA.) We get really strong pricing from them and all of our guys have a contractor card. They walk in, they buy what they want and they walk out. Pawel Matonog: I don’t have an account with a big box retailer, so I don’t know if their contractors that have accounts get better pricing. But I’ve found, on the most basic things, there’s a 10 to 15 per cent difference on things like drywall between a supplier that, by and large, deals only with drywall and your big box walk-in price. So on things like wood, studs, yeah, it is cheaper with the specialty suppliers. Dennis Bryant: I’m not sure if there is a big difference between the big boxes and the smaller building supply dealers. We don’t often look that closely at those things. It’s more about other factors—the service and the quality of materials. For us, it’s more important to get a better product. If you’re buying lumber, whether it’s trim lumber or construction lumber, the better quality lumber is going to make the job go faster. The biggest costs for us are not in those areas. HM

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Bouncing

Photo: Stephen Ferrie

The Canadian hard retailing industry l to the recession

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ian hardware/home improvement dustry looks to regain ground lost ession

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ncing Back

egret is often called a useless emotion, but sometimes you just can’t help yourself. Given the beating the Canadian hardware/ home improvement retailing industry took in recession-ravaged 2009, it is impossible to look at 2010 as anything other than a strong rebound year by comparison. While last year’s Top-100 Report was awash in negative sales numbers for the country’s top retailers, buying groups and distributors in, this year’s listings reflect widespread, if not strong, growth throughout the industry. Whereas in 2009 we estimated that the Canadian hardware/home improvement retailing industry actually contracted by more than five per cent, in 2010 the industry managed to reverse itself, growing by approximately 4.2 per cent (1.85 per cent adjusted for inflation) for the year to a total sales volume of some $40.6 billion. Obviously, growth, no matter how small, is always a good thing in business. Still, as dealers and home improvement professionals across the country reflect on 2010, it is likely that more than a few will look back and wonder, “What if…” As 2009 was winding down, the overall economy, and the home improvement sector in particular, was just starting to pick up steam. For the first nine months of 2009, Statistics Canada reported negative results in the three industry-specific subcategories the agency tracks—building and outdoor home supplies stores, home centres and hardware stores and specialized building materials and garden stores. By December of that year, however, all three sub-categories were showing year-over-year growth again, and that trend carried into 2010. The momentum in the industry in early 2010 was due in no small part to the Home Renovation Tax Credit (HRTC), which was included as part of the federal government’s February 2009 budget in an effort to kick-start home renovations. The HRTC proved to be a smashing success for homeowners, contractors and home improvement retailers. In fact, so many homeowners took advantage of the tax break that the federal government decided not to extend the program for a second year in its February 2010 budget—in spite of vigorous lobbying by the Canadian Retail Building Supply Council and others. If the program had been extended for another year, the Canadian hardware/home improvement retailing industry could well have recovered all of the ground it lost during the recession. If only. Along with being a year of recovery for the industry, 2010 also proved to be a year of further consolidation. Early in the year, the parent company of LBM distributor CanWel Building Materials Group finalized an $81 million deal to acquire rival distributor Broadleaf Logistics. Then, in October, there were two more blockbuster deals that altered the home improvement retailing landscape: RONA’s purchase of Winnipeg-based hardlines distributor TruServ Canada (price not disclosed), and TIM-BR MART’s acquisition of CanWel’s hardlines distribution division, CanWel Hardware, for $50 million. —Ed.

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Boundless Energy

RONA continues to add companies, brands to its portfolio 1. RONA

Boucherville, Que. 2010 Retail Sales: $6.6o-billion Points of Sale: 917

espite its relatively modest returns, 2010 could prove to be a pivotal year for RONA Inc., as the giant buying group continued to lay the groundwork for what its executives are hoping will be big market share gains down the road. In fiscal 2010, RONA’s revenue increased by 2.6 per cent to just under $4.8 billion, which wasn’t a bad performance considering the state of the economy and the expiration of the Home Renovation Tax Credit (HRTC) early that year. The company also eked out a 3.6 per cent increase in net income to $143.2 million.

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But the most important number on RONA’s balance sheet in 2010 may have been the $80.3 million that the company spent to acquire four specialty businesses, three of which—Plomberie Payette & Perreault; Don Park Limited Partnership, with 14 HVAC branches; and MPH Supply in Vancouver—bolstered RONA’s Noble Trade industrial/commercial division. One of RONA’s goals is to expand its presence in Canada’s $70 billion commercial and professional sector. Its ambitions continued to manifest themselves in the early months of 2011, when it acquired La Boutique Plomberie Decoration 25 Inc. That deal left the three-year-old Noble Trade with 63 stores, four distribution centers and three manufacturing plants. In April, Reuters reported that RONA was scouting the United States for I/C companies to buy, and was willing to spend as much as $300 million this year alone. However, the Boucherville, Que.-based retailer remains focused primarily on fortifying its positions in Ontario and Western Canada. In May 2011, the company was readying its July/August 2011

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distribution center in Calgary for expansion and possible relocation. Last October, RONA staked its biggest claim yet to western dealers to date when it acquired the Winnipeg-based True Value Hardware buying group, with 650 dealers, $100 million in annual wholesale sales, and two distribution centers. RONA is running True Value as a separate company with its own brand, which was updated this spring to three TRU banners. This acquisition is particularly important to RONA in its quest to bring more independent dealers into its fold. Early last year, RONA launched a national recruitment campaign that targeted hardware and building materials dealers. The goal was to either sign them as dealer-members or assist them to map out their succession through a planning program RONA launched in late 2009. Succession planning, in fact, is one of the components in RONA’s “New World” growth program, which kicked into gear in 2010. Within the New World framework, RONA is allocating $100 million for succession planning through 2020 to assist families of independent dealers, RONA employees and outside entrepreneurs to acquire RONA stores from retiring members. New World emphasizes four methods of growth: new-store construction, affiliate development, acquisitions and increased

RONA sales by year (in billions)

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6.6

6.3 6.0

5.75

2006

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2007

2008

2009

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same-store sales through improved customer service. If these factors play out as RONA expects them to, the co-op believes it can increase its market share—at around 15 per cent currently—to 25 per cent in four years.

Asian sourcing drives brand strategy Binding members to the buying group is critical to RONA’s market-share calculus, especially at a time when its hegemony is being challenged by groups such as TIM-BR MARTS and Castle Building Centres, which, through alliances or acquisitions, are attempting to make inroads into the hardlines distribution segment of the business. It’s not surprising, then, that RONA is placing more emphasis on private-label and controlled brands. The company went into 2011 with 6,000 SKUs it sells under 11 proprietary labels. Nearly one-third of those items were added last year alone, and these labels now account for 22 per cent of the company’s product mix, which RONA expects to increase to 30 per cent by the end of this year. What’s driving RONA’s proprietary merchandising is its Asian sourcing office, which since its launch in early 2009 through November 2010 had shipped more than $175 million in Chinese-made products to its distribution center near Montreal. RONA intends to spend $400 million this year and through 2012 on purchases from China through this office. RONA’s merchandising department has been quite active of late. Last year, the company realigned its buying team by eliminating one category manager and assigning new duties to other managers. In September, RONA’s “Colour Boutique” concept—with a database of thousands of shades and the technology to reproduce a colour from a sample—began showing up in dealers’ stores. Then, last November, the company introduced an online guide aimed at helping customers choose products that are environmentally friendly. This guide was the latest chapter in RONA’s ongoing effort to establish itself as one of Canada’s greenest retailers. And the company is putting its money where its mouth is by making its stores greener, too. New affiliate Totem Building Supplies outlets opened by RONA in January 2010 were the company’s first to apply for certification from LEED, which rates a building’s environmental design. And in 2011, RONA intends to roll out a pilot program it has been testing in 28 stores that focuses on energy efficiency and waste management. As it entered 2011, RONA had moved to decentralize its operations to allow regional vice presidents more latitude and autonomy to develop their own territories and meet their growth objectives. In May, the company let go dozens of employees at its headquarters and corporate stores. The associates who are left will have their work cut out for them, after the buying group’s revenue in the first quarter of 2011 dipped four per cent from the same period a year ago, and net income was off by nearly $20 million. —John Caulfield HARDWARE MERCHANDISING

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organic growth

Auto, hardware, and sporting goods help Canadian Tire squeeze sales from existing stores 2. Canadian Tire Toronto, Ont.

2010 Retail Sales*: $5.81-billion Points of Sale: 488 (*estimated home and leisure sales only)

nother Year, another five-year growth plan. Like clockwork, Canadian Tire Corp. last year unveiled its latest blueprint for improving its stores’ productivity. That plan, which the Toronto-based retail giant took the wrapping off of in April 2010, in many ways extends and refines the strategic path Canadian Tire has been traveling with for the past several years. The plan reasserts that sales and earnings growth are not contingent on opening a lot more stores beyond Canadian Tire’s current 487 outlets. And as the retailer moves into its 10th decade, its plan reiterates Canadian Tire’s “unique” relationship with the 180 million customers those stores serve annually as the foundation for its future growth.

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By strengthening its automotive business (which accounts for 25 per cent of its retail stores’ sales), bolstering its existing stores’ growth through retrofits that feature “traffic-driving categories,” and by raising its Financial Services division to its historical levels again, Canadian Tire projects it will achieve, over the next three to five years, three to five per cent top-line annual revenue growth, eight to 10 per cent annual earnings per share growth, and 10 per cent return on invested capital. Last year was another step in that direction. Canadian Tire Retail posted $7.51 billion in revenue (which includes dollars from PartSource and auto repair labour at its stores), representing a 1.4 per cent increase over 2009. Same-store sales grew by 0.8 per cent, but pretax income soared by 82.3 per cent. Canadian Tire’s corporate net income jumped 35.4 per cent to $453.6 million, which the company attributed to lower interest costs, “positive margin impact” on several product categories, and lower product acquisition costs as a result of a merchandising procurement review of its $5 billion in annual purchases.

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growth plan. Its “core” categories now include pet care, storage, household cleaning, and “backyard and exercise.” The dealer’s “SMART” concept—to which it retrofitted 59 of its stores and used to open three new units in 2010—employs a racetrack format and clearer signage designed to give more exposure to better-selling items. Last year that concept incorporated separate “stores” within stores for the hardware and sports departments. Interestingly, this spring selected stores started making room for heavy appliances, a new line for the retailer (and a key category for big box competitor Lowe’s). SMART is part and parcel of Canadian Tire’s broader effort to present itself as a “customer-centric” retailer. In April 2010, the company hired dunnhumby, a firm that specializes in analyzing customer behaviors and preferences, in an effort to better understand what shoppers want so it could tailor its marketing and merchandising accordingly. Dunnhumby spent more than six months with consumers with the expressed purpose of evaluating Canadian Tire’s competitive differentiators. In March 2011, the initial results of that analysis emerged in the form of Canadian Tire’s first new consumer advertising campaign in three years. Known by its tagline “Bring it on,” the campaign features consumers engag-

Canadian Tire sales by year (in billions)

(estimated home & leisure sales only)

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ing different tasks—yardwork, camping, backyard grilling, car repair, painting—all with the help of products they purchased at Canadian Tire. Television spots are supported by weekly flyers that reach 11 million households, as well as radio, print and social media such as Facebook. Indeed, Canadian Tire is trying to reach customers via whatever communication platform they prefer. That includes smartphones, for which the dealer introduced a free mobile app last November that consumers can use to scan barcodes and access product information in Canadian Tire stores. The company also has a robust internet presence that is visited by 70 million shoppers annually. It enhanced that presence last year when it developed a new interactive website for storage and organization through which customers could post questions, as well as an in-store online tire selection kiosk. Spearheading that last offering was Michael Medline, who in November 2009 was named president of Canadian Tire’s automotive business. But 11 months later, Medline was gone, as were Huw Thomas, the company’s executive vice president of financial strategy performance, and Stan Pasternak, its treasurer. Those departures were part of a major realignment of senior management and operations aimed at making Canadian Tire’s five related businesses work together “as one company serving one customer.” In that shakeup, the company promoted Canadian Tire Retail’s president Mike Arnett to executive vice president of the corporation. His added responsibilities include strategic marketing (which includes the execution of the company’s ever-evolving loyalty program), merchandising sourcing and procurement. Other personnel changes included the promotion of Glenn Butt to executive vice president of customer experience and automotive, which means he’s the liaison between the company and its dealers.

The Sporting Life 4

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2007

2008

2009

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The musical chairs being played in the corporate suite notwithstanding, Canadian Tire entered 2011 in pretty good shape, operationally and financially. At the end of last year, it reported that it had $1.17 billion in committed lines of credit and $1.9 billion in cash. Business conditions still aren’t ideal, as evidenced by the 0.6 per cent increase in sales that Canadian Tire Retail’s 487 stores eked out in the first quarter of the year. And the prospect that those conditions might not improve markedly for a while could explain Canadian Tire’s out-of-the-blue move in May to acquire, for $26.50 per share, The Forzani Group, a leading sporting goods retailer with more than 500 locations and $1.4 billion in annual sales. More than 70 per cent of Forzani’s sales are in athletic apparel and footwear, and you can bet that its stores will be carrying a healthy complement of hockey-related merchandise that ties into the five-year deal Canadian Tire signed last August to become the Official Sporting Goods Retailer of the National Hockey League. —JC HARDWARE MERCHANDISING

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Who’s in charge? Major changes in the management of in-store stock and operations consumed Home Depot Canada in 2010 3. The Home Depot Canada Toronto

2010 Retail Sales: $5.55-billion (est.) Points of Sale: 179

n April, Home Depot opened its 180th store in Canada, an 80,000-sq.-ft. unit in Chilliwack, B.C., which included the company’s then-new home décor section. This was the first and only new store that Depot will open in 2011, and only the fourth it’s opened since late 2009, as the retailer continues its two-year-long focus on reorganizing, upgrading and expanding its operations for greater productivity. Depot’s latest motto in Canada is “speed to market,” and the company’s executives have made no secret that they expect existing stores to capture greater market share. Earlier this year, the

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company began changing stores over to its three-year-old “Project Stores” concept, whose floor plans organize products to correspond with the customers’ complete project needs. This year’s focus is on increasing customers’ purchases for smaller projects. Encouraging shoppers to purchase more products during each visit they make to its stores is critical for Depot, whose customer transactions over the past year and a half have basically been flat, and whose average ticket sales rose only modestly. Maintaining a consistent in-stock position in its stores is an important element in the company’s efforts to boost sales, so Depot’s decision in the spring of 2010 to bring merchandising services in-house sent a clear message to both vendors and store personnel that the retailer was raising its expectations about the performance of its stores as well as individual departments, categories and even individual products. Depot hired 1,000 people for its Merchandising Execution Team (MET), which it piloted last September. The first phase, July/August 2011

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which launched in all stores in December, affected the lighting and electricals categories. The second phase, which began in the spring of 2011, affected seasonals. By June, all departments were scheduled to fall under this program. MET is unique in that Depot brought it to Canada after testing it in the U.S. (Canada typically has been the retailer’s laboratory for such initiatives.) And while vendors are no longer responsible for managing their inventories on a day-to-day basis, they still handle major resets, and are asked to help train Depot’s employees. Vendors also have some say in setting the guidelines for how MET’s effectiveness is measured, and are asked to provide their own feedback to the retailer via a monthly “Voice of Supply” questionnaire.

New Leadership In any other year, the MET rollout would be the big news story for Home Depot Canada. But the January 31 departure of president Annette Verschuren, who had been with the company for 15 years, set off a chain of events that will likely have long-term ramifications for the Canadian division’s operations. It’s not exactly clear why Verschuren resigned when she did. But as Home Depot Canada’s first Canadian-born president, she

The Home Depot Canada sales by year (estimated, in billions)

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was the face of the retailer for many of its shoppers and will certainly be missed. She gets a lot of the credit for making Home Depot Canada the corporation’s most profitable division, and she definitely had a hand in helping the company develop its line of eco-friendly products and other environmental efforts. The corporation obviously had a lot of faith in Verschuren’s abilities, eventually expanding her responsibilities to include managing its Home Depot Expo stores and its Asian operations. Last year, the company handed over Home Depot Asia to Bill Lennie, its senior vice president of international merchandising. Eleven months later, Lennie was named president of Home Depot Canada after Verschuren’s original replacement Aaron Carmack stepped down from that post after less than three months, reportedly to attend to a personal illness. Soon after he took over, Lennie wasted little time establishing his footprint on the Canadian division through an extensive shakeup of its senior management structure aimed at streamlining its decision making. The biggest change was the departure of merchandising vice president Gino DiGioacchino, who often spoke for the division when it had news to convey. His replacement, Jeff Kinnaird, is now responsible for merchandising, global sourcing and private label development. The division’s category management team was compressed to four directors from six, with a focus on hardlines, building materials, projects and décor. Some of the reassignments simply entailed moving managers and directors into new slots. But this shakeup probably caused some head scratching, too, such as placing supply chain duties with the division’s vice president of finance Mike Rowe. Lennie insisted at the time that Home Depot Canada was not veering from its primary objectives: to improve in-stock performance, store appearance and operating standards. While all the commotion seemed to be happening in the corporate suite, Depot also made less obvious changes that should help its store managers, such as centralizing its hiring process. The company has also been making more of an effort to reach out to different customer groups. Earlier this year the company kicked off a chainwide “First for Pro” program, which not only stepped up its marketing to contractors, but also offered pros better customer service, more convenient store hours, and even designated parking areas. Depot also opened its arms wider to smaller vendors. Its “Innovations for Sustainability” program, which it launched with the Ontario Ministry of Economic Developer and Trade, gives small companies that make innovative and eco-friendly products a better chance at getting its products on Home Depot Canada’s shelves. But are Canadians buying this stuff? Depot’s own recent polling found that fewer Canadians took some environmental action at home than those who did a year previous. In an effort to spur sales in the “green” category, in April Depot lowered prices on 2,400 items sold under its Eco Options brand. —JC HARDWARE MERCHANDISING

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PAINTING BY NUMBERS Home Hardware’s success often stems from its coatings products

4. Home Hardware Stores Ltd. St. Jacobs, Ont.

2010 Retail Sales: $4.85-billion Points of Sale: 1,080

he colour red has long been synonymous with Home Hardware Stores Ltd., but lately, a lusher palette has become a symbol of this dealer-owned buying group’s growth. Home Hardware’s Beauti-Tone line of paint, expanded its colour spectrum last year when the division entered into a partnership with Style at Home magazine, which created 50 different shades arranged along nine palettes. Another colourful line extension came out of Home’s partnership with the celebrity fashion designer Simon Chang, who created his own paint collection for the division. Dealers and customers seem to be embracing Home’s paint line. In the spring of 2010 Home Hardware determined it needed to add another 55,000 square feet to its 178,000-sq.-ft. paint factory. Its paint division isn’t the only place where Home has been splashing on a bit more colour either, as the co-op “cross-pollinates” ideas from one store platform to another. The theme of last January’s show for nearly 70 Home Furniture dealers was “Live and In Colour.” Since early 2010, Home has been offering higher-end “white goods” through its dealers’ furniture outlets—refrigerators, stoves and washing machines—in fire engine red, royal blue and deep grey. For more than a year now, Home Furniture dealers have been featuring products that target urban lifestyles, such as the Urban Spaces collection of smaller furniture pieces. Indeed, Home opened its first furniture store in Toronto in May 2010, a 3,600-sq.-ft. outlet that’s about half the size of a typical Home Furniture store. But in 2011, the Home Furniture stores have been casting a wider net with a “luxury living” concept that showcases upscale living and dining room products.

Group Therapy When Home Hardware gets behind a new idea or product, its dealers commonly follow in droves. Since it was introduced in 2008, Home’s latest store design and signage program has been adopted by more than half of its dealers. That’s impressive considering the fact that nearly half of Home’s dealers currently stock lumber and building materials. Dealers continue to change their stores over to the group’s “Home Centre” banner

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and concept primarily because it allows them more space to display kitchen and garden products. That kind of allegiance is one of the reasons why Home’s dealers have been able to weather the economic downturn over the past few years better than predicted, according to Paul Straus, the company’s CEO. Straus assumed the dual role of president when Home’s co-founder Walter Hachborn retired last year after 46 years with the company. (Terry Davis, Home’s vice president of administration and strategic planning, was promoted to executive vice president and COO.) Straus has worked for Home Hardware since it began in 1964, and was honored for his decades of service to the home-improvement industry when the Retail Council of Canada inducted him into Retail Hall of Fame in June 2010. One of Home’s recent show themes was “Building Tomorrow Today.” And while it rarely gets (or seeks) the publicity other dealers receive, Home Hardware, under Straus’ leadership, has quietly made operational strides. Last year, for example, it retained the supply-chain and logistics consultant Manhattan Associates to enhance its distribution and transportation processes. In the fall, the buying group installed a Logistics Management System that will maximize warehouse space, reduce product handling and streamline distribution. (While not necessarily connected to these initiatives, in July 2010 the Private Motor Truck Council deemed Home Hardware’s fleet, which covers 17 million kilometers annually, the safest in the country. Home won the same honour in 2005 and 2008.) Earlier last year, the buying group, working with Northcore Technologies, launched an intranet that provides an online forum for dealer-members and a channel for them to resell surplus or underutilized inventory and equipment. Another feather in Straus’ cap has been Home Hardware’s ongoing recruitment and dealer development efforts. In 2010, the buying group signed 37 new dealers. In addition, two of its members were recognized by the National Retail Hardware Association as Young Retailer of the Year (Conrad LeBlanc of Tediche Home Hardware Building Centre in New Brunswick) and Retailer Innovator of the Year (Gary, Glen and Dean Thulin and Alison Kirby at Pioneer Home Hardware Building Center in British Columbia.) Straus also demonstrated his company’s concern for the health of its employees when, in March 2011, Home launched a wellness program it’s calling “Good For You!” Designed by La Capitale Financial Group, the program uses data it collects from Home’s associates to develop personalized fitness and diet regimens for them. The program, which started at the company’s headquarters in St. Jacobs, Ont., is going to be rolled out to the buying group’s facilities in Buford, Ont.; Wetaskiwin, AB; and Debert, N.S. —JC July/August 2011

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5. TIM-BR-MARTS Calgary

2010 Retail Sales: $3.3-billion Points of Sale: 745 There are few companies involved in the hardware/home improvement retailing business that look back on 2009 with any fondness, but it was an especially bad year for the Calgary-based buying group TIM-BR MARTS. In last year’s Top-100 Report, TIMBR MARTS reported a drop in retail sales during the recession of more than 20 per cent, and this was during a year when the overall industry was down about 5.3 per cent from 2008. Thankfully, falling farther than some in 2009 just meant TIMBR MARTS would have a much better story to tell about 2010. According to the group, its more than 750 member-dealers nationwide experienced a 10 per cent increase in sales in 2010 over the previous year, recouping close to half of the sales drop between 2008 and 2009. Through moves like its merger with Homecare in Ontario (2005), the signing of about two-thirds of the members of AWARD in Atlantic Canada (2005) and alliances with Groupe Matplus in Quebec (2006) and IRLY in British Columbia (2009), TIM-BR MARTS has made clear its ambition to be recognized as a truly national buying group. The group took another huge step towards that goal in August of 2010 when it announced that it would hold its first national buying show, scheduled for March 31 to April 2, 2011, in Toronto. On announcing the event, group president Tim Urquhart said the goal of the show was to provide a “central venue” for TIM-BR MART dealers to “convene with industry suppliers and take advantage of buying opportunities and new product showings.” Urquhart said the show’s secondary objective was to “create a forum for networking and information exchange among industry colleagues.” If rebounding sales and a new national buying show weren’t enough to satisfy TIM-BR MART members in 2010, the group saved its biggest news of the year for the fall. On October 4, TIM-BR MARTS announced that it had reached an agreement to acquire CanWel Hardware, the hardlines distribution arm of CanWel Building Materials Group, for $50 million. Through the deal TIM-BR MARTS acquired CanWel’s two hardware distribution operations in Victoriaville, Que., and London, Ont., plus two Chalifour building material warehouses in Quebec. TIMBR MARTS also took over ownership of the PRO banner and licensing rights to the ACE banner in Canada. The division was subsequently renamed Chalifour Canada. Commenting on the deal, Uruqhart said: “This is a turning point for our company. With this acquisition, we will further empower our network of strong independent TIM-BR MART dealers; they are the leading purchasers of building materials in Canada and now they will be the leaders in hardware as well.” —Frank Condron

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6. INDEPENDENT LUMBER DEALERS COOPERATIVE (ILDC) Ajax, Ont.

2010 Retail Sales: $1.7-billion (est., ILDC only)) Points of Sale: 135 Since 1964, the ILDC has worked quietly in the background to supply some of the largest family-owned, multi-outlet lumber and building material supply chains in the country. Three years ago, the buying group took a significant step in a new direction by adding four buying groups to its membership: Sexton, Delroc, Federated Co-ops and La Coop federee de Quebec. Though ILDC general manager Andrew Battagliotti considers adding new members—even if they are other buying groups—to be standard procedure, the new expansion was significant enough that on its website one new member calls itself a “founding partner” in the expanded ILDC. Such public enthusiasm for ILDC is not common. Of the 23 member buying groups and dealers, only five even mention it on their websites despite the fact that, with its new buying group partners included, ILDC membership represents some $4 billion in buying clout. Since the expansion, it has been business as usual for ILDC and Battagliotti. The new members are by now fully integrated into the ILDC family. “When you merge groups, be it existing groups or new entities, it takes a little while,” says Battagliotti. “People either have to change culture or ways of thinking. There is always a period of adjustment for everybody. But it’s running very well today. We all understand how things are being approached.” That approach is as a pure buying play with no extraneous offerings, services or branding. It is an approach that is respected in the industry and clearly made it possible for the four buying groups, with various levels of their own branding, to come aboard. Steve Buckle, general manager of Sexton Group, says the relationship the two companies have forged has accelerated Sexton’s development as a buyer. “ILDC has traditionally focused on negotiating a net price on every SKU that the supplier provides,” Buckle says. “That is more valuable to our members than a simple year-end rebate. And ILDC has a strong history of directing purchase volumes to the supplier with the best programs.” —Robert Koci

7. SEXTON GROUP Winnipeg

2010 Retail Sales: $1.326-billion (est.) Points of Sale: 285 Lower prices on gypsum, roofing materials and other near commodities pushed sales down by as much as 15 per cent for some July/August 2011

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of Sexton Group’s members in 2009 but a pricing rebound returned them to growth in 2010. Though the number of Sexon dealers has remained around 285, income across the group has grown by about 22 per cent, says Steve Buckle, Sexton’s vice president and general manager. Last year also marked the 25th anniversary of the Sexton Group, which was established in 1985 in Saskatchewan by Ken Sexton. Buckle characterized celebrations as “low key,” the preference during the annual meeting with dealers being to reflect the pioneering spirit of past leaders like Sexton and Bob Monday. And a much more important anniversary is happening this year, says, Buckle—the 25th anniversary of the group of dealers joining in the first year of Sexton’s existence who have remained loyal to the brand. Efforts to grow the Sexton dealer network in the east showed some promise in 2010. Paradise Building Supplies in Mississauga, Ont. is Sexton’s newest member, and a key one, as the dealer supplies specialty products to the most active market in Canada. Three building materials dealers in Newfoundland have also signed on, and are equally important for another reason. “We’ve never had members from that province, so that’s exciting for us,” says Buckle. Now in its third year, the relationship with ILDC is bearing fruit. Buckle says it has accelerated Sexton’s efforts to improve it’s overall negotiating approach. “We are learning from their different style of doing business,” says Buckle. By the numbers, 2010 was a rebound year for the Sexton Group, but Buckle is cautious about 2011. The first part of 2011 was flat due to weather and the uncertainty south of the border, he says and there will be a release of pent up demand in the second half. But it is more likely, he believes, that this year will be a return to something more like 2009. —RK

8. GROUPE BMR Longueuil, Que.

2010 Retail Sales: $1.30-billion (est.) Points of Sale: 183 Already well established as the No.2-ranked hardware and building materials banner in Quebec, BMR continued its efforts in 2010 to solidify its position in every region of that province as well as to expand its membership in eastern Ontario and in Atlantic Canada. BMR also pushed the development of its farm hardware department, Agrizone, launched in January of last year, as a strategy July/August 2011

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HARDWARE MERCHANDISING

Anniversary

Hardware Merchandising is celebrating 20 years of the ORAs in grand style! We invite you to the largest annual event of its kind in Canada—the ‘Oscars’ of the home improvement industry. For ticket information, please contact: Lynne LeBlanc LLeblanc@bizinfogroup.ca (416) 510-6780 How to Enter: As a Canadian retailer in the home improvement industry, all you need to do to enter is answer some questions on your business, and provide photographic evidence of your store’s merchandising excellence. The complete instruction package, including entry form and information the judges will need, is available by contacting: Frank Condron email: FCondron@hardwaremerch.com tel: (416) 442-5600 x3238 Awards to be presented October 27, 2011 during the Hardlines Conference

Our Sponsors

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to compete with la Coop Fédérée de Québec. Agrizone features more than 2,000 SKUs from cleaning products to farm implements targeted to the agricultural market. The strategy has proven to be effective for BMR, as it now boasts 71 participating dealers in 14 regions in Quebec and Ontario. BMR’s specialty hardware banner, launched in the spring of 2008, has also proven to be a successful venture. The group now has 16 “BMR Hardware” bannered establishments in place, so the concept still has plenty of room to grow and the opportunities are out there. Although BMR felt the impact of the end of the Home Renovation Tax Credit program in February of last year, as was the case with many of its competitors, the group claims the lingering effects of the recession did not significantly affect its business in 2010. The buying group has also rejuvenated its logo and signage program and is in the process of gradually upgrading every store in the chain to the new look. And although the group is not actively looking to make acquisitions, BMR is always on the lookout for viable opportunities to grow its membership and remains proactive in developing its concepts (specialty hardware, renovation centres and Agrizone are examples). In addition, the “360” fidelity card program, introduced in March of 2010 and offered to consumers and contractors alike, is successfully contributing to a growing clientele. Consolidation and integration have been central elements of the home improvement retailing business for some time, but that business environment seems to be agreeing with BMR. So far in 2011, business is rolling along smoothly and the organization is more than confident that its objectives for the year will be met, if not exceeded. —Donald O’Hara

9. CASTLE BUILDING CENTRES GROUP Mississauga, Ont.

2010 Retail Sales: $1.03-billion (est.) Points of Sale: 284 The end of 2010 saw a big shakeup in the Castle Building Centres Group supply chain when RONA purchased long-time Castle hardlines supplier TruServ, TIM-BR MARTS acquired the hardware distribution division of CanWel Building Materials Group and Castle president Ken Jenkins announced an agreement with U.S.-based hardware wholesaler Orgill Inc. With its dealer numbers jumping by 23 to 284, it certainly looks like the changes are not hindering Castle’s growth. The increased membership includes dealers from every region in Canada, says Jenkins: “We have good growth in the West, which is good for CBS (Commercial Building Supplies, a division of

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Castle serving specialty dealers) and we continue to strengthen in the central provinces, primarily in Ontario.” The latest signings in the West include Custom Wall and Ceiling Supply of Prince George, B.C., CDS Building Supply of Winnipeg and P.R. Service of La Loche, Sask. Perhaps the most significant increase in dealers for Castle is in Quebec, with nine points of sale entering the fold in the last seven months. That increase is proving the wisdom of signing Robert Legault as their business development manager for the Quebec region. “Our ability to interact in the Quebec market has improved dramatically over the last year and a half,” says Jenkins. It is too early to say how much of the increase in dealers can be credited to the agreement with Orgill, but Jenkins says it has improved member attitudes regarding Castle’s hardware distribution. “Orgill gives us a key component of our future: a North American cost basis that is significantly better than what Canadian distributors are offering to their customers in Canada,” says Jenkins, claiming Orgill’s cost savings for Castle dealers are between 10 and 40 per cent. Despite the fact that Orgill has no distribution centres in Canada, Jenkins says dealers are happy with Orgill’s fill rates as well as its price points, and Orgill is no doubt happy with its expansion into Canada. Orgill’s business grew by double digits in 2010 and again in the first half of 2011. “Canada is now part of our core business,” says Ron Beal, president and CEO of Orgill. As one of the four largest distributors in the U.S., with over $1 billion in sales and 165 years of experience, Orgill is likely to be working in the Canadian market for a while. As for the existing relationships with TruServ and CanWel (now Chalifour Canada) Jenkins says the TruServ relationship has been strengthened and will continue past the end of 2011. “TruServ sees Orgill as a good competitor in the Canadian marketplace,” he says. The Chalifour relationship, on the other hand, will not continue and moves have already been made to sever its relationship with Castle. —RK

10. ALLROC BUILDING PRODUCTS Calgary

2010 Retail Sales: $745-million (est.) Points of Sale: 56 The Allroc buying group is part of the construction products division of Superior Plus LP, a conglomerate that is also involved in the energy services and specialty chemicals businesses. In energy, Superior Plus is Canada’s largest retail supplier of propane and the company also sells refined fuels in the U.S. northeast. In specialty chemicals, Superior Plus is the third largest producer of sodium chlorate, a chemical used in the pulp and paper industry. Superior Plus’s construction products division includes some 60 points of sale that include members of the Allroc buying group, including some 30 Winroc dealers, the majority of which July/August 2011

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are in Western Canada, although there are six important dealership in Ontario and one in Nova Scotia. Allroc and Winroc are typical gypsum supply dealers (GSD), specializing in products for wall and ceiling sub trades: drywall, drywall tools and finishing products, steel studs, stucco, ceiling tiles, insulation and fasteners. The construction products division contributed about 11 per cent of Superior Plus’s EBITDA in 2010, or $24 million, up from $22.8 million in 2009. According to the Superior Plus 2010 Annual Report, “2010 was focused on adjusting our business for the impacts of the recession and integrating the significant growth initiatives undertaken in 2009 and early 2010.” Those growth initiatives included the acquisition, in September 2009, of Pennsylvania-based Specialty Products and Insulation, a distributor of insulation and architectural products for the commercial and industrial markets with 70 outlets in 28 states. In spite of the full year contribution to revenue from the Specialty Products purchase, however, the Superior Plus construction products division still struggled in 2010, mostly due to the continued weakness in the North American housing and commercial construction markets. The 2010 Annual Report summed up the year quite plainly: “The full impact of the recession hit in 2010, with a more challenging business environment than in 2009.” The company managed to offset the weak construction products market in 2010 through “aggressive cost reduction programs” and the acquisition of B.C.-based Burnaby Insulation, an insulation distributor serving Western Canada and the oil sands region of northern Alberta. —KL

11. DELROC INDUSTRIES Langley, B.C.

2010 Retail Sales: $610-million Points of Sale: 117 Anyone looking to find out the latest news about the Langley, B.C.based buying group Delroc Industries can skip the “News” section on the group’s website. The one and only item available for viewing there refers to Delroc’s entry, as of January 1, 2009, into the Independent Lumber Dealers Cooperative (ILDC). On that date, Delroc, along with Federated Co-operatives, La Coop Federee and The Sexton Group Ltd. joined forces with the ILDC to form a buying entity with more than 1,000 points of sale throughout Canada and generating in excess of $4-billion in annual purchases. While Delroc and Sexton joined ILDC as full members, Federated Co-ops and Coop Federee were only involved in lumber and building materials purchases, opting to remain aligned with Spancan for hardlines. Founded by Bruno Mauro of Dryco Building Supplies in 1974, Delroc has remained a privately-owned buying group

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specializing primarily in drywall, ceiling and other GSD-related products. Along with Dryco, the longest tenured members of Delroc include large regional building supply dealers like Windsor Building Supplies of Surrey, B.C.; Northern Building Supplies of Vancouver; and Peace River Building Products of Fort St. John, B.C. At the end of 2010, Delroc claimed 117 members. Like most suppliers that are closely linked to the new housing market, Delroc and its members felt the full impact of the recession in 2009, and its negative effects lingered throughout 2010. According to the group, cumulative sales for Delroc members dropped from $645-million in 2008 to $620-million in 2009, then down again in 2010 to $610-million. Delroc’s largest single member, Windsor Plywood, which operates 62 points of sale, reported sales of $218-million in 2010, up just slightly from sales of $215-million in 2009. —KL

12. TRUSERV CANADA Winnipeg

2010 Retail Sales: $600-million Points of Sale: 650 In the years leading up to the recession, it seemed like the prevailing business strategy among regional retail chains and buying groups was to just keep turning a profit long enough to get bought out by RONA. But as RONA’s bottom line diminished so did its appetite for acquisitions, and the industry was beginning to wonder when, if ever, the Quebec retail giant would get back in the buy-out game. That question was answered in resounding fashion on October 1, 2010, when RONA announced the acquisition of the Winnipeg-based hardlines distributor TruServ Canada. Through the deal, RONA took control of TruServ’s 400,000-sq.ft. distribution centre in Winnipeg and a 25,000-sq.-ft. warehouse in Kitchener, Ont., but those assets were far from the motivation for the purchase. What RONA also grabbed through the deal was a new hardlines distribution relationship with the more than 650 independent dealers supplied by TruServ, some 250 of which fly the True Value, V&S and Country Depot banners. According to TruServ, its members posted retail sales of some $600 million in 2010, generating purchases through the group of some $400 million. Since the deal RONA has continued to operate TruServ as an independent division under the supervision of long-time president Bill Morrison. Speaking with Hardware Merchandising shortly after the deal was completed, RONA president Robert Dutton suggested that the product mix offered by the two companies complimented each other. “True Value is more of a hardware store, a July/August 2011

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convenience store,” said Dutton. “It’s very interesting because it’s a different market. It’s not a market we had the possibility to serve [previously] and that’s one of the reasons we decided to put an offer to TruServ.” Bill Morrison believes the marriage of TruServ and RONA will open up possibilities for dealer-members aligned with both groups, in part because of TruServ’s having a much stronger share of the rural market. “We hope the deal might allow us to serve many new RONA dealers with these types of products,” Morrison said. The deal presents both new product possibilities and a potential problem for many of the 400 independent TruServ dealers. TruServ supplies hardlines to many independents who are also aligned with buying groups that traditionally compete with RONA on the building supply side—Sexton, IRLY, Castle and TIM-BR MARTS. —FC

13. ALPA LUMBER GROUP Mississauga, Ont.

2010 Retail Sales: $585-million (est.) Points of sale: 19 WRLA PS 2012 - 1 - Hardware Merchandising.ai 1 6/21/2011

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As the Greater Toronto homebuilding industry goes, so goes Alpa Lumber, a group of 19 lumber and building materials supply outlets in the GTA (there is also one outlier in Ottawa—Grandor Lumber Inc.) whose customers comprise the bulk of the tract home builders there. This private company assiduously avoids the spotlight, especially with regard to its finances, so GTA housing numbers become a sort of proxi for Alpa Lumber’s story. In 2009, the GTA building market was suffering through the effects of the late 2008 housing market meltdown. Housing starts dropped to their lowest in decades and building permits were down from ’08 by almost 20 per cent. 2010 was better—but not by much. The first half of the year continued weak with new home starts at a seasonally adjusted annualized rate of 28,900 for the first six months, and by September, the numbers began to improve. The month of November finally saw a big improvement, with the number of starts rising to almost 51,000 that month, which pulled the 2010 starts past the 2009 figures. By the end of the year, dwelling starts in 2010 were 12 per cent higher than 2009. By extrapolation, it is probably fair to say Alpa enjoyed a similar improvement. Unfortunately, when asked for some expression of how Alpa faired in 2010 for this report, Orest Matkowsky, CFO of Alpa, would only say that Alpa is a private company and no information on any aspect of its operations

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would be made available to the press. Another call by Hardware Merchandising to Central Fairbank Lumber, the only retail face of Alpa in the GTA, elicited that 2010 was indeed better than 2009 for Central and that an expansion of this yard was underway in anticipation of improved sales in the future. Grandor Lumber in Ottawa, another retail outlet of Alpa, was a bit more forthcoming. The outlet supplies about 40 per cent of the homebuilders (tract and custom) in the Greater Ottawa area and co-owner Claude Taillefer says sales in 2010 were down about 10 per cent from the year before. This year, Grandor’s numbers were down again for the first half of the year, but Taillefer says he expects to have a good fall and for the net of 2011 to match 2010. —RK

14. FEDERATED CO-OPERATIVES Saskatoon, Sask.

2010 Retail Sales: $538-million Points of Sale: 210 The last few years have been a bit of a roller coaster ride for Saskatoon-based Federated Co-operatives Ltd (FCL), Canada’s largest non-financial co-operative. From a giddy high of $8.4 billion in total revenues in 2008, FCL saw the recession take a 23 per cent bite out of the top line, dropping it to $6.5 billion in 2009. Last year the co-op experienced a small rebound, creeping back up to $7.1 billion in total revenue for the year, but the effects of the recession lingered, and the continued sluggish economy, bad weather and new competition put pressure on FCL’s general merchandise, LBM and farm supply operations. Although its roots date back to the 1920s, FCL’s official founding took place in 1955 when the original farm co-operative joined forces with Consumer’s Co-op Refineries Ltd. Today, FCL has 11 divisions and operates in all the Prairie Provinces and B.C. It is active in areas like home and building supplies, general merchandise, forest products, agricultural products, feed, grocery and petroleum and claims 1.5 million members. In addition to its 210 retail outlets, FCL operates four distribution centres, six feed plants, a sawmill and plywood plant and a refinery. In the wake of such a steep drop in revenues in 2009, the Board of Directors of FCL saw 2010 as a “transition year” and used it, according to the co-op’s 2010 annual report, “to articulate and implement a new strategic focus for FCL.” The changes in the market experienced by FCL in 2009, the 2010 report goes on, “represent a ‘new normal’” forcing the co-op “to seek proactive opportunities for change, rather than taking a more reactive approach.” Toward that end, FCL set about making some changes in 2010. Those changes started at the top, with the appointment of Scott Banda as CEO in February of last year. FCL also put some money into upgrading 28 of its home and agro centres and implemented a new electronic receiving program across its retail division. The co-op also embarked on some innovative

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marketing initiatives in its regional markets, such as branding products like lawn tractors, lawn chairs and even cereal boxes to commemorate the 100th anniversary of the Saskatchewan Roughriders CFL football franchise. —KL

15. KENT BUILDING SUPPLIES Saint John, N.B.

2010 Retail Sales: $410-million (est.) Points of Sale: 33 Kent Building Supplies, a member of the New Brunswick-based J.D. Irving Ltd. family of companies, is by far the strongest home improvement and building supply player in the Atlantic Provinces. That status looked to be in trouble a few years ago when RONA opened new big-box stores across the street from existing flagship Kent stores in Moncton in 2007, and then in Halifax in 2008. At that time, the encroachment of the big box chains on Kent’s traditional turf looked to be a major setback for the company, but that has proved not to be the case.

With its stores covering the whole spectrum of sizes from traditional (5,000- to 25,000-sq.-ft.) to mid-sized big boxes (between 45,000- and 55,000-sq.-ft.) and full-size big boxes (between 85,000- and 100,000-sq.-ft.), Kent not only caters to the DIYers, but also to contractor customers, and it remains a strong brand in all four Atlantic Provinces. Kent’s integration of drywall and truss facilities also somewhat shelters it from any unforeseen and unwelcomed dips in the regional economy because it can control its own output. This is not to say that Kent’s competition is watching idly by, but the battle for the Atlantic home improvement retailing market still rages on—to the benefit of the consumer, who’s getting good prices and great service. —DO

16. TORBSA Bolton, Ont.

2010 Retail Sales: $400-million Points of Sale: 47 July/August 2011

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Usually, the main idea behind any buying group is “the more the merrier”. Obviously, the more members a buying group can sign up, the more buying power it has, and thus the more pressure it can apply to suppliers to negotiate better prices on products and get rebates for its members. That’s why the big buying groups—RONA, Home Hardware, TIM-BR MARTS—are constantly competing to sign up dealers. But there are rare exceptions to the standard buying group rule, and TORBSA is certainly one of them. Founded more than 45 years ago, TORBSA represents only 28 member dealers operating 47 points of sale. And with the exception of one Quebec dealer (Manugypse in Quebec City), all of TORBSA’s members are based in Ontario. Of the group’s 28 members, 11 are located in and around Toronto, with the remainder spread across the province as far north as North Bay, as far east as Kingston, and as far south as Windsor. TORBSA clearly hasn’t survived as a buying entity for almost half a century because of its size, and that’s because the key to the group’s success is diversity. Rather than having a lot of members that operate essentially the same business, TORBSA members include specialty gypsum supply dealers (GSDs), specialty building supply outlets, traditional lumberyards and hardware stores. Some of the group’s members even operate in some exclusive niche markets, such as concrete mixing and pouring, spe-

cialty stone and masonry and thermal and acoustical insulation. This mix of specialties doesn’t tie the group to the fortunes of one market, like new home construction for example, and opens up lots of opportunities to share leads among members. Regardless of how TORBSA does it, its unique member mix seems to be working. According to group general manager Bob Holmes, TORBSA saw retail sales for its members jump from $342 million in 2009 to $400 million in 2010. That’s even more impressive considering the long list of regional buying groups—Homecare (Tim-BR Mart Ontario), AWARD in eastern Canada, Servimat and Dismat in Quebec, and most recently, IRLY in British Columbia—that have either gone out of business or been absorbed by larger groups. —FC

17. LOWE’S CANADA Toronto

2010 Retail Sales: $380-million (est.) Points of Sale: 24 If there is one word that can accurately sum up the entry of Lowe’s, the world’s second-largest home improvement retailer,

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18. UNITED FARMERS OF ALBERTA Calgary

2010 Retail Sales: $348-million Points of Sale: 36

into the Canadian marketplace, that word would be ‘cautious’. But while big box competitors RONA and The Home Depot Canada have spent the last several years finding other ways to grow revenue without opening stores, Lowe’s slow, but steady, expansion plan has continued to take shape. By the time the Mooresville, N.C.-based retailer opened its first office in Toronto in 2005, alarm bells were already ringing throughout the Canadian home improvement industry. That panic proved a little premature however, as Lowe’s proceeded to take more than two years, until December of 2007, to actually open its first stores here, all in the Greater Toronto Area. Since then, Lowe’s has followed the safe expansion route, locating stores in and around Canada’s largest population centre before gradually expanding out to nearby cities like Oshawa, Hamilton and Brantford, then eventually farther afield to Ottawa and Sudbury. By the end of 2009, Lowe’s had 16 stores operating in Ontario, and the time had finally come to really take its act on the road. In late 2009, Lowe’s announced that it would open nine new stores in its next fiscal year, ended January 31, 2011. That group included a number of retrofitted Sam’s Club locations in Ontario—in the city of London and in Pickering and Vaughan (just outside Toronto)—picked up in 2009 after they were closed by Wal-Mart. More importantly, however, Lowe’s 2010 store openings included its first three locations in Western Canada, all in Calgary. (Specifically, the Calgary stores are located in the suburbs of Rocky View, opened in fall 2010; McKenzie Towne and Sundridge, opened in early 2011.) By the end of last year, Lowe’s had 24 stores in operation in Canada. Along with the Calgary stores, Lowe’s also broke ground on new stores in Regina and Edmonton in 2010, and announced its intention to move into the British Columbia market. The company’s Regina location opened during the first quarter of this year. Lowe’s has stated that it plans to open between nine and 12 stores per year, with a goal of reaching the 100-store plateau sometime within the next seven years. —FC July/August 2011

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For most of its existence since the founding of the co-op in 1909, United Farmers of Alberta (UFA) has stuck to what it knows best. Along with running 35 farm and ranch supply stores in Alberta, UFA is active in the oil and gas industry, operating 120 petroleum distribution points located in Alberta, Saskatchewan and B.C., and the co-op has done very well indeed with these agriculture-focused businesses. In fact, until the recession slowed it down in 2009, UFA was growing at an impressive pace, topping out at $2 billion in revenue from all operations in 2008. The co-op set off in a new direction, however, with the appointment of Dallas Thorsteinson to the post of president and CEO in 2005. Thorsteinson was bent on diversifying the co-op’s holdings and appealing to non-rural markets. Toward that end, in the fall of 2008, UFA acquired the outdoor outfitters chain Wholesale Sports, and then followed that up in 2009 with the purchase of 15 Sportsmen’s Warehouse locations in the U.S. northeast. Thorsteinson also had notions about adding “outdoor adventure” products to the co-op’s farm supply stores, starting with the Red Deer store as a prototype.

By the end of 2009, however, with red ink starting to flow, the old-line UFA Board of Directors had seen enough. In February of 2010, Thorsteinson was removed from his post, along with co-op CFO John Steen. The Board of Directors, led by newly elected Chairman Rick Laverick and new president and CEO Bob Nelson, took over control of the co-op and set about getting things back on track. But with a debt issue linked to the acquisitions and a sputtering economy to deal with, 2010 was, in Laverick’s words, “a year of transition” for UFA. The company reported revenue for the year of $1.742 billion from all operations, of which $348 million, or about 20 per cent, can be attributed to the farm and ranch supply business. That was up slightly from total revenue of $1.6 billion in 2009, with $320 million coming from the retail division. Writing about 2010 in UFA’s annual report, Laverick said, “While everyone expects a few bumps and bruises as they adapt to change, I’m not sure anyone could have been fully prepared for the roller coaster ride we took in the last 12 months.” —KL HARDWARE MERCHANDISING

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19. LA COOPERATIVE FÉDÉRÉE DE QUÉBEC Trois-Rivières, Que.

2010 Retail Sales: $326-million (est.) Points of Sale: 178 With total revenues of almost $4-billion, La Coopérative Fédérée de Québec’s sales showed no growth for fiscal 2009-10 (year end October 31st), and its net income of $36.1-million was down from $53.3-million in net income posted the previous year. The co-op, which is heavily involved in agro-business, attributed much of the drop to a very difficult year in the hog farming sector. However, co-op management is quick to point out that the retail sector enjoyed a very good performance overall last year, and the Coop’s building material/hardware division, Coop-Unimat, showed a five per cent increase in sales over the previous year. According to René Labrecque, general manager for Coop – Unimat, the building materials/hardware division felt hardly any impact from the recession in 2009-10. His forecast is different for this year, however. Mr. Labrecque says he believes it will be more difficult for Coop-Unimat to meet its objectives this year than it was last year, and he says there are a number of reasons for this. First, Labrecque believes the ending of the federal grant program for renovations—the HRTC, which ended Feb. 1, 2010— had a definite impact on sales during the second half of 2010 and into 2011. That’s because many consumers who were planning to do renovation projects in 2010 and beyond chose to proceed early last year to take advantage of the program. But this resulted in a vacuum in demand for building materials in the second half of the year as new renovation projects were put off by people who felt they missed the boat. Second, Labrecque also believes the establishment, by the Federal Government, of new, tighter regulations and requirements to obtain mortgage credit with financial institutions has had a negative effect on the renovation market. Tighter credit restrictions substantially affect the capacity of young couples to acquire a first home, and home resales are a huge driver of the renovation market. Third, Labrecque points to the fact that the CMHC estimates a nine per cent decline in new residential construction in the coming months. He says this trend is already being felt by retailers in Quebec, and is partly caused by the tougher credit restrictions previously mentioned. Finally, the U.S. economy is still struggling and has yet to really come out of recession. This influences the overall demand for building materials, thus putting deflationary pressure on commodities such as lumber, plywood and OSB. That, in turn, puts downward pressure on retailer margins. Although he believes 2011 will be a challenging year, Leb-

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recque says Coop Fédérée de Québec has no intention of departing from its strategy for the year. The co-op plans to add six new retailers to its ranks, to open five new stores with existing dealers, and complete seven store expansions in the coming months. It also plans to launch a brand new website designed to be more user-friendly in order to better serve current customers as well as attract new ones. —DO

20. CANAC Quebec City

2010 Retail Sales: $320-million (est.) Points of Sale: 20 Although the effects of the recession were not felt by his organization, Canac’s President Jean Laberge adopts a cautious approach when asked about 2011-12. Laberge says he sees a significant slowdown coming in new residential construction in his market, and with three out of 20 stores fully dedicated to contractors, translating into 20 per cent of total sales, Canac is likely to feel the crunch. The Laberge family is also involved in real estate, so this side of the business acts as somewhat of a barometer for the hardware and building material side. In spite of his lack of faith in the construction market, worry seems to be the last thing on Laberge’s mind these days. In fact, his organization is busy with store retrofits and expansion projects as well as with the construction and opening of a brand new store in Drummondville (west of Quebec City) before the fall of this year. With last year’s sales up by 12-15 per cent (+7 per cent same stores sales), Canac’s President is confident that his organization will pull through again this year with flying colours. Looking a few years back, however, when major American big box competition moved into the Quebec City market, Jean Laberge admits he was concerned. After all, U.S. big box retailers tend to have a “crushing” effect on local dealers. But by sticking to its business plan, Canac managed to weather the storm and is still thriving today. Not only that, but the “orange giant”, as Laberge puts it, all but abandoned further expansion plans for Quebec City and the immediate surroundings. Laberge has relied on the same philosophy in the three years since Canac and ILDC parted ways. At the time, the organization felt it was solid enough and large enough to rely on its own purchasing power, and that belief has proved correct. Although, there were no admissions of plans to further develop new stores, other than Drummondville, it is easy to imagine that Canac has no intention to adopt a “sit and wait” attitude in the prevailing market. By taking stock on its solid background, history and business philosophy, Canac, is still showing boldness. Far from being arrogant, it is simply “sticking to the plan.” —DO July/August 2011

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TOP 20

RETAILERS & BUYING GROUPS

COMPARED TO THE LISTING of the Top 20 Retailers & Buying Groups in Canada in last year’s Top-100 Report, which reflected the industry in 2009, this year’s listing, reflecting the industry in 2010, is close to a complete reversal. At the end of 2009, fully 16 of the top retailers and buying groups in the hardware/home improvement retailing industry in this country posted negative sales numbers for the year, clearly reflecting the impact of the recession. Another two companies showed no change and only two reported gains. On this year’s chart, 12 companies show an increase in sales in 2010 while another five remained steady. Only three showed a drop in sales, and two of those were virtually even year-over-year. Due mostly to the influence of the Home RenovationTax Credit, instituted in the 2009 federal budget and discontinued in February 2010, the industry entered 2010 on the upswing, and these numnbers suggest that the industry managed to maintain much of that momentum throughout the year.

*estimated sales

% DIY/ # Dealer Sales ($M) % # of Stores Change ‘10 ‘10 ‘09 ‘09 Change Pro

Ownership

1. RONA, Boucherville, Que.

6,600

6,000

10.0

917

686

231

85/15

Publicly traded

2. Canadian Tire Retail*, Toronto

5,814

5,590

4.0

488

85/15

Publicly traded

3. The Home Depot Canada*, Toronto

5,555

5,500

1.0

179

85/15

Publicly traded

4. Home Hardware Stores Ltd., St. Jacobs, Ont.

4,996

4,850

3.0

1,080 1,063

55/45

Co-op buying group

5. TIM-BR-MARTS Ltd., Calgary

3,300

3,000

10.0

745

740

25/75

Co-op buying group

6. ILDC*, Ajax, Ont.

1,700

0.0

135

60/40

Co-op buying group

(Note: As of Jan. 1, 2009, ILDC began to purchase with Sexton, Delroc, Federated Cooperatives and Coop Fédérée de Québec, yeilding a retail sales volume for all participants exceeding $4.0-billion-ed.)

7. Sexton Group, Winnipeg

1,326

1,300

2.0

285

35/65

Private buying group

8. BMR Group, Longueuil, Que.

1,300

1,200

8.3

183

55/45

Private buying group

9. Castle Building Centres Group*, Mississauga, Ont.

1,030

0.0

284

261

25/75

Co-op buying group

10. Allroc Building Products*, Calgary

745

0.0

10/90

Private buying group

11. Delroc Industries, Langley, B.C.

610

620

-1.6

117

115

50/50

Private buying group

12. TruServ Canada, Winnipeg

600

0.0

650

80/20

Co-op buying group

13. Alpa Lumber Group*, Mississauga, Ont.

585

0.0

10/90

Private pro dealer

14. Federated Co-ops, Saskatoon

538

556

-3.2

210

60/40

Co-op wholesaler

15. Kent Building Supplies*, Saint John, N.B.

410

397

3.3

50/50

Private retailer

16. TORBSA, Bolton, Ont.

400

342

17.0

15/85

Co-op buying group

17. Lowe’s Canada*, Toronto

380

256

48.4

85/15

Publicly traded

18. United Farmers of Alberta, Calgary

348

350

-0.6

70/30

Co-op wholesaler

19. Co-op Fédérée de Québec*, Trois-Rivières, Que.

326

310

5.2

178

170

75/25

Co-op wholesaler

20. Canac*, Quebec City

320

286

11.9

72/28

Private retailer

July/August 2011

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HARDWARE MERCHANDISING

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TOP 50

DEALERS & RETAIL CHAINS

GROWTH AND ACQUISITONS — The big mover on last year’s listing of the Top 50 Retailers and Retail Chains was Lowe’s Canada, shooting up from 17th position at the end of 2008 to 10th spot in 2009 thanks to nine store openings. Lowe’s kept up the pace again in 2010, adding another eight stores to bring its year-end total to 24, good enough for 8th place on this year’s list. And while The Home Depot Canada was mostly quiet in 2010, Lowe’s other main big box rival, RONA, was busy once again on the acquisiton front. The Boucherville, Que.-based retail giant finalized the purchase of the five-store, Nova Scotia-based Piercey’s chain in June of last year, and followed that up with the purchase of the five-store London, Ont.-based Moffat & Powell chain in July. Both of those regional chains will continue to operate under their original banners for the foreseeable future.

*estimated sales

Retail Sales ($M) ‘10 ‘09

% DIY/ % # # of Stores Change ‘10 Change Pro ‘09

Avg. sq. ft.

Affiliation

1. RONA, Boucherville, Que.

6,600

6,000

10.0

917

686

231

85/15

50,000

A.R.E.N.A.

2. Canadian Tire Retail*, Toronto

5,814

5,590

4.0

488

85/15

31,000

—

3. Home Depot Canada*, Toronto

5,555

5,500

1.0

179

85/15

110,000

—

4. Home Hardware, St. Jacobs, Ont.

4,996

4,850

3.0

1,080

1,063

55/45

8,339

Alliance Int.

5. TruServ Canada, Winnipeg

600

0.0

650

80/20

5,000

—

6. Alpa Lumber Group*, Mississauga, Ont.

585

0.0

10/90

15,000

—

7. Kent Building Supplies*, Saint John, N.B. 410

397

3.3

50/50

50,000

ILDC

8. Lowe’s Canada*, Toronto

380

256

48.4

85/15

117,000

9. United Farmers of Alberta, Calgary

348

350

-0.6

70/30

4,200

10. Canac*,

320

286

11.9

72/28

45,000

—

11. Windsor Plywood, Surrey, B.C.

218

215

1.4

-1

50/50

10,000

Delroc

12. TSC Stores, London, Ont.

185

174

6.3

92/8

20,000

—

13. McDiarmid Lumber Ltd.*, Winnipeg

171

167

2.4

40/60

30,000

Tim-BR-Marts

14. Nelson Lumber, Lloydminster, Alta.

159

155

2.6

15/85

10,000

Tim-BR-Marts

15. Pacific West Systems*, Langley, B.C.

155

150

3.3

5/95

1,000

Tim-BR-Marts

16. Peavey Industries, Red Deer, Alta.

140

136

2.9

95/5

11,000

17. Rockett Lumber*, Mississauga, Ont.

130

0.0

5/95

5,000

—

18. Patene Bldg. Supp. Ltd., Guelph, Ont.

122

112

8.9

3/97

3,000

Tim-BR-Marts/TSG

19. Patrick Morin*, Joliette, Que.

120

117

2.6

50/50

15,000

ILDC

20. Igloo Building Supplies*, Edmonton

103

100

3.0

0/100

60,000

ILDC

(Home and leisure sales only)

— Sexton

L’Ancienne-Lorette, Que.

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OCTO

July/August 2011

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% Retail Sales ($M) Change ‘10 ‘09 21. Central Home Improvement Warehouse*,

# of Stores ‘10 ‘09

% DIY/ # Change Pro

Avg. Affiliation sq. ft.

3.3

60/40

60,000

ILDC

22. François L’Espérance, Inc.*, Laval, Que.

0.0

50/50

32,000

RONA

23. Turkstra Lumber, Hamilton, Ont.

15.9

20/80

4,000

ILDC

24. Star Building Materials*, Winnipeg

2.6

95/5

5,000

ILDC

25. Groupe Dynaco*, La Pocatière, Que.

2.8

n/a

9,330

BMR

26. L. Villeneuve & Cie Ltée.*, Montreal

2.9

60/40

50,000

ILDC

27. Jacques Laferté Ltée.*, Drummondville, Que. 69

3.0

65/35

25,000

ILDC

28. Copp Building Materials Ltd.*, London, Ont. 64

3.2

60/40

25,000

ILDC

29. Potvin & Bouchard Inc.*, Jonquière, Que. 60

1.7

70/30

25,000

BMR

30. Notre Dame Agencies*, Lewisporte, Nfld. 58

3.6

70/30

9,000

31. Builder’s Warehouse*, Orleans, Ont.

3.6

33/67

63,000

BMR

32. Matério Laurentiens*, Saint-Jerome, Que. 56

1.8

80/20

—

ILDC

33. McMunn & Yates*, Dauphin, Man.

3.8

40/60

8,000

ILDC

34. Davidson Enman Lumber*, Calgary

1.9

5/95

2,000

Tim-BR-Marts

35. Gibson Bldg. Supplies*, Markham, Ont.

3.9

20/80

n/a

36. Millwork Home Centres*, Oshawa, Ont. 52

0.0

50/50

25,000

ILDC

37. J&H Builders Warehouse*, Saskatoon

4.1

35/65

18,500

ILDC

38. Piercey’s Building Supplies,*

0.0

25/75

12,000

PAL

39. United Lumber*, Barrie, Ont.

2.2

45/55

18,000

Home Hardware

40. Moffat & Powell*, London, Ont.

0.0

35/65

5,000

ILDC

41. Bolt Supply House*, Calgary

2.8

0/100

5,000

—

42. J.O. Lévèsque*, Cowansville, Que.

2.8

100/0

30,000

43. North American Lumber*, Winnipeg

2.9

60/40

8,500

44. Payzant Building Products*, Sackville, N.S.

2.9

45/55

18,000

Home Hardware

45. Groupe Gaston Côté*, Sherbrooke, Que. 35

-16.7

-2

35/65

10,000

ILDC

46. Ferlac Inc.*, Saint-Felicien, Que.

0.0

70/30

100,000

RONA

47. Quincaillerie R. Durand*, Quebec City

0.0

70/30

35,000

RONA

48. C. A. Fisher*, Edmonton

3.4

30/70

12,000

Tim-BR Mart

49. L. Lapointe Ltée.*, Chicoutimi, Que.

3.4

50/50

30,000

ILDC

50. Logic Lumber, Lethbridge, Alta.

-14.3

-1

10/90

3,000

Antigonish, N.S.

Castle

Tim-BR Mart

Dartmouth, N.S.

July/August 2011

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RONA Tim-BR Mart

—

HARDWARE MERCHANDISING

11-07-11 1:59 PM

coverstory | TOP 100

TOP

NOTE: ON JANUARY 1, 2009, a partnership between the ILDC, The Sexton Group, Delroc Industries, Federated Co-operatives Ltd. and La Coop Fédérée de Québec officially took effect. The agreement created a new buying entity with some $4-billion in purchasing power and retail representation right across Canada. However, because the groups involved retain their individual automomy, we have continued to list them separately on this chart.

BUYING GROUPS & CO-OPS *estimated sales

1. TIM-BR-MART Ltd., Calgary

% Affiliation Dealer Stores # Purchases ($M) Dealer Sales ($M) % Change ‘10 ‘09 Change ‘10 ‘09 Change ‘10 ‘09 2,100

1,800

16.7

3,300

3,000

10.0

745

740

Spancan

2. Sexton Group Ltd., Winnipeg

712

698

2.0

1,326

1,300

2.0

285

ILDC

3. ILDC*, Ajax, Ont.

686

0,0

1,700

0.0

135

Spancan

4. BMR Group Inc., Longueuil, Que.

682

630

8.3

1,300

1,200

8.3

183

OCTO

5. Castle Building Centres Group*,

412

0.0

1,030

0.0

284

261

OCTO

400

440

-10.0

600

0.0

650

Spancan

7. Allroc Building Products*, Calgary 372

372

0.0

745

0.0

Winroc

8. Federated Co-ops. Ltd., Saskatoon 323

334

-3.3

538

556

-3.2

210

ILDC, Spancan

9. Delroc Industries Ltd., Langley, B.C. 277

283

-0.4

610

620

-1.6

117

115

ILDC

10. Co-op Fédérée de Québec*,

227

216

5.0

326

310

5.0

178

170

ILDC, Spancan

166

117

41.9

400

342

17.0

—

12. IRLY Distributors Ltd.*, Surrey, B.C. 32

0.0

173

0.0

TIM-BR MART

Mississauga, Ont.

6. TruServ Canada, Winnipeg

Trois-Rivières, Que.

11. TORBSA Ltd., Bolton, Ont.

TOP 100 METHODOLOGY Rankings were compiled through surveys sent to each company president or a key executive in January and February of 2011. These were followed up with faxed and emailed surveys and phone interviews done in April and May. Further information may come from the files of Hardware Merchandising, annual reports and other news reports. Where a company declined to report data, Hardware Merchandising has estimated based on previous data, retail sales space, store openings and closings, and economic factors. In some cases, estimates were given by company executives and rounded off to the nearest $1,000,000. Percentage sales increases were rounded off to the closest single decimal point. Where two companies had the same sales, the one that posted the highest annual increase was ranked first. In addition, not all retail chains report manufacturing operations as part of their retail sales. Listings do not show stores outside Canada.

H A R D WA R E M E R C H A N D I S I N G

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July/August 2011

11-07-11 2:00 PM

coverstory | TOP 100

TOP

DISTRIBUTORS

IN LAST YEAR’S TOP 100 REPORT, the story for distributors of hardware/home improvement products focused on the weak housing starts and persistently low commodities prices that plagued the industry throughout 2009. Things did improve in 2010, resulting in much better numbers for companies in the distribution business. The big story on the distribution side in 2010 was clearly the purchase, finalized in January of last year, of Broadleaf Logistics by CanWel Building Materials. As a result of that move, Broadleaf disappears from this year’s list while CanWel Building Materials, bolstered by the additional revenue, moves to top spot. (We have chosen not to include companies such as Home Hardware, TruServ and RONA on this list, although all are distributors. They are covered in the retailer listings.)

*estimated sales

Sales ($M) ‘10 ‘09

% % Sales to # of # of Stores Change Served Warehouses Retailers

Product Speciality

1. CanWel Building Materials, Vancouver

1,032

408

253.0*

6,000

100

LBM/hardware

2. Taiga Building Products, Burnaby, B.C.

955

932

2.6

6,100

100

LBM

3. AFA Forest Products*, Bolton, Ont.

528

503

5.0

4,296

LBM

4. Goodfellow, Delson, Que.

505

438

15.2

2,000

LBM

5. Richelieu Hardware, St-Laurent, Que.

447

416

7.5

5,000

hardware

6. Guardian Building Products*, Mississauga, Ont. 200

191

4.7

3,800

100

LBM

7. OWL Distribution*, Woodstock, Ont.

5.4

500

LBM

8. CanSave*, Barrie, Ont.

11.1

1,390

100

specialty bldg. prods.

9. Marcel Baril Ltee.*, Rouyn-Noranda, Que.

5.5

1,800

hardware/plumbing

Big Box map of Canada For the year ending December 31, 2010

■ ■ ■ ■

Home Depot Kent Home Improvement RONA Lowe’s

1 25

1 4

2 1 4

July/August 2011

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HARDWARE MERCHANDISING

11-07-11 2:00 PM

minute read BY rob koci

“Working should be fun.” CanSave remembers 20 years of annual get-togethers in Barrie, Ont.—but I forget 2001.

o look at the 22-year-old picture of the bearded, mustachioed boys of CanSave, Larry and Cully Koza, posted on the CanSave website is to see a couple guys trying too hard. They look very button-down and businesslike for the camera, but anyone who has ever met the Kozas knows that, once the promotion was done, the ties came off and the brothers were back to being themselves—the hardest working and most entertaining brothers in the building supply distribution business. The entertainment began in earnest two years after that website picture was taken, in 1992, when Larry and Kully decided it was time to invite all their business friends to their warehouse in Barrie, Ont., for a drink, a hamburger and a good price on a Whirlybird (the Whirlybird roof vent and the Barrie tornadoes of 1985 were the beginning of CanSave). That first CanSave warehouse sale, now called The Summer Expo, proved the Koza brothers to be great party hosts. My introduction to the CanSave Expo, in 2001, will be remembered as the best reason I can never enter politics. It started innocently enough, but ended less well. I was called to the stage by the hypnotist who was the lead act that year and remember nothing afterwards except some lost car keys, an extraordinary headache and an overnight stay somewhere forgettable (actually, simply forgotten). All of that—and the fact that I was never invited back—was my fault, of course, and I am told that, since those days, the Expo has matured. “We’ve moved away from that kind of… um…um…we’re actually delivering a lot more substance now,” says Larry laughing. These days, symposiums and sales are much more the focus of the CanSave Expo. “We have education seminars for the dealers now. And this year Dan Mallory spoke; he’s the guy who climbed Mount Everest with his family,” says Larry. Although, or perhaps because, the mood of the Expo is now more Discovery Channel than Hangover 3, dealers are attending

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the Expo in increasing numbers. This year marked the largest turnout ever, with over 250 dealers showing up to make millions of dollars worth of deals. That number makes CanSave’s Summer Expo one of the most important buying shows in Canada, and explains why the event moved several years ago from the CanSave warehouse to the Molson Centre, home of the OHL’s Barrie Colts. And notwithstanding Triumph’s Rik Emmit lighting up the stage this year, it may be that the shirts and ties in that old photo on the website were not so much for show after all. HM

The bands of Expo The Koza brothers’ commitment to good fun and great Canadian music is legendary. Here’s a list of some of the memorable entertainers and musical acts that have rocked the past 20 CanSave warehouse events: 1992 Racecar theme 1993 Battle of the 90s theme. (dealers shot now-president Dan McArthur with paint ball guns.) 1995 Curly Bridges/Lawrence Gowan 1996 Curly Bridges/Lawrence Gowan 1997 Curly Bridges/Lawrence Gowan 1998 Lawrence Gowan 1999 Free haircuts to all attendees Lawrence Gowan 2001 Beatles cover band. The Budweiser Girls, Salish the Hypnotist 2002 John Cougar cover band “Scarecrows.” Sandra’s Cats, the Hooter Girls 2003 Jeff Healey 2004 Colin James/Donny Seemans. Pictures were taken with a live tiger 2005 David Wilcox. Casino Day 2006 Donny Seemans/Jeff Healey 2007 Kim Mitchell 2008 April Wine 2009 Chilliwack 2010 David Wilcox 2011 Rik Emmet of Triumph Kim Mitchell July/August 2011

11-07-11 2:03 PM

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Name: Jamie Adams Occupation: Entrepreneur. Independent Castle dealer. Business owner. Revolutionary behaviour: Free thinker. Fearless. Driven to succeed. M.O.: A determined businessman who runs his business his way. Doesn’t like to be controlled by head office decisions that negatively impact his bottom line. Demands the FREEDOM to buy from vendors of his choice. Sets his own pricing and promotions. Committed to serving the needs of his customer. Local competition considers him armed and dangerous (customers think otherwise). Fears: Assuming liability and cost of corporate decisions. On being a Revolutionary: “I get to keep all the profits I’ve earned. I’m livin’ the revolution.” For more detailed information, go to www.Castle.ca/Revolution.

Warning: Independence is not for everyone. Do you have what it takes?

& hardware Your trusted building supply partner®

Retail. Commercial. Specialty.

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

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

castle.ca/freedom 11-07-07 4:28 PM