HARDLINES.CA CONNECTING THE HOME IMPROVEMENT INDUSTRY
THIRD QUARTER / 2016
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HOME IMPROVEMENT QUARTERLY
FEATURE STORY CANADA’S TOP 20 HOME IMPROVEMENT GROUPS HARDLINES’ definitive annual report on the top players in hardware and home improvement retailing.
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HOME IMPROVEMENT QUARTERLY BETTER ENGINEERED WOOD PRODUCTS: THIRD QUARTER / 2016 • VOLUME 6, NO. 3 UÊ ÃiÊ >ÃV>`iÊ>iÃÊÃÌÀ}]ÊÊÊÊÊÊ 528 Queen Street East, Toronto, ON M5A 1V2 • 416-489-3396 ÊÊÊ}`}Ê«À`ÕVÌðÊÊ Ê ÊÊÊÕ«Ê>ÌÊÌ iÊvÀ>}ÊÊ>ÊiÜÊÊ ÊÊÊ iÊ>`ÊÞÕÊà Õ`½ÌÊÊ EDITOR & PRESIDENT PUBLISHER ÊÊÊÃiiÊÕ}ÞÊ}ÕiÊÃi>ÀÃ]Êi}LiÊÊ Michael McLarney, [email protected] Beverly Allen, [email protected] ÊÊÊÃÌ>«ÃÊÀÊÀiÃ`Õ>Ê}Ài>Ãi°Ê MANAGING EDITOR MARKETING DIRECTOR Sigrid Forberg, [email protected] Katherine Yager, [email protected]
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i>ÀÊÀiÊ>ÌÊÜÜÜ° °VÊÀÊV>ÊnääÓÎÓäÇnn NUMBERIN THE HOME IMPROVEMENT ONE INDUSTRY. ONLINE AND PRINT. HHIQ is one facet of the Hardlines Information Network. Since 1995, we’ve been delivering the most up-to-date information directly to you.
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© 2016 Honeywell International. All rights reserved. VOLUME 6, NO. 3 CONTENTS THIRD QUARTER / 2016
COVER STORY 22 CANADA’S TOP 20 HOME IMPROVEMENT GROUPS HARDLINES examines the top players in hardware and home improvement retailing. DEPARTMENTS EDITOR’S MESSAGE 7 Behind the scenes at HARDLINES, one deadline looms large
BUSINESS CONDITIONS BIG BOX UPDATE 8 First quarter 2016 BIG BOX REPORT NEWS FEATURE The big box retailers had a 10 Canadian Retail Building 30 strong start to the year. Supply Council PRODUCT SPOTLIGHT 18 Metal clad vinyl windows and more
BUYING GROUPS NEWS SPOTLIGHT 20 Lowe’s overcomes HOW THE BANNERS final hurdles NEWSROUNDUP 12 ARE ORGANIZED BRICKS VS. CLICKS We break it down for you 29 Lee Valley Tools focusescuses Peavey Mart’s 35th store 32 in an easy-to-read chart. to open in High Prairie, Alta. on bricks-and-mortar SHOW REPORT Ace Canada opens stores SHOW REPORT: KOELNMESSE 38 Canucks busy at the across the country CANADIANS CONNECT National Hardware Show WITH THE WORLD MERCHANDISING Castle sees growth with 40 Driving up the independents in Atlantic Canadian companies attend market 36 the International Hardware average ticket Fair in Cologne. ASSOCIATION CONNECTION Home Hardware’s new VP 42 Regional roundup of reinforces branding message business conditions SELLING TO PROS STORE MANAGEMENT Disappointed with sales, SENDING PRODUCTS, 46 The makings of a Canadian Tire pulls urban test store AND A MESSAGE winning retailer 44 Delivery is a valuable way ENDCAP Titan looking at acquisition for dealers to cultivate 50 Patrick Morin invests in opportunities loyal customers. growthgrow in Quebec market
Atlantic buying show will move to Halifax in 2017 THIRD QUARTER / 2016 5 NEW YORK • PARIS • TORONTO • MUNICH • LOS ANGELES
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POLYMERIC SAND • PAVERS • WOOD • ASPHALT • ROOFING • CONCRETE EDITOR’S MESSAGE BEHIND THE SCENES AT HARDLINES, ONE DEADLINE LOOMS LARGE. Like most things in an editor’s life, it starts with a deadline. But it ends up as a key piece of research that aims to help the entire industry measure its performance better. And it darn near kills me. MICHAEL McLARNEY, EDITOR
ow big is the retail home improvement rooms. But, guess what, we still have lots of industry? How much has it grown gaps in our data, so we resend the surveys H year over year? What is the market another time. share of each buying group, and have they By the time we’re done, we’ve created a gotten bigger or shrunk their ranks—and PowerPoint report with almost 200 slides, their sales—since last year? These are the dozens of charts and graphs, and just about questions we get the answers to in our biggest everything we know about this industry. piece of research we do each year. It’s called The Report can tell you how many stores the Hardlines Retail Report. It started almost each group has, which province they’re in, By the time we’re done, 20 years ago, when we realized nobody knew whether those stores are building centres, we’ve created a PowerPoint how big this industry was. Nobody really hardware stores, or big boxes, and what knew who the biggest players were, who was their average sales are. It’s a monster of “report with almost 200 growing, and who was losing sales. a report. slides... and just about So every year we get busy finding out all Why do we do it? Peter Drucker, business that and more. All with an eye to that dead- guru and co-author of the seminal business everything we know about line. First, we send surveys out to the leading book, In Search of Excellence, said, “If you this industry. retailers and buying groups. We begin ana- can’t measure it, you can’t manage it.” We lyzing annual reports and analysts’ reports. firmly believe this industry can only get bet- We start making “off-the-record” phone ter if we can better understand the players ” calls as we round up details of store counts, and the dynamics that drive the business. company sales, and more. Then we send out And we are firmly committed to delivering another survey, our Business Conditions that insight to help you manage better. Survey, to you, our readers, to help us gauge So enjoy some highlights in this issue’s how business is going in your market. Then Top 20 Report (even if you didn’t send in we resend the surveys, because everyone is that survey). As for me, I’m taking a few busy and needs a gentle reminder. days off to rest up! Next, we start feeding data into a hugehuge database (around here we call it the BiBigg Kahuna). How big is this database? Iff we printed the whole thing out it would coverover an entire wall in most buying group boardoard [email protected]
www.hardlines.ca Hardlines Home Improvement Quarterly THIRD QUARTER / 2016 7 QUARTERLY BUSINESS CONDITIONS After a mild winter, both retailers and vendors agree that Q1 has started 2016 on a positive note. Having experienced a modest increase of three percentage points in sales compared to Q1 2015 for retailers, and a huge jump for vendors of more than 25 percentage points, both groups are optimistic about the coming year. We asked retailers if they felt the effects of showrooming in their stores and 64.3 percent indicated yes—which is down from 72.1 percent in Q1 2015. For vendors, FIRST 73.3 reported that they plan to invest in buildings, machinery, or equipment over the QUARTER 2016 next 12 months—nearly 40 percentage points higher than 31.3 percent in Q1 2015.
How did your business compare Do you expect your sales to with the same time last year? increase over the next six months?
6.7% 6.7% 10.7% UNSURE 25.0% SAME UNSURE SAME 20.0% DOWN 25.0% RETAILERS 57.1% VENDORS NO RETAILERS VENDORS 17.9% UP 64.3% DOWN 73.3% YES UP 93.3% YES
Year-over-year, the percentage of retailers Year-over-year, the percentage of The percentage of retailers expecting The percentage of vendors expecting experiencing better sales than last year vendors experiencing better sales sales to increase over the next six increases in the next six months has is up three percentage points from than last year is up more than months has gone up slightly from jumped nearly 20 percentage points Q1 2015, when 54.6 percent of 25 percentage points from Q1 2015, 61.4 percent in Q1 2015. And the from 71.9 percent in Q1 2015, and the retailers reported increased sales. when 46.9 percent of vendors percentage of retailers unsure about number of vendors uncertain about sales reported increased sales. sales increases has greatly lowered increases also decreased 12 percentage from 20.4 percent in Q1 2015. points from 18.7 percent in Q1 2015.
At year-end 2016, how do you expect Do you expect your sales to sales for this year to have gone? increase over the next 12 months?
6.7% 6.7% 21.4% SAME 21.4% UNSURE SAME UNSURE
10.7% RETAILERS VENDORS RETAILERS VENDORS DOWN 57.2% 21.4% YES 67.9% NO UP 93.3% 93.3% UP YES
The percentage of retailers that predict The percentage of vendors that predict The percentage of retailers expecting Vendors are optimistic about the coming sales will go up this year stayed pretty sales to go up increased more than increased sales rose 0.4 percentage year. Year-over-year, the percentage of much the same from 65.9 percent in Q1 30 percentage points since Q1 2015, points from a year ago. In Q1 2015, vendors predicting increased sales is up 2015, but the percentage expecting sales and the percentage expecting sales 56.6 percent of retailers were expecting from 78.1 percent in Q1 2015. And the to remain flat was four percentage points to go down dropped to zero sales increases throughout the year. number of those uncertain about the future down from 25.0 percent in Q1 2015. from 9.4 percent in Q1 2015. is down from 12.5 percent in Q1 2015.
8 THIRD QUARTER / 2016 Hardlines Home Improvement Quarterly www.hardlines.ca FIRST QUARTER 2016 BUSINESS CONDITIONS
Did you offer RETAILERS: VENDORS: new products/ Top issues in first quarter Top issues in first quarter services in Q1 to better compete? 1. Staffing 1. Exchange rate with 46.4% U.S. dollar Compared to Q1 2015’s NO RETAILERS 53.6% 2. Customer retention 50/ 50 split, more YES 2. Retail consolidation retailers are offering new products/services 3. Decreasing margins
Higher raw material/ Survey Conditions Business Quarterly HARDLINES Source: to better compete 3. this year. 3. Exchange rate with U.S. dollar shipping costs Competition from 5. Increased competition 4. Asian sourcing Did you receive 6. Supplier consolidation 5. In-store merchandising more orders in 7.1 % and replenishment SAME 6. Training Q1 2016 than 5. Housing market in Q1 2015? 28.6% 8. Adding new services NO Increased presence of Year-over-year, the VENDORS 7. level of vendors 64.3% 9. Succession U.S. retailers receiving new orders YES has increased 9. Expanding products 7. E-commerce challenges significantly, compared to 31.3 percent in Q1 2015. 11. E-commerce challenges 9. Cross-border shopping
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A united front working toward a pan-Canadian organization (from West-East): Brad McCluskie and Thomas Foreman from BSIA; Gary Hamilton, Mark Westrum, and Tom Bell from WRLA; Ron Schell, Ken Forbes, and David W. Campbell from LBMAO; Richard Darveau and Nicolas Couture from AQMAT; Chris Deveaux and Denis Melanson from ABSDA. REGIONAL ASSOCIATIONS TO ALIGN MORE CLOSELY UNDER NATIONAL UMBRELLA In a small inn at the mouth of the Credit River in Southern Ontario, executives of the five regional retail building materials associations held a special meeting in April. There, they voted in favour of changes to their relationship. Those changes mark a turning point in the representation of 2,400 Canadian dealers and their suppliers.
he groups agreed to codify the role Not-for-profit Corporations Act. The second raising the awareness of home improvement and position of their umbrella asso- decision was to establish the organization’s retail as a career option, with concrete tools T ciation, the Canadian Retail Building headquarters in Ottawa, with five regional to select employees, and a national hiring Supply Council (CRBSC), which has in offices represented by the respective asso- campaign. Also: online training for renova- the past provided a forum for the member ciations: the Building Supply Industry tion and construction project quoting will organizations to informally exchange ideas, Association of British Columbia (BSIA) in also be available starting this fall. information, and practices. Now, the mem- Surrey, B.C.; the Western Retail Lumber The fourth key decision by the CRBSC bers have developed a rationale to have the Association (WRLA) in Winnipeg; the and its five founding associations was to CRBSC represent the industry more visibly, Lumber and Building Materials Association give their official endorsement to the annual especially at the federal level, while proac- of Ontario (LBMAO), based in Mississauga, Hardlines Conference so the Canadian tively addressing national issues. Ont.; the Quebec Hardware and Building industry will enjoy an event that is wor- “Founded in the mid-1980s, the umbrella Association (AQMAT) in Longueuil, Que.; thy of both its vitality and scale. Therefore, organization established its mission without and the Atlantic Building Supply Association changes in image and organization of this taking into account the means of achiev- (ABSDA), headquartered in Dieppe, N.B. conference are expected beginning with the ing it,” says Council President Richard A key mandate of the newly strengthened 22nd edition in the fall of 2017. Darveau, who is also president and CEO of CRBSC will be to document the effectiveness CRBSC will hold two meetings per year, the Quebec industry association, AQMAT. of past federal renovation tax credits in terms the next one on October 19 and 20 in con- The first decision was to incorporate the of their impact on society, the economy, and junction with the Hardlines Conference in CRBSC in accordance with the Canada public finances. Other initiatives will be Niagara Falls, Ont.
10 THIRD QUARTER / 2016 Hardlines Home Improvement Quarterly www.hardlines.ca MPUTER O S C Y E S C T E U
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The company began fine-tuning the look of its stores with its Strathmore, Alta., location.
PEAVEY MART’S 35TH STORE TO OPEN IN HIGH PRAIRIE, ALTA.
midst the gloom of the Alberta retail development, which will eventually chicks, and a free electric car-charging ser- economy, farm and hardware cover five acres. vice. The company began fine-tuning the A retailing is shining a bright light “High Prairie is a central hub for a large look of its stores l