In Canada, expect change
Toronto There is good news and bad news for the Canadian home improvement market, according to RONA CEO Robert Dutton. The bad news, he said, is that change is going to force everyone to do things differently. The good news is: change provides opportunities for store owners, operators and managers.
Speaking at the 12th Annual Hardlines Conference Series in Toronto, Dutton described several of the changes facing not only the RONA network of 673 locations, but the home improvement industry in general. The two keys: customers will demand more solutions and services; and the operational challenge of staffing will increase as the role of the home improvement retailer becomes more complex.
The evolution of the store will probably lead to the demise of the term “warehouse” as a description of a type of home improvement format. There will always be big stores, he said — but “what will disappear is the store focus providing a large quantity of products with a very limited service component.”
The Canadian market enjoys some favorable market conditions. Dutton pointed to the housing stock as one of them — 85 percent of homes are 10 years old or older, and 65 percent are more than 25 years old.
An early highlight of the combined events came when Dutton maintained that the Boucherville, Quebec-based retailer and distributor would remain Canadian, despite speculation of a buyout — specifically from Canada-bound Lowe’s Cos.
“I suppose someone wants to know if RONA is for sale,” Dutton said during a question-and-answer session following his presentation on the evolution of the home improvement industry in Canada. “We are not on sale.”
He added: “We are a Canadian company, and personally I want to prove that Canadians can have success in the retail business. With the cooperation of all our suppliers, we can continue to be the leader. I’m sure of it.”
The comment sparked applause from the room of conference delegates, many of them suppliers. RONA operates a network of 673 corporate, franchise and affiliate stores of various sizes and formats. “Over the years, RONA has managed to evolve and at the same time remain unique,” he said.
National Hardware Show Canada set for Oct. 16-17
The National Hardware Show Canada kicks off next week in Toronto, at a time when the Canadian home building market is showing strength, and competition among home improvement retailers is heating up.
The show is scheduled for Oct. 16 and 17 at Toronto’s Congress Centre, preceded on Oct. 15 by a Hardlines Conference. Canadian buyers, including buying group Castle Building Centres, will participate in open-to-buy days at the event. The event also includes a “New Product World.” Speakers at the Hardlines Conference are Robert Dutton, president and CEO of Canadian home improvement giant Rona; Ron Beal, president and CEO of Orgill; and Jim Thompson, senior vp-merchandise for Wal-Mart Canada.
According to statistics compiled by the National Hardware Show, the Canadian home improvement industry grew 8.9 percent last year and has seen more than 8 percent annual growth each year for the past three years.
Home Depot’s Canada division leads home improvement retailers in the country by sales, followed by Rona, Home Hardware Stores, Canadian Tire, Sodisco-Howden and TruServe Canada. The top three buying groups by sales are Home Hardware, Independent Lumber Dealers Co-op (ILDC) and the Sexton Group.
Lowe’s entered the Canadian market this year as well, as did specialty home decor retailer Crate & Barrel.
Further illustrating the growth potential for the Canadian market, representatives for Canadian Tire said earlier this month the company planned a five-year, $2.7 billion expansion with the goal of increasing sales by 6 to 8 percent annually. The plan calls for 60 to 70 new stores per year, which over the five-year period would boost the company’s total store count – now at about 1,100 locations – by 5 percent.
RONA to acquire Dick’s Lumber
Boucherville, Quebec-based RONA will increase its presence in British Columbia with the acquisition of three Dick’s Lumber locations.
The building supply and hardware specialist operates three large stores in the Vancouver area. The acquisition builds on RONA’s 2006 acquisitions of Curtis Lumber and Mountain Building Supplies, bringing the retailer’s total store count in B.C. to 54.
RONA “will continue opening new big-box and proximity stores with innovative concepts, as well as recruiting independent dealers in the years to come,” according to a statement from the company.
Terms of the deal were not disclosed. RONA will finance the acquisition through the company’s existing credit facilities, and the transaction is expected to close in the fiscal fourth quarter of 2007.
Dick’s Lumber is a family-owned private company founded in 1964 with more than 100 million Canadian dollars (US$98 million) in sales in the last year. The company’s stores include about 22 acres of lumberyards.
“We have stated in the past that RONA is the consolidator of the home improvement industry in Canada, and this transaction is another step in that direction,” said RONA president and CEO Robert Dutton said. “[The] acquisition reflects our intention to rapidly develop our presence in British Columbia.”