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Canadian retailing in the spotlight

BY HBSDEALER Staff

TORONTO —If it were a television program, the Canadian economy would be called “That 70s Show.” It’s been about 40 years since some key economic metrics have been as strong as they are today north of the border.

September figures revealed:

The Canadian dollar has the highest value since 1974.

Canada’s unemployment rate was at its lowest since 1974.

Housing starts were at their highest since 1978.

What’s more, “There’s no smoking gun out there that’s going to bring it down,” said Peter Norman, senior director, Altus Clayton economic consulting.

The strong Canadian economy served as the backdrop for a pair of Canadian events last month—the Hardlines Conference Series and the National Hardware Show Canada. While retailers at the conference spoke of smooth sailing ahead, new products took the forefront at the co-located trade show.

Exhibitors with hockey-skate sharpeners and hockey sticks gave the event a Canadian flavor above and beyond its Toronto location, as more than 230 exhibitors showcased their products and services for the Canadian home improvement market. According to Scott Temple, managing director of Reed Exhibitions Canada, producers of the National Hardware Show Canada, some 75 of those companies were new exhibitors.

Wendy Hung, a housewares buyer for Mississauga, Ontario-based Bargain Shop, a 180-store Canadian chain, walked out of the Toronto Congress Centre here with a new Acer laptop computer, a prize given away by the people at the ScotiaStar Network booth. The laptop wasn’t the only hardware that interested Hung.

“The LED flameless candles were pretty cool,” said Hung, who tended to focus on the housewares products on the show floor.

Other retailers roamed the floor with a wider product focus. “It’s a good show for finding what’s new,” said Bernie Duryek, of Coda Co., in Mount Forest, Ontario.

The show floor included a New Product World area showcasing a diverse group of products. Numerous products reflected interest in environmental friendliness or energy reduction, including a wooden rainwater tank from USD and non-toxic SoyGuard wood treatment from Erie, Pa.-based BioPreserve.

Temple, who was named as show director last year, said he was encouraged by the new products on display, the new exhibitors and the willingness of attendees to come from far-off provinces. He described attendance as up 5 percent overall, from the inaugural 2006 event. “We need to continue to build relationships with industry associations and exhibitors to market the show and make it a must-attend annual event,” he said.

“We’re not too concerned with effects from the U.S.,” said Norman. “I don’t see why there would be a lot of spillover effects, except psychological.”

The strong Canadian dollar is encouraging to some of the U.S.-based vendors. It’s more expensive to attend a foreign trade show, but that’s more than compensated by the increase in business from the increased buying power of Canadian customers, said David Silverman, global sales manager for General Pipe Cleaners in McKees Rocks, Pa. “It sounds like a bad thing, but a weak U.S. dollar can be good for business.”

At T-Brace, a Dallas-based manufacturer of a bracing system for walk boards and scaffold planks, the healthy Canadian remodeling market was even more attractive than the healthy Canadian dollar.

“This is our first time here, and we were excited by the strong demand for remodeling in Canada,” said Todd Ryan, national sales manager.

RONA CEO: WE’RE NOT FOR SALE

RONA CEO Robert Dutton said his Boucherville, Quebec-based retailer and distributor would remain Canadian, despite rumors of a buyout from Lowe’s.

“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 Hardlines Conference attendees, many of them suppliers.

Lowe’s intends to open its first stores in Canada in December and intends to grow organically, despite speculation that acquisitions of Canadian companies are a more likely approach to expansion.

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Top Kingfisher executive to depart in February

BY HBSDEALER Staff

Kingfisher, the U.K.-based parent of big-box home improvement chains B&Q and Castorama, has announced chief executive Gerry Murphy will step down on Feb. 2, 2008. That date is the official end of the current financial year.

Murphy has served in the chief executive spot for five years; no specific reason was given for his departure. A search is underway for his successor, the company said.

“I am proud of the progress we have made over the past five years, and it is the right time for me to move on and hand Kingfisher over to a new leader,” Murphy said in a statement.

“In a time of great change and challenge … he has transformed Kingfisher into an integrated and successful international home improvement retailer with strong management and a clear direction,” said Peter Jackson, chairman of Kingfisher’s board of directors.

The company said it has seen a “tough environment” for DIY sales in the United Kingdom, but that it still expects strong international sales in the third quarter. Kingfisher is set to release third-quarter results on Nov. 29.

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In Canada, expect change

BY HBSDEALER Staff

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.

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