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At LMC, a billion-dollar campaign

BY HBSDEALER Staff

It’s an age-old fact of business: Small companies will promote the many virtues of being small. Large companies will promote the many virtues of being large.

A new marketing campaign from Wayne, Pa.-based Lumbermens Merchandising Corp. (LMC) represents a noteworthy recent attempt to appeal to both ends of the spectrum. The effort is rooted in four words: “billion dollar buying power.”

The LBM co-op, which ranked 2nd on the HCN Top 100 Distributors Scoreboard with total two-step sales of $2.79 billion, is emphasizing its collective buying power. “LMC has always held that the dealer’s name is most important in their local market,” the company said. “’The ‘Billion Dollar Buying Power’ kit supports the dealer’s marketing efforts with tools that inform customers they are doing business with a local independent that is also a competitive force with national buying power through LMC.”

According to LMC, its 1,200-plus dealers combine for more than $8 billion in annual retail sales.

The co-op is spreading the “billion dollar” word on the sides of trucks, on brochures and anywhere the local dealer has a contact with a customer. From the new lmcbuyingpower.com website: “LMC Dealers’ Buying Power provides the quality products professionals seek at a competitive price. For quality and price, builders, remodelers and tradesmen find more value for their business with LMC dealers’ yard than at a big box.”

 

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Lowe’s and RONA: Deal still on?

BY Brae Canlen

The unexpected departure of Robert Dutton, CEO of RONA for the last 20 years, has breathed new life into the possibility that Lowe’s will finally get its hands on Canada’s largest home improvement chain. Dutton stepped down on Nov.  9, two months after he and his board of directors fended off a takeover by Lowe’s. Dutton said he had new initiatives in store for the Boucherville, Quebec-based RONA, which put in a poor performance in its last quarter. While revenues held steady, profits fell to $5.1 million, from $47.8 million in the third quarter last year.

Dutton never got a chance to implement his strategic plan. While no reason was given for his sudden exodus, Montreal’s La Presse reported that Dutton resigned because RONA’s board was entertaining a new and better offer from Lowe’s: $15 per share, up from its original $14.50 offer.

Five days after Dutton left, Invesco Canada announced in a brief release that it plans “to requisition a meeting of shareholders of RONA Inc. for the purpose of removing RONA’s current directors and electing new directors in their place.” RONA has already scheduled a shareholders’ meeting in May 2013. Invesco owns about one-tenth of RONA, making it the company’s second largest institutional shareholder.

Although Dutton is gone, RONA’s acting CEO, Dominique Boies, is fighting back. On Dec. 6, he announced a proposal to streamline the company by reviewing all its formats and eliminating “non-core assets.” And in a press conference, Boies said that Lowe’s first acquisition offer to Dutton, made in 2011, was met with a counter offer: RONA could buy Lowe’s Canada instead.

Lowe’s already has 31 stores in Canada, and finding new sites to expand has proven to be difficult. But taking over RONA — a conglomeration of retailers, wholesalers, corporate and franchise stores operating under different banners and formats — will prove to be no cakewalk. RONA’s dealers and affiliated employee unions have already expressed opposition to a merger with Lowe’s. The Quebec government could also block the purchase.

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Measuring the impact of a super storm

BY Ken Ryan

Bad weather has meant brisk business for the industry’s largest home improvement retailers, which for the second year in a row experienced significant sales gains from an East Coast hurricane.

Fourteen months after Hurricane Irene wreaked havoc on the Northeast, Hurricane Sandy ravaged the East Coast, particularly New Jersey and southeast New York, where damage totals continue to rise well into the tens of billions of dollars.

Carol Tomé, chief financial officer and executive VP corporate services at The Home Depot, said the company expects to take in at least $360 million in sales related to Sandy. Tomé bases that off Hurricane Irene’s numbers — $230 million in sales from Irene (which hit in late August) in the 2011 third quarter, and $130 million in the fourth quarter.

At its Nov. 13 third-quarter conference call, Tomé said: “The property damage, as we understand it, related to Irene was about $16 billion. The property damage for Sandy is about $20 billion. So it would suggest possibly higher sales, but it’s impossible for us to know right now.”

The retailer got a $70 million lift in sales in the last week of the fiscal third quarter that ended Oct. 28 — for items such as generators, flashlights, batteries and extension cords — “as customers in the North prepared for the threat of Hurricane Sandy,” executive VP merchandising Craig Menear said. Home Depot executives said the company shipped about 4,000 truckloads of products to communities impacted by Sandy.

In the day after the storm, Sears said more than 100 truckloads of “generators, chainsaws, wet and dry vacuums, flashlights, batteries and lanterns, along with dehumidifiers, utility and sump pumps” were sent east from 42 distribution centers as far west as Memphis and Chicago.

Lowe’s executives reported that profits jumped 76% in the third quarter from the same period a year ago, owing in significant part to Sandy-related sales. “We supplied large quantities of generators, flashlights and batteries to customers preparing for Superstorm Sandy,” said chief customer officer Greg Bridgeford. “Our merchant, logistics and store teams worked closely together to identify what products would be needed before and after Sandy, and pre-staged them in appropriate stores and distribution centers.”

Some home improvement dealers even took to themed advertising. An Ace Hardware store in Brooklyn, N.Y., ran a two-page ad with the message: “If Sandy Didn’t Blow You Away, ACE Specials Will!” opposite a page of cleanup-related supplies that were on sale.

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