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www.hirmagazine.comPM NO. 40008000

A Powershift Publication l Volume 20, Number 4 l September 2014

CANADIANREPORT ONDISTRIBUTION

SPECIAL FEATURE

Retailing By Design Showroom Learning Ground For Retail Stores

38

Hand Tool Report DIY And Innovation Drive Hand Tool Category

33

Going Green How To Save Energy And Money

15

For more information, contact Pascal Houle, Executive vice-presidentTelephone : 1 800 361-0885

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e-mail: circulation@powershift.caHOME IMPROVEMENT RETAILING • September 2014

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A POWERSHIFT PUBLICATION

VOLUME 20, NUMBER 4 September 2014

EDITORIAL DIRECTOR & PUBLISHER Dante Piccinin

EXECUTIVE EDITOR Joe Hornyak

MANAGING EDITOR Nienke Hinton

ART & PRODUCTION Keith Boa

VICE-PRESIDENT ADMINISTRATION & CIRCULATION

Catherine J. McKercharADVERTISING SALES

Dante PiccininJohn Simmons

(416) 494-1066 Fax: (416) 494-2536HOME IMPROVEMENT RETAILING is published 6 times yearly by Powershift Communications Inc., 245 Fairview Mall Drive, 5th Floor, North York, ON M2J 4T1, Canada. Telephone: (416)494-1066, Fax: (416)494-2536, e-mail: hir@powershift.ca. Advertising, and Editorial inquiries should be made to the above address. Issue dates are: Jan/Feb; March/April; May/June; September; October; Nov/Dec. Yearly subscription rates: Canada: $76 plus GST*; U.S. and other: $110/yr. Single Copy prices: Canada: $15 plus GST* prepaid; U.S. and other: $30 prepaid. HOME IMPROVEMENT RETAILING assumes no responsibility for the validity of the claims in items reported or for the opinions expressed by our writers. All rights reserved. Contents may not be reprinted or duplicated without written permission. Publisher assumes no responsibility for unsolicited manuscripts and art. Published by Powershift Communications Inc. PRESIDENT, D. Brian McKerchar; VICE-PRESIDENTS, Dante Piccinin, Catherine J. McKerchar, John L. McLaine.CANADIAN PUBLICATIONS MAIL PRODUCT SALES AGREEMENT NO. 40008000 *Goods and Services Tax Registration Number R131006876. ISSN: 1204-3044

Home Improvement Retailing is printed on paper that contains 10% PCW and FSC® Chain of Custody Certification. 100% of the electricity used to manufacture this paper is Green-e® certified renewable energy. Printed with vegetable-based inks that have a minimum 65% bio-based renewable content.

5 Editor’s ViEw Hacking Reaches New Low

6 industry updatE

7 in storE

9 CoaCh your tEam Bending The Rules

11 FoCus on CustomErs Brand Advocates Can Greatly Increase Sales

13 Front LinEs Bathrooms Going Contemporary

Faucet Technology Greatly Improved

15 GoinG GrEEn How To Save Energy And Money

What Is ENERGY STAR?

42 it’s your monEy

43 priVatE wEaLth

46 pubLishEr’s pErspECtiVE Business Is Good, Despite Competition, Consolidation

Departments

Features17 Canadian rEport

on distribution New Channels And New Competition Challenge Retailers

33 hand tooL rEport DIY And Innovation Drive Hand Tool Category

38 rEtaiLinG by dEsiGn Showroom Learning Ground For Retail Stores

40 ContraCtor businEss Contractors Want Faster, Lighter, Smarter Power Tools

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CONTENTS

To find out how you can benefit by joining Home, visit home-owner.ca

“With our previous banner, frequent stock shortages were the norm – a big difference from Home Hardware’s 95+ percent fill rate. Since we’ve joined Home, our customers couldn’t be happier. We’re proud to say they’re not the only ones.”

Yves MorelSte-Anne-des-Plaines

and Saint-Lin-des-Laurentides, QC

We wanted a brighter

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That’s why we trust Home.

48640_HIR_YvesMorelClient: Home HardwareClient Code: HOMProduct Code: COR

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Publication: HIRInsertion September 2014Colours: CMYK

Art Director: MarkCopywriter: NAMac Artist: Daniel

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eDitor’s View

Joe HornyakExecutive Editor

jhornyak@powershift.ca

5HOME IMPROVEMENT RETAILING • September 2014

Data breaches are not new. We recall newspaper headlines trum-peting the horrific news that hos-pital records had blown from a

dumpster and were liable to fall into the hands of unscrupulous individuals. After that, we saw the first tech data breaches. Typically, they involved an employee tak-ing some work home, losing the floppy, and even, if memory serves correct, their laptop. Smaller scale efforts involved criminals tap-ping into the card reader on gasoline pumps and instore chip readers.

Now, however, the scale has escalated, primarily because we have, first, become obsessed with data. And we have collected so much data that we can no longer store the information onsite, but need to upload it to the cloud. Of course, this is a case of one hand shaking the other. The more we become obsessed with data, the more stor-age we need.

Personal InformationSo in recent months we have had a num-

ber of data breaches starting with the one at Target last fall. Just before Christmas,

the retailer revealed that the personal infor-mation of as many as 70 million people had been stolen. This included customer names, credit or debit card numbers, card expiration dates, CVVs (card verification values), mailing addresses, phone numbers, and eMail addresses.

The cost of the breach reached $110 million as well as a decline in the share price from the 65 cent range to the 60 cent range, plus the reputational damage with shoppers fearful of using their cards to shop at Target stores.

The Identity Theft Resource Center reports that have been 395 data breaches in the U.S. so far this year, a 21 per-cent increase over the same period last year. Targets include eBay, PF Chang’s, and Michael stores. And, of course, Home Depot can now be added to that list.

Now, not all data breaches are serious. Right at the time that Home Depot was investigating to see if it had been the tar-get of hackers, word broke that the cloud had been breached and nude photos of celebrities were in circulation. And, in a perfect example of the misguided sensibil-ity of today’s news media, nude pictures of Jennifer Lawrence were given more atten-tion than the reports of the Home Depot breach. This was amusing, not relevant.

So now we have Home Depot as a tar-get and this breach is not only for its U.S. stores, but the breach could potentially impact customers using payment cards at its Canadian stores as well. There is no evidence that information of customers who shopped online at HomeDepot.com was taken. And, while the company con-tinues to determine the full scope, scale,

and impact of the breach, there is no evidence that debit PIN numbers were compromised.

However, what makes these latest breaches perhaps more concerning is that there is a train of thought that they were not motivated by financ-es. This breach was detected by a computer security expert, Brian Krebs. On his KrebsonSecurity website, he reported that hackers had put stolen credit and debit cards from the chain on sale on

a website that regularly offers stolen credit cards for sale. So far, it’s just criminal.

However, he subsequently reported that there were signs that the perpetrators of this apparent breach may be the same group of Russian and Ukrainian hack-ers responsible for the data breaches at Target, Sally Beauty, and PF Chang’s. The scary part is that the cards were listed for sale as ‘American sanctions.’ He interprets this as “intended retribution for U.S. and European sanctions against Russia for its aggressive actions in Ukraine.”

So now we’ve moved from financial crime, data theft, to financial terrorism. And that opens up a whole new area of concern where hackers start using data breaches as an act of terrorism. While the terrorist attack of 9/11 was devastating affecting thousands of people, with this type of act we could be talking millions of lives affected. If the intent of an act of terrorism is to cre-ate widespread fear, certainly this fits the definition.

Industry RespondingClearly, the industry is responding. Home

Depot will roll out ‘Chip and PIN,’ which requires the use of a chip in the card and a PIN to complete a purchase. Apple’s latest versions of its phone will include Apple Pay, which replaces sensitive payment account information found on plastic cards with a digital account number or ‘token’ that can be safely stored on mobile devices.

Still, that’s only solving the problem and sophisticated hackers will find ways to circumvent these technologies. The real solution is aggressive global law enforce-ment which stops the problem at the source, the guy with the computer, not at the cash register. ❖

Hacking Reaches New Low

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inDustry upDate

Husqvarna To Discontinue Dixon

Husqvarna Professional Products Inc., a division of Husqvarna Group, will discon-tinue the distribution of products under the Dixon brand name in North America by the end of 2014. International markets are unaffected at this time. Husqvarna Group will continue to process Dixon warranty claims and provide service parts under the Dixon brand for an extended period of time. Husqvarna will also continue to manufacture and market similar products to the Dixon line of movers and tractors under the current family of Husqvarna Group brands.

Arauco Streamlines Businesses

All sales and operations of forest product company Arauco in the U.S. and Canada are now combined under one organization oper-ating as Arauco North America. The primary objective of the reorganization was to cre-ate a more effective and efficient operating platform, says the company. It is intended to strengthen and consolidate the headquarters in Atlanta, GA, for all the North American operations in terms of domestic and off-shore manufacturing.

Norman Caissie Acquires Don Park

Normand Caissie, of Richibucto, NB, has acquired Don Park Residential Manufacturing, a producer of HVAC galvanized duct, pipe, and fitting products based in Toronto, ON. The purchase includes the manufacturing facility in Toronto, but not Don Park’s commercial manufacturing (ICI) and fire divisions. The company will operate under the name of Don Park Manufacturing Inc. Caissie is a Canadian Hardware and Housewares Manufacturers Association Hall of Fame inductee.

Johns Manville Merging Businesses

Johns Manville plans to merge its American, European, and Asian activities for engi-neered products into one global business unit. It says this reorganization enhances its ability to serve increasingly global needs in the composites, filtration, and energy stor-age markets. Previously, it operated two engineered products business units: one for the Americas and one for Europe and Asia. The realignment keeps some of the regional components, mostly within the non-wovens

business, while the composites, filtration, and energy storage businesses will be man-aged more globally.

Wolseley Opens One-stop Shop

Wolseley Canada’s Mississauga HVAC/R location now carries plumbing products. This will provide customers access to a wider range of products as well as combined specialists under one roof for a variety of services including hydronics, HVAC, refrig-eration, mechanical, and plumbing. This location is the second of several new plumb-ing and HVAC/R branches it is opening over the next few years.

Weyerhaeuser Divests Homebuilding Business

Weyerhaeuser Company has divested its homebuilding business to TRI Pointe Homes,

Inc. The Weyerhaeuser Real Estate Company (WRECO) will now be a wholly-owned sub-sidiary of TRI Pointe. Weyerhaeuser says the separation of WRECO will enable the com-pany to focus on its forest product businesses while enhancing shareholder value.

ROXUL To Begin Production In U.S.

Stone wool insulation manufacturer ROXUL Inc. will officially begin production at its first manufacturing facility located in the U.S. The plant is located in Marshall County, MS. The new facility will ensure the company can meet its customer growing demands.

HD Supply Rebrands Units

HD Supply, Inc. has rebranded some of its units to reflect a unified, consistent, representation that visually showcases the company’s one brand strategy as well as better communicate its business units’ specialized areas of expertise. The facili-ties maintenance, waterworks, and power solutions business unit descriptors remain the same. HD Supply White Cap, Crown Bolt, Creative Touch Interiors, and Repair & Remodel have been rebranded as HD Supply Construction & Industrial, HD Supply Hardware Solutions, HD Supply Interior Solutions, and HD Supply Home Improvement Solutions, respectively. ❖

HOME IMPROVEMENT RETAILING • September 20146

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7HOME IMPROVEMENT RETAILING • September 2014

in store

RONA Represents Ace In Canada

RONA inc. will be representing the Ace brand in Canada. The retailer has signed an agreement with Ace Hardware International Holdings, Ltd. for master licensing. It gives RONA specific rights and privileges with respect to Ace Hardware brands, retail oper-ating systems, and web portals. RONA and Ace have also signed a long-term distribu-tion agreement giving RONA access to products available through Ace Hardware’s various channels of distribution including its China direct programs. TruServ Canada will lead the new business unit dedicated to the success of new Ace dealers.

Lowe’s Rolling Out 3D Simulator

Lowe’s is rolling out a 3D simulator in two Toronto, ON-area stores. The ‘Holoroom’ will focus on bathroom remodeling, but the plan is to add new categories and rooms over the next 12 to 18 months. The technol-ogy was designed by Lowe’s Innovation Labs which focuses on ‘uncommon partner-ships’ with organizations such as Singularity University and SciFutures. There is no firm plan for rollout in the U.S.

Nelson Lumber Joins Sexton

Nelson Lumber Company is now a member of Sexton Group. In business since 1949, it is an independent lumber and building mate-rial retailer and component manufacturer. Based in Alberta, it has five retail locations, four truss plants, and two manufactured housing businesses.

Orgill Concludes Biggest Market

Hardlines distributor Orgill, Inc. has wrapped up its ‘Fall Dealer Market.’ The event occupied 865,000 square feet making

it the largest show floor in Orgill’s history. In addition to its typical market-only deals, educational seminar lineup, and new prod-ucts, Orgill used the market to showcase special category-specific displays, new and remodeled retail concept stores, and pro-gramming which centered around modern advertising strategies and eCommerce.

Sears Canada Opens Fulfillment Centre

Sears Canada Inc. is opening a 240,000 square foot fulfillment centre in Calgary, AB. The centre will pick, pack, and ship small-ticket items such as apparel, home décor, small appliances, and toys for customers in western Canada who use the Sears Direct channel. The facility is expected to reduce delivery time to most western Canadian customers by an average of one to two days.

Castle Buying Expos A Success

Castle Building Centres Group welcomed over 240 participants to its ‘7th Annual Central Buying Expo.’ This year, 65 Castle members and close to 60 vendor partners from Ontario and Quebec took part to strengthen relationships and take advantage of one-of-a-kind buying opportunities. The western buying expo was held in Calgary, AB. It brought in more than 50 member locations and 50 vendor partners from across western Canada for a member update meet-ing and full-day of buying.

TORBSA Gets New Member

Crown Building Supplies Ltd. in Surrey, BC, is the newest independent member of TORBSA Limited. The location is owned and operated by Gary and Gurpreet Sangha, who both have many years of experience in the industry. Their business model mirrors many of the other shareholders in the group.

Warehouse Management System Goes Live

Home Hardware Stores Limited has launched a warehouse management system (WMS) at its distribution centre in Debert, NS. The new system is part of Merchandise

in Motion (MiM), a proprietary logistics management design consisting of the ware-house management system and a transporta-tion management system. These new sys-tems will facilitate efficient operations and maximize resources.

Target Staying On Schedule

John Mulligan, Target Corp.’s chief finan-cial officer, says if the retailer could start its launch in Canada over, it would do things differently. That said, Target is not changing its plans to have 133 stores in Canada by the end of 2014 and 150 stores by 2017. He says Target probably should have launched in Canada with only five to 10 stores, instead of more than 100. It should have refined operations, the supply chain, the technology, and sales staff, but, that’s all hindsight now. “We are where we are right now and we’re focused on moving forward,” he says.

Home Depot Gets Connected

Home Depot Canada has partnered with Wink to develop a smartphone app that allows users to connect and manage up to 70 connected products in their home from anywhere in the world. The app replaces the need for remote programs for each item by combining all products within the one sys-tem. The system relies on a central hub that connects to all the products and is compat-ible with different types of communications including Wi-Fi, BlueTooth, ClearConnect, Z-Wave, and Zigbee. The Home Depot and Wink have partnered with a number of man-ufacturers including Schlage, Honeywell, Philips, and Dropcam. ❖

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Sounds simple, but, in reality, as the rules don’t always apply, make a decision to bend some and to break some. Look at all the policies, procedures, and systems you have in place that make life miserable for your customers. You could have the nicest people in the world, but if you have stupid hours, stupid rules, and stupid procedures, your cus-tomers won’t be happy. If you have policies that slow down tasks or require two or three sets of eyes and signatures for approval, you are wasting time and money. Speed up the process and eliminate time wasters.

Rules stop employees from thinking for themselves and for the customer. In order to ensure customer satisfaction and deliver against the very demanding expectation of your customers, you should try to widen your employees’ customer service skills by teaching them how to bend the rules. It’s not about breaking the rules, but bending them to keep the customer happy. Put yourself in your customer’s place and ask, ‘Do you like to feel valued, listened to, and have your requests respected? How do you feel when an organization solves your problem with-out any hassle? How do you feel when they cannot or will not fix your problems at all?’

Decisions On The SpotIt’s critically important for businesses to

give employees the power to make decisions on the spot because one policy can’t cover everything. There are too many unexpected things that happen every day.

There are rules for a reason: they work for most people most of the time. Often scientific evidence backs them up. But, as with almost

any other endeavour in society that doesn’t involve criminal activity, rules can some-time be broken – or at least bent – without the world coming to an end.

This is especially true in business. Company owners and top executives give a lot of thought to winning and keeping customers and they spend a lot of time and money on things like PR, leadership train-ing, and social media campaigns. But, the real frontlines of building a business are in the daily interactions employees have with customers.

Ridiculous PoliciesOne of the major roadblocks to cus-

tomer service excellence is the policies and procedures most companies have in place to make sure that one per cent of their customers don’t take advantage of them. Meanwhile, the other 99 per cent of their customers are frustrated. When frontline employees are restricted with ridiculous policies and procedures, the process of serving customers is dramatically slowed down and customers are essentially given the boot and will soon be greeted with open arms by the competition.

In all organizations mistakes happen. Things go wrong. Employees need to know they don’t have to follow a canned script. They should be allowed to think like own-ers of the company. They need to know they should treat every customer the way they would want to be treated, even if it means ignoring the official company rulebook. Employees must bend the rules and make empowered decisions to serve the customer.

Cost A PittanceThe best news is that most decisions will

cost the company less than $50, which is a pittance when you consider the lifetime value of the customer and the good will that empowered decisions can make. Every company has something it can give to a customer who experiences a problem. It doesn’t have to cost a lot, but its value as far as goodwill and customer loyalty will be priceless. Identify 10 to 20 products your company has that have value in the eyes of the customer, but won’t cost you an arm and a leg when used as compensation for a problem.

When you are willing to bend the rules, your customers get what they need and are happy. Your organization strengthens a relationship with a client. The employee is recognized for solving a problem and retain-ing business.

Remember, good service alone doesn’t get anyone talking about you. Bend the rules a bit and get people buzzing about you. ❖

John Tschohl is founder and president of the Service Quality Institute.

Bending The Rules

CoaCh your team

By: John Tschohl

9HOME IMPROVEMENT RETAILING • September 2014

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11HOME IMPROVEMENT RETAILING • September 2014

For retailers, the message is clear: mak-ing sure your sales associates have the prop-er expertise is good business. Experticity has the following recommendations:◆ Invest in the right people – There are

people out there who love and use your products and your competitor’s products every day.

◆ Train the people who love your stuff – So often retail employees get trained in things like how to improve service. That has a place, but if they don’t know the products inside and out, they won’t be able to provide the proper guidance. And if your customers have a bad experience after they leave your store, that smiling face from your team doesn’t mean much.

◆ Reward expertise – If your employees are in love with the stuff you sell and know everything about it, then they probably want to be rewarded with your stuff—discounts, merchandise, tickets to related events, etc.

◆ Evangelize the value of helpful expertise – We are all consumers and fundamentally can speak to how a great buying experi-ence impacts your satisfaction. Leading people to the lowest price on your shelf doesn’t build relationships. Ask custom-ers what they want and why they want it. ❖

FoCus on Customers

Brand Advocates Can Greatly Increase Sales

When asked to rate which services con-sumers most desire and value from retail sales associates, the top four were:◆ Product knowledge (73 per cent)◆ Help selecting the correct product (71

per cent)◆ Category knowledge (69 per cent)◆ Help finding alternatives when the first

choice is not available (68 per cent)The survey says two in five consum-

ers are routinely disappointed by the lack of expertise of the sales associates they encounter in retail stores. The biggest shortcoming is in finding suitable alterna-tives, cited by 43 per cent of consumers. Category knowledge, product knowledge, and help selecting products were skills also cited as lacking. Yet, all of these are problems that can easily be overcome with proper training.

Talking To SomeoneGiven the value consumers place on

expertise, it is not surprising that when they cannot find it at retail stores, they find it elsewhere. Consumers say the resource they find most useful in terms of obtaining exper-tise is talking to someone they perceive to be an expert (72 per cent). This is followed by online searching (71 per cent), online user reviews (66 per cent), and traditional product reviews and articles (65 per cent).

Customers look for helpful exper-tise from their sales associates. Yet, a recent study by Experticity, Inc. says many customers are dis-

appointed in the lack of salesperson expertise in retail stores. This should be alarming to retailers because the survey shows that after receiving helpful expertise, consumers will spend 50 per cent more on their purchase. And, 75 per cent of people buy a specific item when recommended by a brand advocate.

Brand AdvocateSo what is a ‘brand advocate?’Brand advocates are the retail associates

and industry professionals who use and pro-mote retail products. Their actions influence the purchases of the customers who shop at your store.

‘Retail Buying Experience,’ the first sur-vey of its kind by Experticity, uncovers a striking expertise gap among sales associ-ates. The study of 600 U.S. consumers shows that customers value sales associate expertise above all else, but often find such expertise lacking.

“The survey shows that consumers still fundamentally want helpful expertise from retail sales associates to guide buying deci-sions while many of today’s retailers have opted for low-cost employees, forcing buy-ers to turn elsewhere for information,” says Tom Stockham, CEO of Experticity. “This clearly shows that consumers are not happy having to do all the research themselves and crave retail to play a hands-on role with their buying decisions.”

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13HOME IMPROVEMENT RETAILING • September 2014

Frontlines

Contemporary style has now sur-passed transitional, taking over as the number one bathroom style, says the National Kitchen

and Bath Association in its ‘2014 Kitchen & Bath Style Report.’ However, designers say

we haven’t seen the end of the transitional style just yet. Transitional was the top style, representing up to three-quarters of the mar-ket, just a few years ago, but it is now the third most popular style and designers don’t expect any major changes this year.

Polished chrome earns the top spot in bathroom faucet finishes and is anticipated to have the most growth in 2014. The report, which surveyed 420 kitchen and bath designers, also says polished nickel faucets, now in fourth place, will be the second fast-est growing finish in 2014.

White is the top fixture colour for the bathroom and is predicted to grow even more in 2014. Colours like beige and almond are expected to decline in popular-ity this year, although silver and grey may increase slightly.

Almost half of designers specified water-saving faucets and fixtures in 2013, with 44 per cent predicting demand will grow in 2014.

The report doesn’t expect much change in vanities, but quartz is expected to rise as the star product for vanity tops. Under-mount sinks continue to be the number one style and are predicted to grow strongly this year.

As for flooring, tile, either ceramic/porcelain or natural stone, makes up the majority of bathroom floors with no major changes anticipated in 2014. Electric radi-ant floor heating continues to increase in popularity. ❖

Bathrooms GoingContemporary

Faucet Technology Greatly Improved

Improved valve technology has reduced leaky faucets to a mini-mum, so choosing a faucet is more about style and less about quality these days. However, it is important for your customers to be familiar with what they are purchasing so they have an idea of

the maintenance required and their expectations for their purchase.

ValvesA faucet (or tap or spigot) is basically a valve

controlling release of water and mixes the hot water with the cold. It is often below the handle. There are four different types of faucets: ceramic disk, compression, ball, and cartridge. They are available in a variety of styles and designs.

Ceramic valves consist of two ceramic carbide disks opposite each other. One is fixed and the other moves. A rod connected to the handle will move the one disk, aligning the holes to allow water through – hot and/or cold depending on how the disks are aligned. Because ceramic carbide hardly wears out from friction, it is very durable and will last a long time

A compression faucet is inexpensive, but

often requires frequent repairs to stop leaks. A compression faucet uses a threaded compression stem with a rubber washer at the top of the threaded area. When the compression stem is tightened, the rubber seal presses against a valve seat to prevent water flow.

Ball faucets usually have a single handle which moves over a rounded ball-shaped cap right above the base of the faucet spout.

The handle controls a plastic or metal ball inside the faucet body. The ball has slots in it, with rub-ber o-rings and spring-loaded rubber seals. This assembly controls the flow and mixing tempera-ture of the water. Ball faucets tend to leak more than other washerless faucets.

Cartridge, or washerless faucets, use rubber o-rings inside a cylindrical cartridge to control the flow of the water.

Another configuration for a cartridge faucet is a stainless steel plate which is pressed against a spring-loaded neoprene seal. Customers should be made aware that over time the neoprene or o-rings will wear out. However, these seals are easy and inexpensive to replace, providing the homeowner is somewhat handy. ❖

Homeowners have many options when buying a faucet. Shown is the stainless steel, pull down Selia faucet by Pfister.

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15HOME IMPROVEMENT RETAILING • September 2014

How To Save Energy And Money

caulking and sealing walls, windows, floors, and doors can also decrease ener-gy usage and costs.

◆ Monitor Energy UsageHomeowners in eligible areas can

sign up for smart meters and smart thermostats to monitor energy usage. By better understanding energy con-sumption, consumers can program and plan for the most efficient use. Even small changes can make a difference

such as replacing incandescent light bulbs with compact fluorescent

light bulbs.◆ Maintain Systems

Simple maintenance such as cleaning and sealing heating and

cooling ducts, replacing air filters, insulating pipes, and cleaning HVAC equipment can greatly improve the effi-ciency of heating and cooling systems. At a minimum, change the furnace filter every three months. A dirty filter will slow down airflow and make the system work harder to keep you warm or cool, wasting energy.A clean filter will also prevent dust and

dirt from building up in the system, which could lead to expensive maintenance and/or early system failure. ❖

With the good weather finally here, Canadians are once again purchasing or build-ing new properties and/or

renovating their existing homes. This is the ideal time to pay attention to a home’s energy efficiency and make energy sav-ing changes where possible. Not only can consumers save electricity and natural gas, they can also realize significant cost savings. Energy-optimizing changes may require initial investment costs, but these expenses can be amortized over the life-time of the home and reduce heating, cooling, and water costs for years to come. Education is the first step to helping homeowners navi-gate the choices that they make when build-ing, buying, or remodeling.

The following are tips you can share with your customers on how they can save energy and money in their home.◆ Invest in Energy Efficient Appliances

Major home appliances such as refrigerators, washing machines, and dishwashers contribute significantly to your customers’ monthly utility bills. By purchasing high efficiency kitchen and laundry appliances, consumers can save as much as half the energy of older appliances. Consumers should look for the ENERGY STAR certification (see sidebar).

◆ Design DiligentlyThe first opportunity for homeown-

ers to save energy and money is during the design and planning stages. Through space planning and intelligent design, homebuilders and contractors can imple-ment design efficiencies that will result in optimum natural heating and cooling, reducing energy needs, and ultimately expenses.

◆ Install and InsulateHomeowners should research the fea-

sibility of installing solar panels on the home or property for efficient electrical and water heating. When remodeling, existing single pane windows should be replaced with energy efficient double pane windows with low-E glass and all windows and doors should be sealed. Insulating attics, walls, and ceilings and

GoinG Green

What Is ENERGY STAR?

ENERGY STAR is an internationally recog-nized brand and a trusted symbol for identifying

energy-efficient or high-efficien-cy products in Canada. Qualified products meet strict technical specifications for energy performance.

These products save energy without compromising performance in any way. Typically, an ENERGY STAR qualified product is in the top 15 to 30 per cent of its class for energy performance. Saving ener-gy saves money and reduces the impact on the environment.

A complete list of ENERGY STAR qualified products is available online at the National Resources Canada (NRCan) website (http://www.nrcan.gc.ca).

New Home DesignationSince 2005, there is also an ENERGY

STAR designation for new homes. ‘ENERGY

STAR for New Homes’ qualifies new construction that is, on average across Canada, 20 per cent more energy efficient than a home built to the local building code.

Typical features of an ENERGY STAR home include:

◆ efficient heating and cooling systems that use less energy, reduce indoor humidity, and improve the overall com-fort of a home

◆ high-performance ENERGY STAR windows, patio doors, and skylights that keep the heat in during the winter and out during the summer

◆ walls and ceilings insulated beyond what is required by the building code

◆ a variety of ENERGY STAR products which use less electricity by meeting strict technical specifications

◆ a heat or energy recovery ventilation system (HRV or ERV) to ensure a home has controlled ventilation ❖

Well Connected.

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For Building Supply Dealers On The Move.

Yardstick Magazine Bleed.indd 1 2014-01-22 12:38 PM16 Go to page 3 CONTENTS

17 Go to page 3 CONTENTS

CANADIAN REPORT ONDISTRIBUTION

SPECIAL FEATURESEPTEMBER 2014

Fold to meet Fold to meet

We stand behind our products and our people. By empowering them to make decisions we prove our commitment to our valued customers every day.

taigabuilding.com

Whatever it takes.

When We empoWerto make decisions it gets you the & solution

our people

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Composite deCking • engineered wood

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19HOME IMPROVEMENT RETAILING • September 2014

Unified commerce, vendor con-solidation, and technology are top of mind for retailers, buying groups, and distributors in the

home improvement sector. More than ever, retailers are struggling to remain competitive in the world of omni-channel retailing where the players seem to be changing on a regular basis. Efficient distribution is a key area for retailers to stay ahead of the game by enabling them to offer lower prices and a real-time, seamless customer experience across the various touchpoint channels.

The top company initiative among supply chain executives is to enable a seamless customer experience online and in the store, says a survey by Boston Retail Partners. Its ‘2014 Supply Chain Benchmark Survey’ says 93 per cent of retailers are transforming their supply chains to enable real-time retailing. The survey defines this ‘unified commerce’ initiative as the evolution of both multi-channel and omni-channel retailing to

provide a seamless shopping experience whether in the store, on the web, or any-where customers choose to shop on their mobile devices.

Real-time RetailingNot only are there more channels to

reach the customers, the number of prod-ucts available continues to increase as well. “As the number of products offered increases, so does the demand on the dis-tribution system,” says Trent Balog, execu-tive vice-president, operations, and COO, Taiga Building Products Ltd. This requires retailers to provide real-time retailing – being able to detect, understand, com-

Efficient distribution systems is a key area where home improvement retailers can stay ahead of the competition. municate with, and serve customers at

every point in the purchase cycle.Today’s customer expects a consis-

tent brand experience, accurate inventory availability, and visibility in real-time, says BRP. Real-time bridges the digital and physical worlds to empower and encour-age customers to fully experience brands whenever and wherever they choose. To meet this generation of customers’ needs, progressive retailers are shifting their busi-ness organization and supply chain away from distinct shopping channels and into a seamless, unified, customer-facing expe-rience. However, BRP says transforming the supply chain to meet the needs of the new consumer requires significant resources and investments.

New ChannelsAnd New Competition

Challenge Retailers

SPECIAL FEATURE

By: Nienke Hinton

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HOME IMPROVEMENT RETAILING • September 201420

SPECIAL FEATURE

This method also causes the dilemma of inventory ownership – who gets a product first? If there is a limited supply of something, which customer gets the priority? Is there room for the inventory? Who is going to pick the order? “So now you have a logistics operation at the store level, which you may not have had before,” says Wulfraat. And, there is no rule book yet, he says. “Everybody is making it up as they go along.”

New CompetitionMeanwhile, Amazon is quietly com-

ing up the pipeline with its business-to-business supply chain. “We do not

hear much about it, but it is as big an opportunity as anything they are doing on the consumer side of things,” says Wulfraat. “Once that technology engine is built and the distribution infra-structure is out there, the only thing they will not have is the heavy duty product experience that comes with a wholesale distributor.

“If all of the supplies available at a home improvement retailer start showing up online at significantly lower prices, we will see a whole new channel of competition opening up and I guarantee loyalty will be low because if people can save money, they will.” Amazon Supply already has 2.5 million products.

Wulfraat says a lot of retailers may not have been affected by Amazon yet, but they will, including the home improvement sector. “It is right around the corner.” Amazon has raised the bar for what customers expect. It has sped up the market with consumers demanding

“The supply chain is evolving at a record pace as customers demand more services and value in shorter delivery times at a lesser cost,” says Terry Davis, CEO of Home Hardware Stores Limited.

Vendor ConsolidationsHome improvement retailers are using

various strategies for distribution. Some use in-house or ‘insourced’ systems, some use third-party distributors; some use banner or buying groups’ distribution channels; and some use the distribution systems provided by vendors and manu-facturers. However, the game continues to change with vendor consolidations.

“Consolidation within the industry has become essential to cutting costs and keeping companies’ heads above water,” says Lou Valeriati, vice-president of operations for Chalifour Canada.

In fact, many industry experts agree. Bill Morrison, president of TruServ Canada says, “The industry will likely need fewer, but larger companies who leverage both size and scale to meet customer needs.”

Bob Holmes, general manager of TORBSA, says, “Vendor consolidation continues and will need to continue. This addresses some of the concern of too many choices.”

“Consolidation will continue to be the best route to long-term health,” says James Jones, vice-president of national market-ing with Castle Building Centres Group.

Powerful ForcesMarc Wulfraat, president of supply

chain consulting company, MWPVL International Inc., says there are two main forces going on that are pretty powerful: self-distribution versus having others do the distribution.

“The large big box retailers like the Home Depot are making major moves to take greater control over their sup-ply chain and greater control over their inventory at the store level. To do that, they are building pretty comprehensive distribution networks, he says.

“The other powerful force taking place is driven by the whole Amazon effect and what is going on with eCommerce. That impacts not only the retailer, but all of the suppliers to that retailer.

“The struggle a lot of companies are facing right now is that online sales vol-ume is a relatively small part of their busi-

ness at this point in time. For traditional retailers, it is usually around two per cent – not enough to go out and invest millions of dollars in capital.”

Wulfraat says retailers know this per-centage will go up, but how do they best handle this new channel cost effectively and in such a way that they don’t disap-point their customers? Should they build a separate distribution infrastructure or use existing assets in their network that already service the stores? He says Home Depot started out by letting the supplier channel fulfill online orders.

However, when you do that, you are basically relying on hundreds of other

people to get the job done and they’re not always as good or accurate as they should be.

Over time, this model usually morphs into a model where the retailer takes cre-ative control. Wulfraat says Home Depot now has a dedicated eCommerce distribu-tion centre tup and running with two more planned for the next 12 months.

Wulfraat says it is important to note that a distribution centre geared up to replenish retail stores is a different beast altogether than one designed to fulfill eCommerce orders. The size of orders is different, as well as the number of employees and how and where items are delivered. There is also the reverse logistics to consider when a customer returns an item.

Another fulfillment method is to use existing stores. Here the retailer is add-ing cost to the individual store business model and would need some type of fair share cost and profit allocation.

A distribution centre to replenish retail stores is quite different from one designed to fulfill eCommerce orders.

ORGILL CUSTOMER INSIGHTS

Now, Orgill Gives All Dealers A Choice.Long-Term

Commitment

Worldwide Distribution & Retail Services

A Simple MissionAs Orgill has emerged as the world’s largest independent

hardlines distributor, its mission hasn’t changed. Like our

way of doing business, our mission is simple and to the

point… “help our customers be successful.” Everything we

do at Orgill focuses on fulfilling that mission and ensuring

our customers’ success.

A Solid PartnerNot only does Orgill have a long track record of service, but

it is also known for its innovation, growth and dedication

to helping retailers prosper. Orgill is fully committed to

providing Canadian retailers with all of the products,

programs and services they need to succeed now and into

the future.

A Unique System for Unique RetailersWith thousands of SKUs in stock, Orgill can deliver unique

assortments to customers of all shapes and sizes throughout

Canada. With more than 160 years of distribution

experience, you know you can count on Orgill to deliver

when you need it.

1-800-347-2860 EXT. 6780 • WWW.ORGILL.COMOrgill, Inc. P.O. Box 140, Memphis TN 38101-0140

To find out how Orgill can help you be more successful, call Phillip Walker

ORGILL HAS A LONG HISTORY OF EFFICIENCY, INNOVATION AND RELIABILITY! YOU CAN COUNT ON ORGILL!

Now, Retailers Throughout Canada Have A Choice!

For more than 160 years, Orgill, Inc. has helped home improvement retailers succeed by providing them with a reliable source for products, programs and services. Now, retailers throughout Canada have access to all of Orgill’s resources and can rely on a distribution partner that is going to be there for them over the long haul.

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HOME IMPROVEMENT RETAILING • September 201422

SPECIAL FEATURE

around since the late 1990s, but its use is expected to increase rapidly over the next few years.

Retailers will need to find a distribution model that will support rapid response to customer’s expectations, says Mario Paradis, senior director, supply chain and logistics for Lowe’s Canada. “You are already hearing about how retailers want to get product to customers within hours of an internet sale. These pressures will only continue to mount and as soci-ety’s expectations continues to increase; retailers will have to either find a solution to support this expectation or potentially lose to the competition.”

Valeriati says, “For the long term, home improvement retailers and distribu-tors will need to broaden their definition of competition. Online retailers such as eBay and Amazon introduce a wide range of vendors who are willing to com-pete for our members’ and customers’ business. Distribution companies must meet customer demands on delivery, availability, lead time, pricing, and tech-nology in order to remain competitive.”

Nienke Hinton is managing editor of Home Improvement Retailing (nhinton@powershift.ca)

faster delivery times and easier return policies and procedures.

Technologies Continue To Evolve

Home improvement retailers, banners, and buying groups are also utilizing vari-ous types of distribution technologies to stay competitive. Technologies continue to evolve and offer more and more func-tions. Indeed, technology can be the differentiating factor in a successful dis-tribution and fulfillment system.

Since the retailer can fulfill the order from the store or the distribution centre or the vendor’s distribution centre, the challenge now is to do a better job of predicting and forecasting the demands that are likely to occur for a product, says Dimitry Erez, vice-president with Boston Retail Partners. He says there are tools now that do a better job of forecast-ing, including configurations for older management systems to support new business rules. These tools will manage product fulfillment and shipping as well as inventory for any type of distribution network. He says this makes it possible to have a variety of distribution facilities as opposed to choosing one model.

Many home improvement retailers

and banners have exclusive technolo-gies, such as Home Hardware. Home’s proprietary logistics management system, called Merchandise in Motion (MiM), uses a leading industry-standard sys-tem to decrease operating costs and increase visibility of products as they move through the entire supply chain.

Chalifour launched its updated eCata-logue (ECAT) earlier this year, making the search and purchase of products extremely easy and efficient for its mem-bers. The ECAT is also mobile-friendly, giving members the freedom to access the product selection anywhere, anytime, and from a wide range of mobile devices – streamlining their entire purchasing process, says Valeriati.

‘Voice Directed Warehousing (VDW)’ is also gaining in popularity with the increased demands on logistics. Home Hardware and Orgill recently imple-mented voice picking systems in their warehouses. Voice picking is an ele-ment of VDW. VDW uses voice direc-tion and speech recognition software in warehouses and distribution centres. Users give and receive voice commands instead of paper or barcode or key entry methods, freeing up their hands and time. The technology has been

The biggest challenge facing home improvement retailing in 2014 was the delayed start to the 2014 year due to the poor spring selling season, says James Jones, vice-presi-

dent of national marketing at Castle Building Centres Group Ltd. “Members have been playing catch up and are very busy. We expect to exceed 2013 sales and purchase volume in a smaller shipping and execution window.”

Electronic CommunicationJones says Castle continues to invest in its electronic member

service site. “The company continues to strive to migrate as much information to this as possible and on a timely basis. We continue to add services and functionality for our members. Long term, we continue to move all operations to the cloud to

make it easier for members and vendors to communicate and sell more products.”

Although the industry has its challenges, Jones says Castle’s business model is working and is successful so the company is not looking to change its plan at this time. “Our members do not want to go out and buy business or distribution systems,” he says. “Why take the risk and put the energy into that when we have a business that has lots of experts who can service the members? We have many vendors who can support us; we do not need to compete against them.”

Change Of Pace AcceleratingYet, there are challenges. Jones says the pace of change is

accelerating. “We continue to see the pace of change move to a faster level. We are not seeing different things change, but in three months the changes we see happening could have taken two years in the past. I guess it is the information age and the power of technology that levels the playing field. Knowledge is power and members do not like to be kept in the dark.”

Castle continues to look at the potential for changes in its technology. “The biggest changes that are on the way will be in the internet for sales and ordering areas for the contractors who are working with the members,” says Jones. “Going forward in the next few years, online ordering and smart systems to get orders placed and re-ordered directly will take over.”

James T. JonesVice-president of National Marketing

Castle Building Centres Group

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23HOME IMPROVEMENT RETAILING • September 2014

SPECIAL FEATURE

Over the next year, distribution in general will see huge challenges, says Jones. We’ll see “investment in systems to improve efficiency and more cost cutting to become profitable. The distributors who are not carrying any debt will be the survivors as debt-laden distributors will not have the ability to convince investors to throw good money at a sinking ship.”

Best RouteJones says consolidation will continue to be the best route

to long-term health. “You need consolidation and those compa-nies that do not realize it will end up with business models that may look successful, but they will not survive. They may win a few battles, but they need to look at winning the war.

“I feel strongly that some businesses are questioning why they committed so much capital and resources to grow distribution.”

Canadians continue to spend their hard-earned dollars with retailers that provide value. Since 2008, spending on home improvement has been bouncing back slowly

but steadily and shoppers have been clear on where they choose to spend their money. Retailers that have not made investments in best-in-class systems and services in order to deliver tangibly better customer value will be challenged to hold on to their customers. Customers simply will not be patient with less than the best when it comes to value, says Terry Davis, CEO of Home Hardware Stores Limited.

Home Hardware is committed to providing that value. “As we celebrate 50 years, Home’s focus is, as always, to

improve store systems and supply chain efficiencies,” he says. “As a part of our ongoing commitment to improve supply chain efficiency, Home has invested in the upgrade of its distribution systems and is implementing best-in-class solutions for logistics management. Home’s proprietary logistics management system, called Merchandise in Motion (MiM), uses a leading industry-standard system to decrease operating costs and increase vis-ibility of products as they move through the entire supply chain.”

Supply Chain Is Evolving The supply chain is evolving at a record pace as customers

demand more services and value in shorter delivery times at a lesser cost – ‘Warehouse Management System (WMS)’ has the power to meet these demands, says Davis. “This comprehen-sive level of logistics management, from product orders to quick and reliable delivery, can’t be found anywhere else.

“Our distribution system makes us competitive as it was planned and designed for our needs, making it a best-in-class system in the industry. Our expanded Debert, NS, distribution

centre has increased capacity to support new growth in eastern Canada and will continue to provide superior distribution to our dealers. WMS moves products smoothly through the entire sup-ply chain and decreases operating costs, which allows dealer-owners to concentrate on helping their customers instead of worrying about ordering products and tracking shipments. The combined result focuses on more orders shipped accurately, faster, and at a reduced cost.

“It’s our goal to ensure we continue to provide the best ser-vice to our dealer-owners so they can provide the best service to their customers. As Home Hardware grows and we add new dealers and customers, we continue to evaluate the capacity, efficiency, accuracy, cost, and speed of our logistics system to ensure it best meets the needs of our dealer-owners and we remain the industry leader.”

Davis says Home is continually seeking for improvement and excellence in every area of its supply chain.

Continuous ImprovementHome’s greatest change in technology in 2014 was its

Debert distribution centre expansion and the launch of WMS which added 236,000 square feet to the warehouse in Debert, NS. The new composition is part of the MiM logistics manage-ment system along with a transportation management system. “These new systems will facilitate efficient operations and maximize resources to ensure the supply chain continues to be the best in the industry,” says Davis. “The implementation of the WMS this past year compliments the expansion with enhanced systems such as voice picking. These changes accommodate fill rate and continue to support Home Hardware’s goals to always be improving in supply chain efficiency.”

Home also provides eCommerce to allow customers access to products, no matter their location. In addition, the com-pany has introduced a proprietary point-of-sale software called ‘Foundation’ to help dealer-owners be more efficient with inven-tory management, ordering, receiving, and sales.

Davis says in the next year, Home Hardware will continue to concentrate its focus on improving supply chain efficiency and assisting dealer-owners in all of their needs to serve customers.

He says, “Home’s success as a dealer-owned network contin-ues to be linked to our group buying and co-operative relation-ship. Our dealer-owner system works because we all support one another through volume purchasing and shared support services. By collectively buying together and sharing our mar-keting and other services, Home will continue to provide quality distribution across Canada.”

Customer Service Top ValueCompetition will continue to be intense and customers will

continue to shop where they feel valued, says Davis. “Shoppers may not care whether a company is big or small, local or global, around for 50 years or for five years, but they care that they were treated with respect, served with genuine warmth, advised knowledgably, and offered great value for their money.” Home supports its dealer-owners to do that by con-stantly improving its supply chain and providing greater buying power, ensuring its marketing always stays true to its culture of value, service, and dependability, and by providing caring and knowledgeable service throughout the organization.

Terry DavisCEO

Home Hardware Stores Limited

“Getting the hardware we needed from our previous banner was always dif-ficult. That made it hard to compete with the larger big box stores – and that’s why Home was perfect for us. From the rebates to the special programs and hardware selection, they’ve been amazing. Thanks to Home, we see big things in our future.”

Jacques RichardBaie Ste. Anne NB

One of the reasons Home Owners are able to help homeowners find what they need is the strength of Home Hardware’s logistics and distribution. Four highly sophisticated

Distribution Centres across the country help our Dealers support their Home customers. Located in St. Jacobs and Elmira, Ontario, Debert, Nova Scotia and Wetaskiwin, Alberta - Home Owners everywhere can depend on reliable fill rates and a high service level (averaging 95+%).

With over 60,000 different items stocked in our Distribution Centres and industry-leading shipping times, Home Owners can rely on Home Hardware to keep their shelves fully stocked. A special orders sys-tem allows a Home Owner to offer products which are not available for customers at the store. These special orders are delivered to the Home Owner’s store.

Home delivers the goods from coast to coast through

Canada’s most recognized fleet of delivery vehicles. Home’s fleet consists of 150 power units and over 500 trailers. Keeping the environment in mind, 90% of our fleet is equipped with low emission engines in our power units, pulling trailers with fuel saving en-vironmentally friendly side skirts. Home Hardware’s professional drivers collectively travel over 17 million kilometers a year. Safety has and continues to be a critical part of Home Hardware’s Trucking operations. Home Hardware’s fleet has been CSA Certified for the past 10 years.

With Home Hardware handling the distribution, delivery and logistics, Home Owners are free to focus on helping their customers find what they need instead of worrying about ordering products and tracking ship-ments. This comprehensive level of service, from prod-uct orders and logistics to quick and reliable delivery, can’t be found anywhere else.

LOGISTICS MANAGEMENT SYSTEM (MERCHANDISE IN MOTION)

Home Hardware successfully implemented a new Warehouse Management System (WMS) at their East-ern Distribution Centre. This new WMS includes voice picking for improved accuracy and efficiency in fulfill-ing orders. Along with the WMS, a new conveyor sys-tem and software was implemented to track all cartons going to each store. The many features of each system will help Home maintain its distribution stronghold in the Canadian retail market. Plans are underway for implementing the WMS and upgrading the conveyor at the Western and Central Distribution Centres.

At the Eastern Distribution Centre, a 236,000 square foot expansion is now complete. This will enable Home to meet the growing distribution needs in Eastern Can-ada. The additional space includes 16,000 new pallet slots, and a new shipping and receiving area.

Since our beginning in 1964, Home understood the importance of logistics. Now, 50 years later, Home is still committed to help the independent Dealer-Owner grow and succeed. Home will continue to invest in im-proving supply chain efficiencies so our Dealer-Owners will be successful for the next 50 years.

HOME HARDWAREALWAYS DELIVERSTHE GOODS

Eastern Distribution Centre,

Debert, Nova Scotia:

236,000 square foot expansion

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HOME IMPROVEMENT RETAILING • September 2013HOME IMPROVEMENT RETAILING • September 201426

SPECIAL FEATURE

chain and logistics of Lowe’s Canada. “Although we were very grateful for the service and support of our third-party provider, the decision was made to finally take distribution in-house in late 2010.”

Currently, Lowe’s has a single 625,000 square foot national distribution centre located in Milton, ON, to support all of its 37 stores in Canada. This facility opened in February 2013 when the retailer exceeded capacity of its original distribution centre (DC) in Milton. The previous facility opened its doors in August 2007 and was 375,000 square feet.

“Roughly 50 per cent of all items we sell in our stores flow through this national DC either as stock, cross dock, or vendor prepared cross dock channels,” says Paradis. “On average, we increase items flowing through the DC by five per cent annually as we continuously review the most effective channel to flow product into our stores.”

Dedication And CommitmentWhen asked how Lowe’s distribution system makes the

retailer competitive, Paradis says it begins with the dedication and commitment of the entire Lowe’s Canada team. “The entire team strives to ensure each customer who comes into our stores walks away with what they were looking for and more. As a supply chain and distribution team, it is our goal to ensure stores have the highest in-stock position versus our competitors. Our team’s focus in 2014 has been ‘store in-stock’ and we’ve been able to provide significant improvements over last year by being more aggressive on inventory builds and investing more inventory dollars in our stores and our distribution centre.

“Another advantage we have is the ability to react to unex-pected situations. Over the last 12 months, we’ve been hit with several ‘freak storms’ across the country (such as the flooding in Calgary, AB, and Toronto, ON, and the December ice storm in Ontario) and in all of these instances, our distribution network was able to react to our customers’ needs, in some cases within hours. Our supply chain team is aggressive with weather-related product both in stores and in our distribution centre. When poor weather is coming, the team deploys inven-tory in the markets expected to get hit and we always carry additional inventory in our distribution centre to react to strong demand within 24 hours.

“We are able to do this because we pride ourselves on being nimble. All the decisions we make are based on ensuring the customers leave our stores satisfied with their experience and want to come back in the future.”

Supporting Strong Sales Growth“Our greatest challenge is to continue to support strong

sales growth in Canada while maintaining high levels of store in-stock,” he says. “We can’t sell what is not on our shelves so this puts a lot of pressure on our supply chain and distribution teams to react to these strong sales and continue to be aggres-sive with inventory. You’ll never know what you can truly sell if you always run out of inventory.

“We are a growing company and change is part of our daily vocabulary. I’ve been with Lowe’s since we moved into Canada in 2007 and I can honestly say that each year is different than the last. Although we don’t have any specific technology improvements planned for the next 12 months, we

Consumers continue to want more and more selections in many categories such as flooring, composite decking, and roofing and companies like Taiga Building Products

Ltd. meet that need by offering more variety in products, colours, and profiles.

As the number of products offered increases, so does the demand on the distribution system, says Trent Balog, executive vice-president, operations, and COO.

Taiga started with one distribution centre (DC) in Calgary, AB, that evolved into 15 locations across Canada and two in the U.S. over 41 years. However, the one thing that makes a distribution centre successful, despite its size, is the people, says Balog. Taiga offers a complete line of building materials and dealers cannot afford to stock all the skus, so the logistics system is key to managing so many products.

Transportation Greatest ChallengeBalog says transportation logistics will continue to be the main

issue “probably for years” as driver shortages continue. Taiga handles this obstacle by insourcing. “We continue to invest in our own trucking fleet and try and manage it from within.”

Another challenge is the continuous evolution of software and computer system, and Taiga faces that challenge by upgrading its systems regularly.

Going forward, Balog says the pressure on increasing distri-bution capabilities will persist. “Dealers will continue to watch their inventories/cash and turn them as quickly as possible – which means smaller orders, more often.”

When Lowe’s entered Canada in 2007, “we strategi-cally partnered with a 3PL provider to operate our distribution network while we focused on opening

stores and providing premier service to our customers, but it was always our intention of taking distribution in-house when the time was right,” says Mario Paradis, senior director, supply

Taiga Building Products Ltd.

Trent Balog Executive Vice-president,

Operations & Chief Operations Officer

Lowe’s Canada

Mario ParadisSenior Director,

Supply Chain and Logistics

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27HOME IMPROVEMENT RETAILING • September 2014

SPECIAL FEATURE

some things have to change to meet their needs, one thing will not change, and that’s our commitment to serving them first and foremost,” he says.

National Distribution System“The TIM-BR MART Group distribution system is truly

national, serving all markets across Canada from out west in Gold River, BC, to the Maritimes in Shoal Harbour, NL,” says Valeriati. “Our nationally integrated distribution system allows us to co-ordinate our product offering to satisfy the selection required by regional markets. For our members this is huge because they’re able to operate regionally and, at the same time, enjoy the benefits of our national buying power.

“Recently our system has expanded into British Columbia where we are now fully integrated into the province and avail-able to meet the needs of our dealers there more efficiently. The new warehouse will lessen the strain on our distribution system as a whole, expand the amount of services we offer our BC members, and allow us to solidify our overall national structure.

“The expansive reach of our distribution system is a core strength; we’ve placed our regional distribution centres in geo-graphically strategic locales across Canada which allows us to supply our members with the products they need when they need it. The sheer size of our distribution centres themselves is another important factor that makes us competitive in the market; we’re able to hold thousands of SKUs for our dealers, offering not only a wide selection of products, but a very high volume of them as well.”

Expansion A Proactive Step“The recent expansion of our distribution network is a

proactive step in not only meeting the supply chain needs of our members, but it will also prevent our memberships’ supply chain from drying up come a bad winter storm. This past winter brought with it more than just a few bad, isolated storms, but severe weather conditions across the country. Our distribution network is comprised of strategically-placed warehouses which makes it very resilient to adverse weather; we didn’t see much of an affect or strain on the warehouses or the network [during last winter],” says Valeriati.

“One of the greatest challenges we have managing our distribution network is meeting the needs of dealers in different regions. Every region has its own unique product needs and we have to ensure that we remain competitive in our product selec-tion, prices, and fill rate. To do this, our operations department works very closely with our category managers and inventory planning team to ensure that we have the right amount of on-hand inventory in the stores, that we evaluate the velocity of our SKUs, the price sensitivity of our products, and overall market conditions.

“In addition to the launch of our ECAT in January, we’re also leveraging another hot technology on the market right now: web-based platforms. In November, we’ll be replacing our tra-ditional Chalifour Expo with a virtual one-week online version. The web-based platform that the virtual show will be hosted on will allow members and vendors to save time and forego the expense of travel while enjoying all the amenities and buy-ing opportunities available at a traditional trade show,” says Valeriati.

constantly look at our distribution model to ensure we continue to have the capacity and capabilities to support all of our stores. Although we are a single distribution centre network today, we are looking at several opportunities that can improve service to not only our stores, but also our customers.”

Paradis believes there will be two necessary changes required long-term. The first is finding a distribution model that will support rapid response to customer’s expectations. “You are already hearing about how retailers want to get product to customers within hours of an internet sale. These pressures will only continue to mount and as society’s expectations continue to increase; retailers will have to either find a solution to sup-port this expectation or potentially lose to the competition.”

The second change is transportation. “There is already a crunch in the trucking industry with capacity and this will con-tinue to be a big problem as more and more truck drivers reach retirement age and have no one to replace them when they leave. I was part of a transportation forum with our core carriers recently and several commented that they’ve had to adjust their hiring criteria in order to fill vacancies. Unless there is a surge in new drivers taking over the roads to fill these voids, this could put a heavy strain on how product is distributed from point A to B.”

The trend that continues to be a major force in not only the home improvement retail industry, but in every retail industry, is eCommerce.

“While the wave of eCommerce across the industry may have been met with some apprehension, we’ve embraced the trend and leveraged technology to serve the needs of our mem-bership,” says Lou Valeriati, vice-president of operations for Chalifour Canada. Chalifour is TIM-BR MART’s wholly-owned distributor, responsible for shipping and allocating hardware, lumber, and building supplies to TIM-BR MART stores. “With the launch of our updated eCatalogue (ECAT) earlier this year, we have made searching for and purchasing products extremely easy and efficient for our members. The ECAT is also mobile-friendly, giving our members the freedom to access our product selection anywhere, anytime, and from a wide range of mobile devices – streamlining their entire purchasing process. As the ECAT was created for our members, it is in a large sense, cre-ated by them as well.

“Our members drive the development of our ECAT; we regularly solicit feedback from them to adjust how the ECAT behaves and gain insight on how to improve it. We know that our members’ needs will change with the ebb and flow of technology and that our ECAT may forever be a work in prog-ress – and our members understand that. They know that while

Lou ValeriatiVice-president of Operations

Chalifour Canada

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HOME IMPROVEMENT RETAILING • September 2013HOME IMPROVEMENT RETAILING • September 201428

SPECIAL FEATURE

that our focus on distribution activities make us more competitive than some companies that are ‘sort of’ in the business of distri-bution, but not as their core focus. Over time, the independent distributor in LBM will grow further. We believe small items that can be readily shipped by courier will erode the traditional chan-nel in those markets, which we are not a part of.”

CanWel is currently in the process of upgrading its ERP sys-tem. The system should be completed in 2015 and it “will have the most advanced platform in the industry, which our company is very excited about. The efficiencies driven will only further us in being the leader in our industry. We don’t see our competi-tors investing in technology, and we will lead.”

Continued GrowthIn 2013, CanWel acquired North American Wood Preservers

in Abbotsford, BC, and Pastway Planing in Combermere, ON, to continue its growth in the wood planing and pressure treat-ing world. The company also expanded its Calgary, AB, distri-bution centre, tripling the size of its former operation in order to serve the growing needs for its services in this area.

“We will continue to be the ‘just in time’ inventory for our customers as well as the ‘less than truckload’ solution as times call for higher turns and lighter inventory investment,” says Doman. “Our customers look for us to be that connection – along with manufacturing certain items to complement our distribution activities. Stay tuned for more growth.”

TORBSA is a Canadian buying group that strives to offer its shareholders a breadth of products from many suppliers rather than a single source. “Our shareholders have the

option of choice,” says Bob Holmes, general manager. “On the building material side, the majority of products pur-

chased through the group are in truckload quantities,” he says. Most manufacturers have Canadian footprints or load centres allowing for timely and efficient supply. On the hardlines side, TORBSA’s association with the OCTO Purchasing Group has grown and become a true benefit to our shareholders.”

Pent Up DemandOver the past year, Holmes saw the entry of more manu-

facturers offering a greater number of choices. At the same time, dealers have gotten lean – “it was a long winter.” In fact, the long winter caused a slow start to year, “about 30 days behind,” says Holmes, causing pent up demand. However, the summer season has been busy and it “should be a strong finish to the year if the weather co-operates.”

TORBSA’s distribution is done through its suppliers and

“As the economy recovers, we expect two trends to con-tinue within the distribution industry: consolidation and the leveraging of technology. Consolidation within the industry has become essential to cutting costs and keeping companies’ ‘heads above water.’ Similarly, new technology has done the same; new types of software have been developed that com-panies continue to leverage to streamline their operations and become more cost effective. Our economy’s slow recovery has forced many companies to become very lean and cautious. With the industry’s strong focus on cost cutting and efficiency, we believe these trends will last well into the future.”

Broaden Their Definition Of Competition“For the long term, home improvement retailers and distribu-

tors will need to broaden their definition of competition,” he says. “Online retailers such as eBay and Amazon introduce a wide range of vendors who are willing to compete for our members’ and customers’ business. Distribution companies must meet customer demands on delivery, availability, lead time, pricing, and technology in order to remain competitive.”

In the past year, we have seen our retailers continue to right-size and evolve with the Canadian landscape, says Amar Doman, chairman and CEO of CanWel Building Materials

Group. “There have been new arrivals to the scene along with closures,” he says. “We believe this will continue for the next few years and then it should settle down. We will see more banner consolidation in my view.

“Interest rates have remained flat, which we view is the driver of the housing market, coupled with a decent Canadian economy, which we feel should get better as the U.S. continues to heal. We forecast a ‘steady as she goes’ environment.”

Doman says, “CanWel has evolved and will continue to evolve as the distribution partner of choice for allied and construction materials. With our 16 distribution centres strategically located from coast to coast coupled with our six pressure treating and plan-ing operations, along with more than 700 excellent employees, we have the ability to service our customers like no other. We will con-tinue to grow in this area through further consolidation and acquisi-tion. Being a publicly traded company also raises our profile for opportunities; we have just celebrated our 10th year on the TSX.”

Core Business StrategyCanWel’s ability to partner world class manufacturers with

world class customers is our core business strategy, says Doman. “Our large scale purchasing power and high volume efficiencies allow us to deliver the savings to our customer base. We believe

CanWel Building Materials Group

Amar DomanChairman & CEO

Bob HolmesGeneral Manager

TORBSA

29 Go to page 3 CONTENTS

29HOME IMPROVEMENT RETAILING • September 2014

SPECIAL FEATURE

dynamic in nature for the channel specific demands of a hard-ware store, home centre, pro lumber, or farm and ranch busi-ness model. With every decision made, we are committed to analyzing our assortment offering with a retailer’s perspective in order to make sure we have the proper variety of products, price points, and niche options that appeal to the multi-faceted range of consumers that shop our customers’ stores.”

Lower Prices Through EfficienciesThe second initiative is “looking for ways to enhance our

position as the price leader in our industry. This comes from not only negotiating better prices from our vendors, but looking to our operations group to become even more efficient. In turn, this translates to lower prices we can offer our customers so that they can effectively compete in their local markets.

“Most recently, Orgill has implemented a voice pick system in all distribution centres. This advancement has resulted in incremental gains of efficiencies that have, in turn, resulted in cost savings for our valued customers,” says Beal. “Our mis-sion doesn’t stop at lowering prices for our dealers. We have an industry leading retail pricing system in place to make sure that retailers are not only priced competitively within their local trading area, but it also ensures that they don’t leave potential margin dollars on the table.”

Online PresenceThirdly, with current trends, it is clear that the majority of

retailers will need a web presence in the future to remain viable in consumers’ minds, says Beal. “The current genera-tion of consumers has come to expect retailers to have an online presence.

“We have been diligently reviewing the latest trends and developing new solutions. During this process, we have identi-fied multiple opportunities that retailers can potentially capital-ize upon. Within these opportunities, there are three distinct business models that can be explored by each retailer in order to find their niche. The identified business models for online sales are a price/volume model; an information is valuable model; and a niche product/enhanced assortment model.

“Our eCommerce team continues to review and enhance programs to assist our customers in participating in one or more of these models to maximize their online sales.”

In many markets, profit margins are being squeezed by increased competition, higher labour rates, and other input costs, says Steve Buckle, president of Sexton Group. He says,

“Smart retailers are examining the value of all costs including

third-party distribution centres. Holmes says members choose who they want to buy from. “Our role is negotiating discounts and then the members themselves make the choice. A lot of the products that our members buy are products that have been specified by their clients or the jobs that they are delivering to. So that can really dictate what products are being bought and how they are delivered.”

For example, if the member is buying plywood or a truckload of plywood, it would go through a distributor like Taiga or AFA Forest Products. “A lot of the products we buy would be things like insulation and gypsum and steel,” says Holmes. “They would all come directly from the manufacturer to the members’ yard and the member would then put it on his truck and deliver these with other products to those jobs or those clients.”

Communication ImportantHolmes says communication is an important piece in the

TORBSA network. “We use our website to keep all shareholders updated with respect to marketing plans, purchases volumes, and vendor notices.”

The group continues to expand and now supports share-holders in eastern and western Canada. Its head office has transitioned to the cloud and it continues to provide sharehold-ers with access to current technology through its distribution of computers and software every two years. The group also provides information and training through monthly meetings.

Holmes says that vendor consolidation continues and will need to continue. “This addresses some of the concern of too many choices.” He sees manufacturers continuing to develop their web-sites and applications that detail the specifications of their product offering. He believes manufacturers and dealers will begin to focus on social media as a vehicle for promoting their brand.

Orgill, Inc.’s commitment to its Canadian customers includes channel-specific products, efficiencies from operations, and unique business models to suit indi-

vidual retailers. Orgill has three current corporate initiatives, says Ron Beal,

chairman, president, and CEO. The first is an assortment review. “The merchandising team is currently working through an ongoing assortment review. More than 30 professionals are methodically reviewing each of their respected categories to ensure we offer our customers the right assortment to meet the demands of their local market,” he says. “We continue to fine-tune a regional assortment of more than 60,000 SKUs that is unique to our Canadian customers. The primary goal of our efforts is to continue to offer a hardlines assortment that is

Ron BealChairman, President & CEO

Orgill, Inc.

Sexton Group

Steve BucklePresident

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HOME IMPROVEMENT RETAILING • September 2013HOME IMPROVEMENT RETAILING • September 201430

SPECIAL FEATURE

national banners, buying group surcharges, and others that, in the past, were often taken as ‘givens’.”

Buckle says the Sexton Group “believes that the existing two-step distributors play a valuable service role in our industry and we support their efforts. Sexton Group also actively develops opportunities for larger purchasers of building materials and hardlines to buy direct from manufacturers. This allows our members to enhance their margins.”

Staying Focused Sexton members benefit from being able to buy directly from

manufacturers at a substantial cost advantage. “In cases where it makes sense for our members to pay a higher price for the ser-vice offered by distributors, we support existing distribution com-panies rather than form our own,” says Buckle. “In this way, we are able to focus our resources squarely on sourcing competitive pricing for our members day in and day out. In our opinion, this is where a buying group creates the most value for its members.”

That said, Buckle says Sexton’s focus is on providing members with the lowest cost solution to their door. “We must understand the freight trends and geographically optimize our supply base with the best routes.

“The biggest logistics issues this year have been challenges with truck and rail freight. As much of our members’ purchase volume comes direct from the manufacturer to their yard, timely delivery is important.”

New Ways To Add ValueBuckle says going forward that “two-step distribution continues

to play an important role in our industry. Like all participants, they must continue to honestly evaluate their performance levels and seek new ways to add value. At the Sexton Group, we will continue to contribute positively with these supply partners.”

Specific to the efficient movement of products, Buckle says there are opportunities for suppliers to work with the Sexton Group to consolidate orders, create central drop points, and otherwise minimize freight costs. “To have maximum impact, this activity requires a higher level of trust and commitment between all participants.”

T ruServ Canada is a national company that offers both a dealer program and a wholesale customer program. It is a wholly-owned subsidiary of RONA inc. and

has been assigned to represent the Ace brand for RONA, which recently partnered with Ace to represent the brand in Canada.

As part of RONA’s national distribution network, TruServ

has 12 distribution centres – a total of three million square feet. “We have evolved from a ‘one centre,’ ‘one purpose’ system to a ‘multi-centre’, ‘multi-option’ network, with new ways of get-ting the right product to the customer at the right time,” says Bill Morrison, president.

More Connected, More LocalMorrison says the key change he’s seen over the past year

is the importance of local factors (economy, zoning, weather) to retailers. “Everything is now both more connected (macro) and more local at the same time.”

He says to remain competitive is to constantly change and evolve to meet the need of the marketplace. “Our distribution system allows us to meet dealer’s needs [by being] flexible (from ‘one’ to a container); scalable (truckloads or 10 truck-loads); and responsive (ability to adjust ‘in season’ or to meet new trends).”

As an example, he mentions this past winter. “The ‘coldest winter in 60 years’ certainly stressed all of our logistic abilities from freezing equipment to highway closures to tremendous demand for seasonal (winter) products,” he says.

Main Challenges However, Morrison says the main challenges for a distribu-

tion network “are our tremendous geography, the expectation of high performance at low cost, and retailers competing with new eCommerce and other competition. We work to continual-ly improve all aspects of distribution and measure factors from the customers view.”

To overcome these challenges, he says, “We have a pro-gram of continuous improvement. We have invested in new eCatalogue updates to increase data speed and allow for ordering on new platforms, we have updated shipment quality packing and wrapping equipment, and we have updated all fleet tracking and route planning systems.”

Going forward, he sees a tremendously competitive market with all companies managing higher energy, infrastructure, and technology costs. He says the industry will likely need fewer, but larger, companies who leverage both size and scale to meet customer needs. ❖

Bill MorrisonPresident

TruServ Canada

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33HOME IMPROVEMENT RETAILING • September 2014

DIY And Innovation Drive Hand Tool Category

A rise in do-it-yourself (DIY) home improvement and consumer expec-tations will continue to drive inno-vation and build sales in the hand

tools and accessories category over the next four years, says Global Industry Analysts, Inc. (GIA). In an upcoming report, it says the need to reduce costs is a prime factor spur-ring the popularity of the DIY trend. Other factors driving growth in the market include increases in the number of home remodeling and redecoration projects. On top of that, there is growth in the number of households and an increase in disposable incomes.

These trends, plus commoditization of the hand tools market, intense pric-ing pressures, and shrinking profit mar-gins are forcing manufacturers to invest in product and technology development

for effective product differentiation in the market. Manufacturers are responding by coming up with innovative solutions to set their brand apart. These include ergonomic improvements, incremental increases in per-formance, and increases in tool functions.

New Functions And Materials

One major trend is making tools capable of more functions.

“People are being asked to do more with less so they need to do more things with less tools,” says Greg Palese, vice-president of marketing with Klein Tools. “They need tools to do double duty and have double functions.” As an example, Klein Tools has introduced a new tool called ‘Switch Drive’ which is a screwdriver blade used in a drill

that can be removed and used as a hand tool. “They can un-chuck it from their drill, chuck it into a handle and they can use it by hand to do the last bit of work when there is a little more finesse needed,” says Palese.

Klein Tools’ Switch Drive power nut driver.

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Klein Tools communicates regularly with its end-use customers to understand their needs. It learned, for example, that contractors using pliers all day complained it was hard on their hands. The company came up with a process for manufacturing pliers so the handles are softer. Yet, “the cutting blades are hard enough that they can cut through a lot of different things and they will last you 30 years,” says Palese.

These types of changes will continue as pricing of materials and technologies come down, says Scott Moore, director of marketing for hand tools and storage with Stanley Black and Decker Inc. “A hammer used to be basically a rock and a stick,” he says. “Now they are made of titanium and have newer handle designs. Manufacturers are using an MIG weld process instead of titanium in hammers. You take three compo-nents and weld it together and, as everybody knows, when you weld something, the weld is actually stronger than the material. Now you can create a lightweight hammer at a lower price.

“That is really what feeds our new prod-uct development in the hand tools market. What can you do differently to make things last longer, be safer, and maybe help solve a problem for the contractor? Inevitably, you want to make the job easier.”

Along that line, Stanley Black and Decker has come up with a five-in-one hacksaw, a professional hacksaw that breaks down into five different hacksaws including a mini hacksaw, which is a hand-held for sawing – in tight spots.

35HOME IMPROVEMENT RETAILING • September 2014

Milwaukee Electric Tools, which also manufactures hand tools, also works with its end users. “We are constantly getting feed-back and looking at how we can improve on things for contractors,” says Keith Potts, national trainer. Contractors said they cut off the plastic from the handles of pliers to get a better grip. Now Milwaukee makes a line of pliers without plastic on the handles. With plumbing levels, the company has put

DeWalt’s five-in-one hacksaw.

Stanley’s Fatmax hammer.

Milwaukee’s reaming pliers with clean handles.

HAND TOOL REPORT

MC11324 CanadianDealerAd-HIR.indd 1 6/18/14 8:24 AM36 Go to page 3 CONTENTS

37 Go to page 3 CONTENTS

37HOME IMPROVEMENT RETAILING • September 2014

magnets on them so they actually stick to the pipe. Electrical contractors would wrap electrical tape around the shaft of the screw-driver to provide an insulating barrier; now Milwaukee offers a screwdriver with an insulating barrier.

Quality Over PriceAlthough consumers want to save money,

they are willing to pay more for quality. Moore says, “A lot of people in our

business are starting to realize that price is not everything. If you design the tool to the application, people will spend the money because you are solving a problem or merging two tools. They are not afraid of spending money if it is the right spend for the right product.”

Task Tools sees the same trend. “We are seeing attitudes of consumers and our cus-tomer base shifting away from the lowest possible cost and towards a preference for better quality,” says Chris Waldner, group product manager at Task Tools. “In many cases, even if we have a lower cost option within our line, our premium grade items are the best sellers.”

Internet Creates Educated Consumer

On the technological side, the internet continues to play a big part in the sales of hand tools.

“It gives our customers new ways to find us, new ways to learn about our products, and new ways to engage with us,” says Waldner. “In the not-too-distant past, it would take a lot of work to see a product video on one of our products. Now, you can just fire the internet up on your smart phone, with a halfway decent mobile connection, and watch it from anywhere.”

Waldner says the advancement of tech-nology will lead to more educated consum-ers. “Now, by the time they show up at a store, they know exactly what they are looking for. Contractors that come into a store, they know what they are looking for because of their experience. Now, a con-sumer can have that similar level of product knowledge based on the availability of that information.”

Internet technology also levels the play-ing field for smaller manufacturers like Task to compete against the larger companies. Waldner says, “We are never going to have the marketing budget of some of the big guys out there that have huge marketing companies, but now we have a chance to engage people more with social media and video on the web.”

Palese says he finds that the growth of mobile technology is definitely impacting business and forcing people to think about

when RFID-type technology will be avail-able in tools.

Moore says this technology is already available, but is not in widespread use in Canada yet. He says with this technology, there would be a chip in each tool so con-tractors will know who is using a tool and where it is at any given time. He adds, as the demographics in the trades change and new generations come in, it will spark more change in technology.

New CompetitionFinally, competition – existing and

new players entering into the Canadian marketplace – is also on the mind of hand tool manufacturers. “We are a big country and I think we are gaining a lot more rec-ognition on a global scale and everybody wants a piece of the pie,” says Moore. “We see global manufacturers that may have never even existed in Canada starting to enter through different buying groups and such.”

With all the innovation and interest in the hand tool category, it will likely grow for many years to come. No matter how experi-enced a person is in home improvement or how much work they do, they will always need hand tools. ❖

things differently. “Mobile has grown for us and has had a pretty big impact on what we do by forcing us to think about our business. We need to think about eCommerce, social media, how to interact with people, how to talk to customers, and offer the content they want. We have to talk to our customers dif-ferently than we used to. We have to present them information differently and we have to make sure that we are engaging them in conversations as opposed to a one-way push as it used to be many years ago.”

Another technology manufacturers are hearing about more often is tool tracking.

Palese says contractors regularly ask

Task Tools’ home page.

HAND TOOL REPORT

38 Go to page 3 CONTENTS

HOME IMPROVEMENT RETAILING • September 201438

Showroom Learning Ground For Retail Stores

Canadian Tire Corporation, Ltd. (CTC) has opened a new concept store to develop displays and technologies for all of its retail

stores. The CTR Showroom will be a ‘test and learn’ environment where CTC will get reactions directly from customers and staff to enhance the shopping experience at every channel.

The one-of-a-kind showroom, located in Toronto, ON, is open to the public and uses innovative displays to showcase a variety of seasonal product assortments.

“We carry a lot of products that custom-ers just do not know about,” says David Hicks, senior vice-president, store opera-tions and dealer relations. He says these products can take up a lot of room to dis-play, so the showroom provides that space. “The goal is to test and learn and see how displays work over here and then we can take them into stores across the country.”

Variety Of DisplaysThe showroom is basically a 16,000

square-foot retail space that is filled with various displays to best exhibit seasonal prod-uct lines. It includes an assortment of single product, multiple product, and thematic dis-

it very quickly and we also brought in a lot of new fixtures and things that you would not see in typical stores. There is a lot of wood treatment here. Other than the gon-dolas, there is no fixture in [the showroom] that you would find inside of a typical Canadian Tire store.”

Learning ProcessIt’s a learning process, says Hicks. CTC

is listening to responses from customers and

play types including box displays, gondolas, and custom fixtures. There’s even a real car featured with the automotive products. One of the unique features of the store is the lighting. Because it is a showroom, the lighting needs are different than typical retail stores. “We actually brought in somebody from the movie business to do lighting and that is something we do not historically do,” says Hicks.

He says the store features some smaller products that shoppers could put in a shop-ping cart, but a lot of items are bulk product which customers would pick up at the load-ing area. Behind the store is a 20,000 square-foot warehouse, which is organized very meticulously. A drive-through pick-up area is in the back of the warehouse and there is a clean area with two bays that customers can drive into to have their merchandise loaded.

The showroom concept was put together in a short time this year because the former tenant vacated early in 2014 and CTC wanted to open the doors by spring. When the unit first became available, CTC executives knew they wanted it for extra retail space, but they weren’t sure how they were going to use it.

“After a couple of iterations of what we wanted to do with the space, we ended up with the showroom,” says Hicks. “We did

The CTR Showroom has 40 digital screens across the store, some are interactive.

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39HOME IMPROVEMENT RETAILING • September 2014

The CTR Showroom has an assortment of single product, multiple product, and thematic displays.

making changes to reflect their expectations.“We have already removed quite a bit of

product from this store,” he says. “We have removed about 30 per cent of the SKUs that we had in here from day one because cus-tomers are not looking for it here. They are not looking for it to be on display. They are telling us what they are looking for so we are swapping out [products] on a regular basis.

“The other thing we are learning are the peaks and valleys in a season.” He says patio and barbeque product lines are fan-tastic in the showroom space. “When we start getting into the in-between seasons, we start to bring in camping and summer fun, some of the big summer products or cot-tage products that you would expect in July and August. We will transition into our fall assortment and then we are actually going to transition this into a complete Christmas store. The plans on it are pretty amazing.”

Hicks says, “We do a good job display-ing a product family on Canadian Tire online. We do a good job of saying, ‘this is the Lakeside Collection. Here are the accessory items that you would expect to see.’ We have not done a good job of taking that inside the store.” What they have done inside of the showroom is build the colours, the naming, and the products around the buying of the product online and then brought it inside the store.

Staging The StoreCTC starts designing a concept and

ordering inventory about eight months prior to a selling season. “You have to have your design at the same time you order the inven-tory or else the two will not mesh together,” says Hicks. The team will use some of the same fixtures and condense existing product lines, such as barbeque and patio, so they are represented all year.

The original staging was done when the store was not yet open, so changing over for the next few seasons will be a learning curve because the store is open to the public. “When you are all displays, it is amazing how quick you can set it up. We can do a segment and we will do it overnight. We will have a crew in, they will complete that zone, and the next morning it will be done. The next morning, we will just keep work-ing our way through.”

Type Of TransactionsAnother change for CTC was the type

of sales transactions occurring in the show-room. Hicks says the amount of pick-ups at the drive-through area in the back of the store surprised him. This meant they had to learn how to manage the customer and the product in this new environment. In the showroom, there are not the typical lineups at the cash register because there are not a lot of customers buying small items. “They buy large ticket items from this store so the average sale is really high,” says Hicks. “The customer count going through the till is actually much lower than we would see in a traditional store. That will change when Christmas comes. People will be coming in for Christmas ornaments, hooks, etc. So the tills are going to be much more important than they were at the begin-ning. That will cause some configuration changes we will have to make at the cash registers because they are set up for more bulk purchases.”

The showroom also offers more staff interaction than the typical store. Because the showroom does not have as much traffic, it allows customers to browse and shop for high-ticket items and take the time to under-stand the features and benefits.

Sales staff are trained on every product.

CTC has a lot of training programs for all of its stores, but since the showroom is close to the head office, it decided to bring in the experts. It brought in vendors and manufacturers to explain the features and benefits of its products. “You do not need a lot of staff in an environment like this, but the staff needs to know the answers to questions or they need tools to help them get those answers.” If the associate doesn’t know the answer, they can look it up on one of the interactive screens.

The CTR Showroom has 40 digital screens across the store, which is more than in a typi-cal store. Some of the screens are interactive so staff and customers can search for a prod-uct or product information. It will list items and the customer can also compare them.

Some products also feature QR codes so customers can scan the product and immedi-ately have access to more information.

One of the advantages of setting up the new store is the ability to test new technol-ogy. For example, the showroom is the test-ing ground for one interactive screen which projects onto a mat as footprints. Kids can can follow these to actually play hockey right in the aisles. “We certainly want to make it a much friendlier environment for families and kids,” says Hicks. There is also X-Box set up on a couple of screens in the store.

Another tool being tested, called Fast Find, helps staff and customers find product. “It obviously helps on the retail floor,” says Hicks, “but it also allows staff to find [prod-uct] quickly in the warehouse.” Fast Find will signal warehouse staff of the customer’s purchase and that they’re coming around to pick up the item. “It is not an option to be wandering around in a warehouse looking for a [product]. Everything here is located like you would find in a typical distribution centre or warehouse. Everyone has RF guns.”

Dedicated Staff There are dedicated warehouse staff so

floor staff can stay on the floor. The ware-house staff picks product and also helps load the product into the customer’s vehicle.

“This has been a big win for this store and a big learning for us on how true pick-up centres can work for all our stores,” says Hicks. He says it is just one of the many ‘learnings’ that will take CTC forward.

Hicks says he won’t rule out doing more showrooms in the future, but, for the time being, this location will remain unique. ❖

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HOME IMPROVEMENT RETAILING • September 201440

Contractors Want Faster, Lighter, Smarter Power Tools

Faster, lighter, and smarter are the qualities contractors are looking for in their power tools, and they’re willing to pay for it.

Power tool sales will outpace hand tools over the next few years, a reversal from the 2008-2013 period when demand for power tools were adversely affected by a decline in professional employment levels, says the Freedonia Group, a market research firm. The ‘2014 Power & Hand Tools’ report says U.S. demand for power and hand tools is forecast to rise 2.9 per cent annually through 2018 to $12.7 billion. Among professional users, growth will stem primarily from a recovery in construction activity, especially in housing starts.

Among power tools, cordless electric tools will offer the best opportunities for growth. Ongoing improvement in lithium-ion battery density and the increased popu-larity of technological innovations such as brushless motors that extend usable lifespan per charge will bolster sales. The report says cordless electric power tools experience more product innovation than other types

Old Versus New Technology“The big buzz in the industry right now

is brushless technology and lithium ion bat-teries,” says Mark Emmerson, lead category manager, Stanley Black & Decker Inc. He says contractors like the increased amp hours, high capacity battery packs, and the expansion of cordless tools so they can run a variety of tools off of one single or dual platform. As an example, Black & Decker offers both the 12-volt max and 20-volt max system and they both use the same charging system.

Emmerson says the price-point of power tools has come down, which is great for contractors, but a challenge for manufactur-ers. “When I started in this business 15 years ago, we used to sell a four-tool kit, a cord-less combo kit for more than $1,000. Now you can pick them up for $250,” he says. However, the quality of the lower price-points isn’t the same. He says the older technologies have drastically come down in price but the newer technologies, like brush-less motors and lithium ion batteries, cost significantly more.

Black & Decker hasn’t changed its bat-tery technology 100 per cent to lithium ion yet. “We are still one of the last professional power tool companies to still sell nickel cadmium technology today and have not completely made that shift to the lithium platform,” he says.

“We had such a large user base that we did not want to disappoint. We needed to be able to support that user base and we will continue to support that user base in the future. When you have millions of these battery packs out there, you cannot just convert to a new system and leave all those people behind. So essentially, we have two platforms out there.”

Better Run TimeAs for the new technology, Emmerson

says brushless motors improve run time. “Essentially, there are a couple of varia-tions of motors that we use, a brush motor and a brushless motor. Brushes will wear on a motor and create heat and friction which absorbs some of that energy from the cordless battery. In a brushless motor, there are no brushes. Everything is trans-ferred via magnet. You have less heat and

of tools, which entices users to upgrade to better performing versions or to switch from plug-in to cordless versions.

Larger ShareThe professional market holds the larger

share of power tool demand, accounting for two-thirds of sales in 2013. Additionally, this market will experience faster gains through 2018, says the Freedonia Group. Professionals generally use higher-value power tools more intensively than consum-ers and they are often willing to pay more for higher quality tools since the initial investment will pay off over the long run through better performance and longer tool life. Since professionals use their tools more intensively, they must replace tools, espe-cially power tools, more frequently.

Power tools continue to evolve as tech-nology and manufacturing costs come down and contractors veer towards tools that are faster, lighter, and smarter. This provides plenty of opportunities for manufacturers which must stay at the forefront of this evo-lution in order to remain competitive.

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41HOME IMPROVEMENT RETAILING • September 2014

reduced repetitive motion, and dust control systems. The platform is so successful that DeWalt has a dedicated YouTube channel about it.

Challenges Of ChangeKeeping up with the changes in the

power tool industry does present chal-lenges to manufacturers. Emmerson says

less friction. It significantly increases your run time.”

Keith Potts, national trainer with Milwaukee Electric Tools, says feedback from contractors shows they find tools too heavy and too big, they want more run time, more battery power, and they want the bat-teries to last longer.

Brushless technology was the answer to all these problems. “We took the brushes out and that allowed us to put more copper in the magnet portion of the motor. More cop-per equals more power. We can work with a 12-volt motor, which is smaller and lighter.”

Milwaukee has also implemented a circuit board in its power tools that creates a three-way communication that will sense how much power the tool needs for any specific application. By using only the power needed, the run-time of the battery is maximized.

On the repair side of things, this makes the tools easier and faster to fix because instead of replacing a bunch of parts, assem-blies can be replaced.

Milwaukee offers a single footprint for a series of power tools. The footprint is how the battery connects to the tool. Contractors often purchase combination kits with more than one tool that shares the battery. Now contractors can purchase additional tools that will work with the same footprint so they don’t need to buy additional batteries and chargers. However, 12- and 18-volt tools and batteries cannot be interchanged.

Safety FocusAnother area having an impact on the

power tool industry is safety. Emmerson says new legislation continues to come out to protect the professional power tool user. These laws are put in place to limit exposure to things like dust and vibration. This offers power tool manufacturers another opportu-nity for innovation.

DeWalt has developed its ‘Perform and Protect’ platform, which offers tools with clutch control systems, reduced vibration,

the biggest challenge is transportation with the price of fuel. “Right now, we are local-izing,” he says. “We have a tremendous amount of cordless product now. They are being built in the U.S. with global materi-als.” However, although efforts are being made industry-wide to localize as much as possible, he foresees manufacturing becoming global. ❖

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it’s your money

Home DepotThe Home Depot had sales of $23.8 billion for the second quarter of fiscal 2014, a 5.7 per cent increase from the second quarter of fiscal 2013. Comparable store sales for the second quarter of fiscal 2014 were positive 5.8 per cent and comp sales for U.S. stores were positive 6.4 per cent. Net earnings for the second quarter were $2.1 billion com-pared with net earnings of $1.8 billion in the same period of fiscal 2013.

RONARONA Inc.’s consolidated revenues from continuing operations were $1,193.5 mil-lion, down 4.4 per cent from $1,249 mil-lion for the second quarter of 2013. This decrease primarily reflects the closure of underperforming stores and a late spring in Quebec and Ontario which had an adverse impact on sales of building materials and seasonal goods in the first half of the quarter coupled with a decline in housing starts in Quebec, RONA’s biggest market. Same-store sales in the retail segment were down 0.7 per cent. However, the strength of the economy in western Canada and successful repositioning of the TOTEM stores in this region, combined with the positive impacts of the redeployment of the Reno-Depot stores in Quebec, have generated positive same-store sales for corporate stores in the retail segment. Same-store sales of the corporate stores in the retail segment have grown for the first time since 2010.

Lowe’s Lowe’s Companies, Inc. had net earnings of $1.04 billion for the quarter ended August 1, a 10.4 per cent increase over the same period a year ago. Sales for the second quar-ter increased 5.7 per cent to $16.6 billion from $15.7 billion in the second quarter of 2013 and comparable sales for the quarter increased 4.4 per cent.

BeaconBeacon Roofing Supply, Inc. had 5.9 per cent growth for its third quarter ended June 30. The company says its diversified product offering allowed it to take advantage of the strength of the current commercial roofing market. In addition, its investment in new branch openings continues to fuel its growth. Total sales for the quarter increased 5.8 per cent to a third quarter record $663.4 million in 2014 from $627.2 million in 2013.

Ace Ace Hardware Corporation had total rev-enues of $1.33 billion for the second quarter of 2014, an increase of $157 million or 13.4 per cent, from the second quarter of 2013. Net income was $66.5 million for the sec-ond quarter of 2014, an increase of $24.2 million or 57.2 per cent from the second quarter of 2013. Total wholesale revenues were $1.25 billion, an increase of $155 mil-lion, or 14.1 per cent, as compared to the prior year quarter. Increases were noted in virtually every department with the paint, electrical, and lawn and garden categories showing the largest increases.

TaigaTaiga Building Products Ltd. sales for the first quarter ended June 30 increased to $374.8 million from $335.8 million in the same quarter last year. The 12 per cent increase in sales was primarily the result of pent-up customer demand caused by the severe winter conditions in the preceding quarter. Gross margin for the first quarter increased to $33 million from $25.4 million

in the same quarter last year. Net earnings for the first quarter increased to $5.6 million from $1.5 million last year.

Valspar The Valspar Corporation had fiscal third quarter 2014 net sales of $1.2 billion, an increase of 10 per cent over the prior year. Third quarter 2014 adjusted net income was $103 million compared to third quarter 2013 adjusted net income of $96 million.

Canadian Tire Canadian Tire Corporation, Limited’s same store sales for the second quarter of 2014 were up 2.8 per cent at Canadian Tire, 8.2 per cent at FGL Sports, and 3.2 per cent at Mark’s Work Warehouse. Consolidated revenue increased 4.8 per cent or $145 million to $3.2 billion in the second quar-ter. Consolidated retail sales in the quarter increased 4.8 per cent or $170.2 million to $3.7 billion over the same period last year. The retail segment revenue increased 4.7 per cent or $129.9 million to $2.9 billion in the quarter. ❖

COMPANY SYMBOL OPEN HIGH/LOW 52-WEEK INDEX

Allegion ALLE 51.63 58.29 – 40.24 NYSECanadian Tire Corp. CTC.a 177.41 194 – 111 TSXCanWel CWX 6.15 6.44 – 4.58 TSXDow Chemical Co. DOW 53.27 54.97 – 38.04 NYSEFastenal Co. FAST 46.24 52.21 – 42.48 NASDAQGeneral Electric GE 25.98 28.09 – 23.5 NYSEHome Depot HD 88.67 93.52 – 73.74 NYSELouisiana-Pacific LPX 13.9 18.96 – 12.71 NYSELowes Cos LOW 53.11 54.14 – 44.13 NYSEMasco Corp. MAS 23.8 24.12 – 19.11 NYSENewell Rubbermaid NWL 34.29 34.47 – 26.27 NYSEOwens Corning OC 34.49 46.64 – 33.71 NYSERichelieu RCH 49.56 52.88 – 42.01 TSXRONA RON 14.5 14.75 – 10.8 TSXSears Canada SCC 15.78 19.89 – 11.03 TSXSherwin-Williams Co. SHW 217.11 219.21 – 170.63 NYSEStanley Black & Decker SWK 91.61 92.76 – 74.13 NYSETrex TREX 38.79 43.42 – 22.52 NYSEUSG Corp. USG 29.86 36.22 – 24.98 NYSEWal-Mart WMT 76.79 81.37 – 71.51 NYSEWest Fraser WFT 56.42 59.5 – 42.98 TSXWD 40 WDFC 68.09 79.31 – 60.76 NASDAQ

As of September 11, 2014

HOME IMPROVEMENT RETAILING • September 201442

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priVate wealth

to provide them with ‘living money’ in retirement. Owners gain the advantage of structuring a vesting agreement that will ensure that key employees/executives remain with the company until retire-ment as it becomes increasingly expensive for another company to match benefits for senior employees as they get closer to retirement. Since succession or sale arrangements often hinge on the reten-tion of key employees and executives, the advantage of a supplemental pension plan’s vesting agreement is attractive. If it is a family business, the children gain the advantage of retaining the expertise of key executives for a period of time.

Another advantage is that while reg-istered pension plans are not allowed to own a mortality component on plan members, a group RCA can. The long-term investment risk is eliminated from the mortality guarantees on the individual

contracts holding each member’s share of contributions. Insurance compa-

nies today provide policies that can be structured to be used for

retirement purposes providing both investment and mortal-ity components, the latter for survivor benefits and fund-ing mitigation.

In group RCAs, some members will live longer, others die short. New mem-bers are added as other mem-bers are closer to retirement or life expectancy. Some of the

members will retire after other members have died.

Proper design allows for the security of the guarantee without

the same risk and expense of a tra-ditional defined benefit plan. Target benefit SERPs can be affordable and sustainable. ❖

Allan Mosher is a senior vice-presi-dent of Retirement Compensation Funding (almosher@rcf.ca).

Most business owners will agree that the most important com-pany asset is key employees. They will also likely agree that

key employees and executives are vital to the transition and succession process (whether passing the business to children or selling to a third party).

How then to keep key employees/execu-tives motivated and with the company to retirement?

In private companies, share ownership is often not an option. Cash bonuses are effec-tive, but the portion they want to save for the future is often taxed at high marginal rates thus reducing asset growth. Of more con-cern, the employee/executive might build up savings from bonuses allowing them an earlier retirement. Key people could retire at 55 to 60 when the company needs them from 60 to 65, reversing the logic of a bonus as a retention arrangement.

SERP Solution

Supplemental pension arrangements can be a solu-tion. Often called SERPs (Supplemental Employee/Executive Retirement Plans), they provide the same deductibility to the company as a bonus, but for the employ-ee/executive, personal tax can be deferred to retirement when benefits are taken. As such, asset growth is higher and personal tax rates might be lower at retirement. From the company’s perspective, benefits com-mence at normal retirement age eliminating the concern of pre-mature retirements.

Utilizing the retirement compensa-tion arrangement (RCA) provisions of the

Income Tax Act make these another option. A group RCA is established for the key employees/executives. The company makes annual deductible contributions to the group RCA segregated internally relative to ben-efits for each employee. A corporate trustee is appointed so all group RCA funds are held separately from the company providing full security.

There are three benefit selections which the company can elect. These can vary by employee group and can be integrated with a group RRSP or other pension plan if desired.

Key employee/executives enjoy the comfort of knowing they will receive guaranteed or adequate retirement benefits

By: Allan Mosher

Supplemental PensionsAnd Key Employee Retention

43HOME IMPROVEMENT RETAILING • September 2014

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HOME IMPROVEMENT RETAILING • September 201444

CastleTerry Mulock is business development manager for Atlantic Canada with Castle Building Centres Group Ltd. He will serve Castle locations in Nova Scotia, New Brunswick, and Prince Edward Island. Mulock previously worked as regional sales

Peoplemanager of Pittsburgh Paints where he was integral in the growth and awareness of this brand in the Atlantic region. He has been in the industry for almost 30 years.

WolseleyEric Whaley is vice-president, informa-tion technology with Wolseley Canada. He brings more than 20 years of experi-ence in the IT indus-try. Previously, he was chief information offi-cer with the Investment Industry Regulatory Organization of Canada (IIROC).

ILDCGord McCusker will take over as gen-eral manager of the Independent Lumber Dealers Co-operative (ILDC) at the end of 2014 when Andrew Battagliotti retires. McCusker joined ILDC in August and will work with Battagliotti through the transition period. He was previously business manager of Euromax Canada.

TIM-BR MARTYves Guérin is sales development super-visor for TIM-BR MART Group at the St-Nicolas, QC, lumber and building mate-rials (LBM) division. He has more than 28 years of experience in LBM sales in sales management and supervisory roles at CanExel, (J. Géo. Chalifour) Chalifour Canada, and Guardian Building Products Distribution. Kurt Norlen is hardware pro-curement manager. Based in Calgary, AB, Norlen will be responsible for managing the buying group hardware programs and Spancan buying programs. Ian Cook is regional director of member services for Ontario. He will act as the liaison between its dealers, vendors, and group manage-ment team. Tristan Flanagan is category manager for national paint programs. Based in Brossard, QC, he will be responsible for tintable liquid goods and control brand products.

RONA Serge Éthier is vice-president, purchasing, at RONA inc. He is responsible for national purchasing for hardware and other related sectors such as paint, tools, and seasonal. Before joining RONA, he was respon-sible for merchandising for the Patrick Morin organization. He has also worked at the Home Depot, Provigo/Loblaws, and Costco. ❖

ERICWHALEY

SERGEÉTHIER

STEEL-CRAFT PRESENTS THE CARRIAGECRAFT SERIES.A garage is more than just a garage; it protects the biggest opening in your house. That’s why a Steel-Craft door is built to stand up to whatever life throws at it. With embossed wood grain panels built from Canadian steel, a patented WeatherLock system and elegant hardware, the CarriageCraft series is proof that all garage doors are not created equal.

WEATHERLOCKOur patented system overlaps the interior and exterior skins, keeping moisture out and extending the life of your door.

CLIMACOREWe have the highest quality insulation between the panels which provides higher R-Value, better strength and consistent protection from the elements.

DURAWAREEvery Steel-Craft component is made by Steel-Craft. Track, hinges, and rollers are made to handle our weather.

BUILT TO WITHSTAND THE HARSHEST CLIMATES. AND THE BIGGEST STREET HOCKEY GAMES.

THE DOOR WITH MORE.A personalized Door Designer awaits you at Steel-Craft.ca

100% CANADIAN

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HOME IMPROVEMENT RETAILING • September 201446

Publisher’s PersPective

Dante PiccininPublisher and Editorial Director

hir@powershift.ca

There is a continued increase in U.S. retailers and manufacturers infiltrating the home improvement sector in Canada, yet the industry

is reporting strong gains. Competition is cited as one of the biggest

challenges facing manufacturers in both the hand and power tool categories and it con-tinues to increase. Scott Moore, director of marketing for hand tools and storage with Stanley Black and Decker Inc., says, “We are a big country and I think we are gaining a lot more recognition on a global scale and everybody wants a piece of the pie. We see global manufacturers that may have never even existed in Canada starting to enter through different buying groups and such.”

Unofficial Competition

One player that hasn’t had a lot of press is Amazon Supply. Although the ‘beta’

online business-to-business retailer hasn’t officially launched, it already offers 2.2 mil-lion products categorized under business, industrial, and scientific supplies. The site even offers a corporate credit line.

“If all of the supplies available at a home improvement retailer start showing up online at significantly lower prices, we will see a whole new channel of competition opening up and I guarantee loyalty will be low because if people can save money, they will,” says Marc Wulfraat, president of supply chain con-sulting company, MWPVL International Inc.

Wulfraat says a lot of retailers may not have been affected by Amazon yet, but they will – including the home improvement sec-tor. He says Amazon has raised the bar for what customers expect. It has sped up the market with consumers demanding faster delivery times and easier return policies and procedures. “Anyone who is the least bit sloppy at how they manage their supply chain is going to get hurt badly,” he says. “The only way they are going to continue is if they have some type of exclusivity.”

Industry AlignmentHowever, the industry seems to be align-

ing itself and the experts agree that consoli-dation will continue, and it should. This past couple of months saw Ace Hardware and TIM-BR Mart Group part ways and Ace signing on with RONA inc. to represent its brand in Canada. RONA has assigned TruServ to lead the new business unit.

Bill Morrison, president of TruServ Canada, says in terms of distribution, “The industry will likely need fewer, but larger companies who leverage both size and scale to meet customer needs.”

“Consolidation within the industry has become essential to cutting costs and keep-

ing companies’ heads above water,” says Lou Valeriati, vice-president of operations for Chalifour Canada.

James Jones, vice-president of national marketing with Castle Building Centres Group, agrees. “Consolidation will continue to be the best route to long-term health,” he says. “You need consolidation and those

companies that do not realize it will end up with business models that may look suc-cessful, but they will not survive. They may win a few battles, but they need to look at winning the war.”

Business Is GoodIn the meantime, despite the heavy com-

petition and consolidation, business is good. The economic indicators remain positive, and retailers are riding the wave after a dif-ficult start to the home improvement season this year.

Net income and sales soared in the second quarter with some home improvement retail-ers and manufacturers reporting double digit results. Just about everyone was in the black except Sears Canada (revenues down 11.9 per cent year over year) and RONA. RONA did see gains in same-store sales in the corpo-rate retail stores for the first time since 2010. Target Corporation tipped the scale at a 63.1 per cent increase in sales in its Canadian seg-ment for the quarter. Its digital sales (over-all) were up by 30 per cent, approximately double the industry growth rate.

And, despite its slow start in Canada, Target says it is not changing its plans to have 133 stores in Canada by the end of 2014 and 150 stores by 2017. It says it has implemented new initiatives to improve business performance and better deliver the Target brand experience to Canadian con-sumers and, based on the numbers, it looks like they are working.

The good news is housing expectations are on the rise and housing has become more affordable due to a decline in mort-gage rates. That, coupled with a continued growth in household income, will hopefully allow retailers to continue to ride the wave for the remainder of the year. ❖

Business Is Good, DespiteCompetition, Consolidation

ORGILL CUSTOMER INSIGHTS

Now, Orgill Gives All Dealers A Choice.ATTENTION

Worldwide Distribution & Retail Services

TO DETAIL“I am definitely a believer in Orgill. Since we have converted to Orgill, I can’t say enough good things about them. They see opportunities for our business that we might not have even seen ahead of time.”

Brent PerryAlf Curtis Home ImprovementsPeterborough, Ontario

Alf Curtis Home ImprovementsAlf Curtis Home Improvements is a third-generation family business that operates two lumber and building materials facilities with locations in Peterborough and Lindsay, Ontario.

The company primarily services contractors and tradesmen but has begun to expand its operation to meet the needs of more walk-in D-I-Y traffic.

Alf Curtis’ Peterborough facility sits on approximately 18 acres and includes a 1,400-square-foot showroom, a 42,000-square-foot of warehouse space and a 17-acre yard.

The Lindsay facility, which was opened in 2005 is a 4-½ acre site with 25,000 square feet of warehouse space, a 1,400-square-foot store and a 3-½+ acre storage yard.

Orgill Helps You Find Opportunities for Growth

Expanding Your Market“We are a pro yard, but we are slowly trying to build our retail trade. Since we started our relationship with Orgill, there is no doubt that we have been able to improve our walk-in traffic.”

Helping Your Operations“Throughout our entire remerchandising process, Orgill was heavily involved. They had a whole team of people that made the process go so smoothly.”

Living Up to Commitments“One of the biggest differences between Orgill and our old supplier is the fill rates. With Orgill, fill rates are just fantastic.”

Presenting Options“Since we started working with Orgill we have returned to and expanded a number of categories because we can be competitive, even with 11 competitors in our market, which has a population base of only about 80,000 people.”

“If I could say one thing to other dealers about doing business with Orgill it would be—do it yesterday!”

—Brent Perry

For more information about how Orgill can help you grow your business, please contact:

1-800-347-2860 EXT. 6780 • WWW.ORGILL.COMOrgill, Inc. P.O. Box 140, Memphis TN 38101-0140orldwide Distribution & Retail Servicesorldwide Distribution & Retail Servicesorldwide Distribution & Retail Servicesorldwide Distribution & Retail Servicesorldwide Distribution & Retail Services

Alf Curtis Home ImprovementsPeterborough, Ontario

Alf Curtis Home ImprovementsAlf Curtis Home Improvements is a third-generation family business that operates two lumber and building materials facilities with locations in Peterborough and Lindsay, Ontario.

The company primarily services contractors and tradesmen but has begun to expand its operation to meet the needs of more

Alf Curtis’ Peterborough facility sits on approximately 18 acres and includes a 1,400-square-foot showroom, a 42,000-square-foot of warehouse space

The Lindsay facility, which was opened in 2005 is a 4-½ acre site with 25,000 square feet of warehouse space, a 1,400-square-foot store and a 3-½+

process go so smoothly.”

Living Up to CommitmentsLiving Up to Commitments“One of the biggest differences between Orgill and our old supplier is the fill rates. With Orgill, fill rates are just fantastic.”

Presenting OptionsPresenting Options“Since we started working with Orgill we have returned to and expanded a number of categories because we can be competitive, even with 11 competitors in our market, which has a population base of only about 80,000 people.”

“If I could say one thing to other dealers about doing business with Orgill it would be—do it yesterday!”

For more information about how Orgill can help you grow your business, please contact:

1-800-347-2860Orgill, Inc. P.O. Box 140, Memphis TN 38101-0140

Canadian_AlfCurtis_HI.indd 1 9/6/12 12:06 PM47 Go to page 3 CONTENTS

castle.ca/freedom

Get the facts. Contact the Business Development Manager in your area:Western Canada Alan Schoemperlen (204) 771-1509 aschoemperlen@castle.caBritish Columbia Les Gillespie (250) 469-4744 lgillespie@castle.caOntario Bruce Holman (647) 228-1414 bholman@castle.caQuebec & Northern NB Robert Legault (514) 208-4158 rlegault@castle.caMaritimes Terry Mulock (902) 471-3985 tmulock@castle.caNewfoundland & Labrador Bob Delaney (709) 649-7173 bdelaney@castle.ca

Cook Street CastleVicki Hagel Owner

“We are Cook Street Castle, a successful downtown Victoria hardware store, a city block long, featuring a convenient drive-thru lumberyard.

Since we joined Castle, we easily compete with stores many times our size. And, we have the freedom to buy exactly what’s right for our Vancouver Island market. I believe 100% freedom and 100% transparency are the most important promises Castle makes to its members. That’s also why Castle is one of Canada’s fastest growing buying groups today.

If you want to maximize your profits and maintain your freedom, talk to Castle. Or, call me. I’d be happy to hear from you.”

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