Warehouse home centers taking Canada by storm - Illustration - Industry Overview - Statistical Data Included - Brief Article

Home Channel News, May 21, 2001 by John Caulfield

Much like their counterparts in the United States, Canadian home improvement dealers are going to greater lengths to inject pizzazz into their stores' presentations and displays. Even Home Depot, which opened 14 stores in 2000 and expects to open another 13 in 2001, is experimenting with showroom-like departments that are the antithesis of its well-honed down-and-dirty warehouse image. At the front of its store in Brampton, Ontario, outside of Toronto, for example, is a large carpeted area where floor-covering, wallcovering, window treatments and samples of kitchen cabinets are amalgamated to create a quieter environment where customers and associates can discuss home improvement projects. Annette Verschuren, Home Depot Canada's president, said this area is being included in all new stores.

The emphasis on home decor, of course, is part of a larger trend that has been sweeping through North America. At the Canadian Hardware Show last February, a special area was carved out to group certain home decor exhibitors for the first time. And as part of its "New Generation" store redesign program, which it rolled out to 100 stores last year, Canadian Tire uses stylish displays and signage to showcase kitchen and bath products, paint, hardware and tools.

"New Generation" is a component of Canadian Tire's C$1 billion store remodeling and upgrading program that it started in 1994. and by the end of 2003 will include the construction or refurbishing of 120 more stores into newer, larger outlets that are expected to boost the company's sales by C$500 million annually. To accommodate that growth, Canadian Tire started construction on a 500,000-square-foot distribution center in Calgary, Alberta that will open next spring and handle 125 stores in the west.

Under its new CEO, Wayne Sales, Canadian Tire has reorganized its operations by creating business units for retail, financial services and new business development, which includes its online selling site that it launched last November with more than 5,500 skus being offered. The company's goal is to boost profitability, which has flagged in recent years and grew only 1.4 percent to C$148 million in 2000.

Independents seek niches

Making money in Canada will continue to be a challenge for all dealers, and many here are convinced that consolidation is inevitable. Rumors persist that West Fraser Timber wants to sell its 60-unit Revy Home Centers, and that Rona and the 15-unit Reno-Depot (which is owned by Castorama, the world's third-largest retailer) have at different points expressed interest, at least in Revy's 14 warehouse units. Even America's Lowe's has been mentioned as a possible suitor.

While the big guys slug it out, smaller dealers are trying to reposition themselves in the market in ways that will keep them out of the warehouses' line of fire.

Independent dealers still appear to serve vital niche in the market. Don Nash, the president of the 125-member buying group Homecare Building Centers, said that his company's wholesale sales last year "equalled" those in 1999, "which was the best year in our history." At the last Canadian Hardware Show, Perth (Ontario) Home Hardware was honored for its innovation; this dealer serves a vacation community and sells a satellite dish every business day. Another honoree, the 27-year-old Executive Home Building Center in Red Deer, Alberta, had the moxy to open its own truss plant after the one in town closed in 1999.