Rona consolidates under one banner - Brief Article

Home Channel News, Oct 8, 2001

MONTREAL -- To strengthen its awareness among consumers in Canada's largest metro markets, Rona, the dealer-owned buying group, is consolidating the store banners for its large-format home centers in greater Toronto under one name.

The company is set to expand its private label on the merchandise being sold in its stores nationwide. And at least one company official spoke of a possible public offering and a move into the United States to facilitate future growth objectives.

The banner changes appear to be a byproduct of the co-op's July acquisition of 50 stores from West Fraser Timber, which operated under the names Revy Home & Garden, Revelstoke Home Centre and Lansing Buildall. With the purchase, Rona's retail network across Canada grew to 540 stores, including 47 big-box units.

"With the acquisition of Revy, Rona has become the coast-to-coast leader of home improvement in Canada," said Robert Dutton, president and CEO of Rona. "We are excited about creating a new Rona and we plan to show Canadians how good home improvement can and should be."

The company's ambition is to "dominate" the retail home improvement market, said Dutton, a market where its stores operate more than 10 million square feet of retail space, employ 16,000 people and are approaching 3 billion Canadian dollars (US$1.95 billion) in retail sales.

The co-op's five big-box stores in the greater Toronto market, which had been called Rona Home Solutions and Revy Home & Garden, will be redubbed Rona Home & Garden. Its eight Lansing Buildall stores will be called Rona Lansing.

At least for now, the 29 stores Revy and Revelstoke outlets in western Canada will retain their name, as will all of Rona's other store formats, which are currently called Rona Warehouse, Rona Cashway, Botanix, Rona Home Centre and Rona Hardware.

Ron Wilbrink, Lansing's former vp-operations and now vp, retail operations-traditional stores, said that prior to the name consolidation, Toronto customers had been "confused as hell. There's a lot of clutter, people have stopped listening and lost track. None [of the banners] were really breaking through against the big orange machine," his reference to Home Depot Canada.

Two days prior to its banner announcement, Rona disclosed that it had purchased the last remaining Revy Home & Garden Warehouse in Ontario. That store shares a parking lot in the Ontario Stockyards district of Toronto with Home Depot and Canadian Tire stores that are among the highest-grossing outlets for each chain.

Rona had postponed that purchase, say its officials, until it completed a review of store and market data. "We have now been able to materialize this acquisition thanks to a conclusive analysis on the potential of the store," said Rona president and CEO Robert Dutton. "With an enhanced big-box presence in the key Toronto-area market, we are strengthening our position as the new Canadian powerhouse in home improvement."

Rona is supporting its banner changes with a media blitz budgeted at C$4 million, that includes heavy radio and newspaper promos which feature an illustration of a wood clamp bracketing the five major Rona banners. Changes in Ontario were completed last month, and will be finished throughout the rest of the country within 12 months.

A move into U.S. is considered

After its banner unification, Rona plans to place greater emphasis on putting its private label on more products its stores sell. Those products, say company officials, will be of equal quality with other brands but offered at a lower price. The strategy has proven to be successful in Quebec already, and is now starting to appear on the shelves of Ontario stores.

The company is aiming for a higher level of consistency in its merchandise mix nationwide. Within the next year the program will be fully launched, with 75 percent to 80 percent of Rona products being consistent from store to store. Currently there is only a 10 percent overlap. More than 85 percent of products sold in Rona's stores are Canadian-made.

A third, albeit less well-defined, leg in Rona's competitive strategy is expansion either through new-store construction or by signing dealers that currently at members of other buying groups.

Where that growth occurs, though, is not fully determined, as most of the choice spots for warehouse stores in Canada's 10 metro markets have been gobbled up by Rona, Home Depot, Reno-Depot and Canadian Tire.

Wilbrink suggested that Rona would consider expanding into the United States through acquisition. He also said that the co-op has given thought to becoming a publicly owned company within the next three years.