Lowe’s Home Improvement Warehouse with the indoor lumber yard sits on a vast expanse of concrete immediately north of Rona Home & Garden, also located on a vast expanse of concrete, on Warden Ave. south of Eglinton Ave. E.

Both are within a five-to-ten-minute drive – depending on traffic—of two Home Depot stores.

“Something’s got to give,” says Michael McLarney, managing director of the North American Retail Hardware Association in Canada and president and editor of the industry news-source Hardlines.

The home improvement sector is saturated in many urban areas of Canada, say analysts, but that isn’t stopping the big guys.

“We believe there is a lot of opportunity for growth in Canada,” says Joanne Elson, a spokeswoman for Lowe’s, headquartered in North Carolina.

Lowe’s popped onto the Canadian scene in 2007, 13 years after The Home Depot arrived, and 68 years after what became Rona Inc. was founded in Quebec.

It has won market share in the U.S. and Canada with an aggressive strategy of moving spanking new stores into locations next to tired competitors. On Tuesday, CFO Robert Hull mused that his company would be interested in Rona if it goes up for sale.

The result is fierce competition in locations like the Golden Mile and the Stockyards at St. Clair Ave. W. and Keele Ave., where a Home Depot, Rona and Canadian Tire are fighting for many of the same customers.

“Is the market saturated in Canada? I would say that overall, it is not saturated, but it is definitely saturated in specific areas,” says Paul Sharpe, Rona’s director of market development.

The saturated areas tend to be in the inner suburbs of big cities – although Sharpe says the Rona in the Golden Mile still does good business.

In the salad days of home improvement stores, Rona saw its stock split two-for-one. That happens when the stock gets too high for the ordinary investor. If companies want to make it more accessible, they split it.

But increasing competition has forced change. In February, Rona announced plans to close 10 big box stores and locate smaller stores farther from the downtown core, in the outer suburbs.

In the ideal scenario, Rona would shrink a big box store by half and rent the other half out to a retailer that could draw customers that would also shop at Rona, Sharpe says.

“I think the big-box for sure is maxed out and has been for three years,” says McLarney. He points to Best Buy as another example. The electronics retailer recently announced it will close 50 big box stores in the U.S.

But McLarney believes there is room for three big home improvement retailers in Canada, in addition to popular private chains, like Home Hardware.

“They all do something a little bit better than the other. That’s how they compete alongside each other. At the end of the day, it’s who has the most amenable shopping experience for the individual and that’s not the same for everybody,” says McLarney.

McLarney prefers Rona for home décor, because he believes it has a European flair competitors lack. Lowe’s features every day low pricing and emphasizes the training given to sales associates in order to better help customers.

As it turns out, that flair is something Rona cultivates.

“In finishings, plumbing, vanities, faucets, towel bards, we have a leading edge on the fashion side,” says Sharpe.

For others, the decision is simpler.

“I like them because they’re Canadian. Home Depot has it cheaper, but Rona is Canadian and I think we should support Canadian business,” said Alex Dubinsky, a manager in the storage business.

It’s not a sentiment Rona counts on.

“There are certainly communities that are more patriotic than others. I don’t think it’s a factor in Vancouver, but in the Prairies, it’s a very strong factor,” says Sharpe. “I’m not sure that that is a strategic advantage. When it works, we’ll take it, but I wouldn’t want to build a business model on it.”

Source: Thestar.com

Posted and edited by Riona, Hanbao News Department

Contact: rionach@cltimber.com