HHIQ_2Q_17_Complete-low

SELLING TO PROS
FLE
HOW ARE THE BIG GUYS SELLING
TO CONTRACTORS AND WHAT
CAN YOU LEARN FROM THEM?
The sweet spot for many independents is the pro and contractor customer
that walks through the door every single day. But guess who’s coming
after that customer.
BY MICHAEL McLARNEY
T
hough they are the number-one and
two retailers by sales in this country,
the Canadian divisions of Home
Depot and Lowe’s are small divisions for their
parent companies. Yet both American businesses
are flourishing here, despite a comparatively
slower economy north of the border.
Home Depot’s estimated Canadian sales
are more than $7.4 billion. Lowe’s Canada
was a $1.5 billion company until its U.S.
parent bought RONA inc. That acquisition
had a direct, positive impact on Lowe’s top
line and sales growth, but its own organic
growth is also driving sales. Lowe’s Canada
opened a dozen Lowe’s stores in Canada
last year, in addition to a number of RONA
openings, which are expected to push total
sales for year-end 2016 to almost $7 billion.
Expansion so far this year indicates that
this growth vector will continue unabated.
CONTRACTORS DRIVE BIG SALES
Both big box retailers acknowledge how
important the contractor customer has
been to that growth. For Home Depot in
the U.S., pros account for just four percent
Separate entrances, like at this North York, Ont., Lowe’s store,
help pro customers find what they need more efficiently.
of the customer base, but represent 40 percent
of the retailer’s sales. That share is
estimated to be lower in Canada—leaving
a huge opportunity for growth.
Likewise, Lowe’s is investing heavily to
woo contractors and trades. Expecting that
“housing will continue to be a bright spot in
the economy” for its U.S. business, Lowe’s
CEO and Chairman Robert Niblock said he
expects the company’s contractor and pro
business to keep growing.
“Pro continues to outperform and we
remain focused on deepening our relationship
with this important customer,” he noted.
Like Home Depot, Lowe’s sees its focus on
national brands, including brands exclusive
to their stores, to drive pro sales. Those
brands include Marshalltown, which Niblock
considers “a trusted pro brand,” as well as
exclusive brands such as Hitachi and Bostitch
pneumatic tools, Vaughan hammers, and its
own private-label line of Kobalt tools.
At Home Depot, pro sales are driving bigticket
sales as well. Sales over $900 account
for about one-fifth of Home Depot’s overall
turnover. While these sales include heavy
appliances, they represent a lot of
the pro spend, as well. Categories
showing increased sales to contractors
include commercial and
industrial lighting, fencing, plywood, pressure-treated
decking, and interior doors.
While Lowe’s has lots of room to expand
in Canada, Home Depot has saturated the
market with an optimal number of stores.
New store openings come much less frequently
and reflect growing urban markets
rather than holes that need to be filled in the
retail marketplace. In fact, it’s only opened
two stores in recent years, one in North
Brampton, on Toronto’s northeast fringe,
where nearby farmers’ fields are rapidly
being turned into housing developments,
and Vaughan, Ont., a well-to-do, thriving
community directly north of Toronto.
In addition, Lowe’s specialty big box banner,
Reno-Depot, is targeted at contractors
and heavy DIYers. The latest Reno-Depot
to open is a store in Boucherville, Que., just
minutes from Lowe’s Canada’s head office.
The store features expanded assortments,
giant endcap quantities, and simplified
signage to help pros get in and out quickly.
SELLING ONLINE
IS IMPORTANT TO PROS
Both Lowe’s and Home Depot see the value
of the rising e-commerce market, and
online sales now account for more than five
percent of Home Depot’s overall sales. So
capturing that business for pros is critical to
the growth of both big box players.
At Lowe’s Canada, President and CEO
Sylvain Prud’homme identifies two distinct
customer segments that his stores are targetting:
women and contractors. He has stated
numerous times the importance of blending
online sales with mobile and bricks and mortar—what
he refers to as Lowe’s omni-channel
strategy. In fact, Lowe’s Canada’s own website
is considered cutting edge in online selling.
EVEN WITH DIGITAL,
KEEP IT PERSONAL
Home Depot Canada follows its own game
plan of combining the strength of its big
box footprint with online sales, called its
inter-connected strategy.
40 SECOND QUARTER / 2017
Hardlines Home Improvement Quarterly
www.hardlines.ca