The shake-up of Canada's home improvement retailing industry continued last week with the announcement that Montreal-based Rona Inc. will purchase Revy Home Centres, a network of 50 hardware and building materials stores. The purchase price will be about $220-million when the deal closes in early July.

The deal puts Rona on top of Canada's booming home improvement retail market, with 539 stores, including 46 big boxes. It will command an estimated 13 per cent of the country's market share, with Home Depot coming in second with an estimated 10 per cent of market share.

With the market growing by more than eight per cent a year for the last 10 years, several retailers are competing for homeowners' business, and consolidation has been predicted for some time. Rona operates several different formats, ranging from small local hardware stores to big box outlets, and since Revy also had various formats, this deal was a good fit. In addition to the Revy warehouse stores, Rona is also getting the well-known Revelstoke and Lansing banners.

"The fit couldn't be better, as our networks show virtually no overlapping," says Robert Dutton, president and chief executive officer of Rona. "The timing is great, as both our organizations were starting to accelerate their expansion into new territories; the partner is great, since it shares our multi-banner breadth, our coverage of both large and small population centres, our marketing approach and our commitment to service."

A few weeks ago, Rona opened a new store called Rona Home Solutions, aimed at the decision makers in home improvement -- women. In addition to what you'd expect to find in a warehouse home improvement centre, the store also includes a variety of home decor accessories. There's also an in-store cafe where customers can sit and relax while examining paint colours and wallpaper samples.

Rona isn't the only Canadian retailer that is expanding its offerings in order to grab a piece of the home improvement pie. Color Your World, a 200-store retailer owned by paint manufacturer ICI Canada, recently redesigned 38 stores to include much more than the traditional paint and wallpaper displays. The new stores feature all aspects of home decorating, including carpeting, upholstery fabrics and window coverings. It offers custom made area rugs, wall-to-wall carpeting, drapery and upholstery products, and the sales staff will make house calls to provide free measuring and estimating services. Color Your World is also taking a page from home centres that cater to the professional trades, by offering separate store entrances and private meeting areas for trade customers.

The company also has redesigned its website to include Color Visualization software, projects for kids, and practical tips and decorating advice. Even the gardening industry is getting into the act. With Canada's short growing season, this is the busiest time of the year for garden centres, as most planting takes place after all risk of frost has passed. In most of Central Canada, that traditionally means waiting until the May long weekend, which just passed.

Gardening is a $4-billion industry, but like the home improvement sector, it's highly competitive. At this time of year, empty parking lots suddenly are filled with seasonal garden centres. Ontario retailer White Rose Home & Garden Centres is taking advantage of the seasonal market by setting up nine open-air temporary locations. And in two of the store's permanent locations, White Rose is branching out into home decor products, opening boutique departments such as Home Accents, The Decorated Wall, The Candle Shop, The Potting Shed and The Nature Centre.

White Rose says two stores, in Mississauga and London, Ontario, will act as prototypes for the new boutiques and for other sales and marketing ideas such as "how to" demonstrations and theme events. If successful, the idea will be expanded to all of the firm's stores.

This week Statistics Canada released retail sales figures for March. Sales were up 3.6 per cent overall, with furniture and appliance stores posting the strongest gains at more than 12 per cent. But the good times are not expected to roll forever for home-related retailers, so expect more consolidations and innovating marketing ideas during the next few months.

For more articles by Jim Adair, please press here.

Published: May 24, 2001

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Jim Adair is editor of REM: Canada's Real Estate Magazine, a business publication for real estate agents and brokers. He is also consulting editor of Homes & Cottages, Canada's largest building and renovation magazine. Email jimhc@pathcom.com.