With the acquisition of Quebec brands by large American players, competition from online giants and the rise of digital technology, Canadian hardware stores and renovation centres are facing major challenges. In addition to a severe shortage of labour, these businesses, especially SMEs, need to take the digital turn and find new strategies to attract customers. Manuel Champagne, Managing Director of Retail Quebec, and Richard Darveau, President and CEO of the Association québécoise de la quincaillerie et des matériaux de construction (AQMAT) helped us take stock of the situation.
Some figures to start with…
- In Quebec, there are about 600 hardware stores and 300 renovation centres, for a total of about 900 retailers.
- In Canada, the market is shared by 3500 retailers.
- 50% of customers are individuals, while the other 50% are construction contractors.
- With businesses ranging from very large companies to local shops and SMEs, the average floor area of a store varies from 1,000 to 120,000 square feet.
Overall situation of the sector
According to Mr. Darveau, “the market is at its strongest, but it is slowed down by the shortage of labour. Some businesses are closing for lack of employees.” In addition, the sector is undergoing a major transformation. Large American players (particularly Home Depot and Lowe’s Canada, which has purchased the Rona stores) are penetrating the market and are changing management and marketing practices. As well, the online giants are making competition fierce. Between 10% and 25% of construction materials are sold online by companies that have nothing to do with home improvement or construction such as Amazon, eBay, Alibaba, Shopify or Wayfair. SMEs are struggling to cope with these large players.
A late digital shift
“Retailers have taken awhile to embark fully on the e-commerce adventure, unlike other sectors. Some businesses have only had a transactional website for three years,” says Mr. Champagne. For those with a one hundred percent corporate structure such as Home Depot, it has been easier to go digital. But for independent merchants or affiliates it is more complex, because they do not have a uniform strategic vision. In addition, the very nature of products has played a major role in this delay. The articles are often heavy and require complex logistics.
New strategies to implement
Fortunately, there are solutions. Manuel Champagne and Richard Darveau both emphasize that the first is to build on the customer experience which must be excellent before, during and after the purchase. Some Quebec and Canadian companies that have been established for years (Canac, Patrick Morin, BMR) are already doing it very well, with a smaller size having the advantage of creating proximity with the customer. According to Richard Darveau, “It is essential to try to remove the distance that exists between a virtual purchase and an in-store purchase by combining the two to make it a winning marriage for the consumer.” For example, for the past two years, the BMR Group has had The BMR Shop, a concept that allows customers to purchase products online and then go to pick them up from the store even after hours, using lockers for a deposit. Manuel Champagne adds that, like Decathlon in the sporting goods sector, renovation centres could also offer to let customers try products in site.
Another solution would also be to train sales advisors better. “When a customer visits a hardware store or renovation centre, he expects to get good advice on how to carry out his projects,” Mr. Darveau says. Companies must therefore invest in continuous training of their staff. Other avenues could also be exploited such as offering in-store workshops on all kinds of subjects (electricity, plumbing, ceramics, etc.) allowing customers to complete their projects.
Despite today’s many challenges, the sector offers excellent career prospects, with labour sorely lacking at all levels. “We can talk about the scarcity of labour for clerks, sales advisers, agents and handlers. Other trades such as delivery people and lift truck operators are in short supply. And the further you get from the big urban centres, the more difficult the situation becomes,” says Manuel Champagne.
The sector also offers the possibility of climbing the ladder quickly, moving in a few years from a position of clerk to a managerial position. “Most SMEs operate like families; there is a good climate of trust. Also, as an employee has to work in several departments, he becomes trained on the products and on renovation techniques. In addition to serving customers, he stores a lot of know-how that he can apply in his own home!,” concludes Mr. Champagne.