The vast number of retail players in Ontario’s home improvement sector is akin to a bunch of kids vying for a spot on the high school basketball team – not everyone’s going to make the cut. While consolidation is likely (Vancouver-based West Fraser Timber Co. is shopping around its Revy/Lansing banners, according to reports), rivals Home Depot, Rona, The Building Box, Home Hardware and Canadian Tire, plus countless smaller retailers, will still have to slug it out in a fiercely fought marketplace.

The rookies, namely Quebec-based retailers Rona and The Building Box, have yet to build their brand in Ontario and are most likely to be bounced out, particularly in an economic downturn, according to Len Kubas, president of Toronto-based Kubas Consultants. ‘The [economy] is shrinking and everyone is fighting to maintain [share],’ he says. ‘It becomes very difficult for new players to nudge into the market and shove people aside.’

Problem is, the big-box contenders are too alike, says Kubas, who sees Home Depot as a juggernaut – a well established and formidable competitor. ‘The others will give you chapter and verse about how they are different from Home Depot, but when you talk to consumers they say the only difference is the colour of the aprons.’

Another factor is that these players aspire to score with the same consumers. For example, The Building Box hits everyone from first-time homeowners, do-it-yourselfers, renovators, and ‘the growing market of trend-aware female consumers.’ Similarly, Rona’s new Home Solutions format store in Brampton, Ont., is geared to homeowners in their 30s and 40s, with an emphasis on women. Home Depot targets the do-it-yourselfer of all ages, and – you guessed it – women. They all go after professional contractors as well.

Home Depot spokesperson David Day admits the positioning of the veteran retailer and its opponents are similar. ‘I know everyone says the same thing, but we’ve been doing this awhile, and [it has] been successful for us,’ he says.

Now seven years old in Canada, Home Depot communicates customer service in its brand message, according to Day. It recently launched an effort in Quebec (See ‘Home Depot tweaks strategy for crowded house,’ page 14), and also introduced a new tagline this spring – ‘First in home improvement’ – in order to leverage its eminence. ‘We are ‘First in home improvement’ because we continually lower the cost, make it easier for people to get what they want by evolving product selection and, on the service side, we have salespeople who empower shoppers with the confidence needed to complete a project,’ he says.

With 500 stores in varying sizes throughout Quebec, New Brunswick, Nova Scotia and Ontario, Rona is the latest to make an aggressive move in this category with its new big-box model. Twenty-five venues are planned over the next five years, and Rona aims to eventually expand the strategy to the rest of Canada.

Bolstered by a radio and outdoor ad campaign from Montreal-based BCP under the tagline ‘Building on the imagination,’ the new Rona concept houses boutiques, such as an interactive Paint Café, where people can order samples from sales associates in white coats, and Décor Accents, featuring frills like candles, picture frames and bath accessories. In addition, Internet kiosks provide project tips. ‘The whole environment is different than anything else in the industry,’ points out national VP of marketing Claude Bernier. ‘We have themed areas where there are displays and information to inspire people.’

Richard Blickstead, Rona’s president, believes there is room for two national players and one regional star in Ontario. He says Rona, which hopes to capture a 35% market share in Ontario (the amount it has seized in Quebec), will win a spot in the severely aggressive marketplace for two reasons.

First, it has small, mid-size and big-box formats, which ‘cover the needs of the Canadian consumer,’ and secondly, the chain, like Home Depot, focuses on service, instead of price and selection like some of its foes.

‘The top retailers have less than 30% of market share in a $25-billion market,’ he says. ‘There’s incredible room for more players.’ Rona will also engage in community work, such as hosting fundraising barbecues for needy children in order to draw shoppers.

Meanwhile, The Building Box unveiled two warehouse locations in Scarborough and Cambridge, Ont., last fall. It also unleashed Hammer Head, the grating-yet-somehow-lovable giant foam mascot in its TV spots, who points out ‘there’s more in the box.’

However, this is one big-box chain that would rather boast selection over service, since consumers have complained retailers don’t always follow through on pledges, says Sylvain Toutant, VP of marketing and merchandising. ‘We never promise what we can’t deliver,’ he says. ‘We don’t want shoppers to walk out and think what they were told isn’t true.’

Like others in the category, The Building Box, which claims to have 30% more product selection than its competitors and plans to add 13 stores across Ontario in four years, features store-within-a-store concepts, such as a kitchen and décor centre.

Meanwhile, tried-and-true veteran Canadian Tire is likely to withstand both the onslaught of new competition and economic instability, says Kubas. ‘Canadian Tire has such a broad niche, I can see people going to it at least once a week to pick up essentials.’

The fact that Canadian Tire peddles automotive and sporting wares, as well as home repair, will keep it on the roster, adds senior director of corporate communications Scott Bonikowsky. ‘If you look at the retail marketplace, who would you rather be? One of five big-box stores with the same assortment and product mix? Or Canadian Tire with a completely differentiated presentation?’

According to Bonikowsky, the retailer advertises via 10 million flyers weekly, and a broadcast effort touting it as a place to find solutions for home repair.

With operating earnings of $56.6 million in 2000, up 1.2% from 1999, the 79-year-old retailer, whose customers include ‘all Canadians,’ has updated its image in 240 ‘Next Generation’ formats over the past several years, and plans to base 390 of its 441 venues on this concept.

Like its big-box rivals, it has also incorporated a store-within-a-store set-up, including a Hardware Store, Paint Gallery, and Kitchen Place, as well as automotive and sporting goods departments.

‘To sharpen our focus in our key areas – sports and leisure, automotive and home products – we’ve changed the presentation, with lower racking, clearer signage and more product assortment,’ he says, adding that there hasn’t been a shift in focus from one category to another. However, home product is Canadian Tire’s largest category and more than a $2-billion business, admits Bonikowsky.

John Torella, a retail analyst with Toronto-based J.C. Williams Group, says the chain must narrow its focus. ‘You have to dominate in the key categories you’re going to play in,’ he says. ‘You can’t just play at it, you have to be in it.’

As for the home improvement market as a whole, Torella sees it coming down to a battle of the brands. Like a prudently selected all-star squad, only the best will survive in the end.