CHHMA - EYE ON OUR INDUSTRY
Volume 11, Issue 02, January 13, 2011
Association News
Canada Night
The 62nd Canada Night reception will be held on Sunday, March 6, 2011, at the InterContinental Hotel, Renaissance Ballroom in Chicago. Canada Night provides an opportunity for those in town for the International Home + Housewares Show to mix and mingle with peers and retail customers in a social atmosphere, celebrating the common bond of being Canadian, while enjoying the wine & beer bar and some excellent cuisine.
Sponsorship applications have been sent to prospective sponsors, vendor registration will be available the last week in January.
For a sponsorship request form, click here.
2011 Spring Conference Taking Shape
The line-up is starting to take shape for this year’s CHHMA Spring Conference & AGM to be held on Tuesday, April 5th at the International Centre Conference Facility, 6900 Airport Road, Mississauga, Ontario. This year’s conference theme “Boom, Bust & Bounce Back” will offer a great line-up of speakers and topics that will be loaded with ideas and information to help you manage and market your way through a slow recovery.
We are pleased that Craig Alexander, Senior Vice President & Chief Economist, TD Bank Financial Group, will be the opening keynote speaker for the conference.
Mr. Alexander holds a Master’s degree in economics from the University of Toronto. He has fourteen years of experience in conducting economic analysis in the financial industry. Prior to joining the private sector, Craig spent four years as an economist at Statistics Canada.
In 2010, Craig was appointed to the position of Chief Economist for TD Bank Financial Group. In his current role, he travels across the United States and Canada speaking to TD clients and various business groups about economic trends and prospects. He is frequently quoted by the media on economic issues and writes reports on a wide array of economic and financial subjects. In addition to his role at TD Bank, Craig is also the current President of the Canadian Association for Business Economics.
Mr. Alexander will present his economic outlook for 2011.
We are also delighted to announce that Professor Ken Wong, Queen’s School of Business, will close the conference with a presentation on marketing in an ‘up and down economy’. During a time when everyone seems to be cutting prices to stay afloat, there is new, compelling evidence of a better way. A methodology that has been shown to actually grow, not just sustain, profitability during economic downturns has been identified. This talk presents the evidence and explains why this new method works, and what it takes to get started.
Mr. Wong is an award-winning professor at Queen's School of Business, and a frequently cited marketing authority. Ken has built a virtual cult following for business elite who have learned his unique terminology for the four groups who are the biggest threats to healthy bottom-line results. Bringing the culprits alive in his content-dense, yet fun-filled presentations sheds new light on business realities for his many clients. His message is both strategic and tactical, factual and motivational, serious and light-hearted.
Other speakers and topics will be confirmed in the coming weeks, so stay tuned for further information in future newsletter issues and other CHHMA communiqués. In the meantime, mark your calendar and we look forward to seeing you there on April 5th.
Industry News
Target Purchases Zellers Stores for $1.8 Billion
U.S. retailer Target Corp. said it is buying Canadian discount retail chain Zellers from Hudson's Bay Co. for $1.8 billion. Under the terms of the deal, Minneapolis-based Target will pay two payments of $912.5 million in cash, in May and September 2011, to acquire the leasehold interests of 220 Zellers locations in Canada.
The Zellers locations will continue to exist under that brand name for "a period of time," HBC said in a release. But Target will convert 100 to 150 of those Zellers locations to Target stores in 2013 and 2014 and sell the rest of the current Zellers network of store leases to other retailers.
"This transaction provides attractive long-term value and will allow us to invest substantial capital into our department store and specialty store businesses to continue to drive growth," HBC governor Richard Baker said in a release.
Baker's company bought all of HBC in 2008 for $1.1 billion. Selling the underperforming Zellers unit at a profit allows the company to focus on the iconic Bay brand, an initial public offering of which is much anticipated.
The Home Depot Announces Canadian Leadership Transition
The Home Depot announced yesterday that Aaron Carmack has been promoted to president, The Home Depot Canada, effective January 31. Carmack, the current regional vice president of the Pac North region in the U.S., is Replacing Annette Verschuren, who is leaving the Company after nearly 15 years of service. Verschuren will remain with The Home Depot until January 30, the end of the Company's 2010 fiscal year, to assist with the transition. She has been president, The Home Depot Canada since March 1996. During her tenure, she grew the division from 19 stores to its current position as the largest home improvement retailer in the country.
"These past fifteen years have been the best of my career," said Verschuren. "However, I am ready to take some time off and then plan the next chapter of my life."
"We cannot thank Annette enough for all she has done for our Company," said Frank Blake, chairman and CEO. "She has been The Home Depot Canada's leader from its infancy and has made it what it is today. We will miss her."
Carmack, a 23-year retail veteran, will assume responsibility for the operations of the Company's 179 Canadian stores. He joined The Home Depot in December 2003 and was promoted to regional vice president in March 2007. In this role, he oversees the performance of more than 100 stores in northern California, Nevada and Utah. Prior to The Home Depot, he worked for Midas International and spent the first 15 years of his career with Sears.
"Aaron has been a consistent high-performing regional vice president for the past several years. His proven record of success, coupled with his leadership ability, makes him an ideal fit to lead our Canadian division," said Blake.
Stewardship News
Stewardship Filing Reminders
This is a reminder that Q1 2011 MHSW reports for all nine phase 1 materials are due by January 31, 2011 and should include data from October 1, 2010 to December 31, 2010. Q1 payments are due by February 28, 2011.
For stewards of the Blue Box program, it’s time to start gathering your tonnage data on each material type of designated blue box waste for which you are obligated to report on and making plans to register and input your 2010 volumes on the Stewardship Ontario website (www.stewardshipontario.ca) . Reports are due by March 31, 2011 and first payment is due by April 30, 2011.
Similarly, stewards of the Multi-Material Stewardship Manitoba (MMSM) program need to register and report on their 2010 volumes by March 31, 2011 at www.stewardshipmanitoba.org. First payment is due by April 30, 2011.
We will update you on filing dates for Quebec’s EEQ program when they are confirmed.
Remember, penalties and interest apply for late filing.
For further information you can contact werecycle@stewardshipontario.ca or 1-888-288-3360; customerservice@stewardshipmanitoba.org or 1-877-883-5828 or you can contact our CHHMA stewardship consultants Al Marks at steward@chhma.ca (416-282-0022 ext.24) or Duncan Deans at ddeans@chhma.ca (416-282-0022 ext.22).
Best Business Practices
Recessionary thinking: Smart Marketing Tips for Tough Times
Continuing on from the past two issues, here are the fifth and sixth tips for effective marketing in a down economy:
5. Continue Advertising.
Carefully assess your current advertising campaigns by analyzing how many ads you run and where they are placed. Do not give in to the temptation to cut all advertising. There is opportunity for success in advertising in a down economy. In down times, fewer businesses will advertise, thinking it is an easy place to save money. This trend creates less competition for existing ad space. More available ad space can provide better negotiation opportunities for the media buyer. Most importantly, though, more ad space decreases advertising clutter, making your ads more visible. Work with the media outlet to strategically place your ads in more visible positions and be sure to include a ‘call to action’ so that you can trace any direct business.
6. Outsource.
Workload doesn’t necessarily diminish in a difficult economy. Internal resources may be scarce, particularly if your organization has downsized its workforce. An alternative to hiring full time marketing staff is to hire experienced professionals on a contract basis to complete projects as they appear. Activities that are easily outsourced include writing and copyediting, web site strategy, research, media planning, graphic design and other resource-intense activities. By contracting with professionals, you can limit your spending and take advantage of the experience and efficiency of someone who focuses in these types of initiatives. When the project is completed, you no longer carry the burden of their overhead and salary.
Look for two additional tips in next week’s issue.
Information provided by: Deb Scaringi, Consultant, Scaringi Marketing, www.scaringimarketing.com, deb@scaringimarketing.com
Economic News
Housing Starts Drop in December
The seasonally adjusted annual rate of housing starts was 171,500 units in December, according to the latest report from the Canada Mortgage and Housing Corporation (CMHC) released yesterday. This is down from 198,200 units in November. Actual housing starts are being verified and will be reported in the January edition of Monthly Housing Statistics.
“Housing starts moved lower in December due to the multiple starts segment, especially in Ontario,” said Bob Dugan, Chief Economist at CMHC’s Market Analysis Centre. “Single-detached starts were also down, but minimally.”
The seasonally adjusted annual rate of urban starts decreased by 13.3% to 149,100 units in December. Urban multiple starts moderated by 20.1% in December to 84,500 units, while single urban starts moved lower by 2.6% to 64,600 units. December’s seasonally adjusted annual rate of urban starts decreased by 45.4% in Ontario and 9.8% in Atlantic Canada. Urban starts increased by 46.8% in B.C., by 13.5% in Quebec, and by 0.7% in the Prairie Region.
Rural starts were estimated at a seasonally adjusted annual rate of 22,400 units in December, down from 26,200 in November.
Building Permits Fall in November
Statistics Canada reported on Monday that municipalities issued $5.5 billion worth of building permits in November, down 11.2% from October and 10.3% lower than in November 2009. It was the second straight monthly decline. The drop was led by lower construction intentions for multi-family dwellings in B.C. and commercial buildings in Ontario.
After two straight monthly gains, permits in the non-residential sector fell 16.1% from October to $2.3 billion in November. Industrial permits edged down 0.9% to $406 million; industrial permits lost 7.8% to $647 million; and commercial sector permits decreased 23.4% to $1.3 billion.
The value of residential permits fell 7.2% from October to $3.2 billion (20.9% lower than in November 2009). Multi-family dwelling permits were down 22.4% from October (17.5% lower than in November 2009), the lowest level since February 2010. B.C. had the largest decrease. Permits for single-family units increased 3.4% from October to $2.1 billion but were down 21.% over November 2009.
The total value of permits fell in seven provinces, led by B.C., Ontario and Newfoundland and Labrador, while Quebec experienced the largest increase.
Canada's Real Estate Market Outlook
A Royal LePage report from last Thursday indicated that Canada’s real estate market is heading into a stronger than expected year that will likely see home prices steadily rise, while overall transactions moderate. The report says that average home prices are expected to rise 3% to $348,600 in 2011, while the number of transactions is predicted to fall 2%. The survey also found that average home prices rose between 3.9% to 4.6% in the fourth quarter of 2010. Activity in the housing sector was helped by low borrowing costs in the fourth quarter of last year, and the report says that trend will likely continue into the first half of 2011 as home buyers weigh the possibility of rising mortgage rates later this year.
“2011 is expected to unfold much like 2010, when close to 60% of sales volume occurred in the first half of the year in anticipation of interest rate increases that never materialized,” said Phil Soper, president and chief executive of Royal LePage Real Estate Services.
Alberta is expected to be one of the provincial market leaders as the economy in the oil-rich region starts to recover and local employers ramp up hiring.
2011 is also shaping up to be the year of the mid-sized cities as a lot of first-time buyers are already being priced out of large urban centres. With the Bank of Canada expected to resume interest rate increases later in the year, affordability will become a bigger issue for even more buyers. Many mid-sized cities already have affordability on their side and also boast solid economic prospects with unemployment rates well below levels in either Vancouver or Toronto. Cities like Winnipeg, Saskatoon, Regina, Fredericton and St. John’s are enjoying some of the strongest price increases in the country.
Bank of Canada Quarterly Business Outlook improves
Hiring intentions by Canadian companies over the coming year rebounded strongly in the fourth quarter, according to the Bank of Canada’s quarterly business outlook survey released on Monday. Also, in the report, the majority of Canadian firms suggested they still plan to increase their capital investment in the next 12 months in an effort to become more competitive and pursue new markets.
49% of firms surveyed said employment levels are expected to be higher over the coming year, compared to a 39% reading in the previous survey. Companies’ plans to acquire productivity-enhancing machinery and equipment at a faster pace eased slightly from record-high levels hit in the last survey. Nevertheless, 44% said they expected greater investment over the next year, with 41% indicating capital-spending levels would remain the same.
Companies also believe input costs are set to climb over the next 12 months, with expectations for inflation between the 2% to 3% range increasing in the October to December period. On balance, firms in the survey said they anticipate that their input and output costs will both increase at a faster rate than in the past poll, with commodity prices serving as “the main driver”.
“This result largely reflects firms’ intentions to at least partially pass their higher costs through to output prices, as well as their attempts to restore margins,” the central bank said. “Nonetheless, many firms noted that competitive pressures continue to limit the expected magnitude of price increases.”
Predictions from Canada's Top Bank Economists
Last Thursday, the Economic Club of Canada managed to get the chief economists of Canada’s five largest banks in the same room while they hosted a 2011 outlook breakfast with Warren Jestin of Scotia Capital, Sherry Cooper from BMO Capital Markets, Craig Wright at RBC Financial Group, Avery Shenfeld of CIBC World Markets and Craig Alexander (opening keynote speaker at the upcoming CHHMA Spring Conference & AGM) at TD Financial Group. What was the overall prognosis for the Canadian economy in 2011 from the big five? Modest growth, the currency close to parity and mild interest rate hikes. There was some split opinions over the pace of growth from 2.2% to 3.2% though the overall theme was moderate growth in Canada and all see the Bank of Canada’s overnight lending rate at 2% by the end of the year, from the current 1% level. Here’s a brief summary of some of their key points:
Warren Jestin: GDP 2.2%, interest rate 2%
Mr. Jestin forecasts 2.5% to 3% growth in North America while emerging markets, especially China, will become the drivers of global growth. The loonie will remain at or near par thanks to high commodity prices.
Sherry Cooper: GDP 2.75%, interest rate 2%
Ms. Cooper expects the U.S. economy to recover, posting at least 3% growth – the key to recovery will be the U.S. consumer. U.S. unemployment is expected to drop to 9% from 9.7% - still high but trending down. Another big driver will be non-residential construction. Residential construction, however, will remain soft with house prices falling. The Fed will not budge on interest rates until at least 2012.
Craig Wright: GDP 3.2%, interest rate 2%
Mr. Wright is even more bullish on the U.S., estimating 3.5% growth which is good news for Canada. There was some front-loading of consumer spending in Canada on big-ticket items, such as the Ontario housing market just before the introduction of the HST. Consumers will keep spending as their employment situation stabilizes, although at a more moderate rate. Canadian companies are sitting on plenty of liquidity, and a strong loonie will also benefit machinery and equipment investment among businesses.
Avery Shenfeld: GDP 2.2%, interest rate 2%
Mr. Shenfeld is a little less optimistic for Canadian growth at 2.2% and predicts 4% global growth as the economy is not as hot as we think it is. This is true with commodities, which are overshooting and behaving more like financial assets than something bought and sold for practical use. He sees a retreat in commodity prices in the first half of the year.
Craig Alexander: GDP 2.6% or higher, interest rate 2%
Sovereign debt fears are the #1 risk to growth for the world in 2011. The euro could sink towards parity with the U.S. dollar. Meanwhile, China and India are at risk of overheating, slowing growth to manage inflation. Even so, prospects for emerging markets remain bright. China and India are raising billions out of poverty. There are enormous opportunities. Household debt is still a worry in Canada, and that’s likely to continue to climb further. The housing market is drifting sideways.
Canada Adds 22,000 Jobs in December
Canada’s economy added more jobs than expected in December with a net 22,000 new positions (the best in four months) concentrated in full-time, private-sector work, while the unemployment rate held at 7.6%.
The December gain, reported last Friday by Statistics Canada, marked the end of a year that saw the economy recoup all of the jobs lost during the recession. The economy created a total of 368,500 jobs in all of 2010, representing a 2.2% increase in the workforce after a 1.1% decrease during 2009.
Full-time employment rose by 38,000 positions in December, the fourth increase in five months, compared with a drop of 16,100 in part-time work. Canadian businesses added a net 52,500 workers, led by a surge of 65,700 manufacturing jobs, the most on record, and 44,500 transportation and warehousing jobs. The construction industry lost 27,100 jobs in December. By contrast, 7,400 new positions were added in the public sector.
Meanwhile, the U.S. economy produced 103,000 new net jobs in December, the U.S. Labor Department reported last Friday, fewer than analysts expected but enough to push the unemployment rate down to a still high 9.4% from 9.8%. Although, the U.S. jobless rate is now at its lowest level since May 2009, the drop partly reflects discouraged job seekers leaving the labour force.
CHHMA Events For 2011
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Canada Night
Sunday, March 6
InterContinental Hotel, Chicago, Illinois
Spring Conference & Annual General Meeting
Tuesday, April 5
International Centre, Mississauga, Ontario
Maple Leaf Night
Tuesday, May 10
The Mirage, Las Vegas, Nevada
Quebec Golf Tournament
Tuesday, May 17
Le Fontainebleau Golf Club, Blainville, Quebec
Ontario Golf Tournament
Wednesday, May 25
Angus Glen Golf Club, Markham, Ontario
Industry Memorial Golf Classic
Tuesday, September 27
Blue Springs Golf Club, Acton, Ontario
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To register for all events visit our website at www.chhma.ca or call Pam Winter at (416) 282-0022 ext.21.
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"Eye On Our Industry" is published by the CHHMA as an information resource for our members. Member input regarding content and format is welcomed. Please contact Michael Jorgenson by email: mjorgenson@chhma.ca, or call at (416) 282-0022, ext. 34. CHHMA is located at 1335 Morningside Ave., Suite 101, Scarborough, ON, M1B 5M4 www.chhma.ca