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CHHMA NEWS

CHHMA - EYE ON OUR INDUSTRY
Volume 11, Issue 26, July 14, 2011

Inside This Issue:

Last Call for Applications for 2011 CHHMA Scholarship Program 
Register for CHHMA Go Kart Night 
Walmart to Lose Most Shoppers to Target?  
Liquidation World Shareholders Approve Takeover 
Seven Personality Traits of Top Salespeople 
Executives Upbeat in Bank of Canada’s Summer Business Outlook Survey  
June Housing Starts Stronger Than Expected  
CIBC: Canadian Housing Market Will Cool 
Canada Adds Jobs in June, Unemployment Rate Holds  
Latest U.S. Job Report Disappoints


Association News


 
Last Call for Applications for 2011 CHHMA Scholarship Program

The CHHMA is once again pleased to be able to offer the opportunity for children of employees of our member companies to apply for a scholarship to help offset the cost of post-secondary education. The Association recognizes the importance of education and therefore encourages children of our member companies to attend University or College.

Five to seven scholarships are awarded each year. Successful candidates receive $1,000 CDN per year for the first two years of study leading to a diploma or degree from an accredited community college or university.

The scholarship program is available to the dependents of any current full-time employees of the CHHMA or member companies. The program is only offered to Canadian companies or divisions of companies based in Canada which are members of the CHHMA. The member company must remain a member in good standing in order for the student to qualify for the second year of the scholarship. The student's parent or guardian must be an active full-time employee with at least one year seniority with the CHHMA or member company as of July 15th in the year of application. Applicants must be high school seniors preparing to enter an accredited community college or university in the fall term, and attain a minimum average of 75% in the last year of high school. The decision of the Selection Committee and the CHHMA is final and not open to appeals. The CHHMA reserves the right to withdraw a scholarship should the student's parent(s) or guardian(s) voluntarily leave the employment of the CHHMA or member company, or if employment is terminated for just cause prior to the start of the school year, or if the company terminates its membership in the Association.

Complete details and application forms can be found at https://www.chhma.ca/Public/Scholarship-Program or click here for a PDF information sheet: https://www.chhma.ca/Public/Page/Files/34_CHHMAScholarshipAwardPoster_2011.pdf

The deadline for the CHHMA to receive applications is this Friday, July 15th.

Since 2001, the CHHMA has awarded $108,000 towards scholarships and some 54 young people have benefited from the scholarship program. 



Register for CHHMA Go Kart Night 

The CHHMA Go Kart Night is taking place on Thursday, September 1st at the Circuit ICAR motorsports complex (http://www.circuiticar.com/accueil.html), located 20 minutes north of Montreal in Mirabel, Quebec.

The Go Kart racing will take place on an outside 1 km long track designed by 1997 F1 World Champion Jacques Villeneuve, where karts can reach speeds of up to 65 km/h.

The cost to attend is $100 for CHHMA members, $120 for non-members plus taxes and will include a cold buffet served in the clubhouse (5:00 p.m.) prior to the racing competition which will start at 6:30 p.m. The competition will be a team format so register a team foursome (individuals not registering as a foursome will be assigned to teams). The event is limited to 40 persons, so register soon!

Click here to register: https://www.chhma.ca/Public/CHHMA-Upcoming-Events.
 

Industry News

Walmart to Lose Most Shoppers to Target?

Walmart Canada has the most to lose when Target Corp. begins operating stores in Canada, according to recent research on consumer loyalty by Toronto consulting firm, Satov Consultants.

The results from the research appeared in an article in last Friday's Financial Post where people, identified as frequent consumers at chain stores, including Walmart, Canadian Tire, Sears and The Bay, were asked which retailers they would be less likely to shop at when Target arrives. 57% of respondents said they would be less likely to shop at Walmart, followed by 44% at Sears Canada, 37% at The Bay and 19% for Canadian Tire. Mark Satov, founder of Satov Consultants, said in the article however, that given the proximity of Canadian Tire stores to Zellers locations that might become Target outlets and the overlap of product mix with Target, Canadian Tire is likely facing a serious threat as well.

"If I were Canadian Tire, I'd worry a whole lot more than the data would indicate. They have gone more into housewares, which is Target's sweet spot, and the location overlap is rather high ... And if Target gives them a great experience I think they should worry about losing female customers. Target has apparel and housewares, and Canadian Tire does not make a lot of money on housewares and cleaning products," Mr. Satov was quoted in the article.

Canadian Tire meanwhile has taken some major moves recently to grow its business and customer base by expanding it sporting goods category with the purchase of Forzani Group Ltd. (a category which Target is not big in) and the addition of large appliances to its stores in late June, including refrigerators, washers, dryers and microwaves.

As for Sears Canada, the retailer caters to an older demographic and there is less geographic overlap with potential Target sites than with Canadian Tire and Walmart, Mr. Satov said.

The potential impact Target will have on other Canadian banners is not clear-cut as a one-to-one consumer defection from any particular retailer, according to Mr. Satov.

"You don't lose shoppers, you lose trips," he explained. "If your average non-food Walmart shopper shops there 12 times a year, 57% of those people would see some of those trips shift to Target. With a food shopper, Walmart becomes part of their routine and store visits could range from 26 to 52 trips a year. The question is, how many trips will Walmart lose?"

Target has indicated that its stores in Canada will carry some fresh food but not the full 'supermarket' offering. Mr. Satov noted that there are leasing restrictions in the malls where current Zellers stores operate as many of those malls are already anchored by another full grocery store.

"That Target has managed to achieve such brand resonance in Canada two years before opening and without mass communication efforts is a remarkable feat," Mr. Satov said. He continued to remark that it is a clear sign that Canadians are primed to at least try the chain when it starts opening up stores in 2013. This feedback is consistent with research from May by Kubas Primedia which showed that 61% of consumers across Canada would be "very" or "somewhat" interested in shopping at Target stores when they open in Canada.

"While Walmart seems to have the most to lose, it's unlikely the retailer will suffer significantly unless it changes its core brand positioning, Mr. Satov said. "Whereas Target's positioning is about offering stylish products for less than expected, Walmart is much more focused on offering the lowest prices available on many goods."  
 
 
Liquidation World Shareholders Approve Takeover

Closeout retailer Liquidation World Inc. said last Friday that its shareholders voted overwhelmingly to approve the acquisition of the company by U.S. retailer Big Lots Inc. in a deal worth $1.8 million, plus debt. The company said 97.53% of the votes cast at a shareholders meeting were in favour of the deal. A court hearing to approve the acquisition was to take place this week.

Liquidation World has roughly 90 stores in Canada and more than 1,100 employees.

Big Lots agreed in May to pay 6 cents per share for Liquidation World and take on the company's debt. Big Lots obtains closeout, liquidated and overstock inventory from wholesalers and manufacturers and sells it to customers in a modern retail setting. The retailer currently operates 1,405 stores in 48 U.S. states.

Liquidation World started 25 years ago in Calgary and had recently tried to adopt the Big Lots model. Under CEO Seth Marks, a former Big Lots executive, the company had been remodelling or relocating stores and rebranding them as "LW - Everybody's Outlet Store." The new locations were posting some positive same-store sales earnings this year, while the older outlets were posting significant declines. Ultimately, the company ran out of money to finish the job during the second quarter. It recorded a net loss of $14 million in the quarter ending April 3 and said it defaulted on its primary operating loan.  
    

Best Business Practices

Seven Personality Traits of Top Salespeople  

If you ask an extremely successful salesperson, "What makes you different from the average sales rep?" you will most likely get a less-than-accurate answer, if any answer at all. Frankly, the person may not even know the real answer because most successful salespeople are simply doing what comes naturally.

The following information appeared in the Harvard Business Review and was written by Steve W. Martin who teaches sales strategy at the USC Marshall School of Business. Over the past decade, Mr. Martin has had the privilege of interviewing thousands of top business-to-business salespeople who sell for some of the world's leading companies. He has also administered personality tests to 1,000 of them. The responses from these interviews have been classified into top performers, average performers, and below average performers' categories. The test results from top performers were then compared against average and below average performers. The findings indicate that key personality traits directly influence top performers' selling style and ultimately their success.

Below, you will find the main key personality attributes of top salespeople and the impact of the trait on their selling style.

1. Modesty. Contrary to conventional stereotypes that successful salespeople are pushy and egotistical, 91% of top salespeople had medium to high scores of modesty and humility. Furthermore, the results suggest that ostentatious salespeople who are full of bravado alienate far more customers than they win over.

Selling Style Impact: Team Orientation. As opposed to establishing themselves as the focal point of the purchase decision, top salespeople position the team (presales technical engineers, consulting, and management) that will help them win the account as the centerpiece.

2. Conscientiousness. 85% of top salespeople had high levels of conscientiousness, whereby they could be described as having a strong sense of duty and being responsible and reliable. These salespeople take their jobs very seriously and feel deeply responsible for the results.

Selling Style Impact: Account Control. The worst position for salespeople to be in is to have relinquished account control and to be operating at the direction of the customer, or worse yet, a competitor. Conversely, top salespeople take command of the sales cycle process in order to control their own destiny.

3. Achievement Orientation. 84% of the top performers tested scored very high in achievement orientation. They are fixated on achieving goals and continuously measure their performance in comparison to their goals.

Selling Style Impact: Political Orientation. During sales cycles, top sales performers seek to understand the politics of customer decision-making. Their goal orientation instinctively drives them to meet with key decision-makers. Therefore, they strategize about the people they are selling to and how the products they're selling fit into the organization instead of focusing on the functionality of the products themselves.

4. Curiosity. Curiosity can be described as a person's hunger for knowledge and information. 82% of top salespeople scored extremely high curiosity levels. Top salespeople are naturally more curious than their lesser performing counterparts.

Selling Style Impact: Inquisitiveness. A high level of inquisitiveness correlates to an active presence during sales calls. An active presence drives the salesperson to ask customers difficult and uncomfortable questions in order to close gaps in information. Top salespeople want to know if they can win the business, and they want to know the truth as soon as possible.

5. Lack of Gregariousness. One of the most surprising differences between top salespeople and those ranking in the bottom one-third of performance is their level of gregariousness (preference for being with people and friendliness). Overall, top performers averaged 30% lower gregariousness than below average performers.

Selling Style Impact: Dominance. Dominance is the ability to gain the willing obedience of customers such that the salesperson's recommendations and advice are followed. The results indicate that overly friendly salespeople are too close to their customers and have difficulty establishing dominance.

6. Lack of Discouragement. Less than 10% of top salespeople were classified as having high levels of discouragement and being frequently overwhelmed with sadness. Conversely, 90% were categorized as experiencing infrequent or only occasional sadness.

Selling Style Impact: Competitiveness. In casual surveys conducted throughout the years, a very high percentage of top performers played organized sports in high school. There seems to be a correlation between sports and sales success as top performers are able to handle emotional disappointments, bounce back from losses, and mentally prepare themselves for the next opportunity to compete.

7. Lack of Self-Consciousness. Self-consciousness is the measurement of how easily someone is embarrassed. The by product of a high level of self-consciousness is bashfulness and inhibition. Less than 5% of top performers had high levels of self-consciousness.

Selling Style Impact: Aggressiveness. Top salespeople are comfortable fighting for their cause and are not afraid of rankling customers in the process. They are action-oriented and unafraid to call high in their accounts or courageously cold call new prospects.

Not all salespeople are successful. Given the same sales tools, level of education, and propensity to work, why do some salespeople succeed where others fail? Is one better suited to sell the product because of his or her background? Is one more charming or just luckier? The evidence suggests that the personalities of these truly great salespeople play a critical role in determining their success.
   

Economic News


Executives Upbeat in Bank of Canada's Summer Business Outlook Survey 

Canadian businesses remain positive about the outlook for the next 12 months, despite more modest expectations for U.S. economic growth. Indicators of future sales and investment are moderately higher, and intentions to hire have become more widespread according to the Bank of Canada's Summer Business Outlook Survey released on Monday.

The survey is published each quarter and the results are derived from interviews with about 100 senior executives from across the country. The latest survey took place between May 24 and June 16 and the central bank uses the results to judge business sentiment and help guide decisions on interest rates.

Hiring intentions are becoming "widespread across all regions and sectors," the survey found, with 57% of respondents saying they plan to hire more staff over the next 12 months (up from 50% in April) compared with just 4% that said they expect to cut their work force. That brought the 'balance of opinion' on hiring to its highest level since the survey began, with the most aggressive plans in the services sector.

The survey also showed businesses remain optimistic about sales prospects and investment in machinery and equipment, albeit less so than they did earlier this year. Overall, 49% of companies said they expect sales volume growth to increase over the next 12 months, down from 51% in the previous survey. Companies tied directly or indirectly to the resource sector, many in Western Canada, are the most optimistic about sales prospects, the survey said.

Companies also indicated they will push forward with plans to buy productivity-enhancing machinery and equipment, an encouraging sign since business investment is now crucial to economic growth in Canada with governments and consumers spending less.

The survey found that companies in Central and Eastern Canada are less positive than their counterparts in the West, "given an economic backdrop characterized by softness in U.S. demand, strong competition and a high Canadian dollar." Nonetheless, a number of firms reported that they expect to benefit from recent efforts to reposition their businesses or diversify their markets.

At the same time though, more companies said they would face "some" difficulty meeting orders if they saw a surprise jump in demand. 46% of respondents said capacity pressures are rising, compared with 38% in the last survey. In addition, 25% of those surveyed said they were having trouble finding workers, up from 14% previously.

The survey said 50% (compared to 53% in the last survey) of companies predict that input costs, such as energy and other commodities used to produce their goods, will rise at a faster rate in the next year, while remaining gun-shy about charging more to their customers.

As in the spring survey, the balance of opinion on output prices is lower than that of input prices. Many companies continue to report that they face competitive pressures that limit their ability to pass on cost increases to customers.

80% of companies expect inflation over the bank of Canada's 2% target (but below 3%) over the next two years, compared to 73% of firms before.

The survey found that credit conditions have eased further in the past three months, with the difference between those reporting tighter standards and those reporting easier terms falling to a record low level. As opposed to previous surveys, the easing was also reported to be more widely based across sectors, region and firm size.
 

June Housing Starts Stronger Than Expected 

The seasonally adjusted annual rate of housing starts was 197,400 units in June, according to Canada Mortgage and Housing Corporation (CMHC)'s latest data on Monday. This was up 1.7% from a revised 194,100 units (from 183,600) units in May and was well ahead of consensus forecast of 185,000. April was also revised to 194,100 units from 178,700. Overall, housing starts gained 11.6% quarter to quarter, which was the best three month showing since last fall.

"Housing starts increased in June due to an increase in single and multiple starts in Ontario," said Bob Dugan, chief economist at CMHC. "The revised numbers show that housing starts have been above their trend line since March. However, we expect housing starts to move back towards levels consistent with demographic fundamentals in the near term."

The seasonally adjusted annual rate of urban starts increased by 2.2% to 174,600 units in June from May. Urban single starts were up by 11.1% to 70,900 units, while multiple urban starts decreased by 3.1% to 103,700 units. Urban starts increased by 24.1% in Ontario and by 5.6% in the Atlantic region, while declining 27.6% in B.C., 3.6% in Quebec and 1.2% in the Prairies.

Rural starts were estimated at a seasonally adjusted annual rate of 22,800 units in June, down 2.1% from May.

"The whole package of the three months combined was quite a bit higher than expected," Robert Kavcic, economist with BMO Capital Markets, said Monday. "This is a good sign for the economy. Obviously, construction will be a good contributor of growth in the second quarter. It's a bit fast, maybe a little bit of overbuilding, but that's not a concern yet. We're still well below starts levels seen before the recession, nowhere near what it was like between 2003 and 2008 when we were regularly hitting 200,000-plus." 
       


CIBC: Canadian Housing Market Will Cool

The Canadian housing market is due for a correction, but it will likely be a slow decline rather than a sharp drop,says a report released from the Canadian Imperial Bank of Commerce last Thursday.

"While house prices are likely to adjust as interest rates eventually climb, the national pace of any correction is likely to be gradual," Benjamin Tal, deputy chief economist at CIBC, said in the report.

Mr. Tal does not expect the Canadian housing market to crash abruptly because two triggers that could cause such a drop are absent, namely, "A significant and quick increase in interest rates and a high-risk mortgage market that is sensitive to changes in economic factors that are not in play in Canada."

A recent report from Capital Economics had said that housing in Canada could be overpriced by 25%. With the average price of a home in Canada at $346,950, that would be a reduction of $86,000. Many analysts think this is an unlikely worst-case scenario, but even if home prices dropped by 10%, this would represent  a dip of $34,000 or possibly, house prices might simply stagnate for years before showing any kind of appreciation, Tal said.

Affordability continues to be a major issue for home buyers as average prices have increased every year for more than a decade.
Nationally, new home prices rose 0.4% in May, led by the Toronto market, according to figures released by Statistics Canada last week. Year-over-ear, new home prices in the Toronto area are up 4.3% in May and 1.9% across the country. Price appreciation has been even more pronounced in the existing home market, which continues to see a lack of listings.

In a separate report last Thursday from Royal LePage Real Estate Services, existing home prices saw big year-over-year price increases in the second quarter of 2011, but high house prices are concealing early signs of a moderating market. According to Royal LePage, house prices have likely peaked after a strong six months. The average house price in Canada rose 7.5% in the second quarter from a year earlier to $356,625 for a detached bungalow. The price for a standard two-storey home increased 6.1% to $390,163, while the price for a standard condominium was up 3.5% to $238,064. Bungalows remain popular because of an aging population, but affordability has also made them a default choice for some buyers priced out of the two-storey market. Older bungalows are also a popular choice for some land developers who are buying land value to build new infill housing.

"The market has seen its near-term peak in house price appreciation, and a slower second half of the year is expected. Still, by the end of 2011, the national average home price is expected to be 7.7% higher than it was at the end of 2010," the report said.

CIBC's Mr. Tal noted that a few hot metropolitan markets drove national average prices up by 8.6% in May from a year ago. If you were to exclude Vancouver and Toronto, prices would have risen only by 3.7%. 
  

Canada Adds Jobs in June, Unemployment Rate Holds

Statistics Canada reported last Friday that employment in June was up 0.2% from May, as employers added 28,000 jobs during the month and the unemployment rate stayed at 7.4% as the number of people participating in the labour market increased.

June's numbers were double what economists were expecting and employment now stands 1.4% higher than a year ago.

Employment was up in transportation, a sector that has suffered in recent months because of supply-chain disruptions linked to the Japanese earthquake, and in warehousing, while jobs were lost in the professional, scientific and technical services sectors. Most other industries saw little change.

Construction employment was up 0.2% from May and 3.2% year-over-year. Manufacturing employment grew by 0.3% in June and is up 1.7% from a year ago. The number of people working in retail and wholesale trade was down 0.1% in June from May and is 1.3% lower than in June 2010.

The labour force increased by 42,000, a sign that usually indicates people are optimistic about the economy's prospects. In another positive sign, job gains occurred in both the private sector and the public sector, although it is expected that public sector hiring will likely start to taper off as governments start to make budget cuts. In June, private sector employment increased by 21,900 positions from May, and was 1.5% higher than in June 2010. Self-employment was down 44,000 (-1.6%) in June from May and down 0.3% from June 2010. Public sector employment grew by 1.4% or 54,000 jobs from May and is up 2.5% from June 2010.

In June, more than 21,000 part-time jobs were created, compared with just 7,300 full-time positions. However, over the past 12 months, growth in full-time has contributed 205,000 of the 238,000 increase in overall employment.

Much of the job gains in June were among women aged 25 to 54, while it held steady among other demographic groups.

For the month, employment increased in Ontario, Alberta and Nova Scotia and saw loses in Quebec and Newfoundland & Labrador, while employment was little changed in the other provinces.   
   

Latest U.S. Job Report Disappoints 

U.S. non-farm payrolls rose only 18,000 in June, the weakest showing since September, the Labor Department reported last Friday, well below economists' expectations for a 90,000 rise. The U.S. unemployment rate climbed to a six month high of 9.2% in June, from 9.1% in May, even as job seekers left the labour force in droves. The government also revised April and May payrolls to show 44,000 fewer jobs created than previously reported.

The private sector added 57,000 jobs in June, accounting for all the jobs created, while government employment decreased 39,000. It was the eighth straight month that municipalities and state governments cut jobs in order to deal with fiscal budgets.

Weakness was widespread, though factory payrolls rebounded by 6,000 after contracting in May for the first time in seven months, as motor-vehicle production picked up. Construction employment fell 9,000 in June after declining 4,000 in May.

Average hourly earnings slipped a cent, evidence that wage-driven inflation is not at risk.

Paul Ashworth, chief U.S. economist at Capital Economics: "With commodity prices in retreat and the Japan-related disruptions easing, we do still expect GDP growth and consequently employment growth to rebound a little in the second half of the year. But judging by this report, that rebound hasn't started yet." 
 

 

 CHHMA Events For 2011

Soiree Karting/Go Karting Night
Thursday, September 1
Circuit ICAR, Mirabel, Quebec

Industry Memorial Golf Classic
Tuesday, September 27
Blue Springs Golf Club, Acton, Ontario

Industry Cocktail
Tuesday, November 29
Casino de Montreal, Montreal, Quebec

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

Canadian Hardware & Housewares Manufacturers Association | 1335 Morningside Ave., Suite 101, Scarborough, ON M1B 5M4
Telephone: (416) 282-0022   Email: pwinter@chhma.ca