RONA | Towards a price reduction strategy?

RONA goes into offensive mode. Obviously determined to stand out from its competitors, the company which has carried out layoffs in recent months is in the process of implementing a strategy of lowering prices on many of its products, confirmed to The Press several merchants interviewed.

Another change: Réno-Dépôt stores could well disappear from the Quebec landscape, believes the president of the Quebec Hardware and Construction Materials Association (AQMAT), Richard Darveau.

After recently announcing the conversion of its Hull branch into RONA+, the company says it is sure that this change “will pave the way for the upcoming arrival of this new brand in Quebec.”

Regarding price cuts, “this is a strategy that will be tested in the coming weeks”. “They will start with a limited number of stores and it will affect all product lines,” he told The Press a RONA affiliated merchant who owns a few stores. The five RONA hardware store owners we spoke to all confirmed the same information, without wanting their identities revealed for fear of reprisals from the company.

“RONA wants to become competitive,” added another merchant. Some 28,000 items could thus suffer a price drop. At the store, The Press was able to note that, for the moment, the strategy has not been revealed in broad daylight. No sign promoting it. An employee on the floor, however, informed us that the declines were gradually starting to appear. She notably gave the example of a sink costing $309, now listed at $199.

On the head office side, we refused to comment on the subject. “Because this is competitive and sensitive information, we will not comment,” RONA’s communications department responded by email. We constantly test different pricing strategies across our network in order to always better serve our customers while ensuring the long-term health of the organization. »

“It’s certain that when there is stock to be released, you have to liquidate it,” mentions Richard Darveau, when asked about a possible generalized price drop in the industry. Stocks have piled up. »

While the pandemic years have allowed hardware stores and renovation centers to do great business, consumers – particularly due to inflation – are reducing their spending and settling for more modest work, according to an analysis of market trends carried out by Soumission Rénovation, which forms the link between clients and contractors.

The year 2023 is characterized by a significant drop of 27% in the average value of projects compared to 2022. This decrease is marked by a growing preference for work costing less than $10,000, while large-scale projects of over $50,000 saw a notable decrease.

Extract from the analysis

The number of large projects increased from 3289 in 2022 to 2298 in 2023.

“High interest rates have a direct influence on the popularity of projects requiring substantial borrowing. Small-scale projects, paid for in cash or with a modest loan, continue to gain in attractiveness. »

Richard Darveau, however, believes that sales will pick up. “Every week since December, there has not been a city or government that has not announced measures to stimulate building construction,” he observes.

What future for Réno-Dépôt?

If sales start to rise again, the number of Réno-Dépôt stores could show a downward trend. In November 2022, the Lowe’s renovation chain announced the sale of all its Canadian activities, including the RONA and Réno-Dépôt brands, to the New York private equity firm Sycamore Partners, for a cash sum of US 400 million and a deferred consideration calculated on future return.

Since then, RONA has begun converting its fifty Lowe’s stores located outside Quebec into RONA+.

And now the movement seems to have reached La Belle Province since the company announced a first change of brand from Reno-Dépôt to RONA+ for its Hull store.

“The conversions to the RONA+ brand that took place in other provinces of Canada have had very positive impacts on store performance. We are sure that this pilot project at the Réno-Dépôt store in Hull will have positive results and will pave the way for the upcoming arrival of this new brand in Quebec,” the company indicated in an official statement.

The company describes RONA+ as an “enhanced” hardware experience. “RONA+ will offer amateur renovators and decorators, as well as professional customers, endless possibilities, an incredible range of products, thousands of low prices and expert in-store service. »

Réno-Dépôt currently has 20 stores in Quebec. For AQMAT, this decision undoubtedly illustrates a desire for standardization. “The four letters RONA are really more prominent since the New York group [Sycamore] got his hands on the company, he emphasizes. They had to get rid of the word Lowe’s. The word RONA is much more present in the rest of Canada than since the Lowe’s years. While we’re at it, it’s a bit like when you start renovating, why keep Réno-Dépôt in Quebec? »

Is this a good strategy? “It makes communications easier. You have only one brand image to convey, it is bilingual. It seems logical to me that everything is integrated under the four letters, from coast to coast. »

Job losses

Remember also that RONA recently announced the elimination of 180 jobs at the Boucherville head office, in stores and at the Terrebonne distribution center, a facility which will cease operations in March 2024. These layoffs are in addition to the 275 positions eliminated in Quebec seven months ago. Elsewhere in Canada, office and store workers also lost their livelihoods, for a total of 120.

RONA in brief

  • Company founded 85 years ago
  • Owner: Sycamore Partners, an American company
  • Brands: RONA, RONA+, Réno-Dépôt and Dick’s Lumber
  • Total number of stores: 425 (corporate and affiliated)
  • Number of employees: 22,000
  • Head office: Boucherville

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