Rona survived the recession by adjusting its offering to the new frugality of shoppers, the CEO of the home hardware and renovations company said Tuesday.
“We quickly reacted and we will overcome this difficult period with success, even if it wasn’t without pain,” Robert Dutton said in a speech to the Montreal Board of Trade.
Like those who lived through the Great Depression, today’s consumers are more careful about their spending, he said.
A 2010 CROP survey found that 67% of Canadians planned to focus on reducing their expenses, compared with 57% five years earlier.
“The recession was a sort of call to order for the consumer, but not fully the cause of the profound changes we have faced.”
They now seek great prices, but are not willing to sacrifice quality or style. And they are socially conscious and concerned about health, the environment and the social consequences of their purchases.
Consumers have also used the internet to arm themselves with information about prices and products to make better choices. And retailers have been forced to adjust.
Unlike some rivals, Rona offers a variety of store sizes, concepts and brands. Its private label products now represent 24% of sales, up from 15% five years ago, Dutton said.
It also offers more than 1,700 certified products, including 461 Rona Eco-brand options.
Still, it hasn’t fully weathered the economic storm and growing competition from U.S. chains Home Depot and Lowe’s.
It missed expectations in November as sales fell slightly amid waning consumer confidence.
Overall sales slipped 0.5% and sales at stores open at least a year fell 2.25%. The lower same-store sales was due to a 0.2% decrease in retail sales and a 1.7% decrease in distribution segment sales.
Dutton had warned the economic recovery would be slower than previously anticipated and would delay the achievement of its financial objectives.
The company is scheduled to release its fourth-quarter and full-year results Feb. 24.
Analysts expect its quarterly adjusted profits will fall 9% on $1.13 billion of revenues. For the year, it is expected to report $4.8 billion in revenues, compared $4.68 billion in 2009.
Profits are expected to surge by 10% next year.
