The Impact of Lowe’s $3.2 Billion Deal on Independents

U.S. home renovation chain Lowe’s announced a $3.2-billion friendly bid last month to acquire RONA, a Canadian company that operates a mixture of company-owned and independent dealers under multiple banners.

In the wake of this announcement, there has been a flurry of articles, editorials, and news stories describing the reaction from politicians, labor unions, and business analysts, but we have yet to see any commentary from independent businesses.

RONA and Independents

RONA was formed in 1939 when a group of independent hardware stores band together to combat a corporate monopoly that threatened its supply chain. Today, RONA operates more than 500 corporate stores but also serves 276 RONA independent dealers and 200 TruServ Canada dealers from 8 distribution centres.

In the 20+ TV and print news pieces we have gone through, there has been almost no mention of these independent dealers. And when they were mentioned, what struck us most was that there were no mainstream words available to describe them. The concept of a Buying Group model where independent dealers share purchasing (and sometimes marketing) power is completely foreign to the press and their audience. If mentioned at all, dealers were referred to as “franchises” or “small formats”.

There has also been no mention of Lowe’s failed Australian venture and the impact it had on independent businesses in that country. In January, Woolworth’s announced that after losing $600 million they were ending their joint venture deal with Lowe’s. In addition to the 7,000+ employees likely to lose their jobs, the failed venture had a significant impact on the Australian independents. The initial venture disrupted the existing supply chain, and the net result of its failure means that the remaining independents are at the mercy of a single, stronger corporate competitor who has significant control of distribution channels.

Not All Doom And Gloom for Independents

Lowe’s has pledged to maintain their support and promised to introduce new product lines that will create new opportunities for the independents. It is just ironic that the independent dealers who belong to the RONA group find themselves purchasing from the same corporate entity that they were competing against in 2015.

We need to build awareness that a viable model for independent businesses exists. We need to make the terms “Buying Groups” and “Purchasing Cooperatives” into the vocabulary of business analysts. We need to celebrate the role of the members of these groups as job creators and economic stimulants. And we need to look at the impact corporate consolidation has on the ecosystem of independents and their groups.

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LBMX offers a business-to-business marketplace platform, helping independent businesses, their Buying Groups, and suppliers buy better and sell more. Its Private Group Marketplace for Groups has transformed billing and ordering, rebate management, real-time analytics, e-commerce and product information management across the building materials, HVAC, plumbing, sporting goods, industrial supply, manufacturing, and agricultural industries. Its LBMX Supply Cloud platform allows suppliers to look at their industrial distribution customers through one lens, offering full EDI, PIM, Analytics and Payments.