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The Low Price of Success


Bargain-hunters turn hardware discounter into fast-growing 13-store chain.


FRANCOIS SHALOM, The Gazette

Saturday, June 1st 2002


Finally, an indisputably true slogan. Nobody beats our prices, blares Matériaux à Bas Prix - Bargain Building Materials - and they ain't kidding.

 

It's tough to undercut a 9-cent electric switch wall-plate. Or an 18-volt electric drill for $39.95. Or a gallon of latex interior paint for $7.99. Never mind that the paint is recycled - the unused portion of paint returned by customers to a company specially set up on recycle. Never mind that the drill is a Tomak (no, neither does anyone else. Suffice to say it's made in China.) And never mind that one of the functions of an $89.99, 4-in-1 cordless drill - also a Tomak - is described on the garish yellow packaging as "a flashhight". The important thing are those 9-cent, $8.99, $39.95, or $89.95 price stickers.

 

At Rona, Réno-Dépot or Home Depot, "you'll pay three times that," Christian Richer beamed. The pony-tailed founder of hardware and home-renovation firm Matériaux à Bas Prix is ambitious, but also realistic, and does not pretend he will compete against the Big Three in Quebec. In fact, Matériaux à Bas Prix recently moved its nominal head office from Lachute - behind the company's original store next to a field - to Rivière-du-Loup. Why? "Because me and my family moved there," explained Richer. "Ten feet from the river. Unbeatable view."

 

Fed up with the never-ending hours the antique business required, Richer carved out his niche in the super-low-price market, and has never deviated from that. He changed slowly and gradually, maybe, but never deviated. The 47-year-old former antique dealer and only shareholder of the company he founded in 1985 is on a tear these days. He now employs about 200 and has just opened his 12th store in Laval. The 13th will follow soon, in Beauharnois on June 13. "When we started, about two-thirds of what we sold was irregular, imperfect materials," said Richer, as he handled a 4-by-8-foot irregular wafer board, at $9.49, about half the price of a comparable sheet Rona or Home-Depot. "Now we're running about one-third imperfect, and the rest of first quality, marked with a yellow tag." A good, and revolving, portion of what he sells is occasionals, items from a surplus shipment of products the manufaturer or distributor will unload at discount. "But when it's gone, that's it, I won't get any more," Richer said. And all sales are final. Guarantees are honoured, but there are no refunds under any circumstances. Richer said his crowd is the do-it-yourselfer doing general work, "not the professional contractor or any thing like that. And we don't sell toasters or barbecues," he noted.

 

Richer pointed proudly to a row of doors, some of them at $12.95 with an entire hole punched out, others brand new at 38$, or in-between doors bearing a barely visible scratch. "People have to see this kind of thing to see if it meets their needs. If they want a door for their tool shed or something, this ($12.95 door) might be just the ticket".

 

Richer must be doing something right, growing by 50 per cent a year in the last two years. Sales now are between $30 million and $35 million a year, up from $18 million two years ago. The mini-chain is also reported to be the biggest seller of laminated floor in Quebec. That claim was not immediately verifiable - unless you accept the extensive market research conducted by Richard Martin, 30, and his companion, Cathy Morrissette, a 26-year-old teacher expecting their first child. The couple was at the Laval outlet this week, and loaded up a cartful of packages of Castorama wood coloured laminated-flooring sheets measuring 1.29 metres by 19.5 centimetres, with each package covering more than 24 square feet. "These packages cost $21.59 each here, the least we've seen anywhere," said Morrissette, "and we've been all over the place, starting at Lachenaie." "The quality is about the same, as far as I can see", Martin added.

 

Stéphane Joly also fit Richer's weekend-handyman customer-type to a T. The 37-year-old technical director for an office-equipment company was also shopping on a weeknight and purchased one of the $39.95 Tomak drills plus a $20 battery, on the strong recommendation of the cashier. "I just do very occasional work around the house. Plus my brother bought one last week, and he told me it gets the job done. That's all I want." Richer said "we know we're very, very little by comparison. But I figure we're 50th in size in Canada. After the 12 big players in business, you start getting down here."

 

And having just won a battle of injunctions against Rona, which tried to make him cease and desist in his campaigns comparing prices item by item, Richer rails against the notion that the arrival of the big-box hardware retailers was ever going to spark a price war, as was predicted by many journalists and analysts.

 

"They go into a region and attack the specific, local competition and drives the small guys out. That's why there's no difference in price among the big guys." In keeping with the no-frills concept, Richer says all the stores were bought from bankruptcies - and that he intends to keep opening about two stores a year.

 

Is he profitable?

"Very."

How very?

"Small margins, but lots of sales. Very profitable."

 

Some price comparisons

 

Paint

MABP : 3.78 litres of interior latex : $7.99

Réno-Dépot: 3.78 litres of Sico interior latex : $36.25

 

Hand Shears

MABP: set of three, imported from China by Brico Tool : $12.99

Réno-Dépot: ranged from Friskars hand pruner as $6.08 to a deluxe Gardena Profi at $29.88

 

7.5-metre tape measure

MABP : indeterminate brand : $4.98

Réno-Dépot: Tool Tech : $8.31

 

Globe lantern-post glass fixtures

MABP : $7.99 to $35.99. Smaller Marina fixture, $3.99.

Réno-Dépot: Average price of $13.98. Same Marina fixture : $18.42

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