Robert Dutton figures he's pretty handy as a do-it-yourselfer, but he admits to being a bit rusty. Mr. Dutton has been preoccupied with building a company - Rona Inc., the largest Canadian-owned home improvement retailer. The 56-year-old CEO has spent a lifetime in hardware, including 34 years with Rona, from the time it was a Quebec-centred buying group. Today, he's running a national company in a rapidly changing market, facing pressure from U.S.-based Lowe's and Home Depot. But Rona is on the offensive, aggressively blanketing Canada with a variety of formats and store sizes - and there still is the United States to consider.
Was your family in the business?
My father opened a very small hardware store on the north shore of Montreal in 1959. It was my playground and nursery. The hardware business is still my life 52 years later. It is in my blood.
Was it always the plan to join Rona?
After university, I was supposed to return to work in my father's store. At the time, I was very, very shy and I couldn't imagine working for another company. But my parents said 'Robert, we don't have a lot of money to pay you.' Even so, I had no confidence in myself and started working with my father. The first day, he took me to a Rona dealers' meeting and showed me off - 'This is my son back from university.' I shook the hand of the Rona president. A couple of days later, the president called and said he wanted to see me.
When you are shy, it is hard to say no, and so I went to meet him. I told him I was going to be my father's successor, but he pointed out the store was very small. 'Come to us for two years,' he said. 'We have formed a marketing department; we want to be more of a sales organization.'
I was so shy, I couldn't say no. I said, 'Okay, two years.' It's now 34 years. [The family store was later sold to an independent Rona dealer.]
What happened?
I fell in love with the people there and the 500 dealer-entrepreneurs. Rona was only in Quebec then, but very dynamic. The dealers faced challenges from Canadian Tire, Beaver Lumber and other players. 'We want to keep our market and we want to grow,' the dealers said. That spirit completely changed me. I grew up.
In six months, I overcame my shyness and felt comfortable. My boss said: 'Your work is very good.' And I thought, 'Oh, I can be good, after all.' After a year, they said I was now head of marketing, and they were grouping all their dealer services together - the merchandising team, retail pricing, market studies. They asked: 'Can you build that department?'
At 23, how did it feel telling older dealers what to do?
The fathers were in their 50s but a lot of their children were coming into the businesses. I had grown up in a hardware store and I knew what they were talking about. It was not my university degree that helped, but my experience with my family's business.
I knew the business and products - if you talked about a Black & Decker drill by its stock-keeping number, I knew what it was - and the price. When there was a family dispute at a dealer, I agreed to talk to the sons. And when they complained about their fathers, I would talk to the older people. I built my way because I understood the reality.
Was this recent recession your toughest test?
It's a big test because it's not a simple recession - there has been a break from the past. But when I came in as president in the early 1990s, there was also a recession. There was a big problem with dealer loyalty, with union grievances at our distribution centre. The GST was coming in, and all the customers were nervous. Big-box stores were on their way.
Dealers who sat on our board said: 'We are your customers and we want the best price but we are also shareholders - after 50 years, we finally want a return on our investment.' Maybe because I was so young, I accepted this mandate. I worked hard with my team to get Rona in good shape - profitable and efficient.
This time, the recession is really not finished, and there is a big change in customers, with Baby Boomers there, but also Generations X and Y. We have to remain very close to our customers. If we have a Rona store in a market, we have to be the leader.
How is the industry changing?
Fifty-two per cent of the [home improvement]market is still in the hands of independent dealers. But surveys show 70 per cent of independent retailers plan to leave the business in the next 10 years because they lack succession. That creates lots of opportunity for our own dealers to grow and expand their own businesses.
Also, the box store is an old concept. It started in 1979 and the demographics have changed. We have to adapt it to the new reality; people want the best price, but they are searching for service too. They want a solution. And there is the strong reality of eco-products, which are not just a fad.
You are going to give a speech in Toronto about global business - but Rona is not global.
Not really, but I read that in five years, 70 per cent of the retail stores in Canada are going to be owned by Americans. That is a big concern for me. What will happen to our manufacturing if all the retail decisions are made from the U.S.? Rona is a strong supporter of Canadian companies and we create jobs in Canada. And we've proven, along with other Canadian companies like Forzani, Loblaw and Sobeys, that we can compete.
Don't the U.S. chains have immense buying power?
Whatever advantage they have, they give to the shareholders, not to the customers.
They have also forced us to look at how we negotiate with the big global suppliers. We have gone with a buying group called Arena with 16 other retailers around the world. We put this buying power together to deal with big suppliers, like Black & Decker and GE. In total, we have $40-billion of purchasing power, and we can negotiate well at the right price.
The other factor is we know our customers, and we can adapt our stores to their local reality.
Are you going after the U.S. market?
We will look in the U.S., but we will start small. At first, we will not make a big move into retail, but we see opportunities in consolidation on the commercial side. We have some people looking for distributors [to buy] just as we have a group in Canada.
But hasn't everybody said Lowe's will eat your lunch?
I don't take care of my competitors - I take care of my customers. I don't know Lowe's agenda. I have my plan - we have a portfolio of banners and formats adapted to our market. We created a lot of surprises in the past, and we are not finished.
When will you retire?
I have more stuff to do. I want to develop strategies with the young people in our organization. I am still single - this is my passion and my life. I am a big dreamer. I want to prove that in Canada we can have strong retailers.
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Robert Dutton
Title: president and CEO, Rona Inc., Boucherville, Que.
Born: Montreal's North Shore
Education: Business degree, Montreal's Ecole des hautes etudes commerciales
Career highlights:
Joined Rona out of school in 1977.
Between 1977 and 1990, held positions in marketing and cllient services.
From 1990 to 1992, vice-president and chief operating officer.
1992: promoted to president.