B4| REPORTONBUSINESS O THEGLOBEANDMAIL| WEDNESDAY,NOVEMBER6,2019
OPINION&ANALYSIS
DILBERTA
lmost four years after U.S.
home-improvement giant
Lowe’s Cos. Inc. swallowed
Quebec-based Rona Inc., the dust
has yet to settle on the $3.2-billion
deal that rocked the province’s
hardware retailing sector and led
to calls for new measures to block
foreign takeovers.
North Carolina-based Lowe’s
has been eroding what it took Ro-
na almost eight decades to build,
specifically an iconic brand in
Quebec, raising questions about
whether the American retailer is
repeating many of same mistakes
Target Corp. made when it en-
tered Canada with a poor under-
standing of the cultural differenc-
es and competitive dynamics
north of the border.
Signs of trouble have been
steadily building since 2018, after
Lowe’s took a US$952-million
($1.3-billion) impairment charge
related to its Canadian operations
and shut 31 stores in this country.
In August, Lowe’s chief executive
Marvin Ellison revealed that
same-store sales in Canada fell in
the second quarter, causing indi-
gestion among Lowe’s U.S. share-
holders.
“After a strategic reassessment
of the Canadian business, we de-
cided to make adjustments to the
original long-term integration
strategy,” Mr. Ellison said. “Al-
though we remain confident in
the long-term potential of this
business, this shift in strategy has
temporarily slowed growth.”
The bad news has not stopped
since. Last month, the head of
Lowe’s Canadian division based
in Boucherville, Que., Sylvain
Prud’homme, suddenly an-
nounced his retirement at 55.
Lowe’s did not immediately
name a permanent replacement
for the former grocery-industry
executive, whose experience in
managing networks of both cor-
porate- and dealer-owned storeswas widely seen as an asset as
Lowe’s moved to integrate Rona’s
diverse mix of retail outlets.
Lowe’s subsequently con-
firmed it was transferring 60 ac-
counting jobs in Boucherville to
its U.S. head office, amid rumours
that it will soon outsource its
Canadian information technolo-
gy operations to India. The news
led Quebec Premier François Le-
gault, whose Coalition Avenir
Québec opposed the 2016 take-
over of Rona, to all but put Lowe’s
on his personal blacklist.
“I don’t want to start a series of
boycotts, but I prefer to buy
Québécois at Québécois stores,”
Mr. Legault said, much to the cha-
grin of Rona dealers in the prov-
ince.
Not long ago, Rona was among
an elite club of Quebec retailers
considered to have a special
knack for tugging at the patriotic
heartstrings of its devoted cus-
tomer base in la belle province.
As with filling their prescriptions
at Jean Coutu pharmacies or buy-
ing groceries at Metro, Quebeck-
ers felt a sense of pride by patro-
nizing their neighbourhood Rona
store.
Rona ran into trouble, howev-
er, as it moved to expand acrossCanada. It could not count on the
same brand loyalty as in Quebec
and faced relentless competition
from Home Depot, Home Hard-
ware and Canadian Tire. That
made it a target for Lowe’s, which
had struggled to build a presence
on this side of the border since
entering the Canadian market in
2007.
Lowe’s botched its first take-
over attempt for Rona in 2012, an-
nouncing its offer on the eve of a
provincial election campaign, on-
ly to pull it after the Liberal gov-
ernment of then-premier Jean
Charest vowed to block the deal.
Quebec-based institutional in-
vestors led by the Caisse de dépôt
et placement du Québec then
controlled enough shares in Rona
to block any takeover.
By early 2016, however, the
Caisse welcomed Lowe’s much-
richer $3.2-billion offer with open
arms. Overnight, the purchase
made Lowe’s the No. 2 retailer in
the Canadian home-improve-
ment sector. But Lowe’s had no
experience with a network of
dealer-owners who had long dic-
tated their preferences to head of-
fice rather than the other way
around.
With more than 400 dealer-owned stores of varying size and
regional tastes, Lowe’s attempts
to streamline distribution by cut-
ting product selection went over
poorly. There were media reports
of customers no longer being able
to find what they wanted at their
local Rona store. Reports of the
bond of trust between customers
and Rona being broken has hurt
the brand.
Louis Hébert, a professor at
HEC Montréal business school,
compares Lowe’s experience to
U.S. retailer Target’s ill-fated foray
into this country in 2013. Al-
though there are several differ-
ences – Target took over leases
held by Zellers rather than buying
Zellers outright – both Target and
Lowe’s underestimated the de-
mands of the Canadian consumer
and the higher distribution costs
involved in supplying stores in
lower-density areas. Target
pulled out of Canada in 2015.
“There was no strategic coher-
ence to the Rona acquisition,”
Prof. Hébert said, adding that
Lowe’s was overly optimistic
about its prospects in the Cana-
dian market.
Lowe’s still insists it is in Cana-
da for the long haul. But its share-
holders may decide otherwise.IsLowe’srepeatingTarget’smistakes?
Home-improvement
gianthasbeeneroding
Rona’sreputationsince
acquiringtheQuebec
retailer,andbadnews
justkeepsbuilding
KONRAD
YAKABUSKI
OPINIONALowe’sstoreinBurlington,Ont.,isseenabove.SignsoftroubleforLowe’sCanadianoperationshavebeenbuildingsince2018whenthecompanyreportedaUS$952-millionimpairment
chargerelatedtotheunitandclosed31ofitsstoresinthiscountry.FRED LUM/THE GLOBE AND MAIL
C
reating a diverse work force
is a dilemma and a con-
stant work in progress for
many CEOs.
I am proudly and passionately
part of the movement to pave
the way to inclusion. However
the journey is a difficult one, and
I am discouraged that we are not
making the strides necessary to
realize true balance in our orga-
nizational ecosystems – not only
for women, but also for visible
minorities, the LGBTQ+ commu-
nity, persons with disabilities
and Indigenous peoples.
With HSBC, I have lived and
worked all over the world. The
time I spent in developing mar-
kets brought home to me the ec-
onomic challenges of a lack of
access to education and oppor-
tunities – particularly for wom-
en. I worked in Brazil without
speaking Portuguese and it was
very isolating, so when I say that
I know what it means to be dif-
ferent, I am not talking just as
the (sometimes only) woman in
the room.
This isn’t just another piece of
writing extolling the virtues of a
gender-balanced board – I’m just
as tired of them as you are. It is
time for action.
HSBC Bank Canada has
thrived under a gender-balanced
Board of Directors and Executive
Committee since 2013. We are
evidence that diversity and in-
clusion are both possible and im-
portant. Our discussions around
the boardroom table are rich,
with genuine challenge leading
to stronger decision making. But
it’s not enough to have a gender-
balanced board and leadership.
To thrive in today’s complex, in-
terconnected world, we need all
of our people to bring their di-
verse perspectives, experiences
and talents to work.
So how did we achieve this?
We started at the top and we
put hard, measurable targets in
place. As a leader, either you met
them or you didn’t and you were
held accountable for your re-
sults. That was key to our suc-
cess. And our record has become
a point of pride for both women
and men within the organiza-
tion.
We took time to ensure we
knew exactly what skills and ex-
periences we needed to help us
be successful. We looked for
those skills and experiences in-
stead of specific titles. We insist-
ed on a diverse slate of candi-
dates for every senior role – en-
suring 50 per cent were female.
We found that there was no
shortage of good, qualified can-
didates.
We need buy-in from every
level of the organization so we
devote the resources to ensure
our employees understand what
our values – being open, con-
nected and dependable – mean
to us and how to live them at
work.
Unconscious bias can be justas damaging as overt discrimina-
tion, so we provided uncon-
scious bias and inclusive leader-
ship training – helping leaders
develop the self-awareness to
disrupt their own excluding be-
haviours.
Our diversity and inclusion
council, made up of senior lead-
ers, acts as executive sponsors to
employee resource groups.
These groups create a communi-
ty of support, but they also have
the resources to effect change.
And they are doing a lot to make
our lives richer and to point out
to us when we unknowingly
make things more difficult.
We take the time to under-
stand the experiences of our em-
ployees through surveys, focus
groups and listening sessions –
and make changes when neces-
sary.
To that end, we recently dou-
bled the salary top-up we give to
employees going on parental
leave – available to either parent.
And we are currently reviewing
our other policies to find andcorrect any unintentional biases
that impact our employees.
So I have a request for my fel-
low business leaders: It’s time to
put your money down on wom-
en. As a leader, when you walk
into a room, take a moment to
think about how it feels for that
lone woman at the table. To have
a room full of men stop talking
about last night’s game just be-
cause she walked in. To have
brought her intelligence, skills,
experiences and grit to bear to
help your organization succeed
and still have people wonder if
she’s committed. Be an advocate
for her.
So when you walk into a room
and there are no women there,
ask yourself why. And then go
out into your organization or
your community and find at
least two talented women. Don’t
just mentor them, be a sponsor.
Take the risk with them and help
them get that next big job. You
will be glad that you did. The
payoff is real.
Own your diversity.Enoughtalkaboutdiversity:CorporateCanadaneedstogetacting
SANDRASTUART
OPINIONPresident and CEO of HSBC Bank
Canada. She is the only female CEO
of a major bank in Canada. HSBC
Bank Canada has had a
gender-balanced board of directors
and executive committee since 2013
I have a request for
my fellow business
leaders: It’s time to
put your money
down on women.
As a leader, when
you walk into a
room, take a
moment to think
about how it feels
for that lone woman
at the table.