RONA's turnaround case study

E Change font size CASE | RONAs Turnaround RONA, the 500-store national chain of hardware, garden, and home-renovation centres, had not seen an improvement in same-store sales in several years. A poorly managed expansion plan had resulted in five consecutive years of declining revenues, even as the larger market grew. In 2013 a new CEO joined the team. Robert Sawyer soon turned things around. Although Sawyer never attended university, he seemed destined for a career in retail. At 14, he delivered beer and groceries on his bike for a corner store in Montreal, where he grew up. He started working for Steinberg's catalogue distribution business at age 16, and by 19, he was foreman of one of its warehouses. He moved on to Metro in 1979, as director of a fruit and vegetable warehouse, and rose through the ranks of the Montreal-based grocer. Those who have worked with him view him as very direct and demanding "With him, you always know where you are headed. There are no grey zones: It's either white or it's black," says Christian Bourbonnire, Metro's first vice-president, Quebec division. "He is demanding to the extreme." In approaching the issues facing RONA, Sawyer took the simple path. Under his leadership, the company cut 375 administrative positions, closed 11 unprofitable stores, sold most of its commercial and professional market division, shaved $110 million from expenses, and developed separate business plans for the four divisions. Sawyer took over just as the job and housing markets were slowing "If you don't know where to cut, I'm giving you two weeks," he told his new team. But it wasn't all about cutting costs. Sawyer also searched for opportunities to invest in that would help RONA achieve some wins. He focused on underperforming assets in Quebec, as well as the poorly executed integration of Totem Building Supplies in Calgary. The real focus has been on Rno-Dpt, one of the company's banners in Quebec, which expanded its seasonal merchandise and put a greater emphasis on big-ticket, high-end products. Even parking spaces were widened to better accommodate trucks driven by contractors-Reno-Dpt's primary customers. Two ears after taking the helm at RONA, Sawyer was named Top Turnaround CEO of the Year by Canadian Business magazine. In 2016, Lowe's Canada took control of RONA in a friendly takeover bid. However, Lowe's soon began consolidating some of those locations with Lowe's stores to streamline operations. Current management is struggling to find ways to catch up with do-it-yourself giant Home Depot, whose stores on average generate almost twice as much in sales as Lowe's locations do. DISCUSSION QUESTIONS 1. How was Sawyer a strong leader in helping RONA's recovery? 2. What areas of management do you think Sawyer emphasized in his attempt to re-establish RONA as a leader in home improvement products? 3. What are the challenges for a new CEO when trying to ensure a company such as Lowe's continues to stay successful