Richelieu Hardware (TSX:RCH) is the main distributor, importer, and manufacturer of specialized hardware and related products in Canada. With 84 distribution centres, including two manufacturing plants, Richelieu is an industry leader that serves markets from coast to coast.
Richelieu’s extensive client base of more than 90,000 active customers is served through 41 sales locations across Canada, 42 sales locations across the United States, and two manufacturing plants in Canada. Of this total, approximately 74,700 customers are manufacturers of kitchen and bathroom cabinets, furniture, doors, and windows manufacturers, or residential and commercial woodworkers, which accounts for approximately 83% of Richelieu’s total sales.
The retail market accounts for the remaining 17% of Richelieu’s sales. In fiscal 2020, 27% of Richelieu’s total sales originated from Eastern Canada, 21% from Ontario, 17% from Western Canada, and 35% from the United States or abroad.
Intelligent acquisitions strategy
The market position now occupied by Richelieu is mainly due to the aggressive acquisition program undertaken since 1987. Capitalizing on significant fragmentation in the specialty hardware industry, Richelieu has completed, as of today, 71 strategic acquisitions at a total cost of over $305 million.
The company’s acquisition program has enabled Richelieu to successfully expand the breadth of the company’s product assortment, diversify distribution activities geographically, reach a broader customer base and gain access to new sources of supply from leading manufacturers worldwide. The company has also consolidated purchasing power with respect to the supply and shipping of products.
Diverse customer base
Richelieu’s customer base includes kitchen and bath cabinets, furniture, doors, and windows and commercial and residential cabinet manufacturers, residential and commercial woodworkers, and hardware retailers, including renovation superstores. In serving such markets, Richelieu continuously monitors the company’s offered product line, so as to emphasize state‑of‑the‑art products and to eliminate unprofitable, slow-moving product lines.
Richelieu’s principal strength lies in the company’s ability to introduce new products to the market, which allows it to adequately respond to customer needs. From a distribution standpoint, Richelieu’s order processing system enables it to ship customer orders in a timely and efficient manner. Items are normally stocked in the company’s warehouse locations according to historical demand patterns. Inventory records are computerized so that any order may be delivered from the warehouse located closest to the customer.
Efficient supply chain network
Inventories are constantly adjusted in response to changes in demand. In order to minimize delivery time, Richelieu engages the services of various independent transportation companies to deliver large bulk order shipments to the company’s largest customers. For smaller orders, Richelieu has delivery arrangements with various independent courier companies that provide it with preferential shipping rates established on the basis of the volume of goods shipped annually. These arrangements enable Richelieu to avoid the higher costs of running the company’s own transportation system, while retaining full control and flexibility in the management of a delivery network.
Richelieu is focused on creating value for shareholders and contributing to the growth and success of the company’s customers. It accomplishes this objective while promoting a corporate culture centered on quality of service and results, partnership and intrapreneurship. This should serve it well.