HGO Merchandiser Spring 2013 by MediaEdge

Michael Knell’s

HGO merchandiser Spring 2013

HomeGoodsOnline.ca

Volume Two, Issue 3

ALIXE MACRAE ON

SEARS CANADA AND THE BROKEN BRAND PROMISE

Art DeFehr:

TWO LIVES, WELL LIVED

TCHFM MARKET VOICES THE MARKET’S NEW NORMAL REV: THE REBIRTH OF A CANADIAN MATTRESS MAKER HomeGoodsOnline.ca

CONTENTS>>> MARKET REVIEW: 20 MARKET’S COMFORTABLE BLING Regular contributor Alixe MacRae reviews the fashion and style found on the floor at this year’s Canadian Home Furnishings Market. She found there was no devil in the details but the details were plenty as were the new product opportunities for retailers in the know and on the prowl for new sales and profits.

26 MARKET’S NEW NORMAL

20 6 FROM THE EDITOR

In this issue, we salute Art DeFehr, a man who has given his all twice in one lifetime, once to the company founded by his father and once to a variety of humanitarian causes that have stirred his passions. Also on the agenda is our review of this year’s Canadian Home Furnishings Market; Alixe MacRae’s take on the future of Sears Canada; and, a look at Canada’s newest mattress manufacturer – Rev Sleep.

PROFILE: 8 ART DEFEHR: TWO LIVES WELL LIVED

32 8

He built Canada’s largest furniture resource, but that wasn’t enough for Art DeFehr. He also devoted himself to a wide range of humanitarian causes, from leading the fight to rescue a devastated Somalia to building a university in Russia. Recently, DeFehr celebrated his 70th birthday and decided to take a step back from the day-to-day management of Palliser Furniture to spend time with his wife Leona and pursue his other interests. It proved a good opportunity to look at his contributions to our industry.

16 ADVERTISERS’ INDEX 4

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Looking at TCHFM from a business perspective, our editor opines while the market may have been lightly attended, independent retailers shopping the show clearly saw the need to floor better-quality goods and continued to move away from imported goods, particularly upholstery.

ASKED: 28 WE MARKET VOICES

For the first time, Home Goods Online conducted “man-on-the-street” interviews in the halls of the International Centre during this year’s Toronto market, asking exhibitors and attendees about their impressions of the only national industry event of its kind in Canada. Here’s a sample of what they had to say.

32 MATTRESSES: DREAMING BIG

Valerie Stranix and her team are building a new Canadian mattress powerhouse whose name, Rev Sleep, is taken from the French word for dream. It is centred on four different brands covering all of the consumers’ most desired and demanded features, benefits and price points.

ON RETAIL: 35 BREAKING THE BRAND PROMISE HGO regular contributor Alixe MacRae notes anyone who reads a newspaper knows Sears Canada isn’t doing well. This former insider points out the once-great retailer has sold off or diluted nearly all the brands that made it a force to be reckoned with. In short, Sears forgot its brand promise to the consumer.

HomeGoodsOnline.ca

FROM THE EDITOR>>>

Living well IN THIS ISSUE WE PROFILE AND SALUTE A MAN WHO HAS GIVEN HIS ALL TWICE IN ONE LIFETIME. ONCE TO THE COMPANY FOUNDED BY HIS FATHER AND ONCE TO A VARIETY OF HUMANITARIAN CAUSES THAT STIRRED HIS PASSION

’VE KNOWN ART DEFEHR FOR THE BETTER PART OF 25

MICHAEL J. KNELL

years. He was one of the first people I met when I joined this industry and was only recently that I began to understand just how much he’s done since graduating from Harvard’s School of Business all those years ago. For many people, building a company is the work of a lifetime. But Art has given a second lifetime’s worth of effort to a variety of humanitarian causes. As a member of the Mennonite Central Committee, he went to Bangladesh in the aftermath of that country’s civil war to direct an agricultural program that is operating today. He then went to Cambodia as part of a team bringing relief supplies to its people after the fall of the Khmer Rouge dictatorship. And how many people in our industry have been named a United Nations High Commission, as Art was to Somalia when no one else wanted the job. And as you will read in our profile a few pages hence, he’s done so much more than that. He truly deserves to be in the Order of Canada and it was more than fitting that the Canadian Home Furnishings Alliance honoured him with the Lifetime Achievement Award in 2012. He tells me that he’s going to take easier now that’s he has reached his 70th birthday. He’s going to spend more time with his wife Leona at their new home in Mexico and stop to play with his grandchildren more often. But I suspect Art’s idea of taking it easy would be the equivalent of embarking on a new career for most other people. I’m proud to call him my friend and am delighted to have the opportunity to share his accomplishments with his colleagues and customers throughout the Canadian furniture industry.

michael j. knell Publisher & Editor mknell@homegoodsonline.ca

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HGO merchandiser SPRING 2013 • VOLUME TWO, ISSUE 3 ISSN 2291-4765

www.HomeGoodsOnline.ca PUBLISHER & EDITOR Michael J. Knell mknell@homegoodsonline.ca MANAGING EDITOR Anthony E. Bengel tony@homegoodsonline.ca CONTRIBUTING EDITORS Alixe MacRae Ashley Newman ART DIRECTOR Samantha Edwards Sam I Am Creative samiamcreative@bell.net IT DIRECTOR Jayme Cousins www.inhouselogic.com websmith@inhouselogic.com PUBLISHED BY Windsor Bay Communications Inc. P.O. Box 3023, 120 Ontario Street Brighton, Ontario K0K 1H0 T: 613.475.4704 F: 613.475.0829 Michael J. Knell, Managing Partner PUBLISHERS OF

HGO This Week Home Goods Online.ca © 2013 Windsor Bay Communications Inc. All rights reserved. Windsor Bay Communications does not accept any responsibility or liability for any mistakes or misprints herein, regardless of whether such errors are the result of negligence, accident or any other cause whatsoever. Reproduction, in whole or in part, of this magazine is strictly forbidden without the prior written permission of the publisher.

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PROFILE>>>

Art DeFehr: two lives well lived HE BUILT CANADA’S LARGEST FURNITURE RESOURCE, BUT THAT WASN’T ENOUGH FOR ART DEFEHR. HE ALSO DEVOTED HIMSELF TO A WIDE RANGE OF HUMANITARIAN CAUSES, FROM LEADING THE FIGHT TO RESCUE A DEVASTATED SOMALIA TO BUILDING A UNIVERSITY IN RUSSIA. BY MICHAEL J. KNELL

 Art DeFehr is seen here in Cambodia sometime in 1980 or 1981. At the time, he was part of the Landbridge Program, which brought relief supplies to the people of war-torn country at the end of the Khmer Rouge dictatorship. “This was probably the most difficult assignment,” he recalls. “We were trying to help nearly a million refugees.”

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RT D E FEHR ESSENTIALLY HAS LIVED T WO PARALLEL

lives, thanks in part to the Federal Bureau of Investigation. The U.S. law enforcement agency was not amused when, as a university student, DeFehr marched in support of the anti-Vietnam War movement and the civil rights efforts of the late Dr. Martin Luther King. The FBI gave him a poor security rating, effectively scuppering his plans to join Canada’s Foreign Service as a diplomat. Instead, DeFehr spent the past 40-plus years leading Palliser Furniture, the family business founded by his father in 1944. Today, Palliser remains Canada’s largest furniture resource, with factories in DeFehr's hometown of Winnipeg and in Mexico and Indonesia. But DeFehr didn't let his dreams of public service die. While he never became a Canadian ambassador, he has led humanitarian efforts around the world, often in the midst of chaos and upheaval, spending as much time over the past several decades on these efforts as on running Palliser. DeFehr, who recently celebrated his 70th birthday, has stepped away from day-to-day duties at Palliser to focus on his other interests and spend more time with his wife, Leona, at their new home in the historic San Miguel de Allende district of Mexico. They continue to maintain their family home in Winnipeg as well as a summer get-away on the shore of the nearby Lake of the Woods. Industry veteran Cary Benson has been named

Art DeFehr in his Winnipeg office.

 Art and Leona DeFehr near their home in historic San Miguel de Allende district of Mexico.

president of Palliser, although DeFehr remains chairman and CEO. Being a successful furniture manufacturer gave him the freedom and the means to pursue his humanitarian interests, he says, while the latter probably made him a better business executive. “Business gave me a sense of reality that my counterparts in humanitarian organizations often did not have,” DeFehr said in an interview with Home Goods Online. “On the other hand, my work with people and places in difficulty always kept my values in perspective. Making money is essential to keeping a business alive, but it really served no other purpose for me. I doubt if that made me a better business person in the eyes of my colleagues and competitors. “While the furniture business allowed for some self-expression, it was limited by the reality of the market and Palliser’s position as a mid-market manufacturer,” he says. “This is one of the reasons why I enjoyed spending about half my life outside the industry taking on assignments in places like Somalia or Cambodia. The furniture business was important in that it provided the financial stability that permitted me to be a free agent in the other half of my life. My friends in the international world cannot believe that I actually run a manufacturing business.” (continued on page 12)

 Art DeFehr (centre) is seen here with his brothers, Dave and Frank in one of the old Winnipeg production facilities sometime in the late 1970s.

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THE CHALLENGES OF FURNITURE

In 2000, Art DeFehr was named Entrepreneur of the Year by Manitoba Business magazine. Here, he is seen on the cover of the magazine’s May 2000 edition.

Palliser built it upholstery factory in Saltillo, Mexico, using the design ideas of well-known modern Mexican architect Luis Barragan. Today, the move to Mexico is studied by M.B.A. students across Canada.

Leading Palliser was never dull, DeFehr says. Challenges of all shapes and sizes presented themselves over the years. He sees furniture as more than a commodity to be made, marketed and sold like so many widgets. It's a creative process. “I’ve always viewed business and furniture as a series of problems to be solved – I enjoyed that. Manufacturing allows for creativity in terms of technique, in applying new technologies, in using global connections to create something. It also allows you to be close to real people who are producing the product.” Although not a designer, he enjoys the design process. “I like to combine design ideas with technology to create solutions that are economical and practical,” DeFehr says, recalling that Palliser pioneered the use of laminates in North America. “We also were the first to deliberately bring ideas and technology from Europe and apply them to the North American market. “Our entry into the leather business is a good example. Most North American manufacturers were reticent to challenge the Italian modern leather when it began arriving in the 1980s and early 1990s. With our Canadian market foundation, which was generally more accepting of modern styling, we were early leaders in modern leather, and that helped us gain placements across North America. It’s also the foundation of our current business.” Another source of pride is the 220 Elm showroom building in downtown High Point. “This was another opportunity to express design ideas in a different way,” DeFehr says. “The building is one of the few that did not get into financial trouble during the recent recession. There is great loyalty to the building. “We also built a factory in Saltillo, Mexico, using the design ideas of well-known modern Mexican architect Luis Barragan. That gives me great personal satisfaction.”

BUILDING AND RESTRUCTURING A COMPANY

Here’s an aerial view of the company’s first-ever presentation at a furniture industry trade show in Winnipeg, circa 1966. At the time, the company was still called A.A. DeFehr Furniture.

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Since 1984, the year DeFehr was named president and CEO, Palliser has seen ups and downs but remained an industry leader. Today, Palliser Furniture Upholstery has annual sales of about $140 million. “To create and operate a financially successful business over time is always an achievement,” he says. “Palliser, its predecessor and its spinoffs, represent a great deal of innovation and creativity in the industry.” In 2006, DeFehr did something that’s practically unheard of in the modern corporate environment. He made Palliser itself smaller, turning what was five operating divisions into five independent companies that had to survive on their own. And surviving they are. Palliser Upholstery, Casana Furniture, DeFehr Furniture, EQ3 and Arconas are all doing well in |their niches. Earlier, Palliser was the first North American furniture company to develop casual oak case goods (for a number of years, it was the category’s largest producer), and the first to operate its own particleboard plant. “We were early participants in Asia, but took a different route in terms of our emphasis,” DeFehr

A life without borders Art DeFehr says his business accomplishments have been deeply satisfying, but the work that fired his soul and imagination sometimes has been found in remote corners of the world, and in the midst of conflict or disaster. “I marched with Martin Luther King and I am very proud of that,” he said in an interview several years ago. A devout Mennonite, the 70-year-old DeFehr has been deeply involved in human rights issues most of his life. As a member of the Mennonite Central Committee, he was the first director of a still-ongoing agricultural restoration and innovation project in Bangladesh, launched immediately after that country’s civil war and a devastating tsunami. DeFehr directed the project from 1972 to 1974. In 1980 and 1981, he was part of the Landbridge Program, which brought relief supplies to the people of Cambodia at the end of the Khmer Rouge dictatorship. “This was probably the most difficult assignment,” he recalls. “We were trying to help nearly a million refugees.” He then served as the United Nations High Commissioner for Refugees to Somalia in 1982 and 1983, directing aid to over 400,000 refugees in a very difficult political environment. During this mission he became friends with Kofi Annan, secretary general of the United Nations from 1997 to 2006. After the fall of Eastern European communism in the early 1990s, DeFehr helped establish an independent business community in Russia, including starting a high-tech farm equipment plant and founding what is now known as LCC International University, a fully accredited English. speaking university in Klaipeda, Lithuania. Both DeFehr and his wife, Leona, serve on its board of directors. For many years he was president of International Development Enterprises, a Canadian organization that provides market-oriented solutions to developmental problems. He continues

to serve on its board of directors. IDE has programs in Bangladesh, India, Nepal, Cambodia, Vietnam and southern Africa. DeFehr also has been active in Habitat for Humanity since its founding, and counts former U.S. President Jimmy Carter among his numerous acquaintances. His work around the world has had an impact on Palliser’s evolution and growth, he says. “We’ve acted globally for the past 40 years,” DeFehr says. Palliser’s market focus always has been North America, but the company has researched ideas, sourced raw materials and manufactured as far afield as Indonesia and Mexico. “And Palliser always has seen itself as a bridge between North America and Europe in terms of styling,” he adds. He says his experiences have deeply affected him as a person, adding, “I believe it also made me sensitive to people issues.” Palliser’s 2,500 employees hail from 80 countries and speak some 40 languages. DeFehr also has been active in the Canadian furniture industry and in the

others to discuss world problems and possible solutions. These days, DeFehr is focused on improving Canada’s immigration policy, and is a booster of the Provincial Nominee Program in Manitoba – “a program that has had dramatic results,” he says. Developed as a cooperative effort by the provincial and federal governments – with strong input from industry – the program fast-tracks potential immigrants who have the skills, education and work experience needed to make an immediate economic contribution to the province or territory that nominates them. Immigration and related issues are important to DeFehr. “Early on, Palliser had programs that allowed a new refugee or immigrant to operate effectively without the English language and prior skills, and our ability to employ thousands of firstgeneration Canadians stands out as a signal achievement,” he says. Palliser has received numerous awards for these efforts, including several for having the best English-in-the-workplace programs.

“I believe it also made me sensitive to people issues.” Palliser’s 2,500 employees hail from 80 countries and speak some 40 languages. business community at large. He was chairman of an initiative to establish a German-style technical university in Canada’s wood products sector. The program was established at the University of British Columbia and is funded by both government and industry. In addition to memberships in the Manitoba Business Council and the Canadian Council of Chief Executives, he has been a member of the World Economic Forum and is still a member of the Trilateral Commission, one of 18 Canadians in that 450-member organization. Founded by David Rockefeller, the commission brings together business people, academics, professionals, government officials and

“This allowed me to blend my international interests with the business, and is the achievement in which I take the greatest personal satisfaction,” DeFehr says. “My grandparents, parents, both daughters, one son-in-law, were all either refugees or immigrants. Of 19 members of my direct lineage – grandparents to grandchildren who live or lived in Canada – only three were born in Canada. The stories of loss, struggle and a new country were what I was raised on. I’ve also had the opportunity to experience it directly through my own children and my work with refugees and other people who did not win the ‘lottery of birth’.”

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Art DeFehr receives the medal designating him an Officer of the Order of Canada from then Governor-General Adrienne Clarkson. He was admitted to the order in 2004.

recalls. “We built our own facility in Indonesia in 1997.” That plant is still operating as a key supplier to EQ3. “Our 1998 decision to go to Mexico to make upholstery rather than to China is now being studied by every MBA student in Canada,” he says. “In light of everything that’s happened in the world since the 2008 recession, it’s a decision that stands up very well.”

A RICHLY REWARDED LIFE The list of accolades and honors bestowed on Art DeFehr is indeed a lengthy one. From the North American furniture industry, he has received the following: 2012: Lifetime Achievement Award from the Canadian Home Furnishings Alliance. 2003: Spirit of Life Award from the National Home Furnishings Industry Chapter of the City of Hope, for contributions to the cancer treatment and research center’s humanitarian goals. 2002: Pillar of the Industry Award from the Independent Home Furnishings Representatives Association.

OTHER HONORS INCLUDE: 2009: Named to the Canadian Manufacturers Hall of Fame. 2001: Lifetime Achievement Award from the Entrepreneur of the Year program of what was then Ernst & Young.

THE FUTURE OF PALLISER AND CANADA’S FURNITURE INDUSTRY DeFehr was active in the discussions that resulted in the original Canada-U.S. Free Trade Agreement, and the North American Free Trade Agreement that followed. He believes free trade was a good idea, but no one could have foreseen what would happen a decade-and-a-half later. “The real issue today is not free trade but globalization – a word that didn’t exist in 1995, and a phenomenon that was not understood in advance and happened too quickly,” he says. “The Canadian furniture industry today is in a difficult situation,” DeFehr says, pointing out that whatever pools of capital existed to support furniture making have been largely exhausted, and there appears to be little interest in rebuilding the industry. “A second problem is that the Canadian furniture industry does not have a stable international financial system or stable terms of trade,” leaving the industry vulnerable to outside forces. “As long as our political masters believe that a resource-based economy should be allowed to find its own level, anyone wanting to build an export-focused Canadian furniture factory is probably being somewhat foolish,” DeFehr says. Canadian manufacturers also face a troubled domestic retail community. “We have a very concentrated retail industry, where the dominate players all have a low-price strategy,” DeFehr says. “That does not make them good candidates for a domestic supply strategy.”

2001: Named Entrepreneur of the Year by Manitoba Business magazine. 2002: Honorary doctorate of laws from the University College of Cape Breton. 1998: Honorary doctorate of laws from his alma mater, the University of Manitoba. 2003: Honorary diploma from Manitoba’s Red River College. 2011: Culture of Service Award from another alma mater, Goshen College. Perhaps the most prestigious award DeFehr has received was his appointment as an Officer of the Order of Canada in 2004, the highest honor that can be bestowed on a Canadian citizen for service to his country and to society at large. In 2011, he was named an Officer of the Order of Manitoba.

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 Art DeFehr is seen here receiving his honorary doctorate of laws from the University College of Cape Breton in Sydney, Nova Scotia in 2002. The college also honored General Romeo Dallaire, (now Senator Romeo Dallaire) former commander of U.N. Forces in Rwanda. Both men were saluted as peacekeepers.

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“To create and operate a financially successful business over time is always an achievement. Palliser, its predecessor and its spinoffs, represent a great deal of innovation and creativity in the industry.” – art defehr Thus, DeFehr doesn’t believe the Canadian furniture industry is likely to produce another mega-player, as it did in the year’s following the initial free-trade agreement, when unfettered access to the U.S. market created a number of manufacturers with volumes over $100 million. Before Palliser restructured in 2006, the company averaged annual sales in the $400 million to $500 million range. In 2012, only two or three other Canadian furniture manufacturers are believed to have annual sales above $100 million. With one or two exceptions, most Canadian furniture makers are either single-factory producers or specialists in a particular product category and are hemmed in by economic and monetary forces beyond their control, DeFehr says. “Palliser is positioned to grow in the years ahead,” he adds. “Our positioning in both Mexico and Canada is unique and allows us to develop different strategies from our competitors. I believe we have an excellent management team in place, and I have to leave it to them to decide what moves are best for the business. “Many of the values important to me are imbedded in the company, and I believe those will survive and be honored by future management.” HGO

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Art DeFehr receiving the Lifetime Achievement Award.

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The Gabrielle bed from Magnussen Home showed off two key detail trends this market: added storage under bed and an upholstered headboard.

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<<<MARKET REVIEW

Market’s comfortable

BLING

IN TERMS OF STYLE, THERE WERE NO DEVILS IN THE DETAILS AT JANUARY’S CANADIAN HOME FURNISHINGS MARKET, AND THE OPPORTUNITIES FOR BOOSTING SALES AND PROFITS ABOUNDED FOR THOSE RETAILERS IN THE KNOW AND ON THE PROWL. ALIXE MACRAE

VEN FOR THOSE WITH TRISKAIDEKAPHOBIA – THE MORBID FEAR OF

the number 13 – this year’s Canadian Home Furnishings Market was fabulous when it came to product. Buyers just had to look for the really good stuff. That may have required a little more walking in the halls of the International Centre, and visiting the shrinking number of outside showrooms, but it was well worth the effort. One of the key elements seen throughout the 300-plus exhibitor presentations was detail – and there was no “devil in the details” this market. The first detail that struck this eye was bling, and lots of it. For example, Ontario-based Elegant Chair Designs showed its new Eagle chair, with its crystal buttons, and a dog bed called Tiger that promises to wow consumers. Other products sporting bling included several from NCA Designs, whose display once again was a show-stopper sporting a slew of accessories — the must-have category for every independent furniture retailer this year. Nail heads were abundant, usually as an understated design element but occasionally as the main attraction. Superstyle, for instance, showed a couple of great nailhead chairs. Several resources also used decorative ribbon fabric as a detail, including Brentwood Classics on one or two new pieces for the Kimberley Seldon collection, and Décor-Rest. Ribbons also added punch to neutral colours. And this was one of the most colourful markets in recent years. Several exhibitors used colour to make the showroom pop. Brentwood Classics was brave enough to feature a pink-and-white zebra sectional. Fashion director Diana Sisto also used Jonathan Adler prints to great effect on a couple of new chairs. Casual dining specialist Acme Chrome did as well. Both achieved stunning results. Also making good use of colour was Décor-Rest’s Cobistyle collection, while NCA showed off a multi-patterned sectional. The lesson for retailers is simple: Don’t be boring! If you must show beige and brown, jazz it up with hot coloured pillows. Palliser took classic designs and made them hot in their Runway collection. And using premium construction techniques didn’t hurt either. As always, Normand Couture showed an unerring sense of colour and style, whatever the product. Who else in Canada has won four Pinnacle Awards from the American Society of Furniture Designers? Quilting also was hot this market. Brentwood Classics used it on velvet, while Superstyle showed it on linen. Speaking of velvet, one of the best examples of its use was seen on an HomeGoodsOnline.ca

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“People bought things that were unique, that were different from what they already have on their floors. This was driven because of the sameness coming out of China. ”

– jason harris, stylus made-to-order sofas

1. This four-seat sofa, the model 2135 from Décor Rest, is another good example of another noticeable market trend that saw neutral upholstery covers pop with the addition of colourful accent cushions. 2. The Eagle chair from Elegant Chair Designs. 3. Traditional styling is making a comeback, as seen here in the Model 6300 sofa from Décor Rest, albeit with today’s condo-inspired sizing.

HGO merchandiser

amazing new sofabed from Simmons Upholstery Canada, Superstyle’s younger sister. Upholstered headboards continued to have a strong presence as this year’s market. Elte, perhaps one of Toronto’s better-known destination retailers and one that’s almost always ahead of the trend curve, has had them on the floor for 10 years or more. The one thing retailers need to understand about this category: There has to be a range of models and price points on the floor. The store display can’t just focus on the higher price points, or the consumer will shop elsewhere. Right now, and probably for the next few years, upholstered headboards will be a part of every category, from kids’ beds to serious adult sets. One Quebec manufacturer even claimed his would absorb noise, although I didn’t ask what the source of the noise would be. Maybe a loud TV? Storage continues to be in demand in bedroom, dining room, occasional and even accent upholstery. After all, downtown condos are getting smaller; they’ll soon be like Paris hotel rooms. In my day job, I move senior citizens into retirement residences, which usually have no space for out-of-season clothing, let alone anything else. So I’m always looking for “dead air” — storage ottomans, under-bed drawers, shelving — anything to create storage.

In Mazin Furniture’s showroom, I counted seven beds with under-bed storage, and at a range of price points. Durham Furniture, the Canadian producer of high-end solid-wood bedroom, featured under-bed storage throughout its Perfect Balance line. Reclaimed wood, or what appears to be, made its presence felt this market. Mountain House Furniture, Tuff Avenue and CDI International were among those showing strength in this segment. Huppé also made a statement by using it in several new bedrooms, while Artage International used it on several bestselling, modern storage coffee tables. In my view, every retailer should have at least one or two reclaimed wood pieces on the floor. Your “green” customers will gravitate to it, but you need to tell the story not just right, but well. Whether in upholstery or case goods, the ability to customize was big this year. It’s also one of the strong points of most Canadian manufacturers, giving them a much-needed edge both at home and it their primary export market, the United States. When it comes to wood, think Canadel or any of the divisions of BDM+ Furniture, such as Bermex, Dinec or Bertanie. This is where their expertise shines, and this gives retailers the opportunity to evolve beyond competing solely on price. Offering

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3. This dog bed, called Tiger, from Elegant Chair Designs showed plenty of bling – an emerging trend designed to capture the consumers attention.

3 1

“For us, the show was good even though traffic was down. We are taking market share away from the importers. A lot of business is coming back to North America.”

– faizel sunderji,

dynasty furniture 1. This sectional is part of the Runway collection from Palliser. It proves colourful cushions are needed to give a sense of bling to middle-of-theroad beige fabrics. 2. This pink and white zebra sectional from Brentwood Classics really showed the power of colour at this year’s Canadian Home Furnishings Market.

HGO merchandiser

customizable product shows the store can satisfy each and every consumer's need, meaning there’s no need to underprice. Is traditional a dying breed of styling? Décor-Rest doesn’t think so. They added a traditional frame to their line because customers were asking for it. It's smaller scale and therefore ideal for downsizing traditionalists. The lesson for other manufacturers is to listen to the customer and act. For retailers, it’s remember that Canadian factories give you options that importers don’t and can’t. The most successful vendors and retailers I spoke with at market credited their success to selling better product. Some pundits predict China’s labour rate will double by 2015, so price increases on imports probably are unavoidable, unless furniture resources move their factories to Bangladesh, Cambodia or Myanmar. This may mean the race to the bottom of the pricing ladder in almost every furniture category is coming to an end. Retailers need to educate sales associates about the value behind higher prices. Start by visiting Crate & Barrel, which has no fear of higher prices and thrives on generous margins. While you’re there, notice what their young buyers are putting on the floor, and from whom.

These guys and gals are smart, and they don’t look like the old men in suits our industry is famous for. Perhaps the overriding trend at this year’s market was, “Make me comfortable,” whether it was a stressless chair or a sleep-inducing mattress. With so many Canadians suffering from back problems, we have a great opportunity to help solve them. For example, Collection A 2000 had a great, madein-Canada stressless chair. Mattresses, long a prime source of high-margin dollars, also were making waves on the comfort front. Good examples included new lines from NexGel and Zedbed. Latex is yesterday’s news, so be current and be profitable. There was enough at the 2013 edition of the Canadian Home Furnishings Market to make this the most profitable year ever for retailers who truly took in what was available. Remember, the top line doesn’t cut it. It’s the bottom line that matters. HGO – Home Goods Online’s most widely read blogger/contributor, ALIXE MACRAE, is one of this country's best-known merchandisers. She has held senior posts at such well-known Canadian retailers as Stoney Creek Furniture, Sears Canada and The Bay.

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MARKET’S NEW NORMAL

THIS YEAR’S CANADIAN HOME FURNISHINGS MARKET MAY HAVE BEEN LIGHTLY ATTENDED, BUT INDEPENDENT RETAILERS SHOPPING THE SHOW CLEARLY SAW THE NEED TO FLOOR BETTER-QUALITY GOODS, AND CONTINUED TO MOVE AWAY FROM IMPORTED GOODS, PARTICULARLY IN UPHOLSTERY. MICHAEL J. KNELL

ight attendance coupled with reasonably strong orderwriting has been declared the “new normal” by the majority of furniture exhibitors at The Canadian Home Furnishing Market, this country’s only national furniture industry event. It can be reasonably argued that what happened in the halls of Toronto’s International Centre this past January reflected a retail marketplace that could be described as lethargic. According to Statistics Canada, furniture store sales totaled $9.53 billion in 2012, up a measly 0.8% over the $9.45 billion rung up in 2011. The forecasts for this year don’t seem all that bullish. With luck, furniture stores will see growth of between 1.5% and 2% this year. Meanwhile, home furnishings stores – which sell everything from floor covering to lamps and lighting, decorative accessories and wall art – had sales of $5.69 billion in 2012, a gain of 2.1%. At best, these merchants are expected to see another 2% gain this year. Exhibitors noted that traffic patterns for TCHFM have changed in recent years, mainly because of what appears to be a growing desire on the part of many independent furniture retailers from Manitoba, Saskatchewan, Alberta and British Columbia to attend the winter market in Las Vegas. Several factory executives said that many larger independents have evolved their buying strategies to the point where TCHFM either isn’t as critical to their planning, or only requires visits of one or two days, not the five days set aside just a few years ago. “For us, this market is more about eastern Canada,” said Jason Harris, vice president of sales for contemporary upholstery specialist Stylus Made-to-Order Sofas, based in Vancouver. “There seemed to be less traffic in the halls but we still saw who we needed to see. Las Vegas is going to be well attended by Western Canada.”

HGO merchandiser

“The traffic patterns have changed,” said Christa Albrecht, vice president of sales for Canada and the eastern United States at case goods producer Magnussen Home. “Eastern Canada drives the traffic here, but the majors are still supporting this market.” Most observers believe that attendance at this market in recent years has been driven by the buying groups. Three of the four big groups – Cantrex Nationwide, Dufresne Retail Solutions Group and Mega Group/Brand Source – use TCHFM to launch their merchandising, marketing and promotion programs for the year. The Quebec Furniture Manufacturers Association, owners and operators of TCFHM, reported some 325 companies exhibited at this market, about the same as last year. Of these, about 40 showed for the first time. The QFMA doesn’t publish attendance figures. The consensus among exhibitors is that traffic continued to trend downwards, but that those retailers walking the halls were there to do business. Among independent retailers, in particular, two buying trends gained momentum – the move to floor better-quality and better-priced goods, and the move away from imports, especially in upholstery.

“ People bought things that were unique, that were different from what they already have on their floors. This was driven because of the sameness coming out of China.” – jason harris, stylus made-to-order sofas

“For us, the show was good even though traffic was down. We are taking market share away from the importers. A lot of business is coming back to North America.” – faizel sunderji, dynasty furniture

Several senior executives noted business for most independent retailers in most parts of the country was tough in November and December, although sales perked up considerably during Boxing Week. That uptick prompted retailers to go from “cautious” to “careful” when it came to buying decisions, but they still needed strong reasons to buy. “People bought things that were unique, that were different from what they already have on their floors,” Harris said, pointing to a 46-inch deep sofa new to the Stylus lineup that received lots of attention. “This was driven because of the sameness coming out of China. There was not a lot of talk about price.” Independent retailers also seemed to be focused on increasing their average ticket, vendors said. Solid-wood specialist BG Furniture came back to the International Centre after several years in an outside showroom, a move President Adam Hofmann said was more than worthwhile. “We saw a lot more traffic other than our regular customers,” he said, adding retailers were demanding new goods, such as BG’s collection made with ash, an opengrain wood. BG also broadened its occasional assortment, adding a number of entertainment centres, sideboards and similar pieces with Dimplex fireboxes. “A lot of retailers told me the imports weren’t working anymore,” Hofmann said. “They told me, 'I need to trade up,’ and ‘I need to re-balance my floor.' Retailers really seemed to like us doing unique things.” Independent retailers also were looking for simplicity, particularly when it comes to flowing the goods. For Magnussen, this meant strong, growing interest in its Quickflex program, Albrecht said, which allows retailers to bring in goods by the cubic foot, rather than buying an entire container. “We were very happy with this market,” she said. “Retailers wanted better price points on their floor. They

wanted better goods because they don’t want to fight where no one wins.” Kevin Sisson, vice president and chief operating officer of bedding major Sealy Canada, said, “It was a good market. We did as much business as we did last year,” adding retailers bought the company's show specials in force. He also noted Sealy’s new zoned pocketed coil/gel hybrid My Cloud collection generated a lot of buzz. “Traffic was sparse but the orders were there,” said Ronnie Mehta, president of Worldwide Homefurnishings, an importer based in Toronto. “They were definitely looking for better-quality goods. The volume they sell isn’t going up, so they need to get their key price points up.” Mehta also noted a disturbing trend: “A number of dealers told us they were closing their doors because the furniture business isn’t as exciting as it used to be.” “For us, the show was good even though traffic was down,” said Faizel Sunderji, president of Calgary, Albertabased upholstery maker Dynasty Furniture, which had 100 new fabrics and 20 new frames at market. “We are taking market share away from the importers. A lot of business is coming back to North America.” Virtually no exhibitor expects 2013 to be a banner year at retail. Many pointed out there’s little in the news or in the economy to suggest this will be a good year. But the attitudes expressed at market by retailers were not as glum as might be expected. “I would call it hopeful,” said Sealy Canada’s Sisson. “This is the new normal. Retailers are seeking new ways to grow their business, which explains the rising interest in specialty bedding.” Worldwide’s Mehta said, “The first half is going to be a continuation of the last quarter of 2012, but I’m very positive for the second half of 2013.” BG’s Hofmann summed up buyer attitudes this way: “They seemed to be more confident about their business in 2013, but not bullish.” The next edition of The Canadian Home Furnishings Market will be January 11 to 14, 2014. HGO – Michael J. Knell is the publisher and editor of the HGO Merchandiser.

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WE ASKED>>>

TCHFM

market voices

FOR THE FIRST TIME, HOME GOODS ONLINE CONDUCTED “MAN-ONTHE-STREET” INTERVIEWS IN THE HALLS OF THE INTERNATIONAL CENTRE DURING THIS YEAR’S TORONTO MARKET, ASKING EXHIBITORS AND ATTENDEES ABOUT THEIR IMPRESSIONS OF THE ONLY NATIONAL INDUSTRY EVENT OF ITS KIND IN CANADA. | BY ASHLEY NEWPORT Faisal and Karina Sunderji of Dynasty Furniture are seen here in their space at this year’s Canadian Home Furnishings Market in Toronto.

Albert Marrache, president of Phoenix AMD International.

Valerie Stranix, chief marketing officer of REV Sleep Corporation, producers of the Natura World, Nex Gel, Obusforme and Sommex brands of mattresses.

Simon Wasserlauf, president of Tapis Cosmos Carpets.

HGO merchandiser

HE 2013 EDITION OF THE CANADIAN HOME FURNISHINGS MARKET IS

likely to be remembered because of the weather. Considering it was Toronto in January, exhibitors and attendees alike were astonished by the spring-like climate that awaited their arrival at the International Centre. For four days, some 300 or so exhibitors – including about 60 new faces – put their best foot forward in the mad rush to persuade retail buyers and interior designers to buy. Home Goods Online stopped people at random and asked them about their market. Respondents included exhibiting manufactures and distributors, store owners, buyers and designers. Not surprisingly, their answers covered a broad spectrum, from proclaiming the market a smashing success with impressive traffic and eye-catching new pieces, to branding it lackluster, “same old same old,” offering little in the way of excitement and interest. Here's a sampling of responses. Karina Sunderji

Albert Marrache

Vice president Dynasty Furniture Calgary, Alberta

President Phoenix AMD International Bowmanville, Ontario

“One of the things we noticed is that we can provide fashion orientation at a unique level that’s not seen commonly in the marketplace. We have some fashion-forward yet still salable looks. We’re getting very good responses to our new collection. It has different seating that’s specially engineered for comfort. It’s in a place where we’re not seeing a lot of other products in that same category. “In colours, we’re seeing a lot of grays and charcoals, with forays into blues and navies and peacock blues. We’re seeing a resurgence of comfort colours. We’re seeing variations of gold, and shiny patterning on some of the accent fabrics. We’re seeing clean, crisp, contemporary, uncomplicated lines.”

“Retailers are trying to find more profit and are looking for different ways (to do that). However, there’s less attendance and, unfortunately, we’re not presenting enough ideas to make retailers come to the shows and see something new so they can make more profit.” Valerie Stranix Chief marketing officer Rev Sleep Corp. Toronto

“We’ve got the weather on our side this year, so it seems like we’re seeing an increase in foot traffic. In the past, this show has been cursed by the Saturday freezing rain phenomenon. One of the things we’re noticing is the continuing strong presence of mattress manufacturers at the show. We’re

seeing more new players. We were thinking the market would be shrinking, but new players are popping up every year.” Simon Wasserlauf Tapis Cosmos Carpets Pointe-Claire, Quebec

“There are items we don’t have that are available in the States, especially some modern furniture, nice leather goods and abstract area rugs, which are available down there. Things are different in Florida, and I’ve seen things in New York that are also different. We’re lacking some things here. I did notice some new designs in shag rugs.” Marcel Gorashio President Cotton House Toronto

“Thus far, I’ve seen some interesting furniture, and the best stuff is the old world furniture

What have you noticed most at the market? What’s the best thing you’ve seen, and what haven't you seen that you'd like to see?

that’s starting to come back. I’d like to see more independents in our industry as customers. I’m seeing a lot of big-box stores displacing independents, and the small bedding stores we deal with are going to the wayside, which is a shame.” Seham Marchese Vice president of sales Laila’s Inc. Mississauga, Ontario

“This time around, the buyers are supporting the exhibitors and the show, and seeing the products and going through the booths, rather than just strolling along and looking. They’re actually going into the booths and seeing the product and placing orders on the spot, not saying they want to wait until the next show. “One thing that’s missing is, the exhibitors are not shopping the colour trends. Some exhibitors are doing the same thing over and over, and furniture is now more fashion forward. They’re bringing in the same product they brought in at the last show, and a lot of the buyers are complaining about that.” Jason Kent Greenway Home Products Guelph, Ontario

“This year, the white-onwhite-on-white trend has really changed, and we’ve got colour and big patterns and big damask prints, and even some of the traditional stuff has come back. Not Baroque, but there’s more detail in the furniture. What I haven’t seen is a lot of interactivity with technology, smart phones and the like.”

Khushwinder (Inder) Singh

Marco Van Dam

Divine Sleep Products Etobicoke, Ontario

President TW Studio Ancaster, Ontario

“It’s a good market. Everybody’s telling me we're still in a recession, but I’m not seeing it. If your target market is good, you’re doing good. People are still selling mattresses and buying mattresses. Some people are lowering the prices like crazy. If people would set up their prices according to good margins and profits, the market would be doing better.” David Gelinas Marketing director ZedBed Shawinigan, Quebec

“The best thing I’ve seen is ZedBed – seriously. It’s a small market with a lot of Quebec manufacturers, so it’s good to see a lot of new manufacturers from the United States. There are new faces at the market. I would like to see more mattress manufacturers. On my side, it would be good to see Serta and Tempur-Pedic here. It would bring more people in who are looking for mattresses.” Ann Marie Hodder Buyer Notre Dame Home Furnishings

Lewisporte, Newfoundland “We’ve been coming for years, and not a lot has changed. We see consistency, and we’re used to the system. We see the same suppliers, and all the suppliers are obviously doing well. It’s a positive experience that way. We’d like to see more suppliers come back to this show. Ashley and La-Z-Boy aren’t here anymore, so we miss some of the big players.”

“The best thing I’ve seen is a trend towards traditional furniture. Back to older styles. But other than that, that’s about all I’ve seen. The show’s been slower; it’s become smaller. Buyers don’t buy as much. I’d like to see the markets pick up.”

Seham Marchese, vice president of sales for Laila’s, a Torontobased art supplier.

Jason Kent, marketing manager for Greenway Home Products, a producer of fireplaces, media consoles and occasional furniture based in Guelph, Ontario.

Paul Dromgole Buyer Heist London, Ontario

“This is my first time, and it’s good to see new colours and swatches, and new, innovative products. I’m a big fan of Pink & Brown and their stuff, and the reproduction mid-century modern products that we specialize in. So far, the market doesn’t appear to be missing anything.”

David Gélinas, marketing director for specialty mattress maker Zedbed.

Patrick Gabriel Buyer Park Home Furniture Hamilton, Ontario

“I was quite impressed with one of our mattress suppliers, Galaxy Home Bedding. There’s a quilted mattress that’s quite unique.” Ken Easby

Ann Marie Hodder (left), buyer and E. Nurk Atkinson, manager of Notre Dame Home Furnishings in Lewisporte, Newfoundland.

Buyer Gold Reflections Fine Jewelery & Specialty Gifts Bowmanville, Ontario

“So far, I haven't seen any one particular favourite, but I come here to have a general look. I’ve seen a few things I’ve enjoyed, but no standouts yet. I’m looking for display cases, display units and hockey paraphernalia.”

Paul Dromgole, buyer and owner of Heist, a furniture retailer in London, Ontario. HomeGoodsOnline.ca

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Patrick Gabriel and Pamela Spragg of Park Home Furniture in Hamilton, Ontario.

Ken Easby, co-owner of Gold Reflections Fine Jewellery & Speciality Gifts, located in Bowmanville, Ontario.

Michael Parsa of Mattress Mall, Richmond Hill, Ontario.

What have you noticed most at the market? What’s the best thing you’ve seen, and what haven't you seen that you'd like to see?

Michael Parsa

Kenny Eom

Michelle Peer

Mattress Mall Richmond Hill, Ontario

CEO Bethel International Markham, Ontario

Buyer Sum of Designs Whitby, Ontario

“There are a lot of transitional items on the way, and I’m finding a lot of very strong crystals and chandeliers. Traditional furniture and accessories are strong, and there are some one-of-a-kind pieces, like mirrored and stainless steel furniture. You don’t see too much variety of products at this show, and that’s a problem here. I would hope to see more variety of products in the future.”

“I’d like to see more mid to highend goods, and more stuff for rec rooms. There are no pool or fooseball tables or game-type pieces for rec rooms, and there are a lot of consumers looking for those pieces for finished basements.” HGO

“There are new looks, and people are getting trendier and paying attention to details, whereas before it was business as usual. They’re listening to the market. For example, some of the mattresses we’ve looked at are addressing people’s needs as far as firmness, softness and even the colour and texture of the fabric are concerned. “I know I can’t see everything here, since this market covers a lot of categories, but I was hoping to see more Canadian manufacturers. I’m also seeing a decline in traditional wooden furniture, and people still want that. I’m seeing a big decline in that kind of furniture at this show.” Luc Crawford Buyer Luc Crawford Design Ottawa, Ontario

Luc Crawford, owner of Luc Crawford Design in Ottawa.

Kenny Eom, CEO of lighting, accessory and metal furniture importer/distributor Bethel International.

HGO merchandiser

“The trends are in keeping with the demand for recycled products; a lot of recycled wood, a lot of refurbished antiques. Most lines are slightly traditional, but there are extremely avantgarde pieces, and retro is coming back as well. “I’d like to see more fashionforward finishes and products. I’m finding a lot of suppliers are selling the same product, and the only difference is the price. I know the Toronto market is competitive, but it should be more like High Point and Vegas. There needs to be more high-end products as well.”

Christina Springer Buyer Snugglers Furniture Waterloo, Ontario

“I’ve really enjoyed the contemporary lines and the different types of woods. It’s nice and refreshing. I’ve seen nice entertainment units and pieces with really nice, contemporary lines. Those lines are what I like. It’s a very good cross section, and there’s a lot of product out there, which is really nice.”

Christina Springer of Snugglers Furniture in Waterloo, Ontario.

Karen Burnett Northern Expression Haliburton, Ontario

“I'm seeing a lot of new retro products, and things that are maintenance-free are big. The market is diversifying. We carry high-density recycled plastic, and there’s no other place in our marketplace that has our product.”

Karen Burnett of Northern Expressions, Haliburton, Ontario.

Michelle Peer and Donna Price, design consultants for Sum of Designs, Whitby, Ontario.

Do you know why and what the Canadian consumer is buying?

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Dreaming BIG VALERIE STRANIX AND HER TEAM ARE BUILDING A NEW CANADIAN MATTRESS POWERHOUSE; BASED ON FOUR DIFFERENT BRANDS COVERING ALL OF THE CONSUMERS’ MOST DESIRED AND DEMANDED FEATURES, BENEFITS AND PRICE POINTS. | MICHAEL J. KNELL Chris French (left), chief operating officer of Rev Sleep, Valerie Stranix, chief marketing officer; and, Ed Farquharson, executive vice president of sales; are seen outside company’s permanent U.S. showroom in the World Market Center in Las Vegas. Acquiring Natura World in the first quarter of 2012 gave the Canadian mattress maker an entree into the American market.

HGO merchandiser

VERY FURNITURE RETAILER KNOWS –

whether he’s an independent store owneroperator, manager of a sleep shop, or a buyer for one of the major chains – how vitally important the mattress category is to his organization’s top and bottom line. The usually white stuffed rectangle traditionally produces the highest average gross margin of any product category on the floor. This makes managing the assortment on the floor to ensure the presentation covers off as many of the customer’s needs and wants as possible critical to a healthy bottom line. Those wants and needs, particularly in this economy run the gambit from comfort and styling to price and then back again. For the decade proceeding the grand recession of 2008, the mattress industry changed the tenor of its conversation with the consumer, something that it hadn’t been able to do in the prior century. It was all about getting a good night’s sleep. But

then the economy stalled forcing another change in the conversation – one where price re-entered the discussion. Consumers still wanted all the things they were getting, but they wanted them at substantially lower prices. It’s in this competitive environment Valerie Stranix, chief marketing officer, and the senior management team – including Chris French, chief operating officer, and Ed Farquharson, executive vice president of sales; the brain trust leading what was then called Spring Air Sommex Corporation (SAS), now Rev Sleep Corporation – found themselves in the autumn of 2011. At the end of 2011, the industry has suffered its fourth consecutive year of decline. Retail sales, which peaked in 2008 at $1.80 billion, had fallen to $1.60 billion, according to data published by Statistics Canada. Meanwhile, manufacturing shipments for 2011 were $741.3 million, a far cry from the $922.2 million shipped in 2008. (It should be noted shipments include those for not just the

<<<MATTRESSES

retail/replacement market but for the contract, hospitality and health care markets as well.) Stranix, French and Farquharson decided they needed to rebuild SAS into a Canadian mattress manufacturer capable of competing effectively in the new realities of the post-recession economy. While they didn’t have to start entirely from scratch – the company was, and probably still is one of the two largest Canadian owned and operated mattress manufacturers (the other being Springwall Sleep Products) – they needed to revitalize the stable of brands they were bringing to the market. This, in turn, would allow them to not only expand in Canada, but into the United States and beyond as well. The rebuilding process began when SAS acquired the North American rights to the ObusForme mattress brand in 2010. Previously, the rights were held by Simmons Canada but after it was re-acquired by the Atlanta-based Simmons Bedding Company a few years ago, the line wasn’t aggressively promoted in the marketplace. Stranix points out ObusForme, which was created in Toronto in the early 1980s, “is among the most recommended brands among healthcare practitioners today, giving consumers terrific value from a trusted group of experts.” This is the company’s “good for your back” brand and is continuing to develop a full assortment believing it will find a powerful niche among consumers throughout North America. Earlier this year, a number of new tickings and components were added to the Obusforme brand including Comfort Wave, a gel and latex zoned topper that will be offered on a number of models. The next step in the rebuilding process was to acquire Natura World – which has been producing naturally healthy, wool-filled and wool-covered mattresses, top-of-bed and pillows since 1995 – out of bankruptcy in the first quarter of 2012. Along with latex specialist’s Cambridge, Ontario factory, SAS also acquired its luxury NexGel brand. “The acquisition of Natura delivered a number of key elements,” Stranix explains. “This is a top-end brand that gives our company a product line-up with offerings at all points of the pricing spectrum. It is also gave us an industry leading array of specialty

mattresses that allows us to address this important and still growing segment of the market as well as a the production of an exciting array of pillows and top-of-bed items.” In addition to its state-of-the-art equipment and single-needle quilting capability (something the company didn’t have), the acquisition also gave SAS entry into the U.S. market for the first time in its history. “Natura has a strong presence in the U.S. market. There is a loyal customer base there and we look forward to building the business with them,” Stranix says. “However, Natura also has a presence in Canada and it’s a brand that resonates well with independent retailers in this country. There is also tremendous potential with Natura and NexGel.” That strength prompted SAS to open a permanent showroom in the World Market Center last summer and exhibit at the semi-annual Las Vegas Market, which over the past couple of years has positioned itself as the North American bedding industry’s leading trade event. SAS also used the summer 2012 edition of the market to introduce its ObusForme mattress brand to retailers in the U.S. At the 2013 Canadian Home Furnishings Market, the brand introduced a refreshed and refocused line of mattresses; a retail pillow display; and, a touch/feel display to make educating the consumer an interactive experience. Stranix noted SAS, now Rev, parted ways with Spring Air in mid-2012, choosing to concentrate on its core group of brands, which includes Sommex, the premiere line of mattresses sold in Quebec. “Sommex is our heritage brand, which we build in Trois-Rivières,” she says, “Sommex encompasses the essence and culture of Quebec with its focus on upto-date home fashion looks and quality of design and construction.” First launched in 1974, Sommex will now be marketed to retailers across the country. The final piece of the puzzle was to create a new corporate identity. After months of reflection, the company adopted Rev, which is derived from the French noun for dream – rêve. Stranix notes the new corporate name reflects the company’s basic belief that a supportive mattress fuels a healthy, energetic and vibrant life.

Rev is built around four brands: (seen below) Natura World NexGel, ObusForme and Sommex, its heritage brand.

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“ We have a strong team of professionals who can deliver the product on time while getting new product to market quickly. We will continue to focus on innovation while continually striving for greater efficiencies.” – valerie stranix

Valerie Stranix is seen here at this year’s Canadian Home Furnishings Market in Toronto with the company’s new introductions under the Natura World brand.

“Rev was born out many years of making mattresses and bedding, studying and learning how different bodies respond to a variety of support systems and we’re confident our 2013 products are as tough as a pro athlete’s performance gear, consistent and able to go the distance when you need it the most,” she said when announcing the new name this past January. Moving forward, Stranix says Rev will be positioned as a “premier mattress manufacturer with a stable of significant brands, which we will continue to supply to the market place and that meet the needs of our customers.” However, she also acknowledges the goods times haven’t come back yet. “We see a crowded marketplace with many manufacturers fighting it out for shrinking retail floor space. It’s a tough go for many who can’t meet the demands of today’s whirlwind pace,” she says, adding she’s confident Rev has a solid game plan that should serve it well, especially as the economy – and consumer demand – recovers. “We have a strong team of professionals who can deliver the product on time while getting new product to market quickly,” Stranix remarks. “We will continue to focus on innovation while

continually striving for greater efficiencies. With this mandate, we can offer greater value at a wide range of price points to our network of retailers.” Unlike the years before the recession struck, when consumers showed a willingness to spend more money than ever before on a new mattress, recent years have seen the industry’s average sales-ticket shrink considerably. It’s a trend Stranix acknowledges and wants to see reversed. “We do see the trend towards price compression. Advertised retail price points have been significantly lower over the past year or two than in the past,” she says. “We are trying to help the situation by offering unique sleep items with demonstrable features that will resonate with consumers and help increase awareness of the importance of sleep. One important element of the Natura deal was its ability to deliver the higher price point product.” Growth will come, Stranix believes. Rev brands are currently on the floor with a broad cross section of this country’s leading national retail banners including Sleep Country Canada, Sears Canada, Leon’s Furniture, Brault & Martineau, and BrandSource Canada, among others. The company also has a following among independent retailers such as Stoney Creek Furniture and Edmonton’s Rogers Sleep Shop, a NexGel gallery. The company is also working with a number of online retailers. “We plan on investing in our U.S. market and opening up channels internationally. We have a global opportunity with our brands,” Stranix says, adding, “We are currently working to develop our digital side, which will support our retailers – both brick and mortar and online.” Stranix believes Rev is off to a good start with its four brand strategy and that over the coming few years, the company will be Canada’s premier mattress manufacturer. EDITOR’S NOTE: Canada’s mattress

industry saw its first uptick in 2012 as manufacturers’ shipments were up 3.2% to $764.7 million and retail sales reached $1.60 billion, a year-over-year gain of 6.7%. HGO – MICHAEL J. KNELL is the editor and publisher of Home Goods Online.

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<<< ON RETAIL

SEARS CANADA:

Breaking the brand promise ANYONE WHO READS A NEWSPAPER KNOWS SEARS CANADA ISN’T DOING WELL. THIS FORMER INSIDER POINTS OUT THE ONCE-GREAT RETAILER HAS SOLD OFF OR DILUTED NEARLY ALL THE BRANDS THAT MADE IT A FORCE TO BE RECKONED WITH. IN SHORT, SEARS FORGOT ITS BRAND PROMISE TO THE CONSUMER. | BY ALIXE MACRAE

hat makes a store special? The brands it offers? The service it provides? Its prices? Its selection? After spending most of my adult life in retail, I can confidently say it’s all about the brand. A store’s service can be trumped and prices are a race to the bottom, especially in today’s economy. Selection is also a tough one to win on. Someone can always open a specialty store, and that advantage will go the way of the Dodo bird. But brands have a power all their own. For example, Oreo – touted as “milk’s favourite cookie” – is now the best-selling cookie in the People’s Republic of China, even though their version is supposedly less sweet than America’s, where it’s also the best-selling cookie. According to

the web site About.com, over 362 billion Oreos have been sold since it was introduced in 1912, making it the best-selling cookie in history. Another famous brand is Tide, which apparently has more than 30% of the domestic liquid-detergent market, and a world-wide market share of between 40% and 44% in the categories in which it competes. And it never competes on price. Consider the power of several other brands: • Wikipedia recently reported that Dove soap was the most trusted brand in India in 2011. It also has more than 13 million “likes” on its Facebook page. • What about President’s Choice, the house brand for the Loblaw group of supermarkets? The brand accounts for 18.5% of the company’s revenue, compared to 11% for the competing national

 An exterior view of the only new Sears Home store to be unveiled in the past few years. Located in Ottawa’s Pinecrest Shopping Centre, it’s the largest in the network with 78,000 square feet of space. It features some 400 SKUs of major appliances as well as 50 SKUs of mattresses – the largest such assortments in any single Sears Canada location.

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Sears – on both sides of the border – is dying for a simple reason. They forgot their brand promises. That’s the lesson every furniture, mattress and appliance retailer in the country, regardless of how big the store is or how many outlets are in the network, has to understand.

Mattresses has been designated a ‘hero’ category by the leadership at Sears Canada, meaning this one product category where they intend to lead the market across country. Seen here is the refurbished mattress department at the store in Newmarket, Ontario.

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brands. No wonder its tag line is “worth switching supermarkets for.” It also has more than 212,000 “likes” on Facebook. This brings us to Sears. No other retailer in North America has exemplified the concept of “the store as brand” more forcefully over the past few decades. What’s more, it was the stable housing some of the most trusted consumer brands. In fact, Sears dominated the market in the categories these brands served. Among them: Craftsman tools, Kenmore appliances, Allstate Insurance, DieHard batteries, Toughskins kids clothing, EasyLiving and WeatherBeater paints. Each of these was unique. Where are they today? Not long ago, I went to the Sears Canada outlet in Toronto’s Yorkdale Shopping Centre – one of the premiere shopping destinations in Canada. I was looking to buy a hammer. Sears has been selling hammers under the Craftsman brand for decades. But on this trip, I couldn’t find one and no sales associate approached me. I then went to Canadian Tire, where there were at least 40 different styles of hammers on display. According to Wikipedia, Craftsman rates second only to Waterford Crystal in terms of perceived quality. So, why does Sears Holdings (and, by extension, Sears Canada) seem to be abdicating this brand, which according to the financial industry web site Seeking Alpha, still has 33% of the hand tool market and 14% of the power tool market? By the way, Craftsman was named both “America’s Most

Trusted Brand” and the “Brand with the Highest Expectations” in 2007. It's also the brand both NASCAR and the Do It Yourself (DIY) cable-TV network use. Yet, it appears Sears Holdings Chairman and CEO Edward Lampert intends to sell Craftsman tools in Costco stores. How dumb can you get? It appears you can get very rich and be very dumb. Craftsman is a great brand and was always associated with Sears. It wasn’t that long ago that sales associates selling Craftsman product were paid largely on commission, and some of them earned three times more than their store managers. It was brands like Craftsman that built Sears into a powerhouse with a loyal customer base. It’s no secret that I used to work at Sears, and still have friends who do. But reading what the analysts are now saying is discouraging, to say the least. Here are a couple of examples: “Sears went online in 1997, but their entire culture is essentially broken,” Cheryl Hanna wrote on Customerlink.com this past February. “It’s been suggested that Sears re-invent itself to focus on men. After all, Craftsman tools have always been a male Christmas present staple, for all those weekend home chores. Experts say get rid of the women’s clothes and jewelry and stock up on Lands’ End merchandise, which appeals to men. Invest in some expert staff training, raise salaries to attract the best sales personnel, concentrate on the company’s culture and rebuild an organization that once dazzled shoppers across the United States.” Then there’s Kaitlin T. Gallucci at Talentzoo. com: “There is no reason for anyone to go to a Sears’s store.” Ouch! “His (Lampert’s) strategy is consistent – every year he gets rid of assets. He monetizes good assets,” Howard Davidowitz, principal of the retail consulting firm Davidowitz & Associates, told narse.org, the web site of the National Association of Retired Sears Employees in March. “If (Sears Holdings) hadn’t sold its assets, it would be in bankruptcy. That’s what’s keeping them in business. They are not fixing up stores or opening stores. They just sell assets and cut costs.” This also is true of Sears Canada. The profits in its most recent fiscal year can all be attributed to the sale of leases on three premium downtown locations – in Vancouver, Calgary and Ottawa – back to the landlord. Moving into those spaces will be Nordstrom’s first three Canadian outlets.

Another Sears’s brand, Kenmore, is still a powerhouse. Manufactured by the big appliance makers, Kenmore models often boast exclusive features not available on the so-called name brand versions of the same product. In 2007, Kenmore’s market share was estimated at 29.5% – miles ahead of the other brands. Sadly, that’s down from 40% a few years earlier. Kenmore once encompassed small appliances – toasters and the like – but branding meant higher prices, so it was discontinued. With proper promotion and sales training, I believe branded small appliances could have generated higher profits. Most people have forgotten that until it was sold in 1993, Allstate Insurance was a very profitable division of Sears. (Allstate generated US$296 million in 2010, according to the Insurance Bureau.) It was a great brand that has gone on to make big profits for someone else. This was another case of short-term profits leading to long-term losses for Sears. Sure, Allstate has seen its ups and downs – especially with the ongoing weather-related tragedies in the U.S. – but its overall performance is very strong. DieHard has been the dominant brand in car batteries for a long time. It captured market share because Sears promised a DieHard battery “would last forever” – that is, for as long as the customer kept the car it was originally installed in. This brand promise eventually was discontinued because consumers began keeping their cars longer. Even so, it’s still a powerful brand. Try entering DieHard in the Google search bar. Several years ago, Sears sold its hugely profitable credit card division. What’s not well known is that the credit card propped up the company’s very unprofitable consumer electronics business (which lost some $8 million a year in the 1970s). For some reason, Sears never switched out the space in favour of profit-generating categories like Craftsman tools. Sears also owned two of the most profitable brands of paint, EasyLiving and WeatherBeater. Both were made by Sico, a Canadian manufacturer. (I know because I was the paint buyer for nine months.) As training taught us, paint should be only one-third of the total ticket, because people need brushes, drop cloths, rollers and a bunch of other things when they start a renovation project. Back in the 1980s, a Canadian company retooled its entire plant because they had the exclusive contract to make Sears paint. With dollar signs in their eyes, the factory let all of their other accounts go. Then, at renewal, Sears found someone who would make it cheaper. All of a sudden, the company was left with a paint factory they couldn’t use. Today, Sears is suffering. At one time Sears was not only a brand unto itself, it was the home of some of the most demanded brands in the marketplace. But over time, whether out of greed or arrogance or

both, those brand promises – both with consumers and suppliers – were broken. The result is pretty much what we’ve been reading in the news of late. It’s been suggested that Target is the next big competitive challenge to Sears in Canada. I don’t totally buy into that. I recently visited one of Target's new stores in Toronto and can’t say I was all that impressed. While Target offers a “price match guarantee,” all that really means is they will match competitors advertised prices. Target has developed its own line of lamps and home accessories, so it’s difficult to compare this line with others. My immediate impression is that, unless you’re buying kids’ clothing, their prices are too high. Wal-Mart is cheaper. If I were to grocery shop at Target, I would be armed with everyone else’s flyer. At the end of the day, Sears – on both sides of the border – is dying for a simple reason. They forgot their brand promises. That’s the lesson every furniture, mattress and appliance retailer in the country, regardless of how big the store is or how many outlets are in the network, has to understand. Sears isn’t as successful as it used to be because it isn’t Sears anymore, at least the one the consumer remembers and wants. The decline of Sears is bad for the home goods industry. It still is among the top four Canadian sellers of furniture, mattresses and major appliances. A lot of furniture manufacturers, for example, rely on Sears for cash flow and steady orders. If that changes, those suppliers could be in trouble. Can Sears, especially Sears Canada, come back? If senior management doesn’t run out of time, it’s possible. But they have to remember and keep their brand promise. HGO

 Sears Canada is pulling out all the stops to defend its position as Canada’s largest retailer of major appliances, including revamping the majap departments in at least four of its mainline department stores in southern Ontario, including this one in Newmarket.

– Home Goods Online’s most widely read blogger/ contributor, Alixe MacRae is one of this country's best-known merchandisers. She has held senior posts at such well-known Canadian retailers as Stoney Creek Furniture, Sears Canada and The Bay. HomeGoodsOnline.ca

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