HGO Merchandiser Winter 2013-2014

Michael Knell’s

HGO merchandiser HomeGoodsOnline.ca

Winter 2013-14

Volume Two, Issue 5

HUDSON’S BAY: Visions of furniture fashion

TCHFM Preview: Made to Measure

KEEPING UP WITH 2014 LAA HONOUREE

BOB KAY

BrandSource sets a new store design direction Our forecast: modest growth ahead

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FROM THE EDITOR PULLING TOGETHER

This community isn’t doing as well as it should. We need to pull together and getting to Toronto for market in January is a pretty good place to start. After all, industries are like communities and the community that is the furniture, mattress and major appliance industry is getting smaller. For the independent retailer, TCHFM has a lot to offer.

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MARKET PREVIEW MADE TO MEASURE

The Canadian Home Furnishings Market is this country’s only national furniture and mattress industry event. This year, the focus will continue to be on bringing retailers the latest styles, trends and colours in the product they need to merchandise. It will also be the industry’s best face-toface networking opportunity. Our report is written by HGO editor Michael Knell.

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PROFILE VISIONS OF FURNITURE FASHION

Hudson’s Bay is making an all-out effort to return department stores to their glory days as furniture merchandisers. Taking their cue from their core business, apparel, the emphasis will be on fashion and better quality goods. For this reason, among others, it has been named Canada’s 2014 Retailer of the Year.

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RETAIL BRANDSOURCE SETS NEW DESIGN DIRECTION

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Mega Group’s primary national go-to-market strategy added four new stores to its network in the second half 2013. Each reflects a new, a more contemporary, attitude towards the consumer

as the network of independently owned stores looks for new ways to grow. The goal to create an environment where she is comfortable while telling her she’s the store’s main focus.

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ADVERTISERS’ INDEX

SPOTLIGHT KEEPING UP WITH BOB KAY

It’s rare to meet an entrepreneur who has kept one business afloat for half a century, let alone several. For Bob Kay, chairman and founder of Springwall Sleep Products, growing several successful businesses at once, while staying focused on mattresses, was a welcome challenge. Our profile of the 2014 recipient of the Lifetime Achievement Award was written by regular contributor Ashley Newport.

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BY THE NUMBERS MODEST GROWTH AHEAD

Furniture store sales should grow modestly in 2013. So should those of home furnishings stores. The consumer’s net worth is improving and the housing market continues to be relatively strong. These should result in a very measured level of growth for big ticket retailers in the months ahead.

ON OUR COVER Made in Canada is a major merchandising theme for 2014 Retailer of the Year Hudson’s Bay and so is contemporary styling including the Reverie classic Sahara leather sofa and chair in sterling ivory fabric from the Winnipeg-based EQ3. Also seen is its new custom table collection, featuring a wood top coffee table and a market top end table along with the Martian floor lamp. (Inset): 2014 Lifetime Achievement Award winner Bob Kay, chairman of Springwall Sleep Products.

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FROM THE EDITOR u

MICHAEL J. KNELL

Pulling together This community isn’t doing as well as it should.

We need to pull together and getting to Toronto for market in January is a pretty good place to start.

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NDUSTRIES ARE LIKE COMMUNITIES. IN FACT, A SMALL INDUSTRY

really is a small town with its own attitudes, mores, standards and ways of doing things. Like those idyllic small towns so beloved in novels, everyone knows everyone else and, for good or ill, everyone knows everyone else’s business. As a member of Canada’s furniture, mattress and appliance industry for the past 30 years or so, I can attest to the truth of that statement.

The trouble is, our community is getting smaller. As you’ll read elsewhere in this issue, the years following the Great Recession of 2008 haven’t been kind to us. Those who work in the housing and automotive industries were the only ones to enjoy the benefits of a low interest economy, because consumers were so stretched otherwise there was no room left in their wallets for high quality goods we have to offer.

But unlike those small communities, the furniture, mattress and appliance industry hasn’t been all that great at coming together in times of adversity. We don’t even work all that well together when it’s to and for our mutual benefit.

Want a few examples? Call me as they’re too numerous to mention here.

But we have to start pulling together and there’s a pretty easy way to begin.

Get out of your office, wherever it is and regardless of where you work in our industry’s supply chain and get yourself to Toronto in time for the opening of the Canadian Home Furnishings Market on January 11, 2014. Spend a few days looking at product and talking to other people in the industry.

Look up the leadership of our two industry associations – the Canadian Home Furnishings Alliance and the Quebec Furniture Manufacturers Associations – and ask how you can get involved. We also need to a strong association for Canadian furniture retailers and TCHFM just might be a good place to start talking about that as well.

We have got to start pulling together. Because we’re living in the new economic normal, and small industries can only thrive if, from time to time, they work together.

HGO merchandiser WINTER 2013-14 • VOLUME TWO, ISSUE 5 ISSN 2291-4765

www.HomeGoodsOnline.ca

PUBLISHER & EDITOR Michael J. Knell mknell@homegoodsonline.ca MANAGING EDITOR Anthony E. Bengel tony@homegoodsonline.ca CONTRIBUTORS Ashley Newman ART DIRECTOR Samantha Edwards Sam I Am Creative samiamcreative@bell.net IT DIRECTOR Jayme Cousins In House Logic 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.

AFFILIATE MEMBER

Michael J. Knell Publisher & Editor mknell@homegoodsonline.ca

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The Metro East Collection combines clean lines with subtle shaped details to create a design that’s sleek and sophisticated. The new Ebony Brown finish when accented with the gleaming modern hardware brings a stylish elegance to any decor.

When pairing the Ebony Brown finish with the new Pearl White finish the group is transformed into a striking modern look with hints of glamour. To increase the design possibilities the group can also be purchased in any of Durham’s wood finishes or Durham’s new Premium Designers Choice paint finishes.

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TORONTO MARKET PREVIEW u

Made to Meas The Canadian Home Furnishings Market is this country’s only national furniture and mattress industry event. This year, the focus will continue to be on bringing retailers the latest styles, trends and colours in the product they need to merchandise. It will also be the industry’s best face-to-face networking opportunity.

BY MICHAEL J. KNELL

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N THE CALENDAR, THE NEW YEAR

officially arrives on January 1 after a night of revelry, which admittedly can take a variety of forms. But for members of this country’s furniture, mattress and major appliance industries, the New Year doesn’t really start until about ten or twelve days later with the opening of the Canadian Home Furnishings Market (TCHFM), which has made its home for the last four decades or so at the International Centre in Mississauga, Ontario – about a stone’s throw from Pearson International Airport.

The 2014 edition of Canada’s only national furniture industry event will open on Saturday, January 11 and end on Tuesday, January 14 and has been themed Made to Measure.

However, things get kicked-off on the Friday

asure evening with a welcoming reception followed by the annual Canadian Home Furnishings Awards gala.

TCHFM is owned and operated by the Quebec Furniture Manufacturers Association (QFMA). This year’s event is expected to attract some 2,000 or so independent furniture store owners; plus merchandisers and senior executives from the regional and national chains as well as a number of interior designers and decorators over it four-day run.

“While styles and colour choices may have evolved over the show’s history, one thing remains the same. TCHFM is still the ultimate, and only, Canadian sourcing destination for discovering home furnishings and accessories that are geared to specifically appeal to the Canadian market.

From traditional to contemporary, rustic to modern, every style and taste is accounted for – all under one roof,” said Pierre Richard in an open letter to the industry.

This will mark Richard’s first TCHFM as president and chief executive officer of both the event and the QFMA “The market offers an exceptional opportunity to not only view, but also experience, the very best that the Canadian furniture industry has to offer,” he continued. “It is also an exciting face-to-face networking opportunity which enables visitors to build upon the working relationships that are so vital to this industry.

“The TCHFM team works tirelessly to create a made-to-measure experience that is specifically tailored to meet the needs of its manufacturers, suppliers, designers, distributors and }

Left: The Julian collection was a top seller this year for upholstery house Brentwood Classics and is shown here in a fabric called Catcher Zinc.

Right: The Monaco bed from Vancouver’s Van Gogh Designs is available in several heights, styles and finishes such as nail heads and buttons.

Storage is also offered.

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The 11208 from Italian specialty mattress maker Magniflex offers the ultimate in comfort. At 14 inches high, this mattress features six layers of breathable memory foam and other natural fibres that mould and respond to individual body weight.

Its removable cover is made from natural viscose fabrics.

The new Union bedroom suite from Huppé is constructed from carefully selected birch veneers and seen here in a finish called Anthracite, a very ofthe-moment hue. The collection is offered in 15 different finishes.

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retailers,” Richard adds, noting consumers have become more knowledgeable about styles and trends in recent years. This in turn, has prompted them to become more demanding when it comes to finding and buying furniture. Keeping up with these changes is the primary task of TCHFM and the real reason why retailers return to the International Centre in the dead of winter each year.

All three of Canada’s major furniture buying and marketing groups – including Cantrex Nationwide, Mega Group/BrandSource Canada and Dufresne Retail Solutions Group – are expected to have a significant presence at this year’s market. In addition to spaces on the floor, each is expected to host a series of pre-market briefings for their members – to introduce their merchandising and marketing programs for the opening months of 2014 – as well as product displays and social gatherings at both the Inter­ national Centre and nearby hotels.

Harbor Loft, a new collection from bedroom specialist Durham Furniture features clean lines and a relaxed, timeless appeal.

The collection is available with an optional two-tone combination of Bourbon and Sandstone, and can be purchased in any of Durham’s wood finishes or new Designers Choice paint colors.

Attending retailers should see a fairly broad cross-section of Canada’s furniture manufacturing and distribution capacity as they walk through the halls of the International Center.

Perhaps the largest single exhibitor will be long-time support Palliser Furniture Upholstery which will continue to occupy Aviation Ballroom adjacent to Hall 5.

As has been the case for the past several years, TCHFM will be a strong mattress industry event with Sealy Canada – this country’s largest mattress producer – continuing to anchor the category. Expected to show at TCHFM for the first time in 2014 is Tempur-Pedic, the publicly-held specialty bed maker that acquired Sealy Canada’s parent company in March 2013.

While neither Simmons Canada nor Serta Canada can be found on the official exhibitors’ list, both are expected to have a presence in the buying group merchandise spaces. There is also a wealth of other mattress producers expected to participate. Among them the Quebec-headquartered foam specialist Zedbed; Rev Sleep, the Canadian producer of the Natura World, Sommex, NexGel and ObusForme lines; and Magniflex, the Italian bedding maker.

COLOURFUL TRENDS RETURN TO TCHFM

The Montréal-based duo of display designers, André Caron and Pierre D’Anjou, will assemble the 13th edition of the Trends Display in the centre of Hall 5. As usual, the display will feature Canadian-made furniture that’s available }

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goers. The colours serve to draw the audience toward a display and invite them to discover more about it.”

For Caron and D’Anjou, the Pantone colour choices underline and highlight the individuality and artistry that is Canadian furniture. “We live in a design climate that is absolutely bursting with creativity and richness. We draw upon two cultures – European and American, we have access to the beautiful materials, we have a style that pushes into more avant-garde avenues – Canadian furniture is extremely exciting to work with.”

TCHFM attendees will also be invited to cast a vote for their favourite display and be entered into a draw for an iPad Mini. One will be drawn each day of the show from Saturday until Tuesday. The Trends Display will be kicked-off with a cocktail reception on Saturday, January 11 at 6pm in Hall 5.

THE POP-UP VIGNETTES ARE BACK

Top left: Inspired by wideopen spaces and soaring ceilings, dining resource Canadel’s new Loft collection combines solid wood with metal accents to create an authentic industrial charm.

Middle: CDI International will debut its new teak wood and metal collection this market. Teak has been used as a boat building material for over a century and is not only strong, but is resistant to rot, fungi and mildew.

It is also unusual in that is not only an excellent structural timber, but it can be easily worked and finished as well.

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at the market while highlighting selection’s from Pantone’s 2014 colour palette.

The pair draws their inspiration for the display from art, travel and design shows in both Europe and North America. “This year, the presentation has a Cubist feel and has been inspired by street art as well as classical references such as Mondrian,” explained D’Anjou. “The look is very geometric and features lots of volume thanks to the elongated walls that are featured in the three islands.”

This year the pair is putting a stronger focus on the lighting. “In past years, it was very general and was simply used to illuminate the displays. This year, we are really working on using spotlights that add warmth and create focal points that guide the eye throughout the displays,” D’Anjou said.

For the second consecutive year, the Trends Display will also reflect the latest Pantone Home + Interiors colour forecast. “This year’s palettes are going to be such a beautiful marriage with the products that we will be showcasing,” D’Anjou said. “These shades are the vehicle that we use to communicate with show-

For the third year, design personality Janette Ewen will sprinkle her Pop-Up Vignettes throughout the International Centre. This time out, she promises to take market attendees in a whirlwind trip around the globe as she explores some of the world’s most unforgettable design and shopping destinations.

This year’s vignettes have been carefully curated to reflect the personalities of the world’s most iconic design cities including: Paris, London, Marrakech, St. Petersburg, Rome, Berlin, Melbourne, Stockholm, Barcelona, New York City, Miami Beach and São Paulo.

“The idea behind the vignettes is to really take inspiration from the character of each city. } The model 41481 stool from Amisco is part of the metal producer’s Urban collection. Its retro vibe and inviting shape is supported by an ultra-sturdy steel frame and a well-cushioned seat and backrest.

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Top left: For the third consecutive market, Janette Ewen’s ‘pop-up vignettes’ of products that best highlight current product and style trends will be scattered throughout the halls of the International Centre.

Top right: Renowned colour expert Leatrice Eiseman will brief TCHFM attendees about the nine colour palettes that make-up Pantone’s 2014 forecast at the market’s conference session.

The perfect sofa shouldn’t only look good, but should feel grand. Available as a sofa, loveseat or sectional, the Fabiano from Bugatti features offers a wide choice of options including choice of fabric and foam density for superior seating comfort.

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Elements such as architecture and textures are important factors that help to define the personality of each city,” Ewen said. “Rather than trying to capture a typical city scene, I wanted to look at what was new and unique in each location. In São Paulo, it’s all about the use of colour that defines the shanty towns, while for New York I wanted to reflect the strong sense of creativity that resides in all five boroughs.”

She believes that when designing a window or showroom display, understanding and interpreting trends is always important. More important is creating an atmosphere that elicits a sense of connection and enthusiasm within the consumer. Travel, whether real or virtual, is a perfect jumping-off point. “I think it’s important to think about what gets you personally

excited,” says Ewen. “When you’ve found a destination that really speaks to you, why not use it as a cornerstone for building a collection or designing a window?”

The marriage attendees will see between Canadian pieces and international trends is a happy one. “Our furniture is a summary of the global market,” Ewen said. “Canada is a huge mixing bowl; it’s a blend of so many different cultures. Canadian furniture designers often nod to their own personal heritage in their designs, while also giving them a uniquely Canadian flavour. We have so much to offer when it comes to our designs and we have access to some of the best resources, like wood and stone, in the world. You really can’t compare Canada to anywhere else.”

COLOURFUL CONFERENCE

When it comes to colour, not all shades are created equal. From retail spaces to furniture materials, the selected hue can directly impact the consumer experience. For the second consecutive year, international colour guru Leatrice Eiseman will take an in-depth look at the nine colour palettes from the Pantone View Home + Interiors 2014 trend forecast during the TCHFM conference session.

Entitled Style and Substance: Major Colours Trends and Directions, this highly visual presentation will showcase how colour can influence design choices for the upcoming year. }

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The Buttonback sofa from Palliser is all dressed up with plenty of eyecatching details, including two sets of buttons and a contoured welt on its arms. A sectional is also available

Eiseman has been named among the 50 top stylemakers by Home Furnishings Now; the leading home furnishings trade publication and is internationally recognised for her work as the executive director of the Pantone Color Institute and as the director of the Eiseman Centre for Colour Information & Training. She assists companies in making key colour decisions that are critical to the success of a product or an environment.

The conference will be held on Sunday, January 12 beginning at 10am in Orion B, located in the conference area of the International Centre. Admission is free for all TCHFM attendees.

For more information about the market or to register, visit the web site at www.tchfm.com. HGO MICHAEL J. KNELL is the publisher and editor of

Home Goods Online. He has attended every Canadian Home Furnishings Market since 1986.

TCHFM AT-A-GLANCE Site: International Centre; 6900 Airport Road, Mississauga, Ontario, Canada L4V 1E8 (near Pearson International Airport, Toronto) Owned and operated by: Quebec Furniture Manufacturers’ Association Dates: Saturday, January 12 to Tuesday, January 14, 2013 Schedule: Saturday, January 11 to Monday, January 13: from 9am to 6pm; Tuesday, January 14: from 9am to 12noon.

Who and what: Approximately 300 exhibitors showing residential furniture, mattresses, lighting, decorative accessories, juvenile furniture, and accessories in Hall 1 to Hall 5. Also includes the permanent showrooms inside the SOFA resource annex of the International Centre and participating outside showrooms.

TCHFM will also feature suppliers of related products and services throughout the market.

Market website: www.tchfm.com

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MARKET ACTIVITIES Welcome Cocktail Reception: Friday, January 10 from 5 to 7pm in the lobby to the International Centre’s conference facility.

CHFA Awards: The Canadian Home Furnishings Alliance will host an awards gala honouring the 2014 Retailer of the Year – Hudson’s Bay – and the 2013 recipient of the Lifetime Achievement Award – Bob Kay, founder and chairman of Springwall Sleep Products – on Friday, January 10 beginning at 7pm. For tickets or more information, contact Murray Vaughn, CHFA president at (905) 677-6561 or by e-mail at murray@chfaweb.ca.

The Pantone-inspired Trends Display Cocktail Party: Saturday, January 11, beginning at 6pm in Hall 5 of the International Centre.

Beer and Burgers at the Bunkie: Sunday, January 12, beginning at 5pm in the Hall 1 Mezzanine of SOFA, the permanent showroom annex of the International Centre.

Breakfast at the Bunkie: Tuesday, January 14, at 9am in the Hall 1 Mezzanine of SOFA, the permanent showroom annex of the International Centre.

CONFERENCE PROGRAM Style and Substance: Major Colour Trends and Directions with Leatrice Eiseman: Sunday, January 12 at 10am in Room Orion B, International Centre.

Admission is free to attendees upon presentation of a market badge.

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Made in Canada is a major merchandising theme for Hudson’s Bay and when combined with a leaning towards contemporary styling, the consumer is confronted with this assortment from the Winnipeg-based EQ3 including the Reverie classic sahara leather sofa and chair in sterling ivory fabric. Also seen here is EQ3’s new custom table collection, featuring a wood top coffee table and a market top end table along with the Martian floor lamp.

Hudson’s Bay is making an all-out effort to return department stores to their glory days as furniture merchandisers with an emphasis on fashion. For this reason, among others, it has been named Canada’s 2014 Retailer of the Year.

BY MICHAEL J. KNELL

VISIONS

OF FURNITURE

fashion

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t PROFILE

C

ANADIANS EXPECT THEIR

department stores to be experts when it comes to furnishings the home. Indeed, it was the department stores that set the tone and standards for the merchandising, styling and pricing of furniture, mattresses and major appliances for the rest of retail to follow until about 25 years ago. They decided what the consumer bought.

That changed when what were then much smaller businesses – including such well-known names as Leon’s and The Brick – grew into the national chains they are today. Looking at the business section of almost any major newspaper gives the impression department stores continue to not only be on their way out of big ticket home, but out of retail all together.

However, there is at least one believer in the power of department stores as furniture and mattress retailers – the Canadian Home Furnishings Alliance (CHFA) which recently named Hudson’s Bay as its Retailer of the Year for 2014.

This is the second consecutive year the association has awarded the distinction to a department store. Last year, Sears Canada was the honouree.

The Retailer of the Year Award was established by the CHFA in 2001 to recognize exemplary models of excellence and community service by Canadian furniture retail businesses.

Hudson’s Bay is the upper scale department store banner of the publicly-held Hudson’s Bay Company (HBC), which was founded in 1670 and is North America’s longest continually operating company and one of the oldest commercial enterprises in the world. The parent also owns décor and accessory specialist Home Outfitters in Canada and Lord & Taylor, an upscale department store operating some 48 outlets across the north-eastern United States. It recently acquired another high-end, U.S. based retail icon – Sak’s Inc., the operators of Saks Fifth Avenue.

It’s no secret that Canadian department stores have been struggling in recent years.

Under the leadership of Richard Baker, who acquired HBC in 2008 (thereby becoming Governor under the terms of its Royal Charter), the company has refocused its merchandising on the ‘better’ and ‘best’ categories with a heightened emphasis on fashion.

The emphasis on Made in Canada has been reinforced with the company’s long standing partnership with the Torontobased Marshall Mattress, one of the first developers of the individual pocket coil technology.

Seen here is Marshall’s Rest Assured queen mattress set that’s upholstered with luxurious New Zealand wood and Belgium damask fabric.

A FASHION VISION FOR FURNITURE

This emphasis has spread through the entire product assortment, including furniture and mattresses, according to Alan Asbridge, Hudson’s Bay vice president of living, dining, kitchen and laundry. In his position, he is responsible for all big ticket home merchandising for the company’s 90 stores across Canada. }

The Pierce dining collection from Shermag, a division of the Quebec-based Bermex Group, is a recent edition to the Hudson’s Bay furniture line-up.

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“ Taking the cue from our apparel businesses we have edited the offering and will continue to enhance the shopping experience with new brands and environments.”

Hudson’s Bay has long been associated with Canadian interior designer Brian Gluckstein and his GlucksteinHome collection of furniture, furnishings and accessories. Seen here with the Kent accent chair are the Ice Eco Diamond table and a carved crystal table lamp from the designer’s Studio collection.

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“We now treat furniture as a fashion department, selling trend right products that are lifestyled to make it easy for the customer to find inspiring ideas and visualize the pieces in their homes,”Asbridge explains. “For mattresses, our focus is on aspirational brands that resonate with the customer, and driving technology forward within that category.”

This has meant moving away from the style categories historically common to the department store’s furniture presentation and taking inspiration from what has always been its core business: women’s (and, to a certain, extent, men’s) apparel.

“We’ve shifted away from traditional, and will further develop and position ourselves in Updated and Contemporary directions. These looks resonate with our fashion savvy Hudson’s Bay customer,” Asbridge says. “Taking the cue from our apparel businesses we have edited the offering and will continue to enhance the shopping experience with new brands and environments.

With mattresses we’ll continue to refine the assortment to speak to the ‘most wanted’ brands within the industry, and create a more compelling shopping environment for the customer.”

Shifting to this emphasis on fashion seems to be paying off as HBC reported sales for the first half of its current fiscal year were up 4.1% – although sales for the Canadian operation (Hudson’s Bay and Home Outfitters) advanced 6.9%, almost twice that of the company’s operations south of the border.

Although the company doesn’t break out category sales, Asbridge says furniture and mattresses sales are growing right along with the

other categories. “In matter of fact, our furniture and mattress businesses have outperformed industry trends over the past few years,” he maintains. “With a new design and trends focused team in place we have driven the fashionability and value forward in furniture and are continuing to excite the customer. Mattresses are on a similar trajectory.”

The company’s evolving approach to furniture and mattresses has also meant being more selective about what locations offer the categories. At one time, every one of its stores across the country featured a furniture and mattress department. Today, furniture is carried on 49 of 90 stores while mattresses are offered on 79 floors.

“Hudson’s Bay went through a right-sizing exercise across the company – looking at sales performance by square foot - and while furniture lost space, it has maintained and grown sales and sales per square foot,” Asbridge explains. “Since we believe furniture is more of a destination business, the customer wants to see a broad assortment, and our current 49 doors allow us to do that on a cross-Canada basis.”

Like other serious mattress merchants, Hudson’s Bay is taking a ‘sleep shop’ approach to the category. “The mattress and bed basics department has evolved into a ‘sleep centre’ strategy, offering complete sleep solutions for the customer,” he notes, “A single destination for the customer that will offer them a tailored and personal view as to their perfect night’s sleep.”

The efforts are even expanding into the company’s e-commerce space, which Governor Baker has been touting as a vital part of its future success. Indeed, the company reported ecommerce sales grew 56% on a year-over-year basis in its most recent fiscal quarter.

“This is a growing opportunity for us. Furniture was launched online in fall 2012, with our Top 10 sofas,” Asbridge says. “That assortment has been carefully growing to include top performers, as well as all of the product featured in our very successful Home Books. We expect this department to only grow larger as we move forward for the online business. Almost all our mattress assortment is online, and gives the online customer a complete and quick overview of every brand, and we’ll be adding more premium brands to the assortment shortly.”

The company has also been very careful to ensure the online assortment follows the instore model, capturing all the price points and technology differentiators they believe the consumer is looking for.

In in spring of 2013, Hudson’s Bay published its first Home Book, a combination style guide and catalogue for all areas of the home. }

More than 95% of exhibitors on the floor are the business owners.

It's the perfect place to do effective business.

Register today at www.tchfm.com

MADE TO MEASURE Toronto

January 11 - 14 2014 HomeGoodsOnline.ca

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“Our exciting plans currently include creating a two-level destination for home on {floors} six and seven,” Asbridge says. “The seventh floor, which hasn’t been retail space for many years, is currently under construction and will house Kleinfeld’s Bridal Boutique, fine china and housewares, while sixth will showcase furniture, the recently renovated ‘sleep centre’ for mattresses and bed basics as well as soft home.

“Our furniture assortment will be refined for Queen Street to capitalize on the downtown condo market, as well as continue to surprise and delight our fashionable customer,” he adds.

SALUTING EXCELLENCE

Hudson’s Bay wants the consumer to see furniture as fashion. In this scene from the latest edition of the company’s Home Book, the Umbria sectional from Natuzzi Editions has been paired with Enix stainless steel table collection from Mobital. Also seen here is the Vortex floor lamp from Zuo Modern and the Morgan accent table from Thomasville.

“ We were exceedingly happy with the customer response and quickly rolled out the lifestyle presentation to all furniture stores.”

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“It definitely performed well above expectations, which we were happy to see since it was a leap forward in style and point of view,” Asbridge reports. “Our Home Books are definitely part of our plans as we move forward, since they allow us to message fashion and newness to our customers. This is all backed up by online trend features, videos and social media support that all bolsters the company’s fashion message.”

There has also been a shift towards Made in Canada – and by extension, Made in North America – when it comes to selecting product for the floor, something Asbridge believes “resonates with our target customer.

“They appreciate the quality, value and faster lead times on custom special orders, as well as that idea of ‘made locally’,” he adds. “Going forward, we’re in the process of sourcing more product and programs that speak to this and will make sure that message reaches both new and existing customers.”

This was also the year in which Hudson’s Bay unveiled its new concept store in downtown Vancouver, the first to receive a re-worked floor plan and assortment for furniture. “For the first time we were able to show all of home on one floor,” Asbridge enthuses. “The open-concept, loft-inspired space allows us to showcase lifestyle presentation by décor style for the first time.

“We were exceedingly happy with the customer response and quickly rolled out the lifestyle presentation to all furniture stores,” he adds.

The concept is expected to be driven home when the renovations to the company’s flagship store on Queen Street in downtown Toronto are seen for the first time sometime in the first half of 2014.

“Over the years, Hudson’s Bay Company has helped move our industry to new levels of excellence,” CHFA chairman Laine Reynolds said when announcing the company’s selection as the 2014 Retailer of the Year this past November.

“With their growing brand status, new in-store transformation and their sustained commitment to the home furnishings industry; as well as being a great example of a business enterprise that generously gives back to the community, Hudson’s Bay Company is a very worthy recipient of this coveted award,” he continued.

Since 2005, the HBC Foundation has made significant donations to Canadian charities across the country including Canadian Olympic Foundation and the Canadian Paralympic Committee; the Breast Cancer Research Foundation; Habitat for Humanity and the Canadian Red Cross.

For the past seven years, it has also been supporting Canadian athletes through various sport organizations and has donated over $35.5 million to help support athlete development, training and coaching.

Hudson’s Bay is the 13th recipient of the CHFA’s Retailer of the Year award. The 2013 honouree was Sears Canada and the first recipient was the late Tom Leon of Leon’s Furniture in 2002. Other prior recipients include Dennis Novosel of Stoney Creek Furniture and Bill Tepperman of Tepperman’s Furniture.

A gala dinner celebrating Hudson’s Bay’s contributions to the industry will be held immediately prior to the opening of the 2014 Canadian Home Furnishings Market. HGO MICHAEL J. KNELL is publisher and editor of

Home Goods Online.

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RETAIL u

BRANDSOURCE

sets new design direction

E

Mega Group’s primary national go-to-market strategy added four new stores to its network in the second half 2013. Each reflects a new attitude towards the consumer as the network of independently owned stores looks for new ways to grow. The goal to create an environment where she is comfortable while telling her she’s the store’s main focus. BY MICHAEL J. KNELL

VERY FURNITURE RETAILER IN THE COUNTRY

is looking for growth. Admittedly, growth takes different forms depending on circumstances. Most are looking to grow the bottom line, to be more profitable. Some are looking to grow profits by growing sales, others by reducing costs or some combination of the two. Still others want more physical storefronts.

By that measure, the Saskatoon-headquartered BrandSource Canada may be considered one of the fastest growing furniture, mattress and appliance retail networks in the country, adding four stores to its network in the second half of 2013, including the first-ever outlet it has built from the ground up. The remaining three stores were all conversions to the network, which is the primary go-to-market strategy for the co-operatively owned Mega Group, the largest Canadian furniture-focused buying and marketing organization.

Indeed, few other national networks are adding stores at the same pace in 2013, if at all. Only two other national retailers opened four or more new stores this year: Leon’s Furniture, this country’s largest full-line furniture retailer opened one new cor-

BrandSource Ottawa owners Brian Janna, Richard Laplante and Marc-Olivier Laplante are seen here at the store’s grand opening in early September.

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porate store and three new franchises; and, Sleep Country Canada, which opened five stores in and around Halifax this past summer, making its long-awaited entry into Atlantic Canada.

Indeed, the most recent Annual Retail Trade Survey from Statistics Canada pointed out that the total number of independent furniture stores in operation fell by 11.7% between 2008 and 2011, the last year for which figures are reliable.

This isn’t to say other stores haven’t opened in 2013, they have. But, it seems store openings have become the exception, rather than the norm.

NEW THINKING

Especially with its first built-from-the-ground-up BrandSource Canada outlet in Ottawa, Mega Group is taking a new, highly contemporary approach to big ticket home store layout, design and merchandising.

BrandSource Ottawa’s interior was created by Mega’s longtime director of commercial design Carole Vallières and designer Carrie Chubey. This team also designed two of the remaining three stores that opened in recent months.

“It’s all about the consumer – she was our main focus,” Vallières said when describing the store’s interior. “The [Ottawa] store is close to a residential area where two types of clientele coexist: a young, hip crowd living in condos; and, a more conservative clientele looking for classically-styled furniture.”

To answer the needs of these two specific customer groups, the store was thought out in two different styles which Vallières labelled Urban and Timeless. Each is represented in a complete mock house display located in the store’s entranceway.

“Signage is a key component of the consumer’s venturing into the store,” Vallières explained. “As soon as she crosses the front doors, she is lead to choose the style that corresponds to her taste right away. The signage indicates and leads the consumer in the specific zone representing the style she has chosen. In each area, she can find a living room, a dining or }

Owners Vivi Chedica, John Chediac, and their sister Renée Cumminger are seen here outside Chediac BrandSource Home Furnishings in New Glasgow, New Brunswick. The second generation full line furniture is one of the latest HomeGoodsOnline.ca addition to the national network.

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Well displayed accessories are a key part of Chediac BrandSource’s merchandising strategy.

The store’s merchandising profile focuses on contemporary designs targeting the urban tastes of new condo dwellers, such as the living room groups.

bedroom in perfect co-ordination. This type of setting also mirrors the open concept of most homes.”

The 16,000 square foot store – located at the intersection of St. Laurent Blvd. and Belfast Road on outskirts of downtown Ottawa – also sports Mega’s new Sleep Experience gallery concept.

The store also features a lounge complete with a self-serve coffee bar. “This offers a relaxing environment to discuss her next purchase,” she noted, adding the washrooms feature hotelstyle hand towels to enhance the at-home feeling. The change tables also offer diapers for harried parents.

The store is owned by Richard Laplante, his son Marc-Olivier Laplante and Brian Janna. The senior Laplante and Janna are seasoned home furnishings retailers but are new to Mega Group and BrandSource Canada. The younger Laplante serves as the company’s controller.

Sales associates are all equipped with iPads, allowing them to respond immediately to most every question a customer might ask. Among the floor’s more prominent furniture suppliers are Palliser, El Ran, Bugatti Design, Magnussen Home and Ashley.

The mattress assortment includes collections from Sealy and Tempur-Pedic, among others.

“We’re very excited with the collection we’ve assembled with the help of BrandSource. We’ve added Canadian-made products to our collection as well as a variety of brands to respond to each customer’s taste,” Richard Laplante said. “We wanted a unique and ‘wow!’ store and we think we’ve got it.”

“This new store has lots of advantages for us,” Brian Janna added. “BrandSource responds to the customers by offering them unsurpassed customer services and customized solutions fitted to their taste” Michael Vancura, Mega’s executive vice president of retail, said Laplante and Janna were two examples of the types of people Mega want to attract to the co-operatively owned buying and marketing group.

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“They were looking to migrate to a more contemporary merchandising offering to serve the growing urban tastes of new condo owners,” he noted. “They are also interested in Mega’s more collaborative, co-op driven approach that allows a fair amount of regional customizing while still receiving all the support today’s retailers require, such as design, merchandising, marketing, web, social media, sales and sales management training.”

Vancura also believes Ottawa BrandSource is also a good example of where Mega wants to take its national go-to-market strategy.

“This first from-the-ground-up store is well designed and well located in an urban market and will be a showcase of what BrandSource is and will serve as proof that this type of store can and will generate volume and profit,” he said.

KINDRED SPIRIT

Walk through the front door at Meubles & Nous in SaintGeorges de Beauce – a small city of 33,000 or so people 100 kilometres south of Quebec City – and the similarities to BrandSource Ottawa are almost immediately apparent, including the fact it’s in a new building. The two are obviously kindred spirits.

But the differences between the two are also important.

Most significant is Meubles & Nous is what Mega calls a BrandSource ‘authorized’ dealer. Owners Michel Tardif and Karline Turcotte receive almost the same level of service and support as a full-fledged Ameublesment BrandSource (known as BrandSource Home Furnishings throughout English Canada) member store, but it doesn’t carry the banner as part of its corporate identity.

Tardif, who was elected to Mega’s board of directors in 2011, and Turotte acquired what was then a 62-year old retailer called Meubles Jacques Veilleux in 2008. Earlier this year, they launched a new branding initiative for the store, including moving into a new 27,000 square foot building under a new name – an investment totalling some $4 million.

For Meubles & Nous, Vallières created four distinct colourcoded sections for different styles of furniture as well as galleries for bedding and major appliances.

“The owners wanted us to develop a signature style for them,” she said. “The store was divided into four different }

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The interior layout of Meubles & Nous is designed to allow the consumer to move about easily. Aisles through the store are well signed and colour coded to reflect the varying styles it offers.

areas with different collections. Main areas were conceived to create a unique concept – called quartiers – and were named Movi, Vivia, Klass, and Urba. All have different styles which are consistent throughout the areas. Urba, for example, features furniture with a modern touch.”

The mattress department is called Rèva.

The store features colour co-ordinated signs, maps, and pathways to direct visiting customers to the area she’s looking for.

These colour motifs are also found and repeated in all featured advertising and flyers, including the store’s web site (www.meublesetnous.com).

Like BrandSource Ottawa, Meubles & Nous features a working coffee bar that serves customers throughout the day.

REVITALIZING THE STORE

ADVERTISERS’ INDEX

During the closing weeks of 2013, two other long-time Mega Group members converted to the BrandSource Canada concept.

What is now called Chediac BrandSource Home Furnishings is a second generation family business operated by John Chediac, Vivi Chediac and their sister Renée Cumminger. This was

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Page 7 Durham Furniture 450 Lambton Street W Durham, ON N0G 1R0 T: 519.369.2345 F: 519.369.6515 www.durhamfurniture.com Pages 11 and 23 Canadian Home Furnishings Market 101-1111 Saint-Urbain Montreal QC H2Z 1Y6 T: 514.866.3631 F: 514.871.9900 www.tchfm.com/en

the one store that required no design work as it was completed renovated just two years before. What makes this store, which can be found in New Glasglow, Nova Scotia, is that in addition to furniture and mattresses, it is also one of the area’s premier floor covering retailers. It is also a member of consumer electronics specialist Audio Video Unlimited as well as white goods division, Appliances Unlimited.

The fourth addition was the newly rebranded Ameublement BrandSource Desrocher in Ste-Thérèse, Quebec, on the northern outskirts of Montreal.

Formerly known as Meubles Dubois, this 10,000 square foot store was acquired by the husband and wife team of Ghislain Guindon and Andrée Labrosse and their children, Geneviève Guindon and Marc-Olivier Guindon – who will be the new store’s manager – in August 2013.

This is the family’s third outlet, which includes the first Ameublement BrandSource Desrochers in Plaisance, Quebec – about two-thirds of the way from Montreal to Toronto.

Their third outlet is Meubles La Détente, a high-end store in Gatineau, Quebec that serves the National Capital Region.

Most retail experts agree: renovation and refurbishment generates new sales dollars and new profits for the retailer.

With its new design direction for BrandSource Canada, Mega Group is hopefully setting the stage for member growth.

Since rolling out the network in March 2012, BrandSource has added some 13 outlets it number, bringing the total to 156 or so. Only two names in big ticket have more stores in Canada: the aforementioned Leon’s, which with acquisition of arch-rival The Brick in March 2013, now operates some 311 stores under its various banners. Big ticket leasing specialist Easyhome operates some 183 corporate stores in Canada as well as 52 franchise locations across North America.

Another BrandSource store is expected to open in British Columbia over the next few weeks. Michael Vancura noted Mega’s target for 2014 is to add another ten stores to the BrandSource Canada network. HGO MICHAEL J. KNELL is publisher and editor of Home Goods

Online.

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Bob Kay (centre), chairman and founder of Springwall Sleep Products, is seen here with his sons Boyd (left) and Greg (right). Kay is the 2014 recipient of the Canadian Home Furnishings Association’s Lifetime Achievement Award.

Keeping up with BOB KAY

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N JANUARY 2014, SACKVILLE, NEW BRUNSWICK-

born mattress mogul and outstanding entrepreneur Bob Kay will become the 15th recipient of the Canadian Home Furnishings Alliance’s Lifetime Achievement Award, joining such industry stalwarts as the late Orville Mead and Art DeFehr, chief executive officer of Palliser Furniture.

The CHFA established the award in 2000 to recognize those individuals who over their lifetime have made exemplary and sustained contributions to the Canadian furniture and home furnishings industry as well as the communities in which they live. It’s hard to argue that Kay, who has now left most of the day-to-day heavy lifting to his sons Boyd and Greg, doesn’t fit the bill.

While Kay’s primary passion and focus has always been Springwall (which produces the Chiropractic, H2 Chiropractic and Steven & Chris mattresses brands, among others), he’s

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dipped his toes into a startling number of unrelated ventures — often quite successfully. A quick glance at this CV would make anyone feel lazy, as he presided over a growing company while indulging his interests in bottling Coca Cola; holding and development companies; cable companies; cell phone service companies; and, restaurants.

Kay, who majored in business administration at Sackville’s Mount Allison University before landing a job as an industrial rubber products salesman, fell into the furniture world when his affinity for selling put him in touch with local furniture sales reps and, later on, the president of the now defunct Beverly Bedding Company in Toronto.

“They hired me as sales supervisor and I was there for three years,” Kay recalls. “After that, I came back [to Moncton] to buy a small mattress manufacturing concern. My father and grandfather had worked in stove manufacturing and I was al-

t SPOTLIGHT

It’s rare to meet an entrepreneur who has kept one business afloat for half a century, let alone several. For Bob Kay, chairman and founder of Springwall Sleep Products, growing several successful businesses at once — while staying focused on mattresses — was a welcome challenge.

BY ASHLEY NEWPORT ways around [manufacturing] or close to it. I think it’s in my blood. When I got into mattresses, it carried on from there.”

And carry on it did. On April 23, 1964, Atlantic Sleep Products was born. Although the beginning was challenging — according to a 1985 article in the Atlantic Insight, the company only netted $150,000 in sales its first year — Atlantic grew by staying on trend and focusing on its chiropractic line. “[The Chiropractic sleep sets] were developed by Springwall in Minneapolis with a chiropractic school that had a testing laboratory,” Kay explains. “They built a mattress that was the right type of sleeping mattress, and we were able to obtain the name Chiropractic and the endorsement of the American Chiropractic Association.”

After first establishing Atlantic Sleep Products, Kay began buying Springwall licenses. By 1997, he owned all of the company’s licenses in Canada, the U.S. and beyond and became

the president of the entire Springwall brand. Under his stewardship, the once small Maritime concern grew to include major manufacturing facilities in Mississauga, Ontario and Calgary in addition to the company’s headquarters in Scoudouc, just outside of Moncton.

Springwall now boasts 250 employees and is probably the largest Canadian-owned and operated mattress manufacturer. In addition to independent furniture and mattress retailers, the company includes both Sears Canada and The Brick among its retail partners.

Over the years, Kay made a few changes to the brand, but says his alterations were far from radical. “There was nothing major, just constant realignment,” he says. “We just kept expanding the Chiropractic and Springwall brand. We closed and opened plants, just the regular parts of running a business.”

But small changes or not, something about Kay’s vision resonated with retailers and consumers, and he attributes the brand’s longevity to the product. “It’s a good product and we stand behind it.”

Building an eternally marketable product is hard enough when it’s your sole focus, so it seems like it would be difficult to sustain one company while jumping – with aplomb and great success – into other ventures.

While Kay was building Springwall, he was active in the local Coca-Cola bottling plant – Tennant Beverages N.B. Ltd. – as well as in Stephen International Inc., a holding and development company, which he joined as a director and shareholder beginning 1966. In 1974, he launched Cable Service Ltd. along with ten other shareholders (he eventually became the sole owner). Kay ran the cable company for almost 20 years, studying the field with engineers and obtaining a license to provide cable television to the greater Moncton area. The company launched pay-tv in 1983 and debuted a community service channel that allowed local groups to broadcast homegrown content. He sold the company a decade later.

While running Springwall and Cable Service, he launched Celserve Communications, the first cellular telephone service in New Brunswick. In 1993, he got the opportunity to indulge his interest in development launching condominium builder Cambridge Developments Inc. Two years later, he opened Maverick’s Steakhouse and Grill – a fine dining restaurant that’s now run by his grandson Ryan Kay. Kay also immersed himself in charitable and community work by getting involved in the Canadian Federation of Independent Business, Young President’s Organization, the Moncton YMCA, Friends of the Moncton Hospital, PEI Boys and Girls Club and supporting Saint Mary’s University in Halifax. He also established the Robert G. Kay/Killam Properties Inc. Entrance Scholarship Fund at Mount Allison University.

When asked why anyone would want to juggle several demanding enterprises at once, Kay is nonplussed.

“Why spend energy climbing Mount Everest? I don’t know.

When opportunities came along that interested me and were a challenge, I had to take them,” he says. “In the 90s I worked with an open door policy in business and many people used } HomeGoodsOnline.ca

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The ‘Geneva’ seen here is part of the Chiropractic collection manufactured by Springwall Sleep Products. This 11-inch deep mattress features seven inches of bio foam, supported by two inches of its Convergency-brands latex and two inches of AquaGel memory foam. It is also encased with an air flow-through system.

The mattress is complimented with by the company’s DuraSystem foundation.

Part of the H2 Chiropractic collection, the ‘Peerless’ is constructed using a 2550 stacked coil innerspring system.

It is also foam encased with an airflow system and its plush pillow-top construction includes the company’s AquaGel memory foam.

Bob Kay (third from right} is seen here celebrating the 25th anniversary Springwall Sleep Products with a group of head office staff member. The company will be 50 in 2014.

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my open door instead of others, so I moved the Springwall plant into the city and ended up with some extra time.”

And while Kay still has hands in some big name operations – such as the publicly-held Killam Properties, an owner and manager of apartment buildings and manufactured home communities, and shredding company Redishred Capital Corp. – it’s Springwall that carries on his legacy. So, with so many ventures under his belt, it seems prudent to ask: why mattresses?

“Because of the style and constantly changing environment,” he says. “It’s not same old, same old type of manufacturing. It’s not like tires, where the circle just never goes away. It’s more challenging.”

What’s also challenging is maintaining a family business, but keeping the company

alive and thriving is one of Kay’s proudest achievements. “[One of my greatest achievements] is having a 50-year-old company that I started. My sons now run the business and handle the day-to-day and make decisions while I stand aside. I still attend board meetings and put my two cents in and we’ve managed to get along in that process very well. It’s a family achievement, and sometimes it’s hard for a family to do that.”

As for family, both Boyd and Greg Kay credit their father with inspiring their business sense.

“My dad was born an entrepreneur and I have benefited greatly from his energetic and innovative spirit,” says Greg Kay. “In business, I was impressed with his leadership and his way of doing things such as his vertical integration of manufacturing processes and his constant search for new and better ways of doing things. He is a true builder, be it mattresses, buildings, systems. As a father, he has been a good role model and instilled in me a good work ethic.”

Family businesses – like any business – have their benefits, but they also have unique challenges in the sense that it’s sometimes not possible to leave work at work. For Kay, it’s important to understand both the perks and fallbacks of running a close-knit, family-run operation.

“The great benefit in a family organization is the family sticks together and you’re not concerned about losing your top people. I think it’s also a challenge to try to stay a family. Sometimes families don’t get along that well. But [companies run by families that get along] have strong companies and develop a family-staff.

Our Moncton plant manager has been with us for over 30 years. My assistant has been with me for almost 20 years. We have lots of very longterm employees, and that stops a lot of turmoil in business,” says Kay. As for lack of turmoil, Boyd Kay is also pleased with his time in his family-run, distinctly Canadian operation.

“I have known Bob Kay for over 50 years, working for and with him since I was five-years-old,” says Boyd Kay. “I even lived in his home for quite some time! His honesty and integrity, along with a very direct style, always lets you know where you stand. From raising cattle and buffalo to driving trucks to working in the upholstery and Springwall factories, it was all an enriching and rewarding experience. I always felt someone had my back. I look forward to working another 30 years with RG.” While it seems likely that Springwall will still be churning out its celebrated mattresses

in 2043 – the company boasts very low returns compared to other major retailers – Kay acknowledges that the playing field has changed since he first stepped up to the plate in the 60s.

“It would be tough [to start a Springwall] in 2013,” he says. “Not because people can’t do it, our industry has talented people, but because the customer base has shrunk. There used to be a lot of independent retailers, but the market has been taken over by big retailers and if you’re small, you often belong to a group and you’re dealing with whoever is running the group. If you’re a start-up, you have to get under the arm of a large retailer and have an in before starting a business. I see that as the main problem. Financing isn’t any easier these days and everything you’re dealing with is big – big banks, big retailers. Mom and Pop operations have difficulty with financing and reaching customers, which is something that’s happened in most industries.”

Having said that, Kay remains optimistic about the industry’s future.

“I’m hopeful for it,” he says. “It goes through phases and I don’t agree with some of the new materials [coming into the market]. There’s too much focus on memory foam. My idea of a good sleeping surface is firmer than some of the products out there today. But there’s always phases and changes because someone comes along with new materials that can change the industry quickly. The industry in general has changed a lot over the past five to seven years but I believe it’s stabilizing. It will find its way and make better and better products.”

As for Bob Kay himself, it seems like stepping away from the day-to-day operations would be a challenge for a man who filled his sparse spare time with complex business ventures. While Kay says that he has indeed left the heavy lifting to the next generation of family members (and to the others who now run his side projects), he says he’s still got enough going on to keep him on his toes.

“Oh, I keep busy, believe me!” he says.

“With meetings and projects I keep busy every day.” HGO A frequent contributor to HGO Merchandiser, ASHLEY NEWPORT is a Torontobased freelance journalist who primarily writes for trade and business publications. Her specialties include food, hospitality and emerging social/ business trends.

ALL ABOUT BOB Some business associates weigh in on their experiences with Bob Kay LARRY NELSON, president and chief executive officer of the Lounsbury Group of Moncton, New Brunswick, the owner of the five-unit Lounsbury Furniture: “I have known Mr. Kay for over 45 years. He was and is a pioneer in the bedding business, starting out as a very small local manufacturer and growing that business into one of the largest and oldest bedding companies in North America.

“His word is his bond, a handshake will seal any deal. He has been a personal inspiration to me, with his sage advice, along with his great grasp of what is going on in the marketplace, always giving solutions to the problems our industry might be facing at any particular point in time.

“Another quality I have most enjoyed is his ability to ask your opinion, a skill he has honed from his many business successes and also from a few missed opportunities.

“He is a realist who has given many individuals great opportunities to become better people.

“We need more people like Mr. Kay; he deserves any and all accolades that come his way.”

ALLEN SKALING, secretary-treasurer of Springwall Sleep Products: “I have worked for Bob Kay for over 39 years. Bob is a hands-on person who is able to assess a situation quickly and get to the heart of the issue and put it in perspective. He leaves the details of what to do to his employees. He has always said that he never faults an employee for making a decision, unless he neglects to fix a previous decision that was either wrong or only partially right. He is a tough negotiator, but once the deal is struck he lives up to the deal. He has taught me that if you have to substitute, you never sub down, always up. Your reputation is on the line and second best is not good enough. This holds true in every business he is involved.

“I do not believe he will ever ‘retire’. If something piques his interest he is going to get involved – enthusiasm and determination will always override age.”

LAINE REYNOLDS, chairman of the Canadian Home Furnishings Alliance and vice president of sales for Superstyle Furniture: “Bob Kay is a successful, high-energy business entrepreneur who through his vision and leadership has developed the Springwall brand into a significant bedding resource in a highly competitive sector of our industry. In recognizing his extensive professional accomplishments and his commitment and dedication to community involvement, Bob is a most deserving recipient of the CHFA Lifetime Achievement Award.

“Many people have benefitted from Bob Kay’s risk taking spirit. In the true style of an entrepreneur he is able to perceive opportunities and take advantage of them. Bob Kay is not afraid to take risks into the ‘unknowns’ of business, but always with a calculated assessment of the possible outcomes, and respect for the value of budgets and the planning process.”

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BY THE NUMBERS u

MODEST

growth AHEAD

Furniture store sales should grow modestly in 2013. So should those of home furnishings stores. The consumer’s net worth is improving and the housing market continues to be relatively strong. These should result in a very measured level of growth for big ticket retailers in the months ahead. BY MICHAEL J. KNELL

O

NE THING IS CERTAIN: 2013

won’t set new sales records for the owners and operators of furniture, mattress and major appliance stores in this country. This isn’t to say things haven’t improved over 2012, they have, but the growth rates seen in these heady years before the Great Recession of 2008 aren’t likely to come back in the foreseeable future.

While there are certainly exceptions to be found, most retailers – whether the owner of a comparatively small family-owned enterprise or the leader of our largest full-line furniture merchant – have found growth hard to come by and, in some cases, extraordinary growth has come from business activities other than the merchandising and marketing of our industry’s core product lines.

Perhaps the industry’s most significant single event of 2013 was the acquisition of The Brick, the Edmonton-headquartered high-impact promoter, by its arch-rival, the Toronto-based family controlled Leon’s Furniture in a deal valued at just over $700 million, which incidentally may be the largest deal of its type in the industry’s history.

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The other major news story of interest to furniture, mattress and major appliance retailers is the continuing sad saga that is Sears Canada, which continued to struggle throughout 2013.

The multi-channel retailer turned much of its prime downtown real estate into cash throughout the year and invested little or none of the proceeds into the process of returning itself to its glory days as a this country’s ‘go to’ retailer.

The company also admitted that by the end of the third quarter, its sales of major appliances had fallen 2.5% year-over-year and sales in its ‘home and hardlines’ segment (which includes furniture and mattresses) was down 8.9%.

On the other hand, it unveiled a new store concept for its Sears Home network albeit at only two of its 40-odd locations. While the concepts themselves earned considerable praise, the question is will it be expanded across the rest of the network?

The really big news on the retail scene in 2013 was the entry of cheap-chic specialist Target into the Canadian market. Their splash wasn’t as big as expected, but when linked to the impending arrival of other big U.S. retail names – including Nordstrum and Saks – has ignited concern about an impending American invasion. Fortunately, most of these big names are not active furniture, mattress and major appliance merchants. With the exception of the already established Ashley Furniture Home Stores and La-Z-Boy Furniture Galleries, there has been little expressed desire by other members of the Top 100 U.S. furniture retailers to enter the Canadian market.

THE STATE OF THE CANADIAN CONSUMER

For the second or third consecutive year (depending on how one views the data), the Canadian consumer showed few signs of returning to the spending habits she employed before the meltdown of 2008. But this doesn’t mean there isn’t any good news. The most significant piece being that, according to Statistics Canada, 69% of all Canadian households own their home – giving her a sense of financial stability not shared by her cousins in the United States.

Equally important, on a per capita basis, the typical Canadian consumer’s net worth breached

the $200,000 mark for the first time ever in 2013 with household net worth coming in at twice that.

Offsetting these advances are several factors, perhaps the most important of which is average household debt which rose to $1.64 for every $1 of disposable income in the closing months of 2013 – a new record. Furthermore, median household income is stuck in a rut at $68,000 – a figure that has changed little in the past five years.

While overall household spending was up 2.7% in 2011 – the last year for which figures are available – spending on household furnishings fell 2.3% to $864, although spending on major appliances was up 7.7% to $448.

With unemployment stuck at just over 7% for most of 2013, consumers remain concerned about job security, which when coupled with income stagnation and rising debt levels is causing her to be more cautious, especially when it comes to furniture, mattresses and, to some extent, major appliances.

In recent years, consumer confidence has become the most important bellwether to watch when forecasting the fortunes of furniture, mattress and major appliance retailers – much more so that the state of the housing market or any

other measure. The three major indices published in this country – by the Conference Board of Canada, TNS Canada and Neilsen Canada – all feature a ‘major purchases question’, which basically asks “is now a good time to make a major purchase such as a house, car or other big ticket item?”

All three surveys show that those saying now is not a good time to make a major purchase outnumber – by a relatively small, but nonetheless real margin – those holding the opposing view. In fact, the TNS survey shows its ‘buy index’ fell to the lowest level seen in several years in October 2013. }

Seen here are the four executives that steered the sale of The Brick, the Edmonton-based high impact promoter, to its arch-rival, Leon’s Furniture of Toronto.

From left to right are: Bill Gregson, then executive chairman of The Brick; Marc J. Leon, chairman of Leon’s Furniture; Vi Konkle, now the former president and CEO of The Brick; and, Terry Leon, president and CEO of Leon’s Furniture.

(CNW Group/Leon’s Furniture Limited) HomeGoodsOnline.ca

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The publicly-held and family-managed Leon’s Furniture became one of the largest furniture, mattress and major appliance retailers in North America when it completed its acquisition of archrival The Brick in late March 2013. Seen here is their store in Kitchener, Ontario.

TRADITIONAL DRIVERS STABLE

Conventional industry wisdom has always linked housing starts and sales to retail sales of furniture, mattress and major appliances. While it’s not as powerful an indicator as it once was, people who buy homes eventually and usually furnish them, so it remains important to understand the direction the housing market is taking.

The much anticipated ‘housing bubble’ failed to burst in 2013, indeed there is an emerging view among economists and academics that the Canadian housing market isn’t overvalued and won’t crash because the underlying economic fundamentals support the current pricing and value model. If this view holds sway, this is good news indeed for Canadian furniture, mattress and major appliance retailers.

The Canada Mortgage & Housing Corporation (CMHC) is forecasting housing starts will end up at 182,800 units in 2013 – a 15% drop from the 214,827 units built in 2012 and the first time in almost a decade where they haven’t at least approached the 200,000 mark. The point forecast for next year is 186,600 units. Most experts agree this level of starts is in line with Canada’s demographic fundamentals; that is, it supports the pace of new household formation in this country.

For the resale market, CMHC is offering a

point forecast of 448,900 units to be sold by the Canadian Real Estate Association’s Multiple Listing Service (MLS) this year – which is essentially unchanged from the 453,372 units sold in 2012.

In 2014, the point forecast is expected to gain 4.2% to 467,600 units.

The national average price for a house sold through the MLS is expected to reach $374,800 at the end of 2013, a year-over-year gain of 2.7%. It is forecast to gain a further 2.1% to $382,800 in 2014.

The second traditional driver is interest rates. Here, the news for big ticket retailers remains favourable as the Bank of Canada isn’t expected to allow rates to rise significantly over the next 12 to 18 months. However, the data suggests low interest rates have done more to fuel the housing market and automotive sector, both of which have outperformed both the economy as-a-whole and the retail sector as-a-whole for past few years. Indeed, CREA has attributed much of 2013’s sales activity to consumers seeking to enter the housing market ahead of any upticks in mortgage lending rates, which actually saw some minor increases in the second half of the year.

FURNITURE AND HOME FURNISHINGS STORE SALES

Statistics Canada’s monthly Retail Trade report details sales by type of store and is probably the industry’s best ongoing performance barometer.

It should be remembered Statistics Canada defines a furniture store as a retail establishment that generates 51% or more of its annual revenue from the sale of furniture and mattresses. The balance can be anything at all, but the typical store’s product profile includes major appliances, consumer electronics, floor coverings and other home furnishings – all to varying degrees.

Just prior to press time, Statistics Canada reported actual (not seasonally adjusted) furniture store sales for the first nine months of 2013 were $7.20 billion, an uptick of 2.7% over the $7.03 billion for the same period of 2012, marking the third consecutive year of improvement in the January to September period.

Home furnishings stores – which sell everything from floor covering to lamps and lighting,

Furniture Store, Home Furnishings Store, Electronics & Appliance Store Sales In Current $ (thousands). From January 2011 to September 2013

Jan-11

Feb-11

Mar-11

Apr-11

May-11

Jun-11

Jul-11

Aug-11

Sep-11

Oct-11

Nov-11

Dec-11

Jan-12

Feb-12

Mar-12

Furniture stores

704947

650117

722271

761908

785142

799586

826758

829836

835617

808489

815420

915784

728510

658965

756027

Home furnishings stores

391654

348018

428275

438354

447892

470071

447580

486763

461727

496410

527152

627368

401223

387525

439708

Electronics and appliance stores

1067409

956324 1148365 1071996 1107170 1122182 1144935 1245728 1263133 1215159 1389186 2251857 1056285

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HGO merchandiser

955301 1121660

linens, decorative accessories and wall art – rungup year-to-date sales for the first three quarters of $4.06 billion, up 2.3% compared to $3.98 billion for the prior year.

The third member of the big ticket home group – electronics and appliance stores – weren’t having as good a year as through to the end of September were $9.94 billion, down 3.9% from the $10.3 billion rung-up during the comparable period of 2012.

How are these merchants going to end out the year? That’s hard to say, especially since furniture stores recorded a marginal 0.8% sales uptick to $9.53 billion in 2012 but still well below the high water mark of $10.2 billion left in 2008. It would not be unreasonable to suggest 2013 will end up slightly – say 1.5% – ahead of 2012.

Home furnishings stores fared much better as their 2012 sales totaled $5.69 billion, a gain of 2.1% over the $5.57 billion for 2011. And the pace they’re going suggests their sales will advance

by at least 2% in 2013. After all, it’s less expensive for the consumer to change out the lamps and pillows in her living room than it is to replace an entire upholstery suite.

Electronics and appliance stores are generally expected to suffer their third year of declining sales in 2013. They fell 6.0% last year to $14.0 billion, and unless the Holiday Season is very good to them they will probably not make that mark.

Considering the furniture, mattress and major appliance retailers’ traditional business drivers are somewhat in their favour, 2014 should be another year of modest growth. But it will probably be 2016 before sales are back to their 2008 levels. Allowing for inflation (albeit very modest), it could be 2018 before the industry has recovered from the Great Recession. At least, things are moving in the right direction. HGO MICHAEL J. KNELL is publisher and editor of

Home Goods Online.

Sears Canada turned a number of their prime store locations into cash by selling the leases back to their landlords.

This has caused much speculation about the future of the multichannel retailer, which continues to be a leader in the sales of furniture, mattresses and major appliances.

Apr-12

May-12

Jun-12

Jul-12

Aug-12

Sep-12

Oct-12

Nov-12

Dec-12

Jan-13

Feb-13

Mar-13

Apr-13

May-13

Jun-13

Jul-13

Aug-13

Sept-13

728197

795918

816100

836264

855249

850990

789554

832980

886437

740352

641507

760005

779173

846184

839723

863601

881654

850915

426525

451641

461243

475096

490253

449926

507233

579363

629953

434344

369776

432422

437918

467803

454598

482412

498136

482636

977070 1029305 1094829 1057408 1203939 1172131 1092506 1374134 1953203 1083723

945932 1117242 1070297 1100326 1101506 1116648 1230714 1173423 Source: Statistics Canada Monthly Retail Trade Survey

HomeGoodsOnline.ca

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