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Michael Knell’s
HGO merchandiser
HomeGoodsOnline.ca
SUMMER 2021 Volume Ten, Issue 2
dex10
opens, a furniture
store without
sales associates
THE TARIFFS – THE ARGUMENTS FOR AND AGAINST
CONTENTS
18 BY THE NUMBERS
TARIFFS: A STATISTICAL
BACKGROUND
At the apparent market level, upholstery sales
in this country are generally growing, despite
the aberration of the pandemic. But one thing
remains clear: imports are growing faster as
Canadian-made product loses space on the
retail floor. HGO looks at the hard numbers
through the end of 2020 with an update on the
first quarter of 2021.
20 OPENINGS
THE FURNITURE STORE OF
THE FUTURE
A unique retail concept designed to meet the
challenges of the pandemic and the needs of
12
the 21st century shopper, dex10 allows the
customer to walk into the store and purchase
a piece of furniture – that they can see and
touch – without having to consult with a
salesperson. A report from our contributing
6 EDITOR’S LETTER editor, Ashley Newport.
Michael Knell’s
HGO merchandiser
HomeGoodsOnline.ca
NOT A SIMPLE PROBLEM
25
SUMMER 2021 Volume Ten, Issue 2
Everyone who opposes the tariff on motion INDUSTRY
and leather talks about the cost to the retailer CALENDAR
and the consumer, but not the heart of the A list of furniture, mattress and appliance
matter. The People’s Republic of China is industry events to be held across North
dex10
opens, a furniture
store without
breaking the rules and we need to find a America over the coming few months. Many
sales associates balance that ensures the Canadian industry are presented in a digital format.
survives. We can’t let furniture go the way of
THE TARIFFS – THE ARGUMENTS FOR AND AGAINST
the five core major appliances, which aren’t
ON OUR COVER: manufactured in this country any longer.
ADVERTISERS’
8 INDEX
Geoff Dodsworth, founder
and chief executive officer MANUFACTURING
of dex10, is seen here on TARIFFS: THE REASONS WHY
a promotional display just Canadian manufacturers supporting the Pages 2-3 Page 11
outside his store in The levying of anti-dumping tariffs on motion Phoenix AMD Tempur Sealy Canada
CORE Shopping Centre, and leather furniture from China and International 145 Milner Avenue
an upscale retail facility Vietnam say those countries have gotten 41 Butler Court Scarborough, ON
in downtown Calgary. away with illegally subsidizing their industry Bowmanville, ON M1S 3R1
It’s quite likely unique for decades. All they want is to compete on L1C 4P8 T: 800.268.4414
in the Canadian market. a more level playing field where everyone T: 800.661.7313 stearnsandfoster.ca
Customers can browse plays by the rules. HGO editor Michael Knell phoenixamd.com tempurpedic.ca
its innovative showroom explores their argument for seeking the Page 5 Page 26
full of seating, dining measure and what they hope to achieve. Zucora Home Goods Online
12
and bedroom options 552 Clarke Road P.O. Box 3023
but still order as though DISTRIBUTION London, ON N5V 3K5 Brighton, ON K0K
they’re casually visiting TARIFFS: THE REASONS T: 800.388.2640 1H0
its online counterpart or WHY NOT zucora.com T: 613.475.4704
any other e-commerce Import duties shouldn’t be used to protect a homegoodsonline.ca
Page 7
store for that matter. All domestic industry that fails to invest in itself. Las Vegas Market
without consulting a sales Critics say the motion and leather duties 475 S. Grand
association. If they have were not only too high, but they were also Central Pkwy.
a question, they can ask poorly timed and could financially cripple Las Vegas, NV 89106
Alexa. the financial performance of many Canadian T: 702.599.9621
furniture retailers. HGO editor Michael Knell lasvegasmarket.com
explains the other side of the issue.
4 HGO merchandiser
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EDITOR’S LETTER
HGO merchandiser
NOT A SIMPLE MICHAEL J. KNELL
SUMMER 2021 • VOLUME TEN, ISSUE 2
ISSN 2291-4765
www.HomeGoodsOnline.ca
PROBLEM
Everyone who opposes the tariff on motion and leather talks
PUBLISHER & EDITOR
Michael J. Knell
mknell@homegoodsonline.ca
MARKETING DIRECTOR
Corrie-Ann Knell
marketing@homegoodsonline.ca
about the cost to the retailer and the consumer, but not the
CONTRIBUTING EDITOR
heart of the matter. The PRC is breaking the rules and we need Ashley Newport
to find a balance that ensures the Canadian industry survives. ashley@homegoodsonline.ca
CONTRIBUTORS
I
Donald Cooper
AM AN ECONOMIC NATIONALIST. IF CANADA IS TO REMAIN A TRULY
democratic nation governed by the rule of law with a free market economy, it ART DIRECTOR
must be able to provide the necessities of life. We must be able to feed, clothe Samantha Edwards
Sam I Am Creative
and shelter all our citizens.
samiamcreative@gmail.com
Applying this to the debate revolving around the Canadian Border Services Agen-
cy’s decision to impose anti-dumping tariffs on certain furniture imports from the IT DIRECTOR
People’s Republic of China and the Socialist Republic of Vietnam isn’t as big a leap as Jayme Cousins
you might think. In House Logic
websmith@inhouselogic.com
This country must be able to manufacture furniture. It staggering we no longer
manufacture major appliances. No one makes a standard 22-cubic foot refrigerator or PUBLISHED BY
any of the five core appliances in Canada – something we’ll come to regret. We need to Windsor Bay Communications Inc.
ensure the survival of Canada’s upholstery industry, although I am unsure how. P.O. Box 1566, 120 Ontario Street
Brighton, Ontario K0K 1H0
Those opposed to the tariffs aren’t wrong when they complain about the impact on
T: 613.475.4704
pricing to the consumer, the hit on retailers’ financial performance and the inability of F: 613.475.0829
Canadian manufacturers to meet their product requirements.
Michael J. Knell, Managing Partner
But the five complainants who sought the tariff aren’t wrong when they accuse the
PUBLISHERS OF
PRC of flouting the rules and dumping their product into the Canadian market by il- HGO This Week
legally subsidizing the cost of certain key components. Home Goods Online.ca
The real danger to retailers who rely on product from the PRC is the possibility its
government will phase out these subsidies. Right now, PRC upholstery producers have © 2021
Windsor Bay Communications Inc.
a component cost advantage of roughly 60%. When gone their prices will skyrocket. All rights reserved.
The other thing tariff opponents haven’t considered is the PRC is not Canada’s
friend. It’s brutal dictatorship doesn’t abide by the conventions of international law. If Windsor Bay Communications does not accept
responsibility or liability for any mistakes or
it did, why is it threatening to execute two Canadians for crimes they didn’t commit as misprints herein, regardless of whether such errors
leverage against an extradition request from the U.S. seeking the arrest of a prominent are the result of negligence, accident or any other
citizen of the PRC? cause whatsoever. Reproduction, in whole or in part,
of this magazine is strictly forbidden without the
The tariffs aren’t going to solve the industry’s problems. Upholstery manufacturers prior written permission of the publisher.
face a host of challenges, too many to list here. With a little luck and leadership, they
may help buy the time needed for them to find their way. AFFILIATE MEMBER
Michael J. Knell
Publisher & Editor
mknell@homegoodsonline.ca
6 HGO merchandiser
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©2021 International Market Centers, LLC HomeGoodsOnline.ca 7
MANUFACTURING
TARIFFS: THE REASONS WHY
Canadian manufacturers supporting the levying of anti-dumping tariffs
on motion and leather furniture from China and Vietnam say those
countries have gotten away with illegally subsidizing their industry for
decades. All they want is to compete on a more level playing field where
everyone plays by the rules. BY MICHAEL J. KNELL
L
AST DECEMBER, FIVE CANADIAN a 75-year-old family operated company based
upholstery manufacturers jointly in Winnipeg, Manitoba and perhaps this
applied to the Canadian Border country’s largest furniture resource. They are
Services Agency (CBSA) seeking its namesake Palliser upholstery division and
tariff protection for a select group of leather- EQ3, a contemporary furniture specialist with
wrapped goods exported by certain compan- its own retail network. The others are family-
ies located in the People’s Republic of China owned and operated furniture makers based
(PRC) and the Socialist Republic of Vietnam. in the Greater Montreal Area – Elran, Jaymar
They alleged their governments illegally sub- and Fornirama.
Right: A member of the sidized the cost of key components, giving Although not one of the original complain-
production team is seen here them an unfair advantage in the marketplace. ants, the Toronto-based Brentwood Classics, a
assembling a leather chair at The members of this consortium include family owned and operated specialist in upper
Jaymar’s production facility two members of Palliser Furniture Holdings, mid-range to high-end fabric upholstery, has }
just outside of Montreal.
Below: The Montreal-based
Jaymar is best known for
its contemporary leather
upholstery. Here a member
of the production team cuts
a hide to size. The company’s
competitors in the People’s
Republic of China are believed
to have a cost base that’s 40%
and 60% lower.
8 HGO merchandiser
indicated to the CBSA it supports the impos- the WTO almost 20 years ago and is subject to
ition of the tariff regime. its regulations and practises.
In early May, after a five-month investiga- “Unfair trade practices are being used by
tion the CBSA imposed antidumping tariffs foreign counties as tools to dominate domes-
on motion furniture – such as recliners – and tic industries,” Tielmann maintains. “Once
leather stationary upholstery imported into that goal is reached prices will go up. The low
Canada from both the PRC and Vietnam. The prices are only bait and a short-term gain for
duties demanded ranged from a low of 17% to some, at best. These actions are necessary to
a high of 296%. No other furniture category allow the Canadian furniture manufacturing
– for example, fabric stationary upholstery or industry to survive and ultimately to save
bedroom furniture – is subject to the tariff. (A jobs and knowledge in Canada.”
complete list of the tariff rates and the com- The complainants are adamant the goal isn’t
panies subjected to them can be found on the to force these imported goods off the retail
CBSA’s web site.) floor, but merely to level the competitive play- Peter Tielmann, president
Peter Tielmann, chief executive officer of ing field. They maintain both the PRC and Viet- and chief executive officer of
the Palliser Furniture Holdings, notes while nam – but especially the PRC – operate a struc- Palliser Furniture Holdings,
the CBSA imposed the duties in early May of ture of subsidies and government-controlled probably the largest Canadian
this year, the effort to bring these issues to production that result in an artificial and unfair furniture resource. Both of
light has been ongoing for some time. “The export price, accusations they believe are well- its operating divisions have
process started four years ago,” he said in a documented in the international press. } supported the action.
recent interview, adding like almost every-
thing else it was impacted by the ongoing
global pandemic. “We did not choose this tim- “Unfair trade practices are being used
ing. The current disruption caused by COVID
is a short-term issue and we will need to work by foreign counties as tools to dominate
through it together.”
For those advocating the tariffs, the goal domestic industries. Once that goal is
is to focus attention on many of the illegal,
but long tolerated, trade practices of both reached prices will go up. The low prices are
the People’s Republic of China and its client
state, the Social Republic of Vietnam. And, in only bait and a short-term gain for some, at
so doing, at least partially level the competi-
tive playing field for the dwindling number best. These actions are necessary to allow the
of Canadian leather upholstery and motion
furniture manufacturers disadvantaged by
Canadian furniture manufacturing industry
those same practices, which are contrary to
the rules set down by the World Trade Or-
to survive and ultimately to save jobs and
ganisation (WTO).
It should be noted the PRC was admitted to
knowledge in Canada.” – PETER TIELMANN
HomeGoodsOnline.ca 9
“The idea here is not to squelch competition but that competition
has to be fair. Furniture dumping can result in consumers acquiring
products that may not be safe, up to code or built by workers who
are not of age and not paid a decent wage. Plus, after all, dumping
is illegal – this is true for furniture but for other goods produced
overseas and imported into Canada.” – GILLES PELLETIER
The Quebec Furniture Manufacturers As- for 60% less than North American foam pro-
sociation (QFMA) – the only such trade group ducers can obtain it for on the open market. In
still operating in North America – has come the case of polyol, the cost to them is 40% less.
out in support of the anti-dumping action and This is despite the fact foam produced in both
the reasons behind it. the PRC and North America is made using oil
“The idea here is not to squelch competition bought at world prices.
but that competition has to be fair,” QFMA Government policy in the PRC also gives
president and chief executive officer Gilles producers in China greater flexibility to pour
Pelletier told Home Goods Online. “Furniture their own foam, thereby reducing its cost.
dumping can result in consumers acquiring If a producer can pour its own foam, it also
products that may not be safe, up to code or saves on the cost transporting to its factory.
built by workers who are not of age and not The Palliser and EQ3 secure their foam from
paid a decent wage. Plus, after all, dumping is suppliers in Calgary and bring it to Winni-
illegal – this is true for furniture but for other peg, where their factories are located. There
goods produced overseas and imported into are few foam suppliers in Quebec. Furniture
Canada.” manufacturers in that province also source
The five complaining manufacturers stress the component from suppliers in Ontario and
their objective is to establish a level playing the northeastern United States.
field unfettered by artificial foreign govern- The complainants believe PRC government
ment intervention. policies and actions mean the cost of a piece
of foam at assembly may well be one-third of
Gilles Pelletier, president THE REASONS FOR that paid by a Canadian producer.
and chief executive officer ANTI-DUMPING TARIFFS Raw steel is used to make the motion mech-
of the Quebec Furniture By imposing the tariffs, the CBSA determined anisms used in reclining chairs, sofas, futons,
Manufacturers Association. His both the PRC and Vietnam are dumping mo- sofa beds and similar products. Once again,
organization, which represents tion furniture and leather stationary uphol- the PRC government controls the price of raw
furniture manufacturers, stery into the Canadian market, contrary to steel, typically charging their own factories
supports the imposition of WTO regulations. Dumping is when a manu- 25% less than that paid by suppliers to the
anti-dumping duties on motion facturer charges retailers in a targeted export furniture industry in Canada and the United
furniture and leather stationary market (in this case, Canada) less for a certain States. It should be noted raw steel is also a
upholstery from the People’s product than it does retailers in its own do- commodity bought at world prices. Also, ver-
Republic of China and the mestic market. tical integration on the part of Chinese pro-
Socialist Republic of Vietnam. The complainants believe when it comes ducers eliminates the cost of transportation,
to motion furniture and leather stationary suggesting the effective cost of a mechanism
upholstery, dumping is possible because the at the point of assembly is at least half that
government of the PRC controls both the pro- paid by Canadian manufacturers.
duction of the finished, assembled product By design, factories in the PRC focus on
and the price of materials critical to its manu- the mass market while Canadian manufac-
facture. The best examples are urethane foam turers tend to specialise in creating furniture
and steel. assortments that can be customised to reflect
The foam used to create seating cushion is the needs and tastes of the consumer – what
made from two petrochemicals – TDI (toluene is usually referred to as the ‘tag order’ mar-
diisocyanate) and polyol. The government of ket. This creates complexities and costs their
the PRC owns the petrochemical company Chinese and Vietnamese competitors do not
that produces both agents and in the case of share. Canadian furniture makers who manu-
TDI, sells it Chinese furniture manufacturers facture in this country – employing Canadian }
10 HGO merchandiserproud
supporter of hockey
Sealy® Canada is the official mattress of Canada’s
National Women’s Team and Proud Partner of the
2021 IIHF Women’s World Championship.
HomeGoodsOnline.ca 11“The tariff at 295% applies to only about 11% of the
domestic market for upholstery and only about 3.3%
of the total Canadian furniture market.”– ART DEFEHR
workers and paying Canadian-level wages
and benefits to do so – cannot compete in the THE FALLOUT FROM
mass market because they cannot get close 20 YEARS OF DUMPING
enough in price. The impact of PRC government policies relat-
As the QFMA’s Pelletier points out, “Even ed to the manufacturing and export of motion
if we did not pay our workers, it would be im- furniture and leather stationary upholstery
Art DeFehr, executive possible to match the prices of goods that are can be shown. For example, in 2003 – the year
chairman of Palliser Furniture being dumped and subsidised.” the PRC was admitted to the WTO – Palliser
Holdings, points out that the During its investigation, the CBSA identi- operated six upholstery factories in this coun-
illegal trade practices China fied 26 different subsidy programs offered by try. Today, it operates only one, which produ-
has engaged in have gone the government of the PRC to benefit uphol- ces 95% of the furniture it sells to retailers in
unchallenged for years and stered furniture manufacturers and exporters. Canada. (Palliser also operates facilities in
the anti-dumping complaint is For the complainants, this means they com- Mexico to serve retailers and consumers in
an attempt to at least partially pete under different cost conditions, ones the United States.)
level the playing field. which allow factories in the People’s Republic Daniel Walker, owner and chief executive
of China and the Socialist Republic of Viet- officer of high-end upholstery maker Jaymar,
nam to sell their product to Canadian retail- notes in the early 2000s his company – then
ers for less than they charge retailers in their owned by the late George Reinitz – employed
home markets. some 300 people with annual sales in the $40
“With materials, they start off with a cost million range. Today, its workforce is half that
base that’s 40% to 60% lower,” Palliser Furni- size and sales are significantly lower.
ture Group executive chairman Art DeFehr In 2003, Canadian manufacturers ac-
told the Globe & Mail in an interview earlier counted for more than 50% of the upholstery
this year. sold to Canadian consumers. By 2020, their }
12 HGO merchandisermarket share had fallen to slightly less than
18%, according to recent statistics released by
“The cost of manufacturing is going
Industry Canada.
Meanwhile, the market share of imports
up like crazy, making us less and less
from the People’s Republic of China and the
Socialist Republic of Vietnam went from prac-
competitive. I can’t compete with China
tically zero in 2003 to approximately 67% last directly.” – DANIEL WALKER
year.
Walker points out while the cost of foam
and steel is artificially low for manufacturers It should be noted the United States im-
in the PRC, their costs have been rising sig- poses a 25% tariff on all categories of fur-
nificantly for Canadian producers in recent niture imported into that country from the
months. “The cost of manufacturing is going PRC. Except for motion furniture and sta-
up like crazy, making us less and less com- tionary leather upholstery, furniture imports
petitive,” he told HGO. “I can’t compete with from both the PRC and Vietnam are subject
China directly.” to the standard WTO most favoured nation
Over the past decade, the number of Can- tariff of 9%.
adian upholstery manufacturers, at least The QFMA’s Pelletier acknowledged the
those employing two or more people, has immediate levying of the anti-dumping tariff
shrunk practically in half – from 254 in 2012 to produced a sudden shock to retail prices. “We
155 in 2020 – according to figures published understand consumers were getting a very
in Statistics Canada Business Counts report. good deal,” he said. “We also understand re-
“We believe about half of all furniture tailers may have gotten stuck with incoming Daniel Walker, owner and
manufacturing jobs have been lost over those containers. But dumping is still illegal and we president of the Montreal-
years,” said the QFMA’s Pelletier. believe the tariff was long overdue.” based Jaymar Furniture,
which he acquired in 2013. He
TARIFFS’ IMPACT ON THE ULTIMATE GOAL notes that when the People’s
PRODUCT AND PRICING For the five complainants and their support- Republic of China first joined
The preliminary tariffs imposed by the CBSA ers, the goal imposing of these anti-dumping the World Trade Organization
on imports of motion furniture and leather measures is the preservation of the leather back in 2003, the company
stationary upholstery impacts a small portion upholstery manufacturing in this country. employed far many more
of the overall market for upholstered furniture It is their view Canadian retailers and people than it does today and
in Canada, which at the wholesale or apparent consumers would or should support such enjoyed much higher sales.
market level (that is, before retail mark-ups, a position, pointing out retailers want level
sales taxes and related costs) is estimated to playing field with other retailers. Canadian
have a current value of $1.6 billion annually. consumers also want to have jobs that pay
Palliser’s DeFehr points out, “The tariff at Canadian salaries, and both should under-
295% applies to only about 11% of the domes- stand furniture manufacturers want the same
tic market for upholstery and only about 3.3% opportunities.
of the total Canadian furniture market.” “Having a level playing field will allow them
An examination of the CBSA’s announce- to compete on a fair basis,” Palliser’s Tiel-
ment reveals the average tariff imposed on 36 mann said. “That can lead to re-investment
importers named was about 60%. The highest and growth in Canada again. We, for one, have
tariffs were levied on those who, for whatever plans under way to expand manufacturing
reason, didn’t respond to the CBSA’s request capacities hiring hundreds of people.
for information during the initial investigation. “All we want is a fair business environment
The CBSA is expected to establish a more and survival of the manufacturing sector in
permanent set of anti-dumping tariffs on the Canada,” he continued, “allowing Canadians
products in question on August 3. After that, to continue making furniture for Canadians
the Canadian International Trade Tribunal and people of other countries.”
(CITT) is expected to hold hearing to deter- Pelletier adds, “The goal is to protect
mine if there was enough injury done to the manufacturers from unfair trade but also to
Canadian industry by the PRC’s and Viet- protect consumers from goods that are com-
nam’s trade practices to justify the tariffs. ing illegally into this country.” HGO
A quasi-judicial body, the tribunal is ex-
pected to issue its final report on September 2 MICHAEL J. KNELL is the publisher and editor of
and, whatever the outcome, its rulings will be Home Goods Online and all three of its plat-
in place for the next five years. forms.
HomeGoodsOnline.ca 13DISTRIBUTION
MANUFACTURING
TARIFFS: THE REASONS WHY NOT
Import duties shouldn’t be used to protect a domestic industry that fails to invest
in itself. Critics say the motion and leather duties were not only too high, but they
were also poorly timed and could financially cripple the financial performance of
many Canadian furniture retailers. BY MICHAEL J. KNELL
14 HGO merchandiserStructube, a contemporary
furniture specialist, is one
T
of the 50 or so retailers who
HOSE WHO OPPOSE THE IMPOSITION oppose the tariffs. Seen
of anti-dumping tariffs on imports of here is the exterior of its
motion furniture and leather stationary unit in the Montreal
upholstery from the People’s Republic of China suburb of Laval.
(PRC) and the Socialist Republic of Vietnam
say the levies were too high, poorly timed and
could potentially cripple the financial perform-
ance of those Canadian retailers who rely on
these products to meet the needs of their cus-
tomers.
The opposition is being organized and led
by the Toronto-based Retail Council of Canada
(RCC), which has put together a coalition of
distributors who specialize in bringing in fur-
niture from the PRC and Vietnam as well as
some of its more prominent furniture retailing
members. Among these are:
Also opposing the tariff on motion and leather
• L eon’s Furniture Limited (LFL), the public- stationary upholstery is Urban Barn, the 52-unit
ly held parent to both Leon’s and The Brick, Vancouver-based retailer owned by the private equity
with about 300 stores from coast-to-coast; firm Stern Partners. Seen here the exterior of their
• Structube, the Montreal-based chain of store in Newmarket, Ontario.
contemporary furniture stores with some 74
units across the country;
• The Dufresne Group (TDG) of Winnipeg,
operators of the 11-unit Dufresne Furniture
& Appliances and the largest Ashley Fur-
niture HomeStore licensee in Canada (it
also operates the Dufresne Retail Solutions
Group);
• Crate & Barrel, the Canadian arm of the
U.S. retail home furnishings giant;
• Urban Barn, a 52-unit furniture chain based
in Burnaby, British Columbia; and,
• Mobilia, the Montreal-headquartered re-
gional chain of contemporary furniture
stores.
The Dufresne Group is a leading member of the opposition to the tariff regime.
RCC said in total some 50 Canadian retail- Seen here is the exterior of one of its 11 Dufresne Furniture & Appliance stores in
ers are actively supporting its bid to quash the Winnipeg, where its headquartered. It is also the largest Ashley HomeStore licensee
tariffs or, at least, reduce them substantially. in Canada and operator of the Dufresne Retail Solutions Group.
In summary documents issued by the Can-
adian International Trade Tribunal (CITT),
several others have also expressed opposition
to the tariffs including the Canadian branch of
Wayfair, the publicly held furniture e-commerce
giant headquartered in Boston, Massachusetts.
Two independent retailers are also listed, Dodd’s
Furniture and Jag’s Furniture & Mattress, both
of which operate in British Columbia.
Two manufacturers are also listed, the pub-
licly held consumer goods giant Dorel Indus-
tries, based in Montreal, and Fuli Furniture
International Group Limited, a manufacturer
of motion furniture and leather stationary }
HomeGoodsOnline.ca 15“To add insult to injury, retailers have hundreds of millions of dollars
worth of goods on order and thousands of containers in ocean transit and
port that they simply cannot afford to bring into Canada.” – DIANE J. BRISEBOIS
upholstery with a factory in the Chinese city While Brisebois conceded the decision fol-
of Shenzhen. lows the standard approach when dealing with
In addition to leading the charge, RCC complaints made under the Special Import
president and chief executive officer Diane Measures Act (SIMA). “What is not in any way
J. Brisebois is acting as the group’s spokes- standard is the level of duties applied by CBSA
person. Indeed, most of the others involved in this matter,” she said. “The complainants
deferred to Brisebois when ask for comment had sought relief assuming duties up to 53.58%
on this issue by Home Goods Online, although on Chinese furniture imports and 40.18% on
several were featured in news stories published Vietnamese furniture imports. Instead, CBSA
by mainstream media outlets such as the Globe landed on a range of exceptionally high provi-
& Mail, Global News and the Vancouver Prov- sional duties reaching up to 295.9% on Chinese
ince among others. furniture imports and 101.5% on Vietnamese
furniture imports.
Retail Council of Canada THE REASONS AGAINST TARIFFS “Duties at these levels are highly unusual
president and chief executive Brisebois noted the five Canadian furniture and are potentially crippling to Canadian fur-
officer Diane J. Brisebois is the manufacturers who launched the complaint niture retailers as they can double the cost of
spokesperson for a group of last December allege motion furniture and Vietnamese imports and quadruple the cost
distributors and retailers who leather stationary upholstery is being dumped of Chinese imports,” she continued, pointing
oppose the CBSA’s decision to into the Canadian market – that is, its being out these provisional duties must be paid – or
impose anti-dumping tariffs sold to retailers here for less than it is sold to security posted – before the product can enter
on imports of motion furniture merchants in their home countries – while its Canada.
and leather stationary production is also being subsidized by the gov- This in turn, creates “an immense cash-flow
upholstery from the People’s ernments of Vietnam and the PRC. crunch for Canadian retailers,” she said.
Republic of Canada. “RCC disagrees strongly with the allega- RCC also argues furniture stores have been
tions,” she told HGO, adding “several Can- one of the most adversely affected retail sub-
adian importers and furniture retailers have sectors during the global COVID-19 pandemic.
made every effort to co-operate with CBSA “While we know that this product category
(Canadian Border Services Agency) and look was highly in demand during the pandemic,
forward to our ‘day in court’ at the CITT when many retailers still suffered losses and incurred
we can address the allegations of dumping, additional overhead costs due to ongoing
subsidy and whether any injury has arisen to brick-and-mortar consumer capacity restric-
Canadian manufacturers.” tions in many jurisdictions across Canada and
The CITT is expected to hold those hearings in some markets extended shutdowns,” Brise-
– at press time, they were expected to be vir- bois said. “For example, in Ontario many of
tual – sometime in August and is expected to our retailers’ stores were closed for more than
make its final ruling in early September. 200 days since the beginning of the pandemic
Brisebois also questions the CBSA’s deci- thus they could only rely on their e-commerce
sion to impose much higher tariffs than the and curbside pickup options (where it was al-
complainants originally sought and without lowed and possible).
providing a grace period before they came into “To add insult to injury, retailers have hun-
effect, pointing out many retailers had product dreds of millions of dollars worth of goods on
‘on the water’ when they were imposed. order and thousands of containers in ocean
Many retailers expressed astonishment to transit and port that they simply cannot afford
their local newspapers when the duties were to bring into Canada,” she continued, adding,
imposed. “Even if retailers could find the financing to
For example, Jeet Jaswal, owner of MJM pay the provisional duties, it is unlikely that
Furniture in Surry and Coquitlam told the Van- they could sell much of it at the far higher con-
couver Province he was fortunate to be able to sumer prices that would result from these in-
divert four incoming containers of sofas and creases in the cost-of-goods. To add to our re-
recliners to the U.S. so he wouldn’t have to pay tailers’ frustration and challenges, there is no
the new anti-dumping tariff. way for them to obtain alternative products }
16 HGO merchandiserfrom domestic manufacturers, who have next cumstances,” she says. “What we are asking is
to no current capacity.” that the two ministers consider whether these
Many others opposing the tariff expressed circumstances call for remission, given the ex-
similar concerns. tremely high level of duties, the cost implica-
For example, Mobilia president Johan- tions for Canadian consumers and businesses
nes Kau told the Globe & Mail his company such as ours and the challenging economy faced
is maintaining its pricing and absorbing the by Canadian furniture retailers and employees.”
losses where necessary. It is also trying to find
new sources for the goods in question. THE RCC’S ROLE AND INTEREST
“We’re doing everything we can to find alter- This might very well be the first time the Retail
nate sourcing,” Kau said, noting in some cases Council of Canada has gotten involved in a fur-
Mobilia has shifted to buying from Italian sup- niture industry-specific dispute but Brisebois
pliers. “We need a robust furniture [manufac- points out the association has a large number
turing] industry here in Canada. Having said of members who sell furniture and home fur-
that, even those manufacturers that exist could nishings – whether its just part of their assort-
not come close to supplying all of these prod- ment or as specialist in the category.
ucts – that’s just not realistic.” “RCC is the national association repre-
LFL president and chief executive offi- senting retailers of all types and sizes across
cer Mike Walsh made a similar observation. Canada,” she told HGO. “It has and will con-
While his company buys some product from tinue to take the appropriate actions to rep-
Canadian manufacturers, this country’s in- resent, advocate and defend retailers in cases
dustry can’t meet the volume it requires. “The where dumping is alleged by a domestic manu-
production in Canada can’t satisfy our de- facturer. It is important to our sector as well
mand,” he said. as to the customers we serve and to the entire
Brisebois also pointed out the pandemic se- industry as a whole.”
verely disrupted supply chains throughout the Brisebois was also quick to stress the RCC
industry. “Raw material was and continues to respects the laws design to protect trade and
be in short supply thus increasing challenges ensure fair competition.
for retailers and their consumers,” she said. “RCC also maintains that a strong and
The long-time association chief also said her healthy domestic manufacturing market is of
organization disagrees with the complainants’ benefit to all stakeholders in Canada,” she says.
allegation the PRC and Vietnam are illegally “However, it also maintains that import duties
subsidizing their manufacturers allowing them should not be used as a way to limit the abil-
to dump their product into the Canadian mar- ity of retailers to source goods from around the
ket – “and especially with the assertion that world that may not be available in Canada or
they have suffered injury.” that may be in short supply domestically.”
“Most of these product types are not and She also points out when import duties were
cannot plausibly be made in Canada and the applied to a variety of apparel goods sourced
Canadian furniture manufacturers are in fact from outside the country some decades ago,
backlogged on production of the furniture that the ruling body at the time noted it was in-
retailers do buy from them,” Brisebois main- cumbent on domestic manufacturers to invest
tains, noting at the time they filed, the com- in innovation, new technologies and state-
plainants did not anticipate so high a tariff of-the-art processes to ensure they remained
range. competitive and at the cutting edge of product
selection, assortment and availability so that
IMMEDIATE ACTIONS their products reflected the ever-changing
While the CBSA and the CITT are work- tastes and needs of consumers.
ing through the process, the RCC is asking “As the U.S. recognized some time ago, im-
Bill Blair, the Minister of Public Security and port duties also come with unintended conse-
Chrystia Freeland, the Minister of Finance, to quences if the appropriate incentives and quid
grant remission of the provisional duties, al- pro quo measures are not in place,” Brisebois
though Brisebois admits it may not be granted. said. “If the duties simply protect a domestic
“This discretion has been used only rarely,” sector that does not invest in its future and
she admits, noting it was exercised in a case in- does not innovative – no one wins.” HGO
volving certain types of steel pipe used in the
resource industry. “While unusual, we presume MICHAEL J. KNELL is the publisher and editor
that the rationale was to help a threatened and of Home Goods Online and all three of its plat-
important industry survive in challenging cir- forms.
HomeGoodsOnline.ca 17BY THE NUMBERS
TARIFFS: A STATISTICAL BACKGROUND
At the apparent market level, upholstery sales in this country are generally growing,
despite the aberration of the pandemic. But one thing remains clear: imports are growing
as Canadian-made product loses space on the retail floor. BY MICHAEL J. KNELL
W
HILE IN MANY WAYS, THE compared to 2019, writing off 2020 as fabric, so it’s difficult to give precise
global pandemic was a an aberration created by COVID-19, category data. The same is true of In-
boon to Canada’s uphol- although it should be remembered the novation, Science and Economic De-
stery manufacturers as drove demand pandemic wasn’t declared until mid- velopment Canada (formerly Industry
create production backlogs not seen March 2020. Canada) and its import/export data.
for quite some time. But an analysis of As of press time, the most reliable While Statistics Canada reports re-
the numbers published by Statistics data available is for the first quarter – tail sales by commodity, it only pub-
Canada and other government agen- that is, the January to March period – lishes sales of indoor furniture and it
cies suggests that in other ways, the of the year. The trends are positive. doesn’t break out upholstery – or any of
once-in-a-century cataclysm merely Canadian domestic shipments are its categories – lumping it in with every
added insult to injury, quickening the up over the comparable periods for other kind of furnishings.
industry’s recent slide into an ever- both 2020 (8.8%) and 2019 (15.6%). HGO has developed what it believes
smaller share of retail floors across the Exports are also up 6.8% over the first to be reasonable estimates for the size
country. quarter of 2019. of the upholstery market in Canada at
We’ve updated the chart first pub- Imports for the first quarter – before retail. These are the result of off-the-
lished in these pages in our Winter the anti-dumping tariffs were levied record conversations with a number
2020-2021 edition – The Upholstery Is- against imports of motion furniture of seasoned industry observers. While
sue – to include full-year apparent mar- and leather stationary upholstery on they weren’t unified in their outlook,
ket statistics for the year 2020. As you May 5, 2021 – also made significant their observations informed these es-
can see, overall domestic shipments of gains, climbing 13.9% over 2019 after timates.
upholstery by Canadian manufacturers falling 14.4% for same period last year. There is little hard data available in
fell for the third consecutive year, drop- Imports from all three of Canadi- the public sphere and this country’s
ping 8.6% to $512.3 million. an retailer’s largest offshore sources three largest furniture retailers – Le-
Similarly, imports into the Canadian were up significantly in the first three on’s Furniture Limited (parent of Le-
market also fell, in all by 9.6%. What’s months of the year (see chart). on’s and The Brick); IKEA Canada; and,
particularly interesting is imports from The data suggests the apparent BMTC Group (parent of Brault & Mar-
the People’s Republic of China (PRC) market for upholstery grew 29.1% over tineau, EconoMax and Ameublements
and the United States declined by 11.2% 2020 and 15.7% over 2019 – good news Tanguay) – don’t generally provide in-
and 18.5% but those from the Socialist for retailers hoping to attract consum- sight into their sales mix, even though
Republic of Vietnam actually climbed er attention as the economy begins to two of them are publicly-held.
26.1%. re-open across the country. And, for the Complicating the picture further is
When all is said and done, the appar- first quarter of 2021, imports account- the increasing popularity of the pure-
ent market for upholstery in Canada – ed for 81.2% of the apparent Canadian play e-commerce (or DTC) furniture
the value of domestic shipments less market. merchants. Exactly how much uphol-
export plus imports before retail mark- stery they sell is a matter for debate
ups and sales taxes – fell 9.9% in 2020 THE DATA’S DOWNFALL and speculation.
to $1.42 billion from $1.58 billion the AND HGO’S ESTIMATES When it comes to retail in this coun-
year before. Statistics Canada only publishes dol- try, there are only four provinces that
lar volumes and doesn’t perform unit matter as together they account for
THE FIRST QUARTER counts in its surveys. Manufacturing 89% of all business written in any given
OF 2021 data breaks indoor furniture into four year. They are Ontario (38%); Quebec
Most economists and other financial general categories including uphol- (25%); Alberta (12%); and, British Co-
analysts are urging 2021’s performance stery, case goods, metal and mattress- lumbia (14%).
– whether for factory shipments or re- es. It doesn’t break down upholstery Our research leads us to conclude
tail sales – should be more properly into motion or stationary, leather or upholstery – stationary and motion, }
18 HGO merchandiserTHE APPARENT MARKET FOR UPHOLSTERY IN CANADA
Full year 2015 to 2020 / First quarter 2019 to 2021 In millions of current Canadian dollars
2015 2016 2017 2018 2019 2020 1Q -2019 1Q - 2020 1Q - 2021
Total Domestic Shipments $630.7 $710.4 $786.4 $582.2 $560.4 $512.3 $131.1 $139.3 $151.6
percent change 18.4 12.3 10.7 -26.0 -3.7 -8.6 6.2 8.8
Total Canadian Exports $235.7 $263.9 $272.3 $267.9 $261.5 $249.9 $64.5 $66.7 $68.9
percent change 28.9 12.0 3.2 -1.6 -2.4 -4.4 3.4 3.2
share of shipments 37.4 37.1 34.2 46.0 46.6 48.8 49.2 47.9 45.4
Exports to the United States $231.6 $259.6 $267.4 $260.2 $253.4 $243.7 $62.5 $64.7 $68.0
percent change 30.9 12.1 3.0 -2.7 -2.6 -3.8 3.5 5.1
share of exports 98.2 98.4 98.2 97.1 97.0 97.5 96.9 97.0 98.7
Total Canadian Imports $1,147.2 $1,146.4 $1,231.2 $1,244.3 $1,276.5 $1,153.3 $323.7 $277.2 $368.8
percent change 9.3 0.0 7.4 0.6 4.2 -9.6 -14.4 24.3
Imports from the People’s $598.9 $621.1 $690.9 $709.4 $737.6 $655.3 $196.3 $177.0 $214.8
Republic of China
percent change 7.4 3.7 11.2 2.7 4.0 -11.2 -9.8 21.4
Imports from the United States $389.5 $354.7 $332.6 $301.5 $280.1 $228.2 $67.3 $66.1 $67.8
percent change -28.9 -8.9 -6.2 -9.7 -7.1 -18.5 -1.8 2.6
Imports from the Socialist $45.6 $51.7 $73.2 $92.2 $114.6 $144.5 $22.0 $34.4 $40.4
Republic of Vietnam
percent change 19.9 13.2 41.8 21.0 24.2 26.1 56.4 17.5
Apparent Market $1,542.2 $1,592.9 $1,745.3 $1,558.5 $1,575.4 $1,418.7 $390.3 $349.8 $451.5
percent change 11.6 3.3 9.6 -10.2 1.1 -9.9 -10.4 29.1
Imports - market share 74.4 72.0 70.5 79.8 81.0 81.3 82.3 79.2 81.2
Sources: Innovation, Science and Economic Development Canada, Statistics Canada, others. Copyright © Windsor Bay Communications Inc., Home Goods Online.ca
fabric and leather (including sofa beds sumed Article is similar to their brick- past five years. This is about 36% of all
or sofa sleepers) – is the single largest and-mortar cousins in that their sales upholstery sales in the country.
product category for most traditional mix follows the 25% average, this would The more difficult estimate is for
brick-and-mortar furniture retailers in give them estimated Canadian uphol- the divide between fabric and leather
Canada, accounting for an average of stery sales of about $10 million annu- upholstery. Once again, there are sig-
25% of their annual sales. This percent- ally in 2018. nificant regional differences. Leather
age hasn’t really changed all that much Until early this year, Statistics Can- seems to be more popular in Quebec,
over the years, although it does vary, ada didn’t publish retail commodity urban markets and in product sold at
often considerably, among individual sales by the pure DTC players, making the higher price points. Sales mix also
retail operations. it difficult to estimate upholstery sales seems higher for leather among the
HGO’s analysis focused on 2018 – for emerging powerhouse such as the DTC contingent.
which in some ways was the last year Canadian branch of Wayfair. Our best estimate for 2018 brick-
totally untouched by the COVID-19 However, for 2018 the available data and-mortar store sales of leather uphol-
pandemic. For that year, a conserva- suggests online sales of upholstery in stery in Canada is $1.12 billion – about
tive estimate would put upholstery Canada were between $140 million to 12% of total indoor furniture and mat-
sales by Canadian retailers at $2.33 bil- $170 million annually. tress sales. This is about 48% of all up-
lion, based on Statistics Canada’s retail Of the two, stationary generates holstery sales in country. Once again,
commodity sales figures. more dollars than motion. However, there hasn’t been a significant shift in
Upholstery sales at retail grew – in there are significant regional differenc- the mix in recent years.
dollar volume at least – over the five es. For example, motion is more popu- It is against this backdrop that the
years preceding 2018, although its es- lar in suburban and rural markets than Canadian International Trade Tribunal
timate of $2.33 billion was only slightly it is in purely urban markets (such as (CITT) will decide what level of dam-
higher than the $2.32 billion sold in downtown Toronto, Montreal and Van- age, if any, imports of motion furniture
2017. At the end of 2014, they stood at couver). and leather stationary upholstery from
an estimated $2.13 billion. HGO’s best estimate for 2018 sales the PRC and Vietnam have done to fur-
These estimates cover both in-store of motion upholstery in Canada is niture manufacturers in this country. HGO
and online upholstery sales by brick- $840.8 million – which is about 9% of
and-mortar retailers but exclude those total indoor furniture and mattress MICHAEL J. KNELL is the publisher and
by pure DTC furniture retailers such as sales. Once again, the mix doesn’t editor of Home Goods Online and all
the Vancouver-based Article. If it is as- seem to have varied greatly over the three of its platforms.
HomeGoodsOnline.ca 19OPENINGS
THE
A unique retail concept
designed to meet the
challenges of the pandemic
FURNITURE and the needs of the 21st
century shopper, dex10 allows
the customer to walk into the
STORE of the store and purchase a piece of
furniture – that they can see
and touch – without having to
FUTURE consult with a salesperson.
BY ASHLEY NEWPORT
W
HILE THE PANDEMIC HAS
made life incredibly difficult
for retailers of every stripe
This dex10 product and size with rolling lock-
display is in the downs and a variety of restrictions on brick-
common traffic area and-mortar businesses, many furniture store
of high-end The CORE owners have benefitted from both a boom in
Shopping Centre, online shopping and an increase in demand for
which is popular household goods.
not only with local One retailer in particular has found a way
residents by visitors to appeal to consumers who want to see and
to Calgary. The touch their future purchase in a safe, physically
store is immediately distanced environment while never sacrificing
across from ladies’ the opportunity to buy an item with the click of
fashion specialist a mouse or press of a button on a touch screen.
Holt Renfrew.
HOW DOES IT WORK?
dex10 is a fully automated furniture retailer
occupying a recently opened 9,800 square
foot space in The CORE Shopping Centre in
downtown Calgary. It’s quite likely unique in
the Canadian market. Customers can browse
its innovative showroom full of seating, dining
and bedroom options but still order as though
they’re casually visiting its online counterpart
or any other e-commerce store for that matter.
“dex10 provides better value to Canadian
consumers by addressing current inefficien-
cies that exist in both e-commerce and brick-
and-mortar stores,” according to company
founder and chief executive officer Geoff Dod-
sworth, adding, “When a consumer buys some-
thing online, one in five (20%) are returned and
75% of the reason is related to the product not
being expected and 5% of the reason is poor
customer service.” }
20 HGO merchandiserPrior to founding dex10, he worked with a “The original version was a 1,500 square
company that dealt with a large volume of fur- foot showroom in Black Diamond, Alberta. [We
niture returns. launched it] to see if you have to drive 20 min-
“We looked at the wastage for when prod- utes, will you still come in and purchase.”
ucts show up that are bought online and are Eventually Dodsworth tried the same model
returned because they were the wrong colour – which allowed customers to enter the facility
or didn’t fit well in the room,” he says, noting by accessing a lockbox – at a 4,000 square foot
while ordering from an online retailer like Am- space before upgrading to the current 9,800
azon or Wayfair is easy, customers can end up square foot facility in what many consider to
unsatisfied with a product they couldn’t see or be Calgary’s most chic shopping environment.
touch pre-purchase. “People could go on site, search models and
Dodsworth also says when he was thinking purchase on their phone.”
about different sales models, he noticed people When asked if it was difficult to open a
who shop for furniture in person often end up store inside a shopping mall in the thick of the
paying more in the end because the cost of pandemic, Dodsworth replied saying the low-
consulting with a salesperson is baked into the contact nature of the store appeals to buyers
purchase price. who would prefer to avoid crowds. He also says
“dex10 was the brainchild of seeing an op- a lot of shoppers who might not have been as
portunity in a market and saying, ‘I can literal- tech-savvy before the crisis have become used Geoff Dodsworth, the
ly, product for product, offer consumers lower to scanning QR codes to get information, as founder and chief
cost of acquisition than any other business.’ many restaurants have transitioned from offer- executive officer of
We wanted to eliminate the cost of the sales- ing paper menus to electronic ones that must dex10, which is currently
person and what was lacking was the ability be accessed via smartphone. billed as Canada’s first
to get consumer questions answered,” Dod- “The consumer response has been terrific fully automated retail
sworth says. because the fear of coming into contact with furniture showroom.
The solution? Allow customers who are brows- other people is there and now, the consumer is He’s also president of
ing furniture in the store to quickly and easily more aware of how to scan a QR code. If you Luxury Hotel Furniture,
consult a well-known expert who can tap into an scan, it lands you on the collection page on our which serves the
incredible wealth of knowledge: Amazon’s Alexa. website and we have three Alexa’s in the store hospitality industry in
“Alexa can answer the questions commonly to answer any questions.” Western Canada.
answered by a salesperson. Taking that cost Dodsworth says Alexa can
out, we can be more competitive,” he says. give the customer a detailed
Although the idea for dex10 began brewing breakdown of the piece of furni-
some time ago, Dodsworth only opened the ture they’re perusing. “She can
company’s flagship location in December 2020 tell you if it’s leather and what
– just a few months ago. kind and colour, etc. We have to
“We launched this flagship at an ultra-luxury give the consumer the shortest
retail space to give us exposure to the market answer first and what Alexa does
and we thought it was a really good backdrop. is give a direct answer and the
We’re downtown, right beside Holt Renfrew,” option to say more,” he says.
he says, adding he and his team tested the Dodsworth says the dex10
concept at a warehouse for two years to see if doesn’t just help people save
people would purchase products at a store with money, it also saves them time
no salespeople. by allowing them to make a pur- }
Seen here is the mall entrance to
dex10, a fully automated furniture
retailer occupying a recently opened
9,800 square foot space in The CORE
Shopping Centre in downtown Calgary.
HomeGoodsOnline.ca 21Seen here at the showroom’s
official opening this past
December are four of the
Dex10 shareholders including
Christy Leeferink (top left), chase quickly. “We want the shortest path be- evidence – such as the popularity of brick-and-
Chris Leeferink (bottom left), tween experience and purchase possible. You mortar Amazon Go stores – to suggest people
Carmen Dodsworth, spouse scan a QR code, you’re two clicks away from enjoy pairing in-person browsing with online
of company founder Geoff buying it,” he says. shopping. “If you look at Amazon Go, you just
Dodsworth (top right) and The store is also focused on providing walk into Amazon and shop and then leave.
Justin Friesen (bottom right). consumers with extremely flexible shopping It’s genius,” Dodsworth says, adding dex10 ap-
hours. “I came up with the idea to create a peals to consumers because it’s a gallery where
more customized experience by letting the you can experience what you’re buying in per-
consumer shop whenever they want to shop. son without having to engage with any store
A shopper can go to access.dex10.ca (there’s a employees.
sign on outside of the store) and put in their “It’s like shopping online at Wayfair, but
name, number and email and we generate their without the 20% chance you won’t like it. If
own QR code that they can show at the front of you’re shopping online and you wonder if it’s
the store and the store will open just for them. comfortable, that’s why you go to dex10. It’s
Heat mapping and facial recognition are used, like jumping through your computer.”
so it’s controlled access,” he says, adding cus- As far as marketing goes, Dodsworth says
tomers currently cannot enter the store with- dex10 hasn’t had to rely too much on traditional
out a mask. tactics thus far and has benefitted from good,
“Outside of a mall setting, this will be avail- old-fashioned foot traffic wandering through
able 24 hours. Right now, it’s available at the on of Calgary’s leading retail destinations for
mall from 9am to 9pm,” he adds. both residents and visitors alike.
“Because of COVID, the focus has been on
WHAT MAKES the e-commerce side of the business and the
dex10 DIFFERENT? foot traffic. That’s why we’re physically here,”
While most shoppers are perfectly comfort- he says, adding that the company is also using
able shopping for anything and everything digital advertising.
– including furniture – online, some might
say dex10 still has to work harder to compete THE dex10
against the e-commerce heavyweights such as PRODUCT ASSORTMENT
Wayfair and Amazon. dex10 offers shoppers a range of products
While it’s true most people know both Way- spread across two key categories – leather up-
fair and Amazon well, there’s considerable holstery (both motion and stationary) and }
22 HGO merchandiserYou can also read
