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Michael Knell’s
HGO merchandiser
HomeGoodsOnline.ca
SUMMER 2020 Volume Nine, Issue 2
OPENS IN
Kingston
SPECIAL FEATURE
Our post-pandemic
forecast begins
CONTENTS
8
18
6 EDITOR'S LETTER
A NEW ERA BEGINS
Canadian furniture and home furnishings
18 OPENINGS
BENNETT’S OPENS
IN KINGSTON
stores had a good 2019. Sales have been moving Eric Bennett believes furniture retailing is not
Michael Knell’s
in the right direction for most of the past five a sprint. It’s a marathon and the store owner
HGO merchandiser
HomeGoodsOnline.ca
SUMMER 2020 Volume Nine, Issue 2
years or so. But that’s all going to change. The should pace himself accordingly. Opening his
question becomes, what comes next? third store here in Eastern Ontario’s largest
city is an act of faith in the next generation of
OPENS IN
Kingston
8 THE FORECAST
WHERE WE’VE BEEN: STORE
SALES AND CONSUMER SPENDING
his family’s business which is getting ready to
take the reins.
We start off by marking where the industry
SPECIAL FEATURE
Our post-pandemic
finished off at the end of 2019 with a glimpse
of how 2020 began. Furniture and home ADVERTISERS’
INDEX
forecast begins
furnishing stores had a good year even
ON OUR COVER: Marlaine though their number declined. We also look
and Eric Bennett (insert) at consumer spending on the important home Pages 2-3 Page 7
opened a third location in goods categories. Phoenix AMD Las Vegas Market
International 475 S. Grand
13
the Eastern Ontario city of
Kingston as the company THE FORECAST 41 Butler Court Central Pkwy.
gets ready for its fourth THE EXPERTS WEIGH IN Bowmanville, ON Las Vegas, NV 89106
generation of family As the recovery begins, time is the real enemy. L1C 4P8 T: 702.599.9621
ownership. Will there be enough to give retailers the T: 800.661.7313 lasvegasmarket.com
opportunity to adapt? An economist and a phoenixamd.com
Page 22
retail consultant and author weigh in the
Page 5 Home Goods Online
challenges facing the industry as life gets back
Zucora P.O. Box 3023
to what will be decidedly new normal.
552 Clarke Road Brighton, ON
15
London, ON K0K 1H0
THE FORECAST N5V 3K5 T: 613.475.4704
A RETAIL PERSPECTIVE T: 800.388.2640 homegoodsonline.ca
In recent weeks, we talked to a number of zucora.com
retailers across the country. While not in
total agreement, their common view was the
pandemic will change how they do business into
the foreseeable future. There’s no going back.
4 HGO merchandiser
Service is at our core.
With a legacy rooted in an industry-wide reputation for creating
exceptional customer experiences, we’ve become Canada’s
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HomeGoodsOnline.ca 5
EDITOR’S LETTER
A NEW
HGO merchandiser
SUMMER 2020 • VOLUME NINE, ISSUE 2
ISSN 2291-4765
MICHAEL J. KNELL www.HomeGoodsOnline.ca
ERA BEGINS
Canadian furniture and home furnishings stores had a
PUBLISHER & EDITOR
Michael J. Knell
mknell@homegoodsonline.ca
MARKETING DIRECTOR
Corrie-Ann Knell
marketing@homegoodsonline.ca
good 2019. Sales have been moving in the right direction
for most of the past five years or so. But that’s all going to CONTRIBUTING EDITOR
Ashley Newport
change. The question becomes, what comes next? ashley@homegoodsonline.ca
T
CONTRIBUTORS
Donald Cooper
H E WO R L D C H A N G E D O N T H E 1 1 T H O F M A R C H . N O O N E I N Shannon Houff
his or her right mind would have imagined just 24 hours earlier that
we were able to shut down our entire economy and society save for a ART DIRECTOR
select number of essential services. It had never happened before, not Samantha Edwards
Sam I Am Creative
even during either of the World Wars or the Great Depression of the samiamcreative@gmail.com
1930s. Even now, as we slowly struggle back to what will be undoubtedly a vastly
different normal, many still can’t quite believe the impact the pandemic has had on IT DIRECTOR
our lives and businesses. Jayme Cousins
In House Logic
That’s what this issue of the Merchandiser – as well as the next – will examine.
websmith@inhouselogic.com
We’ll try to figure out where this industry is going, and to the degree possible, how
we’re going to get there. We’ll start at retail, before moving on to manufacturing PUBLISHED BY
and the apparent market. Windsor Bay Communications Inc.
In the attempt to plot the way forward, the best place to start is to look at P.O. Box 1566, 120 Ontario Street
Brighton, Ontario K0K 1H0
where we’ve been. First off, we’ll look at the numbers and take an overview of T: 613.475.4704
where furniture, mattress and major appliance retailing ended up at the end of F: 613.475.0829
2019. We have a snapshot of the first quarter of 2020, based on what is admittedly Michael J. Knell, Managing Partner
preliminary data.
PUBLISHERS OF
The focus will be on brick-and-mortar or, as Statistics Canada prefers, location- HGO This Week
based retail. The reason is simple. Traditional merchants still dominate furniture, Home Goods Online.ca
mattress and major appliance retailing in this country. What little data there is © 2020
indicates that despite all the press they receive, the direct-to-consumer e-commerce Windsor Bay Communications Inc.
All rights reserved.
players – such as Amazon, Wayfair, Endy and the rest – are still minor players when
it comes to big ticket home goods. Windsor Bay Communications does not accept
We’ll also have a look at the state of the Canadian consumer and the drivers any responsibility or liability for any mistakes or
misprints herein, regardless of whether such errors
behind her desire and ability to purchase the goods we carry. are the result of negligence, accident or any other
Finally, in this issue we’ll report on the experiences of a few seasoned cause whatsoever. Reproduction, in whole or in part,
independent furniture retailers and talk with a recognized expert, speaker and of this magazine is strictly forbidden without the
prior written permission of the publisher.
author on all things retail. The goal is to give some insight into where we’re been
and where we’re going as an industry. We don’t know what tomorrow will bring, but AFFILIATE MEMBER
let’s prepare as best we can.
Michael J. Knell
Publisher & Editor
mknell@homegoodsonline.ca
6 HGO merchandiser
WHAT’S NEXT
STARTS NOW
Access thousands of furniture,
gift and home décor resources:
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Explore at LasVegasMarket.com
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Visit TogetherSafely.com to see what
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including crowd management, personal
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FE ATURED LINES: IMAZ, HiEnd Accents, Potluck Press
©2020 International Market Centers, LLC
HomeGoodsOnline.ca 7
THE
FORECAST WHERE WE’VE BEEN:
S P E C IA L E
F E AT U R STORE SALES
We start off by marking where the industry finished off
BY
MICHAEL J. at the end of 2019 with a glimpse of how 2020 began.
KNELL Furniture stores had a good year even though the number
of store fronts continued to decline. Home furnishings and
electronics stores took a similar path.
E
VEN BEFORE THE ONSET OF • Leon’s Furniture Limited (LFL): few years, although IKEA added new
the pandemic, the number of this Toronto-based publicly held full-size stores in Halifax and Quebec
furniture stores operating in operator of Leon’s, The Brick and City in 2017 and 2018, respectively. It
Canada has been shrinking steadily Appliance Canada had sales for $2.73 also shelved plans to build another
for most of the past decade. Accord- billion and a 22.7% national market full-size store in London, Ontario ear-
ing to data published by both Industry share in 2019, generated by some lier this year. It should be noted, LFL
Canada and Statistics Canada, there 304 corporate and franchise stores; and BMTC have been continuously in-
were an estimated 3,268 furniture • IKEA Canada: headquartered in vesting in their real estate, relocating
stores across the country at the end Burlington, Ontario and owned by and renovating a large number of their
of 2019. Seven years earlier there were the global home furnishings giant stores in recent years.
3,437. For the most part, the evidence based in The Netherlands, its 14 By contrast, the four largest furni-
suggests most of those lost were sin- full-size stores had revenues of ture stores in the United States had
gle unit operators. $2.53 billion during the fiscal year collective sales of US$14.7 billion last
Despite this shrinkage in numbers, ending August 31, 2019 for a 22.0% year but with only a 26% share of that
furniture store sales improved mod- market share; country’s market, according to Furni-
estly but steadily from $9.53 billion in • BMTC Group: this Montreal-based ture Today. They also operated 3,845
2012 to a record $12.0 billion last year. and publicly held retailer operates brick-and-mortar stores between them,
This has also driven sales for the aver- solely in Quebec with 32 stores making them substantially larger than
age furniture store – which Statistics under the Brault & Martineau, the entire Canadian furniture store
Canada defines as a retailer generat- EconoMax and Ameublements sector in terms of both sales volume
ing 51% or more of annual revenue Tanguay banners, ringing up and unit count.
from the sale of furniture and mat- sales of $720.2 million and a 6.0% Statistics Canada includes furniture
tresses – from $2.77 million in 2012 to national market share for its last stores as one of 11 segments its uses
$3.67 million in 2019. fiscal year; and, to track the performance of location-
In 2019, the furniture store segment • Sleep Country Canada Holdings based – brick-and-mortar – retail in
of Canadian retail was dominated (SCC): also based in Toronto, the Canada. There are two other types of
by four players whose combined to- publicly held owner of mattress retailers in the big-ticket home group,
tal sales of $6.7 billion accounted to specialists Sleep Country, Dormez- home furnishings stores and electron-
a market share of roughly 56%. In all, Vous and Endy ended 2019 with ics/appliance stores. Home furnish-
they operated a combined 626 outlets revenue of $712.4 million out 275 ings stores sell everything from floor
from coast-to-coast, just over 19% of stores plus its endy.ca virtual covering to lamps and lighting, linens,
all brick-and-mortar Canadian furni- platform for a 5.9% market share. decorative accessories and wall art as
ture stores. Three of these companies well as furniture, particularly accent
are publicly held, while the fourth is Of the four only SCC is aggressively and occasional furniture.
the Canadian subsidiary of what is adding to its store count at present, Although their growth has been
believed to be the world’s largest fur- opening 12 new locations last year. slight, at best, over the past three years
niture and home furnishings retailer. For the three others, store counts have these merchants finished 2019 with
They are: been remarkably stable over the past sales of $7.08 billion, a record high for }
8 HGO merchandiser
this sector. The number of store fronts in a decade. The largest electronics/ the beginning to January until the pan-
has also seen considerable attrition appliance retailer in the country is be- demic was declared in mid-March – a
over the past seven years. At the end lieved to be Best Buy Canada, a subsid- pace that was outperforming all other
of last year, Statistics Canada counted iary of the publicly held Best Buy Co. location-based retailers in Quebec.
some 2,890 home furnishings across headquartered in the U.S. Its 177 stores All three reported sales declines for
the country, down from about 4,368 at are estimated to ring-up annual sales the first quarter, consistent with the
the end of 2012. of $4.15 billion, giving them a market preliminary data out of Statistics Can-
Currently, the largest retailer in share of about 29.4%. Ranked second ada which reported furniture stores
this space is believed to be Home- in this segment is the Calgary-based sales for the first three months of
Sense, a division of TJX Companies, Visions Electronics. This family-held 2020 were $2.45 billion, off 5.1% from
the U.S.-based conglomerate that also enterprise has a network of 42 stores in the $2.58 billion for the same period
operates fashion discounters Winners Ontario and in Western Canada with of 2019. Home furnishings stores took
and Marshall’s. Its 125 stores are esti- sales in the $630 million range, giving an even bigger hit, falling 10.5% to
mated to generate about $1.2 billion them a national market share of 4.5%. $1.37 billion.
annually, giving it a 17% market share Electronic/appliance stores saw
in this space. THE FIRST QUARTER their first quarter sales fall for the sec-
Electronics/appliance stores sell OF 2020 ond consecutive year, dropping 5.9% to
everything from cell phones, video Before 11 March, furniture store sales $2.82 billion.
games and computers to major appli- were tracking higher than expected. Historically the first quarter has typ-
ances. Once again, store fronts have For example, in reporting its first quar- ically been the low point of the year for
fall dramatically in recent years. The ter results, Leon’s Furniture Limited all three categories of big-ticket home
latest count by Statistics Canada puts noted sales in January and February goods stores. The winter months have
their number at just over 2,800 last were up 5.4% year-over-year, which always been a damper on sales as re-
year – half of what they were not five went a long way towards offsetting tailers have generally ‘made their year’
years earlier. Sales have also been fall- the downturn suffered in March, when in the third or fourth quarters depend-
ing for most of the past decade, a trend it closed almost every one of its 304 ing on the product category and the
most experts have attributed, at least stores from British Columbia to New- store’s promotional heft.
in part, to product deflation. For ex- foundland & Labrador. Most observers agree the real im-
ample, a top of the line television that Sleep Country told a similar story, pact of the pandemic won’t be felt until
retailed for $2,000 five years ago, has a reporting that same store sales were up the second quarter figures are report-
price tag of less than $800 today. 13.1% through to the end of February. ed. There is also an emerging consen-
These merchants had sales of about So did BMTC, which told sharehold- sus that store sales will not return to
$14.1 billion in 2019, off 14% from the ers recently that company revenues the levels seen in 2019 until 2022 at
prior year falling to their lower point increased by approximately 1.7% from the earliest. }
HomeGoodsOnline.ca 9
Retail Store Sales – January to March (First Quarter) 2017 to 2020
(Actual millions of current Canadian dollars)
Q1-2017 Q1-2018 Q1-2019 Q1-2020
Furniture Stores $2,477.8 $2,499.8 $2,578.7 $2,446.5
Percent change 0.9 3.2 -5.1
Home Furnishings Stores $1,475.9 $1,535.3 $1,529.8 $1,368.8
Percent change 4.0 -0.4 -10.5
Electronics/Appliance Stores $3,140.7 $3,336.6 $2,995.5 $2,817.7
Percent change 6.2 -10.2 -5.9
Sources: Statistics Canada; Industry Canada; J.C. Williams Group; Windsor Bay Communications Inc.
Copyright © Windsor Bay Communications Inc. 2020
Retail Commodity Sales – January to March (First Quarter) 2017 to 2020
(Actual millions of current Canadian dollars)
Q1-2017 Q1-2018 Q1-2019 Q1-2020
Mattresses $451.3 $432.5 $414.5 $412.1
Percent change -4.2 -4.2 -0.6
Indoor Furniture $1,664.0 $1,595.5 $1,686.9 $1,584.9
Percent change -4.1 5.7 -6.0
Outdoor Furniture $75.0 $68.2 $60.1 $77.3
Percent change -9.1 -11.9 28.6
Decorative Home Furnishings $536.4 $610.3 $605.0 $560.8
Percent change 13.8 -0.9 -7.3
Major Appliances $1,226.0 $1,268.5 $1,256.1 $1,250.7
Percent change 3.5 -1.0 -0.4
Televisions & A/V Equipment $930.4 $1,030.3 $904.9 $778.9
Percent change 10.7 -12.2 -13.9
Source: Statistics Canada, Retail Commodity Sales Survey (20-10-0016-01); Industry Canada; Home Goods Online
Copyright © Windsor Bay Communications Inc. 2020
Furniture and Home Furnishings Stores/Electronics & Appliance Stores – 2014 to 2018
(Actual millions of current Canadian dollars)
2014 2015 2016 2017 2018
Furniture and Home Furnishings Stores – Total sales $17,295.7 $18,017.4 $18,426.4 $19,075.4 $19,299.6
E-commerce sales $229.0 $313.4 $315.8 $335.0 $414.7
Percent change - total sales 4.2 2.3 3.5 1.2
E-commerce as percentage of sales 1.3 1.7 1.7 1.8 2.1
Percent change - E-commerce sales 36.9 0.7 6.1 23.8
Electronics & Appliance Stores – Total sales $13,680.9 $13,779.6 $13,795.6 $13,800.6 $13,837.5
E-commerce sales $496.0 $564.2 $645.3 $667.8 $1,094.4
Percent change - total sales 0.7 0.1 0 0.3
E-commerce as percentage of sales 3.6 4.1 4.7 4.8 7.9
Percent change - E-commerce sales 13.7 14.4 3.5 63.9
Sources: Statistics Canada Annual Retail Survey (Table: 20-10-0065-01; formerly CANSIM 080-0032); Home Goods Online
Copyright © Windsor Bay Communications Inc. 2020
10 HGO merchandiserRetail Commodity Sales – 2015 to 2019
(Actual millions of current Canadian dollars)
2015 2016 2017 2018 2019
MATTRESSES AND FOUNDATIONS
All retail stores $1,892.3 $1,966.9 $1,994.3 $2,005.2 $2,157.1
Percent change - all retail stores 3.9 1.4 0.5 7.6
Furniture and home furnishings stores $1,702.4 $1,771.3 $1,760.5 $1,856.0 $2,029.1
Percent change - furniure and home furnishings stores 4.0 -0.6 5.4 9.3
Market share - furniture and home furnishings stores 90.0 90.1 88.3 92.1 94.1
INFANT/JUVENILE FURNITURE
All retail stores $356.4 $365.9 $364.0 $356.8 $375.2
Percent change - all retail stores 2.7 -0.5 -2.0 5.0
Furniture and home furnishings stores $163.5 $157.2 $172.5 $190.8 $207.9
Percent change - furniure and home furnishings stores -3.8 9.7 10.6 9.0
Market share - furniture and home furnishings stores 45.9 43.0 47.4 53.5 53.4
INDOOR HOME FURNITURE
All retail stores $6,855.6 $6,950.2 $6,929.4 $6,980.0 $7,127.9
Percent change - all retail stores 1.4 -0.3 0.7 2.1
Furniture and home furnishings stores $5,841.2 $5,905.5 $5,787.0 $5,990.7 $6,030.4
Percent change - furniure and home furnishings stores 1.1 -2.0 3.5 0.7
Market share - furniture and home furnishings stores 85.2 84.9 83.5 85.8 84.6
General merchandise stores $454.7 $441.3 $545.0 $440.6 $494.0
Percent change - general merchandise stores -2.9 23.5 -18.1 12.1
Market share - general merchandise stores 6.1 6.3 7.9 6.3 6.9
OUTDOOR HOME FURNITURE
All retail stores $897.0 $945.8 $970.3 $872.4 $921.9
Percent change - all retail stores 7.6 2.6 -10.1 5.7
DECORATIVE HOME FURNISHINGS
All retail stores $2,439.8 $2,962.0 $3,387.0 $3,438.5 $3,786.9
Percent change - all retail stores 21.4 14.3 1.5 10.1
Furniture and home furnishings stores $796.6 $1,018.2 $1,227.1 $1,141.5 $1,179.1
Percent change - furniure and home furnishings stores 27.8 25.4 -10.1 3.3
Market share - furniture and home furnishings stores 32.7 34.4 37.7 33.2 31.1
MAJOR HOME APPLIANCES
All retail stores $4,623.9 $5,164.0 $5,920.2 $6,169.3 $6,071.7
Percent change - all retail stores 11.7 14.6 4.2 -10.6
Electronics and appliance stores $2,085.7 $2,426.1 $3,304.1 $3,369.6 $3,151.9
Percent change - electronic and appliance stores 16.3 36.2 2.0 -6.4
Market share - electronic and appliance stores 45.5 47.0 55.8 54.6 51.9
TELEVISIONS & A/V EQUIPMENT
All retail stores $3,441.8 $3,522.8 $4,831.0 $4,830.4 $4,385.7
Percent change - all retail stores 3.2 37.1 0.0 -9.2
Furniture and home furnishings stores $251.8 $226.4 $243.9 $246.9 $267.3
Percent change - furnture and home furnishings stores -10.1 7.7 1.2 8.3
Market share - furniture and home furnishings stores 7.3 6.4 5.0 5.1 6.1
Electronics and appliance stores $2,266.5 $2,415.8 $3,248.9 $3,168.8 $2,707.8
Percent change - electronic and appliance stores 8.5 34.5 -2.4 -14.5
Market share - electronic and appliance stores 64.7 68.0 67.2 65.6 61.7
Source: Statistics Canada, Retail Commodity Sales Survey (20-10-0016-01); Industry Canada; Home Goods Online
Copyright © Windsor Bay Communications Inc. 2020
HomeGoodsOnline.ca 11THE
FORECAST WHERE WE’VE BEEN:
S P E C IA L E
F E AT U R CONSUMER SPENDING
When it comes to buying the product we sell, the consumer has
choices, some say too many. But she is consistent about where
she buys as sales of mattresses, furniture and appliances grew
through the eight years ending in 2019.
W
HEN IT COMES TO BUYING televisions and audio-visual equipment sumer purchases in this category. An
furniture and furnishings (home theatre systems). analysis of the data leads HGO to be-
for the home, the consumer This survey focuses on consumer pur- lieve furniture and home furnishings
has lots of choices. At one time, a now chases in brick-and-mortar stores and stores account for about 40% of con-
retired industry stalwart, who served as not purchases made via e-commerce, sumer purchases of white goods each
publisher of Furniture Today, the North whether from a pure play online vendor year – a share that hasn’t varied greatly
Carolina-based trade newspaper, deter- such as Article.com or the virtual plat- over the past decade. Major appliance
mined North America contained about form of a retailer such as Leon’s or IKEA. sales by furniture retailers are estimat-
75 channels of distribution of which she One thing the data does show is that ed at $2.31 billion for 2019.
could avail herself. And that was long over the past decade or so, the Canadi- In each of the five years from 2015
before e-commerce became a fact of an consumer has been consistent about to 2019, consumer spending on indoor
daily life. the type of store where she buys big home furniture, decorative home fur-
Statistics Canada monitors the ticket goods for the home. The best ex- nishings and mattresses was up on a
sales of furniture, mattress, major ap- ample is mattresses. Commodity sales year-over-year basis. In fact, each cat-
pliances and consumer electronics in have grown in the past decade, but fur- egory set new record highs, particularly
two ways. In the Monthly Retail Trade niture and home furnishings stores are mattresses which broke the $2 billion
Survey, the agency monitors sales by where she buys them 91% of the time. barrier for the first time in 2018 before
location-based retailers (we explore This suggests retailers such as Costco advancing another 7.6% to end 2019 at
this in the previous story). In the Retail and Walmart haven’t had that big an $2.16 billion.
Commodity Survey, it tracks what the impact on the product’s channels of dis- Indoor furniture came in at $7.5 bil-
consumer buys, regardless of the store tribution. It also supports the view that lion last year – when infant/juvenile
she buys from. while Sleep Country Canada has a mar- furniture is added in, capping a growth
However, the agency doesn’t cat- ket share of about 30% for this category, spurt that began once the economy be-
egorise the product we sell in quite the it has taken share from other furniture gan recovering from the financial disas-
same way as the industry. For the pur- and home furnishings stores. ter of 2008.
poses of this exercise, HGO has iden- Consumers have been consistent in Last year was a stellar one for decora-
tified the following categories within their channel choices for other catego- tive home furnishings, as sales topped
the Retail Commodity Survey, believing ries as well. Furniture and home furnish- out at $3.8 billion, a 10.1% climb over 2018
the majority of furniture, home furnish- ings stores account for about 85% of in- although furniture and home furnishings
ings and electronics/appliance stores door furniture sales, 34% of decorative stores only managed to eke out a growth
feature some or most on their floor: home furnishings sales and 6% of televi- rate of 3.3%. This gives credence to the
mattresses; infant/juvenile furniture; sion and audio-visual equipment sales. view that since furniture stores only com-
indoor home furniture (upholstery and The sore spot is major appliance sales. mand at 33% share in this category, its
case goods); outdoor home furniture; For reasons not easily explained, Sta- here where non-traditional home goods
decorative home furnishings (lamps tistics Canada doesn’t publish major retailers such as Costco, Walmart are re-
and lighting, wall art, area rugs, accent/ appliance sales by furniture stores in ally making their mark.
occasional furniture); major appliances the Retail Commodity Survey. The data After posting real gains in each
(refrigerators, ranges, dishwashers, shows electronics/appliance stores of the three years prior, consumers
washing machines and dryers); and, consistently account for 51% of all con- really slowed their purchases of major }
12 HGO merchandiserappliances in 2019 as sales fell 10.6% to store: furniture (upholstery, case goods years, 2020 being no exception as they
$6.07 billion. Much of the decline is at- and juvenile) accounts for 52% of an- dipped 0.6% to $412 million – a far cry
tributed to two factors: deflation with- nual sales; major appliances accounts from the $450 million recorded in the
in the category and slowdowns in the for 19%; mattresses another 16%; and, first quarter of 2017.
housing market. decorative accessories 6% with the bal- Indoor furniture sales fell 6.0% in
The Retail Commodity Survey also ance coming from other products and the first quarter to $1.58 billion. Deco-
reveals consumer purchases of tele- services (for example, delivery fees, rative home furnishings, major appli-
visions and audio-visual equipment extended warranties; fabric protection ances and televisions suffered similar
have fallen in each of the past three and other add-ons). declines, even though stores weren’t
years, declining 9.2% to $4.38 billion closed as part of the government’s
last year. Of interest here is while only THE FIRST QUARTER shelter-in-place orders to combat the
a relative handful of furniture stores OF 2020 pandemic until the second week of
sell the category, they’ve actually Consumers have rarely shown much March.
climbed in each of the last three years interest in spending money on big- Most industry insiders believe the
– in 2019, by 8.3% to $267.3 million. ticket home goods in the opening three real impact of the shutdown on loca-
This category is dominated by elec- months of year. Its winter in Canada tion-based retail won’t be seen until
tronics/appliance stores, who account and most economists believe she is the Retail Commodity Survey for the
for an average of 65% of all consumer more focused on paying down debt ac- second quarter of 2020 (covering the
purchases even though their TV sales cumulated during the previous year’s months of April, May and June) are
fell in both 2018 and 2019. Holiday Season than in making new published sometime later this summer.
An analysis of both surveys also investments in her living space.
suggests the sales mix for the mythical Indeed, first quarter mattress sales
average full-line Canadian furniture have fallen in each of the last three
THE
FORECAST THE EXPERTS WEIGH IN
In the post-pandemic period, time is the real enemy. Will there
S P E C IA L E
F E AT U R be enough to give retailers the opportunity to adapt? Two
experts, an economist and a retail consultant and author, weigh
in the challenges facing the industry as life gets back to what a
decidedly new normal. BY MICHAEL J. KNELL
E
VERYONE AGREES THE COVID-19 cades, futurists have forecast the rising “We may see people doing much
pandemic is a unique event. Most importance of telecommuting. But the more tele-work,” says Pedro Antunes,
also agree it will have a profound pandemic has hastened this process chief economist of the Conference
effect on the future of our society. Some as shelter-in-place orders were given Board of Canada, a private think tank
of the most significant changes will be by health authorities across much of based in Ottawa and publisher the In-
economic, starting with an evolution in North America. Indeed, many large dex of Consumer Confidence.
the nature of work and places of work. It corporate concerns have said they In a recent telephone interview with
will change how consumers buy every- are reluctant to force employees back Home Goods Online, Antunes was re-
thing – from cars and homes to grocer- to the office having discovered their markably upbeat about the long-term
ies and other everyday items. It will in- working from home hasn’t resulted prospects for the Canadian economy
fluence not only how she buys furniture, in any significant loss of productivity although he acknowledged the short-
mattresses and major appliances but or efficiency. This development could term impact of the measures employed
how much she buys as well. provide highly beneficial to furniture to combat the pandemic have been
The role of the home will become retailers, many of whom have reported severe in the extreme. He also admits
more significant in the economic life upticks in sales of home office furni- the critical unknown factor is time –
of the country. For the last several de- ture in recent months. there is no way to predict accurately }
HomeGoodsOnline.ca 13ing as a disincentive to re-entering the ties their pricing and terms from sup-
labour force. pliers are less favourable,” Winder
Antunes also observed while Ca- points out, adding, “many indepen-
nadians needs to shift back from the dents have weaker balance sheets and
CERB to employment, the program have a harder time getting reasonable
produced a positive benefit few antici- financing. Finally, as consumers worry
pated when it was introduced by the about finances, they may shop for the
federal government in late March. lowest price which may be found at
“We are going to see a savings rate large chains. These forces add up to
increase…the savings rate has gone make it tougher on these retailers ver-
Pedro Antunes, chief economist of the very high,” he told HGO. In turn, this sus the chains.”
Conference Board of Canada, is optimistic has fuelled considerable pent-up de- He also notes not all Canadian con-
about the post-pandemic recovery but mand, which will have to be satisfied sumers are fragile economically as
recognises much will depend on the creation as the re-opening of previously shut- “their outlook varies by socio-econom-
of a viable vaccine. tered brick-and-mortar stores contin- ic stratum. That is, wealthy consumers
ues across the country. have felt far less economic uncertainty
how long the recovery will take as it is Consumer confidence has also taken than lower income consumers who
likely to hinge on the severity of the a hit in recent weeks but Antunes is have been laid off or have had their
second wave and when a viable vac- confident the trend will reverse itself hours reduced.”
cine is ready for distribution. No one as employment returns to pre-pandem- Those in low wage jobs have been
is expecting the latter until sometime ic levels. the hardest hit – think those working
mid-year 2021 or later. The other thing Antunes believes is in the retail, hospitality and tourism
“How long the recovery takes de- working in favour of the recovery is in- sectors – and have the most uncertain
pends on two important assumptions,” terest rates – which continue to be low. job prospects as the economy re-opens.
he said. “The first is how long it’ll be The Bank of Canada has shown little Winder says this means retailers have
before there’s a vaccine, which will take desire to move them upwards, which an even greater imperative to be un-
at least a year and how long it will be will bolster confidence and give the derstand who the target customer re-
before enough people are immunised. consumer room to spend the employ- ally is and what she wants and needs
“The other critical piece is we need ment picture improves over the com- – particularly if the customer works in
to support business more fully,” he con- ing 18 months or so. the lower wage strata.
tinued, adding businesses do not seem “In addition, some consumers do
to be taking full advantage of either A RETAIL not and will not feel comfortable shop-
the Canadian Emergency Wage Sub- CONSULTANT’S VIEW ping at a brick and mortar retail store
sidy (CEWS) or the Canada Emergency Like the Conference Board’s Pedro until a vaccine is discovered,” he con-
Commercial Rent Assistance (CECRA). Antunes, Bruce Winder, the Toronto- tinued, pointing out in-store traffic }
“But for the recovery to become firm- based retail analyst and author of a new
ly entrenched, companies will need ac- book called Retail Before, During & Af-
cess to workers as capacity ramps up,” ter COVID-19 (which is now available
Antunes recently wrote in the Globe & on Amazon), is also more upbeat about
Mail. If for no other reason, he encour- life after the pandemic than would be
ages all businesses, particularly small expected. While he too acknowledges
to medium-sized enterprises such as the weeks and months ahead will be
furniture, mattress and major appli- difficult, at the very least, retailers who
ance retailers to apply for the subsidy do not panic should be able to smart
because for the recovery to take hold, their way through the crisis.
full employment is needed. He acknowledges independent furni-
While he said the Canada Emergen- ture, mattress and appliance (FMA) re-
cy Response Benefit (CERB) staved off tailers may more exposed to the ravages
disaster, he does not see it as an ef- of the new economy that emerges as the
fective long-term measure, noting it’s crisis subsides, noting they often have
equivalent to an hourly wage of slight- less leverage with landlords, suppliers, Bruce Winder, the Toronto-based retail
ly less than $15 for a 33-hour work lenders and other creditors so they are consultant says there are strategies the
week and well above the minimum often less able to negotiate relief. independent furniture, mattress and
wage in most Canadian jurisdictions. “Because their volume is lower than appliance retailer can use to smart their way
That means it has the potential of act- large chains that buy in large quanti- through the post-pandemic recovery.
14 HGO merchandiserand sales volumes will be challenged for the most part, what to see the sofa, in-store pre-set appointments to limit
as social distancing protocols limit mattress or other piece of furniture crowding and increase comfort for cus-
how many shoppers can enter a store she’s wants in store before she buys. tomers,” he suggests. “Consider using
at any given time. She will also want to ask staff about augmented reality apps to allow cus-
Like Antunes, he also sees an uptick the product, even sit or lie down on it. tomers to visualize their FMA product
in working from home in the past-pan- “With store traffic being metered and in their home. Create a community
demic period and he also notes the fac- regulated, the purchase process will connection to differentiate from online
tors influencing the consumer’s buying take longer and require a greater in- retailers and big boxes.”
decisions will evolve somewhat. These vestment,” Winder said. “In addition, He also believes in the power of
factors will include variable such as consumers may fear that independent value-added services such as home
current disposable income; potential FMA stores may go bankrupt and void delivery and set-up or installation
disposable income; job certainty; the warrantees which could lead them to (for a modest fee) while disposing of
inflation or deflation of prices; and, take their business to the large chains.” the product her purchase is replacing.
interest rates, which he agrees will re- There are strategies the FMA retail- Retailers also need to sell extended
main low for the foreseeable future. er – especially the independent – can warranties and offer price-matching
Retail promotions will also have a employ to bolster his operation’s com- guarantees. “And be sure to offer ex-
role, as Winder points out that “in re- petitive position in the post-pandemic ceptional customer service while rene-
cessionary times, sometimes consum- period. gotiating rent and terms with suppliers
ers opt for lower price point products Winder recommends independent to help with cash flow.”
with less features to save cost.” retailers ensure they can sell online
Offsetting this will be an increase in through Shopify or some other e-com- EDITOR’S NOTE: Bruce Winder’s book
the savings rate, which is being driven merce provider. He also recommends Retail Before, During & After COVID-19 is
by job and income uncertainty. investing in personal protective equip- available on Amazon for $9.99 with 5%
He also believes FMA retailers will ment, staff training and proper signage of the proceeds being donated to mental
face challenges not shared by other to make the in-store experience as safe health programs across the country.
merchants as the consumer will still, and easy as possible. “Use virtual and
THE
FORECAST A RETAIL PERSPECTIVE
In recent weeks, we talked to a number of retailers across the
S P E C IA L E
F E AT U R country. While they weren’t in total agreement, they agreed on
a lot of things, mainly the pandemic will change how they do
business into the foreseeable future. There’s no going back.
I
T’S A GIVEN, THE PANDEMIC HAS accelerated changes the industry has which has six stores spread across
done a lot of economic damage to been long expecting. Among the more south-western Ontario. Noting his
every Canadian furniture, mattress notable is a heightened adoption of shopping cart exceeded expectations,
and major appliance retailer – both digital technology, ranging from more he told Home Goods Online “we’ve
large and small – over the recent weeks intensive use of platforms such as Ins- been selling on-line for over a year,
and months. At the same time, it is also tagram to show off product trends; to so we had the process in place, but we
changing every facet of the business. signing on to third party apps such a didn’t anticipate the volume.”
What’s more, they will be felt for years Flipp, which publishes flyers electroni- In the two weeks immediately fol-
to come while others have yet to be dis- cally; and, to a greater appreciation for lowing the shutdown (ending April 1),
covered. The pandemic is not only in- the shopping cart, an often underused the Montreal-based consulting firm
fluencing how and what the consumer feature of most FMA retail web sites. Absolunet reported e-commerce sales
buys, but how retailers operate their Andrew Tepperman, president of of furniture and home décor jumped
physical space, merchandise their prod- Tepperman’s, was pleasantly surprised 232% year-over-year while sales of
uct assortment and serve the customer. by how much new business the shop- appliances and electronics climbed a
In many ways, the pandemic has ping cart generated for his operation, rocket-fueled 345%. Unfortunately, }
HomeGoodsOnline.ca 15ter and move through their brick-and- options (e-transfer or pay over the
mortar stores – designed to prevent phone), signage with all our measures,”
spread of COVID-19 and stimulate she explains. “And, most importantly,
economic recovery. For the first time, have had our visual display person and
many store owners are experimenting cleaning person get the store visually
with appointments while almost ev- beautiful and sparkly clean.”
ery retailer in the country cleaned and Staff reductions announced when
shined their physical spaces. government-ordered store closures
Most introduced intensified clean- began in mid-March are slowly being
ing regimes into their stores, adding reversed. Most retailers surveyed for
Kim Yost, president and chief executive officer hand sanitizing stations and securing this report indicated they are bringing
of Mega Group, the member-owned buying personal protection equipment (PPE) back team members as conditions al-
group headquartered in Saskatoon. for their teams, limiting the number low and picks up. It’s no easy task when
of consumers who can the floor at any one considers payroll costs for the en-
dollar figures weren’t provided, and one time. tire FMA retailing community are es-
the report hasn’t been updated in the Noting, it would “take me five pages timated at about $4.6 billion annually.
weeks since it was posted. In the five to explain,” Andrew Tepperman said “Rehiring will be done in phases to
years ending 2018, Statistics Canada that in his stores, “a high level of safety control costs and based on consumer
pegged e-commerce at roughly 2% of and cleaning plans were prioritized… demand and government restrictions
annual sales for the typical FMA retail- more sanitizer, PPE, signage – every- as we ramp up,” said Jim Fee, president
er. Several retail analysts have opined thing you’re reading about is what of Stoney Creek Furniture in a typical
it’s jumped to about 8% during the shut- we’re doing. We also used the down- response to the question.
down, which lasted through the month time to repaint, freshen up and improve Depending on store size, many re-
of June in most regions of the country. the merchandising in the stores. Never tailers indicated many of their admin-
Many furniture retailers reported let a crisis go to waste as they say.” istrative team members will continue
having similar experiences, including Natalie Papia shared a similar ex- to work from home with the sales, ser-
Natalie Papia, president of the single- perience. “We are so excited to reopen vice and delivery teams more likely to
unit Zilli Home Interiors, which can be our doors and have done so much to return first to the store itself.
found in the northern reaches of To- prepare: followed Ontario government Most are also expecting not only
ronto. “Online sales have increased ex- workplace measures for a safe work- fewer customers to walk the floor in
ponentially!” she enthused, adding the place which include sanitizer stations, the opening weeks of re-opening, but
shopping cart has “been a huge tool in floor decals to show six-foot distance, they are anticipating the interaction
helping us generate sales.” masks and gloves for staff and cus- between the customer and the team
This wasn’t always the case. “Before tomers, curbside pick-up, delivery to member will also change.
March 15th, we had an online shopping the front door, contactless payment “Based on phone calls we received
cart with most of our product selec- and the web chat inquiries, there is plen-
tions,” she explained, “however, the ty of demand,” Jim Fee said. “We expect
site was used mostly for educational a good initial period after reopening but
purposes and as a reference for cus- limited on the traffic allowed in store at
tomers and prepare them for their visit one time. After that, I think it will be
into the store. Although we hoped we slower as people get used to shopping
would get online sales, it happened again in the outside world.”
very seldom. Since March 15th, we have “We actually have quite a few cus-
added photographs of our many floor tomers that are waiting for a store
models, in the fabrics or combinations visit as soon as we are allowed to open
as we display them, and featured them our doors, so we expect to have some
at a discount. This tool has been great good sales immediately,” Natalie Papia
so all sales staff, and customers, know agreed. “However, I think the traffic will
what is available and have resulted in be slow and will take time before we
numerous online and telephone sales.” get the busy weekend traffic we were
As stores were permitted to slowly Andrew Tepperman, the third-generation used to and enjoyed so much. We will
reopen across the country, retailers president of the family owned and operated all be keeping six-feet apart and wear-
found themselves adapting to new Tepperman’s. Based in Windsor, the full- ing masks – it simply won’t be the same.
government-imposed guidelines about line furniture retailer operates six stores However, its necessary and more im-
how consumers were supposed to en- throughout south-western Ontario. portant to be safe than anything else.” }
16 HGO merchandiserconsumers who are ready to buy fur-
niture, mattresses and appliances will
be looking for good value. Given the
restrictions likely to imposed by health
authorities, retailers think if a con-
sumer is walking the floor, she’s going
to buy. Those who aren’t willing, won’t
venture through the door. There is a
hope throughout the industry that the
recovery will kick in once a viable vac-
Jim Fee is the president of Stoney Creek cine has been approved for broad use Natalie Papia is the founder and president
Furniture. The destination furniture and across the country. of Zilli Home Interiors, a single unit furniture
mattress specialist’s flagship store is in specialist located in the Toronto suburb of
Stoney Creek, Ontario and has a second MEGA GROUP CARRIES ON Woodbridge.
location in the Toronto suburb of Vaughan. As governments across Canada issued
shelter-in-place orders, essentially group seems to have come through the
Andrew Tepperman had a slightly keeping almost everyone at home while shut in reasonably good shape as not
different take. “Considering the high COVID-19 spread, Mega Group issued one member was lost to the pandemic.
unemployment, negative impact on the a promise it would not lose a single “We are amazed at the success of
economy and a percentage of consum- member to the crisis. “Mega will leave our members and how they navigated
ers who will still fear going out, there no one behind, no member will go out so successfully through this COVID-19
will be less of a demand,” he remarked, of business or be rendered insolvent,” crisis,” he said. “We have a plan we’re
but adding, “I imagine those who are president and chief executive officer executing as if our lives depend on it,
shopping will be more inclined to buy.” Kim Yost said in a video presentation to because they do.”
members in late March. Right now, keeping the shelves
WILL BUSINESS The Mega Stimulus Plan has four stocked is consuming much of their
GET BETTER? phases: survive; recover; sustain; and, efforts. “We are currently realizing
For most retailers surveyed, the open- grow. product flow disruptions due to CO-
ing weeks of 2020 were better than an- “We are pleased to say we came VID-19, selling off existing inventory
ticipated. “We were increasing nicely,” through the ‘survive’ phase all mem- and purchasing high velocity items,”
said Stoney Creek’s Jim Fee in a senti- bers in place,” Yost recently told HGO, Yost said. “The main focus is on keep-
ment that was widely echoed. adding, “Congratulations to our mem- ing retail floors seem full and well
Pre-pandemic forecasts were opti- bership for reacting quickly, maintain- merchandised.”
mistic with many believing, as Fee did ing some flow of business and making He also believes the crisis has re-
their sales in 2020 would grow 5% to 10% gut wrenching decisions that had to be minded Mega’s members of the im-
over 2019. And then COVID-19 struck. made concerning cash management portance of the domestic suppliers
“Losing April and May business, and staff reductions. It was all about and produced several other tangible
which is always good for us, is going to staying focused and following a plan.” changes.
kill the year,” Fee said. “You won’t get it He noted the survival period was all “COVID-19 has challenged all as-
back, even with some pent up-demand. about communicating with his 700 or pects of our members’ business model
The consumer is going to be hesitant so members – who operate some 944 with unprecedented pressure on cash
and some financially challenged.” stores – as well as helping them navi- management, product availability and
“2020 will be substantially off,” An- gate the various government assis- forecasting, staffing and advertising
drew Tepperman adds. “As long as the tance programs, working with vendors, expenses,” Yost said. “The crisis has
virus doesn’t re-emerge, 2021 will be lenders and other suppliers to keep ev- also accelerated retailers’ digital trans-
fantastic as compared to 2020. 2020 erything on a even keel. formation. In the efforts to maintain a
will force everyone to become more The group itself faced challenges as certain flow of business, retailers have
efficient. If we can maintain that effi- many of its staff was furloughed, most turned to their web sites, e-mail, chat-
ciency we will bounce back stronger.” temporarily, as other worked from bots, virtual appointment shopping
Among the big questions right now home. They were all back on the job and social media as their lifelines. And
are, will consumers be more price sen- as Canada Day approached with Yost like their customers, there is no going
sitive as the economy re-opens and the noting that the first phase of the plan back.”
recovery begins; and, what are they go- was a success. “We are now in recover So, it seems the changes have just
ing to be most interested in buying. which is anticipated to last through begun. It will be interesting to see
Many are of the view that most this calendar year,” he said, adding the where they lead. HGO
HomeGoodsOnline.ca 17OPENINGS
BENNETT’S
opens in kingston
Eric Bennett believes furniture retailing is not a sprint. It’s a
marathon and the store owner should pace himself accordingly.
Opening his third store here in Eastern Ontario’s largest city is an
act of faith in the next generation of his family’s business which is
getting ready to take the reins. BY MICHAEL J. KNELL
Eric and Marlaine
Bennett are seen here
in their new Kingston
store. Eric took over the
business in 1985 from
his father and built the
store as part of a growth
O PENING A NEW STORE FOR
any established retailer is a
multi-year process. Whatever
else it is, it’s also an act of faith
in the future of the business. That’s part of the
rationale behind the move by Bennett’s Furni-
ture & Mattresses to open a third location in
as it readies for a leadership transition to the
fourth generation as well as its centennial.
“Bennett’s is thinking long term,” third
generation president Eric Bennett told Home
Goods Online in a recent interview, adding a
third store will provide economies of scale that
should enable the company to thrive.
strategy that will see it Kingston, Eastern Ontario’s largest and most “In order to give the current and future con-
transition to the fourth important city. Located in what used to be a sumer what she wants, significant improve-
generation of family Chapters store, it’s part of the family owned ments in technology will be required,” he ex-
leadership. and operated retailer’s long-term growth plan plained. “With three stores, the investments }
18 HGO merchandiserSeen here is the exterior
of the new Bennett’s
Furniture & Mattress store
in Kingston. Situated in
a renovated building that
previously served as a
Chapter’s, the store is
located on Princess Street,
the city’s main shopping
fare and most important
east-west traffic corridor.
in things like improved point of sale informa- ing Corrections Canada and the Department of
tion, virtual reality, improved web sites, deliv- Defense. Private sector employment also tends
ery tracking software and other in-store tech- to generate higher than average earnings,
nology will be more affordable.” making Kingston one of the country’s more af-
At 27,000 square feet, the Kingston store fluent communities on a per capita basis.
is slighter larger than its relocated Peterbor- The drawback, Bennett noted, is the popula-
ough flagship – where the retailer’s buying and tion surrounding Kingston is limited. “Where-
distribution centre is headquartered – which as Peterborough has more population in the
opened in 2015 and was also designed by Con- surrounding region than Kingston does,” he
nie Post, the North Carolina-based owner of said. “Bennett’s always aims to be a ‘destina-
Affordable Design Solutions. (This store was tion store’ and attract customers from longer
featured in the Spring 2017 edition of the Mer- distances than most furniture stores.”
chandiser, page 24) While the Kingston and Peterborough
Kingston was chosen as home for store stores have design elements in common, they
three for several reasons but most notably be- are quite different in several respects. “Peter-
cause of its stable economy. “They aren’t hav- borough was built from an old 70,000 square
ing huge growth, but they are stable,” Bennett foot factory with exposed ceilings and exposed
said. “It’s far enough away from our existing wood beams,” he said. “It’s more rustic and re-
two stores (the other being the original store laxed while Kingston is a new building with a
in Campbellford, Ontario) but close enough for more modern look – even a bit ‘glam’.”
us to manage it. Kingston is a larger city than Eric Bennett believes their Kingston store
Peterborough and has more higher income em- will fill a void in that city’s market for furniture
ployment.” and mattresses and will occupy its own niche –
In fact, the city is home to Queen’s Univer- particularly in the ‘better’ and ‘best’ segments
sity and the Royal Military College. Kingston where the competition is not as fierce. Both Le-
also boasts an extensive hospital network and on’s and The Brick have stores in the city and
other government-related employment includ- there is a La-Z-Boy Furniture Galleries store }
HomeGoodsOnline.ca 19Left: The store’s central as well as a number of independents including early stages), will also be critical to the store’s
aisle, which is covered by an James Reid, generally regarded as the oldest long-term success. “We believe technology
oversized barrel ceiling, leads furniture retailer in the country. Lastman’s Bad will find a way to let the smaller player com-
from the front door to a design Boy, the Toronto-based high-impact promoter pete,” Bennett said.
centre and fabric library that opened a store in Kingston in early fall 2019. Although Bennett’s is firmly brick-and-mor-
adorns the rear wall where Sleep specialists Mattress Mart and Sleep tar, its competition of tomorrow is not other
customers and salespeople can Country Canada are also to be found. traditional furniture stores, so being able to
meet to review their needs and Kingston was also home to one of the more source product at the best price will become
purchases. successful Sears Home stores, which shuttered more critical. “Flowing containers and having
with the iconic department store closed for our choice of the best suppliers will be more
Right: Bennett’s emphasises
good in early 2018. important,” Eric Bennett said. “It will be easier
vignettes throughout its floor,
“There are a lot of furniture stores in to flow containers with three stores.”
such as this bedroom group
Kingston,” said Bennett, a well-known and
in its new Kingston store. The
retailer does a lot of custom or
long-time shareholder of Mega Group, the CONNIE POST ON
tag order business and carries
member-owned buying group based in Sas- STORE DESIGN
katoon. “We always try to develop our own Kingston was the second Bennett’s Furniture &
mainly Canadian and North
brand strategy and offer the consumer some- Mattress store to be designed by Connie Post,
American suppliers.
thing different. How well we do this will deter- owner of the North Carolina-based Affordable
mine our success.” Design Solutions. A veteran interior designer,
The adoption of new technology, including over her career she has created interiors for
an upgraded web site (a project that’s in its other Canadian furniture retailers such as The
Brick. She has also built store interiors for sev-
“Our plan was to give an open site plan eral well-known U.S. furniture retailers includ-
ing Cococnis, Gabbert’s and HOM.
from the main aisles so the guest would Repurposing the space from one formerly
used by a well-known branded bookseller did
not feel closed in but could focus on present a few challenges, she told HGO. “We
vignettes and products without being decided to include a few left over architectural
details worth saving into the design plan such
distracted by other products. Each as the oversized barrel ceiling down the middle
of the showroom because it added an element
group is allowed to shine on its own.” of ‘glam’ to the plan,” she explained. “Our }
20 HGO merchandiserYou can also read
