HUDSON's BAY:Visions of Furniture Fashion

Michael Knell’s HomeGoodsOnline.ca

HGOWinter 2013-14 merchandiserVolume Two, Issue 5

KEEPING UP WITH HUDSON’S 2014 LAA HONOUREE BAY: Visions BOB KAY of furniture fashion

BrandSource sets a new store design TCHFM direction Preview: Our forecast: Made to modest growth Measure ahead

CONTENTS u

FROM THE EDITOR as the network of independently 6PULLING TOGETHER owned stores looks for new This community isn’t doing as ways to grow. The goal to create well as it should. We need to pull an environment where she is together and getting to Toronto comfortable while telling her she’s 18 for market in January is a pretty the store’s main focus. good place to start. After all, industries are like communities ADVERTISERS’ and the community that is the 30INDEX furniture, mattress and major appliance industry is getting SPOTLIGHT smaller. For the independent 32KEEPING UP retailer, TCHFM has a lot to offer. WITH BOB KAY It’s rare to meet an entrepreneur MARKET PREVIEW who has kept one business afloat 8MADE TO MEASURE for half a century, let alone The Canadian Home Furnishings several. For Bob Kay, chairman Market is this country’s only and founder of Springwall national furniture and mattress Sleep Products, growing several industry event. This year, the successful businesses at once, while focus will continue to be on staying focused on mattresses, bringing retailers the latest styles, was a welcome challenge. Our trends and colours in the product profile of the 2014 recipient of they need to merchandise. It will the Lifetime Achievement Award also be the industry’s best face-to- was written by regular contributor 26 face networking opportunity. Our Ashley Newport. report is written by HGO editor Michael Knell. BY THE NUMBERS PROFILE MODEST36 GROWTH AHEAD 18 VISIONS OF Furniture store sales should grow FURNITURE FASHION modestly in 2013. So should those Hudson’s Bay is making an all-out of home furnishings stores. The effort to return department stores consumer’s net worth is improving to their glory days as furniture and the housing market continues merchandisers. Taking their cue to be relatively strong. These from their core business, apparel, should result in a very measured the emphasis will be on fashion level of growth for big ticket and better quality goods. For this retailers in the months ahead. reason, among others, it has been named Canada’s 2014 Retailer ON OUR COVER Made in Canada is a 8 of the Year. major merchandising theme for 2014 Retailer of the Year Hudson’s Bay and RETAIL so is contemporary styling including the 26BRANDSOURCE Reverie classic Sahara leather sofa and SETS NEW DESIGN chair in sterling ivory fabric from the DIRECTION Winnipeg-based EQ3. Also seen is its Mega Group’s primary national new custom table collection, featuring a go-to-market strategy added four wood top coffee table and a market top new stores to its network in the end table along with the Martian floor second half 2013. Each reflects lamp. (Inset): 2014 Lifetime Achievement a new, a more contemporary, Award winner Bob Kay, chairman of 32 attitude towards the consumer Springwall Sleep Products.

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MICHAEL J. KNELL HGO merchandiser WINTER 2013-14 • VOLUME TWO, ISSUE 5 ISSN 2291-4765 www.HomeGoodsOnline.ca

Pulling together PUBLISHER & EDITOR Michael J. Knell This community isn’t doing as well as it should. [email protected] We need to pull together and getting to Toronto for market in January is a pretty good place to start. MANAGING EDITOR Anthony E. Bengel [email protected] NDUSTRIES ARE LIKE COMMUNITIES. IN FACT, A SMALL INDUSTRY really is a small town with its own attitudes, mores, standards and ways of CONTRIBUTORS Ashley Newman doing things. Like those idyllic small towns so beloved in novels, everyone knows everyone else and, for good or ill, everyone knows everyone ART DIRECTOR Ielse’s business. As a member of Canada’s furniture, mattress and appliance Samantha Edwards industry for the past 30 years or so, I can attest to the truth of that statement. Sam I Am Creative The trouble is, our community is getting smaller. As you’ll read elsewhere in [email protected] this issue, the years following the Great Recession of 2008 haven’t been kind to us. Those who work in the housing and automotive industries were the only IT DIRECTOR ones to enjoy the benefits of a low interest economy, because consumers were Jayme Cousins so stretched otherwise there was no room left in their wallets for high quality In House Logic [email protected] goods we have to offer.

But unlike those small communities, the furniture, mattress and appliance PUBLISHED BY industry hasn’t been all that great at coming together in times of adversity. We Windsor Bay Communications Inc. don’t even work all that well together when it’s to and for our mutual benefit. P.O. Box 3023, 120 Ontario Street Want a few examples? Call me as they’re too numerous to mention here. Brighton, Ontario K0K 1H0 But we have to start pulling together and there’s a pretty easy way to begin. T: 613.475.4704 F: 613.475.0829 Get out of your office, wherever it is and regardless of where you work in our industry’s supply chain and get yourself to Toronto in time for the opening of Michael J. Knell, Managing Partner the Canadian Home Furnishings Market on January 11, 2014. Spend a few days PUBLISHERS OF looking at product and talking to other people in the industry. HGO This Week Home Goods Online.ca Look up the leadership of our two industry associations – the Canadian © 2013 Windsor Bay Communications Inc. Home Furnishings Alliance and the Quebec Furniture Manufacturers Asso- All rights reserved. ciations – and ask how you can get involved. We also need to a strong associa- Windsor Bay Communications does not accept tion for Canadian furniture retailers and TCHFM just might be a good place any responsibility or liability for any mistakes or to start talking about that as well. misprints herein, regardless of whether such errors We have got to start pulling together. Because we’re living in the new eco- are the result of negligence, accident or any other cause whatsoever. Reproduction, in whole or in part, nomic normal, and small industries can only thrive if, from time to time, they of this magazine is strictly forbidden without the work together. prior written permission of the publisher.

AFFILIATE MEMBER

Michael J. Knell Publisher & Editor [email protected]

6 > HGO merchandiser The Metro East Collection combines clean lines with subtle shaped details to create a design that’s sleek and sophisticated. The new Ebony Brown finish when accented with the gleaming modern hardware brings a stylish elegance to any decor. When pairing the Ebony Brown finish with the new Pearl White finish the group is transformed into a striking modern look with hints of glamour. To increase the design possibilities the group can also be purchased in any of Durham’s wood finishes or Durham’s new Premium Designers Choice paint finishes.

HomeGoodsOnline.ca < 7 TORONTO MARKET PREVIEW u

Made to Measure

N THE CALENDAR, THE NEW YEAR The Canadian Home Furnishings Market officially arrives on January 1 after a is this country’s only national furniture night of revelry, which admittedly and mattress industry event. This year, can take a variety of forms. But for Omembers of this country’s furniture, mattress the focus will continue to be on bringing and major appliance industries, the New Year doesn’t really start until about ten or twelve retailers the latest styles, trends and days later with the opening of the Canadian colours in the product they need to Home Furnishings Market (TCHFM), which has made its home for the last four decades or merchandise. It will also be the industry’s so at the International Centre in Mississauga, best face-to-face networking opportunity. Ontario – about a stone’s throw from Pearson International Airport. BY MICHAEL J. KNELL The 2014 edition of Canada’s only national furniture industry event will open on Satur- day, January 11 and end on Tuesday, January 14 and has been themed Made to Measure. However, things get kicked-off on the Friday

8 > HGO merchandiser Made to Measure

evening with a welcoming reception followed From traditional to contemporary, rustic to Left: The Julian by the annual Canadian Home Furnishings modern, every style and taste is accounted for – collection was a top Awards gala. all under one roof,” said Pierre Richard in an seller this year for TCHFM is owned and operated by the open letter to the industry. upholstery house Quebec Furniture Manufacturers Association This will mark Richard’s first TCHFM as Brentwood Classics and (QFMA). This year’s event is expected to attract president and chief executive officer of both the is shown here in a fabric some 2,000 or so independent furniture store event and the QFMA called Catcher Zinc. owners; plus merchandisers and senior execu- “The market offers an exceptional opportun- Right: The Monaco tives from the regional and national chains ity to not only view, but also experience, the bed from Vancouver’s as well as a number of interior designers and very best that the Canadian furniture industry Van Gogh Designs is decorators over it four-day run. has to offer,” he continued. “It is also an excit- available in several “While styles and colour choices may have ing face-to-face networking opportunity which heights, styles and evolved over the show’s history, one thing re- enables visitors to build upon the working rela- finishes such as nail mains the same. TCHFM is still the ultimate, tionships that are so vital to this industry. heads and buttons. and only, Canadian sourcing destination for “The TCHFM team works tirelessly to create Storage is also offered. discovering home furnishings and accessor- a made-to-measure experience that is specific- ies that are geared to specifically appeal to the ally tailored to meet the needs of its manufac- Canadian market. turers, suppliers, designers, distributors and }

HomeGoodsOnline.ca < 9 The 11208 from Italian specialty mattress Harbor Loft, a new collection from bedroom maker Magniflex offers the ultimate in specialist Durham Furniture features comfort. At 14 inches high, this mattress clean lines and a relaxed, timeless appeal. features six layers of breathable memory The collection is available with an optional foam and other natural fibres that mould two-tone combination of Bourbon and and respond to individual body weight. Sandstone, and can be purchased in any of Its removable cover is made from natural Durham’s wood finishes or new Designers viscose fabrics. Choice paint colors.

Attending retailers should see a fairly broad cross-section of Canada’s furniture manufacturing and distribution capacity as they walk through the halls of the International Center. Perhaps the largest single exhibitor will be long-time support Palliser Furniture Uphol- stery which will continue to occupy Aviation Ballroom adjacent to Hall 5. As has been the case for the past several years, TCHFM will be a strong mattress industry event with Sealy Canada – this country’s largest mattress producer – continuing to an- chor the category. Expected to show at TCHFM for the first time in 2014 is Tempur-Pedic, the The new Union bedroom retailers,” Richard adds, noting consumers have publicly-held specialty bed maker that acquired suite from Huppé become more knowledgeable about styles and Sealy Canada’s parent company in March 2013. is constructed from trends in recent years. This in turn, has prompted While neither Simmons Canada nor Serta Can- carefully selected them to become more demanding when it comes ada can be found on the official exhibitors’ list, birch veneers and seen to finding and buying furniture. Keeping up with both are expected to have a presence in the buy- here in a finish called these changes is the primary task of TCHFM and ing group merchandise spaces. There is also a Anthracite, a very of- the real reason why retailers return to the Inter- wealth of other mattress producers expected the-moment hue. The national Centre in the dead of winter each year. to participate. Among them the Quebec-head- collection is offered in 15 All three of Canada’s major furniture buy- quartered foam specialist Zedbed; Rev Sleep, different finishes. ing and marketing groups – including Cantrex the Canadian producer of the Natura World, Nationwide, Mega Group/BrandSource Can- Sommex, NexGel and ObusForme lines; and ada and Dufresne Retail Solutions Group – are Magniflex, the Italian bedding maker. expected to have a significant presence at this year’s market. In addition to spaces on the floor, COLOURFUL TRENDS RETURN each is expected to host a series of pre-market TO TCHFM briefings for their members – to introduce their The Montréal-based duo of display designers, merchandising and marketing programs for the André Caron and Pierre D’Anjou, will assemble opening months of 2014 – as well as product the 13th edition of the Trends Display in the displays and social gatherings at both the Inter centre of Hall 5. As usual, the display will fea- national Centre and nearby hotels. ture Canadian-made furniture that’s available }

10 > HGO merchandiser HomeGoodsOnline.ca < 11 goers. The colours serve to draw the audience toward a display and invite them to discover more about it.” For Caron and D’Anjou, the Pantone colour choices underline and highlight the individuality and artistry that is Canadian furniture. “We live in a design climate that is absolutely bursting with creativity and richness. We draw upon two cultures – European and American, we have access to the beautiful materials, we have a style that push- es into more avant-garde avenues – Canadian furniture is extremely exciting to work with.” TCHFM attendees will also be invited to cast a vote for their favourite display and be entered into a draw for an iPad Mini. One will be drawn each day of the show from Saturday until Tues- day. The Trends Display will be kicked-off with a cocktail reception on Saturday, January 11 at 6pm in Hall 5. THE POP-UP VIGNETTES ARE BACK For the third year, design personality Jan- ette Ewen will sprinkle her Pop-Up Vignettes throughout the International Centre. This time out, she promises to take market attendees in a whirlwind trip around the globe as she explores some of the world’s most unforgettable design and shopping destinations. This year’s vignettes have been carefully cur- ated to reflect the personalities of the world’s most iconic design cities including: Paris, Lon- don, Marrakech, St. Petersburg, Rome, Berlin, Top left: Inspired by wide- at the market while highlighting selection’s Melbourne, Stockholm, Barcelona, New York open spaces and soaring from Pantone’s 2014 colour palette. City, Miami Beach and São Paulo. ceilings, dining resource The pair draws their inspiration for the dis- “The idea behind the vignettes is to really Canadel’s new Loft play from art, travel and design shows in both take inspiration from the character of each city. } collection combines solid Europe and North America. “This year, the pres- wood with metal accents entation has a Cubist feel and has been inspired The model 41481 stool from Amisco to create an authentic by street art as well as classical references such is part of the metal producer’s industrial charm. as Mondrian,” explained D’Anjou. “The look Urban collection. Its retro vibe Middle: CDI International is very geometric and features lots of volume and inviting shape is supported by will debut its new teak thanks to the elongated walls that are featured an ultra-sturdy steel frame and a wood and metal collection in the three islands.” well-cushioned seat and backrest. this market. Teak has This year the pair is putting a stronger focus been used as a boat on the lighting. “In past years, it was very gen- building material for over eral and was simply used to illuminate the dis- a century and is not only plays. This year, we are really working on using strong, but is resistant spotlights that add warmth and create focal to rot, fungi and mildew. points that guide the eye throughout the dis- It is also unusual in that plays,” D’Anjou said. is not only an excellent For the second consecutive year, the Trends structural timber, but it Display will also reflect the latest Pantone can be easily worked and Home + Interiors colour forecast. “This year’s finished as well. palettes are going to be such a beautiful marriage with the products that we will be show- casing,” D’Anjou said. “These shades are the vehicle that we use to communicate with show-

12 > HGO merchandiser HomeGoodsOnline.ca < 13 excited,” says Ewen. “When you’ve found a destination that really speaks to you, why not use it as a cornerstone for building a collection or designing a window?” The marriage attendees will see between Canadian pieces and international trends is a happy one. “Our furniture is a summary of the global market,” Ewen said. “Canada is a huge mixing bowl; it’s a blend of so many different cultures. Canadian furniture designers often nod to their own personal heritage in their designs, while also giving them a uniquely Can- adian flavour. We have so much to offer when it comes to our designs and we have access to some of the best resources, like wood and stone, Top left: For the third Elements such as architecture and textures are in the world. You really can’t compare Canada consecutive market, important factors that help to define the per- to anywhere else.” Janette Ewen’s ‘pop-up sonality of each city,” Ewen said. “Rather than vignettes’ of products trying to capture a typical city scene, I wanted COLOURFUL CONFERENCE that best highlight to look at what was new and unique in each When it comes to colour, not all shades are current product and style location. In São Paulo, it’s all about the use of created equal. From retail spaces to furniture trends will be scattered colour that defines the shanty towns, while for materials, the selected hue can directly impact throughout the halls of New York I wanted to reflect the strong sense of the consumer experience. For the second con- the International Centre. creativity that resides in all five boroughs.” secutive year, international colour guru Leatrice Top right: Renowned She believes that when designing a window Eiseman will take an in-depth look at the nine colour expert Leatrice or showroom display, understanding and inter- colour palettes from the Pantone View Home + Eiseman will brief TCHFM preting trends is always important. More im- Interiors 2014 trend forecast during the TCH- attendees about the portant is creating an atmosphere that elicits FM conference session. nine colour palettes that a sense of connection and enthusiasm within Entitled Style and Substance: Major Colours make-up Pantone’s 2014 the consumer. Travel, whether real or virtual, Trends and Directions, this highly visual pres- forecast at the market’s is a perfect jumping-off point. “I think it’s im- entation will showcase how colour can influ- conference session. portant to think about what gets you personally ence design choices for the upcoming year. }

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14 > HGO merchandiser HomeGoodsOnline.ca < 15 Eiseman has been named among the 50 top style- makers by Home Furnishings Now; the leading home furnishings trade publication and is internationally re- cognised for her work as the executive director of the Pantone Color Institute and as the director of the Eise- man Centre for Colour Information & Training. She as- sists companies in making key colour decisions that are The Buttonback sofa from Palliser critical to the success of a product or an environment. is all dressed up with plenty of eye- The conference will be held on Sunday, January 12 catching details, including two sets beginning at 10am in Orion B, located in the confer- of buttons and a contoured welt on ence area of the International Centre. Admission is its arms. A sectional is also available free for all TCHFM attendees. For more information about the market or to register, visit the web site at www.tchfm.com. HGO

MICHAEL J. KNELL is the publisher and editor of Home Goods Online. He has attended every Canadian Home Furnishings Market since 1986.

TCHFM AT-A-GLANCE

Site: International Centre; 6900 MARKET ACTIVITIES Airport Road, Mississauga, Ontario, Canada L4V 1E8 (near Pearson Welcome Cocktail Reception: International Airport, Toronto) Friday, January 10 from 5 to 7pm in the lobby to the International Owned and operated by: Centre’s conference facility. Quebec Furniture Manufacturers’ Association CHFA Awards: The Canadian Home Furnishings Alliance will host an Dates: Saturday, January 12 to awards gala honouring the 2014 Tuesday, January 14, 2013 Retailer of the Year – Hudson’s Bay – and the 2013 recipient of Schedule: Saturday, January 11 to the Lifetime Achievement Award – Monday, January 13: from 9am to Bob Kay, founder and chairman 6pm; Tuesday, January 14: from of Springwall Sleep Products – 9am to 12noon. on Friday, January 10 beginning at 7pm. For tickets or more Who and what: Approximately information, contact Murray Vaughn, Breakfast at the Bunkie: 300 exhibitors showing residential CHFA president at (905) 677-6561 or Tuesday, January 14, at 9am in the furniture, mattresses, lighting, by e-mail at [email protected]. Hall 1 Mezzanine of SOFA, the decorative accessories, juvenile permanent showroom annex of the furniture, and accessories in The Pantone-inspired Trends International Centre. Hall 1 to Hall 5. Also includes Display Cocktail Party: Saturday, the permanent showrooms January 11, beginning at 6pm in Hall CONFERENCE PROGRAM inside the SOFA resource annex 5 of the International Centre. of the International Centre and Style and Substance: Major Colour participating outside showrooms. Beer and Burgers at the Bunkie: Trends and Directions with Leatrice TCHFM will also feature suppliers Sunday, January 12, beginning at Eiseman: Sunday, January 12 at 10am of related products and services 5pm in the Hall 1 Mezzanine of in Room Orion B, International Centre. throughout the market. SOFA, the permanent showroom Admission is free to attendees upon annex of the International Centre. presentation of a market badge. Market website: www.tchfm.com

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HomeGoodsOnline.ca < 17 Hudson’s Bay is making an all-out effort to return department stores to their glory days as furniture merchandisers with an emphasis on fashion. For this reason, among others,

Made in Canada is a major it has been named Canada’s merchandising theme for Hudson’s 2014 Retailer of the Year. Bay and when combined with a leaning towards contemporary BY MICHAEL J. KNELL styling, the consumer is confronted with this assortment from the Winnipeg-based EQ3 including the Reverie classic sahara leather sofa and chair in sterling ivory fabric. Also seen here is EQ3’s new custom table collection, featuring a wood top coffee table and a market top end table along with the Martian floor lamp.

VISIONS OF FURNITURE fashion

18 > HGO merchandiser t PROFILE

The emphasis on Made in Canada has been reinforced with the company’s long standing ANADIANS EXPECT THEIR partnership with the Toronto- department stores to be ex- based Marshall Mattress, one perts when it comes to furnish- of the first developers of the ings the home. Indeed, it was individual pocket coil technology. the department stores that set Seen here is Marshall’s Rest the tone and standards for the Assured queen mattress set merchandising, styling and pricing of furniture, C that’s upholstered with luxurious mattresses and major appliances for the rest of New Zealand wood and Belgium retail to follow until about 25 years ago. They damask fabric. decided what the consumer bought. That changed when what were then much smaller businesses – including such well-known names as Leon’s and The Brick – grew into the national chains they are today. Looking at the business section of almost any major news- paper gives the impression department stores continue to not only be on their way out of big ticket home, but out of retail all together. However, there is at least one believer in the power of department stores as furniture and mattress retailers – the Canadian Home Furnish- ings Alliance (CHFA) which recently named Hudson’s Bay as its Retailer of the Year for 2014. This is the second consecutive year the association has awarded the distinction to a department store. Last year, Sears Canada was the honouree. The Retailer of the Year Award was established by the CHFA in 2001 to recognize exemplary models of excellence and community service by Canadian furniture retail businesses. Hudson’s Bay is the upper scale department store banner of the publicly-held Hudson’s Bay Company (HBC), which was founded in 1670 and is North America’s longest continually operating company and one of the oldest commercial enterprises in the world. The parent also owns décor and accessory specialist Home Outfitters in Canada and Lord & Taylor, an up- scale department store operating some 48 outlets across the north-eastern United States. It recently acquired another high-end, U.S. based VISIONS retail icon – Sak’s Inc., the operators of Saks Fifth Avenue. A FASHION VISION FOR The Pierce dining It’s no secret that Canadian department FURNITURE collection from stores have been struggling in recent years. This emphasis has spread through the entire Shermag, a division OF FURNITURE of the Quebec-based Under the leadership of Richard Baker, who product assortment, including furniture and acquired HBC in 2008 (thereby becoming Gov- mattresses, according to Alan Asbridge, Hud- Bermex Group, is ernor under the terms of its Royal Charter), the son’s Bay vice president of living, dining, kitch- a recent edition to company has refocused its merchandising on en and laundry. In his position, he is respon- the Hudson’s Bay the ‘better’ and ‘best’ categories with a height- sible for all big ticket home merchandising for furniture line-up. fashion ened emphasis on fashion. the company’s 90 stores across Canada. }

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www.sertacanada.com HomeGoodsOnline.ca ©2013 Serta® < Inc. 21 “Taking the cue “We now treat furniture as a fashion depart- other categories. “In matter of fact, our furniture ment, selling trend right products that are life- and mattress businesses have outperformed in- from our apparel styled to make it easy for the customer to find dustry trends over the past few years,” he main- businesses we inspiring ideas and visualize the pieces in their tains. “With a new design and trends focused homes,”Asbridge explains. “For mattresses, our team in place we have driven the fashionability have edited the focus is on aspirational brands that resonate and value forward in furniture and are continu- offering and with the customer, and driving technology for- ing to excite the customer. Mattresses are on a will continue ward within that category.” similar trajectory.” This has meant moving away from the style The company’s evolving approach to furni- to enhance categories historically common to the depart- ture and mattresses has also meant being more the shopping ment store’s furniture presentation and taking selective about what locations offer the categor- inspiration from what has always been its core ies. At one time, every one of its stores across experience with business: women’s (and, to a certain, extent, the country featured a furniture and mattress de- new brands and men’s) apparel. partment. Today, furniture is carried on 49 of 90 “We’ve shifted away from traditional, and will stores while mattresses are offered on 79 floors. environments.” further develop and position ourselves in Up- “Hudson’s Bay went through a right-sizing dated and Contemporary directions. These looks exercise across the company – looking at sales resonate with our fashion savvy Hudson’s Bay performance by square foot - and while furni- customer,” Asbridge says. “Taking the cue from ture lost space, it has maintained and grown our apparel businesses we have edited the offer- sales and sales per square foot,” Asbridge ex- ing and will continue to enhance the shopping plains. “Since we believe furniture is more of a experience with new brands and environments. destination business, the customer wants to see With mattresses we’ll continue to refine the as- a broad assortment, and our current 49 doors al- sortment to speak to the ‘most wanted’ brands low us to do that on a cross-Canada basis.” within the industry, and create a more compel- Like other serious mattress merchants, Hud- Hudson’s Bay has long ling shopping environment for the customer.” son’s Bay is taking a ‘sleep shop’ approach to been associated with Shifting to this emphasis on fashion seems the category. “The mattress and bed basics de- Canadian interior designer to be paying off as HBC reported sales for the partment has evolved into a ‘sleep centre’ strat- Brian Gluckstein and his first half of its current fiscal year were up 4.1% egy, offering complete sleep solutions for the GlucksteinHome collection – although sales for the Canadian operation customer,” he notes, “A single destination for of furniture, furnishings and (Hudson’s Bay and Home Outfitters) advanced the customer that will offer them a tailored and accessories. Seen here with the 6.9%, almost twice that of the company’s oper- personal view as to their perfect night’s sleep.” Kent accent chair are the Ice ations south of the border. The efforts are even expanding into the Eco Diamond table and a carved Although the company doesn’t break out cat- company’s e-commerce space, which Governor crystal table lamp from the egory sales, Asbridge says furniture and mat- Baker has been touting as a vital part of its fu- designer’s Studio collection. tresses sales are growing right along with the ture success. Indeed, the company reported e- commerce sales grew 56% on a year-over-year basis in its most recent fiscal quarter. “This is a growing opportunity for us. Furni- ture was launched online in fall 2012, with our Top 10 sofas,” Asbridge says. “That assortment has been carefully growing to include top per- formers, as well as all of the product featured in our very successful Home Books. We expect this department to only grow larger as we move forward for the online business. Almost all our mattress assortment is online, and gives the online customer a complete and quick overview of every brand, and we’ll be adding more premium brands to the assortment shortly.” The company has also been very careful to ensure the online assortment follows the in- store model, capturing all the price points and technology differentiators they believe the consumer is looking for. In in spring of 2013, Hudson’s Bay published its first Home Book, a combination style guide and catalogue for all areas of the home. }

22 > HGO merchandiser More than 95% of exhibitors on the oor are the business owners. It's the perfect place to do eective business.

Register today at www.tchfm.com MADE TO MEASURE Toronto January 11 - 14 2014 HomeGoodsOnline.ca < 23 “Our exciting plans currently include creating a two-level destination for home on {floors} six and seven,” Asbridge says. “The seventh floor, which hasn’t been retail space for many years, is currently under construction and will house Kleinfeld’s Bridal Boutique, fine china and house- wares, while sixth will showcase furniture, the recently renovated ‘sleep centre’ for mattresses and bed basics as well as soft home. “Our furniture assortment will be re- fined for Queen Street to capitalize on the downtown condo market, as well as continue to surprise and delight our fashionable customer,” he adds. SALUTING EXCELLENCE “Over the years, Hudson’s Bay Com- Hudson’s Bay wants the “It definitely performed well above expecta- pany has helped move our industry to new lev- consumer to see furniture as tions, which we were happy to see since it was els of excellence,” CHFA chairman Laine Rey- fashion. In this scene from the a leap forward in style and point of view,” As- nolds said when announcing the company’s se- latest edition of the company’s bridge reports. “Our Home Books are definitely lection as the 2014 Retailer of the Year this past Home Book, the Umbria part of our plans as we move forward, since they November. sectional from Natuzzi Editions allow us to message fashion and newness to our “With their growing brand status, new in-store has been paired with Enix customers. This is all backed up by online trend transformation and their sustained commitment stainless steel table collection features, videos and social media support that to the home furnishings industry; as well as be- from Mobital. Also seen here is all bolsters the company’s fashion message.” ing a great example of a business enterprise that the Vortex floor lamp from Zuo There has also been a shift towards Made generously gives back to the community, Hud- Modern and the Morgan accent in Canada – and by extension, Made in North son’s Bay Company is a very worthy recipient of table from Thomasville. America – when it comes to selecting product this coveted award,” he continued. for the floor, something Asbridge believes “res- Since 2005, the HBC Foundation has made onates with our target customer. significant donations to Canadian charities “They appreciate the quality, value and faster across the country including Canadian Olym- lead times on custom special orders, as well pic Foundation and the Canadian Paralympic as that idea of ‘made locally’,” he adds. “Going Committee; the Breast Cancer Research Foun- forward, we’re in the process of sourcing more dation; Habitat for Humanity and the Canadian “We were product and programs that speak to this and Red Cross. will make sure that message reaches both new For the past seven years, it has also been exceedingly and existing customers.” supporting Canadian athletes through various happy with This was also the year in which Hudson’s Bay sport organizations and has donated over $35.5 the customer unveiled its new concept store in downtown Van- million to help support athlete development, couver, the first to receive a re-worked floor plan training and coaching. response and and assortment for furniture. “For the first time Hudson’s Bay is the 13th recipient of the quickly rolled we were able to show all of home on one floor,” CHFA’s Retailer of the Year award. The 2013 Asbridge enthuses. “The open-concept, loft-in- honouree was Sears Canada and the first recipi- out the lifestyle spired space allows us to showcase lifestyle pres- ent was the late Tom Leon of Leon’s Furniture presentation entation by décor style for the first time. in 2002. Other prior recipients include Dennis “We were exceedingly happy with the cus- Novosel of Stoney Creek Furniture and Bill to all furniture tomer response and quickly rolled out the Tepperman of Tepperman’s Furniture. stores.” lifestyle presentation to all furniture stores,” A gala dinner celebrating Hudson’s Bay’s he adds. contributions to the industry will be held im- The concept is expected to be driven home mediately prior to the opening of the 2014 Can- when the renovations to the company’s flagship adian Home Furnishings Market. HGO store on Queen Street in downtown Toronto are seen for the first time sometime in the first half MICHAEL J. KNELL is publisher and editor of of 2014. Home Goods Online.

24 > HGO merchandiser Protecting… 2,000,000 CANADIAN HOMES …and counting.

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

VERY FURNITURE RETAILER IN THE COUNTRY porate store and three new franchises; and, Sleep Country Can- is looking for growth. Admittedly, growth takes dif- ada, which opened five stores in and around Halifax this past ferent forms depending on circumstances. Most are summer, making its long-awaited entry into Atlantic Canada. looking to grow the bottom line, to be more profit- Indeed, the most recent Annual Retail Trade Survey from Eable. Some are looking to grow profits by growing sales, others Statistics Canada pointed out that the total number of in- by reducing costs or some combination of the two. Still others dependent furniture stores in operation fell by 11.7% between want more physical storefronts. 2008 and 2011, the last year for which figures are reliable. By that measure, the Saskatoon-headquartered Brand- This isn’t to say other stores haven’t opened in 2013, they Source Canada may be considered one of the fastest grow- have. But, it seems store openings have become the exception, ing furniture, mattress and appliance retail networks in the rather than the norm. country, adding four stores to its network in the second half of 2013, including the first-ever outlet it has built from the NEW THINKING ground up. The remaining three stores were all conversions Especially with its first built-from-the-ground-up BrandSource to the network, which is the primary go-to-market strategy for Canada outlet in Ottawa, Mega Group is taking a new, highly the co-operatively owned Mega Group, the largest Canadian contemporary approach to big ticket home store layout, de- furniture-focused buying and marketing organization. sign and merchandising. Indeed, few other national networks are adding stores at the BrandSource Ottawa’s interior was created by Mega’s long- same pace in 2013, if at all. Only two other national retailers time director of commercial design Carole Vallières and de- opened four or more new stores this year: Leon’s Furniture, this signer Carrie Chubey. This team also designed two of the re- country’s largest full-line furniture retailer opened one new cor- maining three stores that opened in recent months. “It’s all about the consumer – she was our main focus,” Val- lières said when describing the store’s interior. “The [Ottawa] store is close to a residential area where two types of clientele coexist: a young, hip crowd living in condos; and, a more con- servative clientele looking for classically-styled furniture.” To answer the needs of these two specific customer groups, the store was thought out in two different styles which Vallières labelled Urban and Timeless. Each is represented in a complete mock house display located in the store’s entranceway. “Signage is a key component of the consumer’s venturing into the store,” Vallières explained. “As soon as she crosses the front doors, she is lead to choose the style that corresponds BrandSource Ottawa owners Brian Janna, Richard Laplante and to her taste right away. The signage indicates and leads the Marc-Olivier Laplante are seen here at the store’s grand opening in consumer in the specific zone representing the style she has early September. chosen. In each area, she can find a living room, a dining or}

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

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

“They were looking to migrate to a more contemporary merchandising offering to serve the growing urban tastes of new condo owners,” he noted. “They are also interested in Mega’s more collaborative, co-op driven approach that allows a fair amount of regional customizing while still receiv- ing all the support today’s retailers require, such as design, merchandising, marketing, web, social media, sales and sales management training.” bedroom in perfect co-ordination. This type of setting also mir- Vancura also believes Ottawa BrandSource is also a good rors the open concept of most homes.” example of where Mega wants to take its national go-to-mar- The 16,000 square foot store – located at the intersection of ket strategy. St. Laurent Blvd. and Belfast Road on outskirts of downtown Ot- “This first from-the-ground-up store is well designed and tawa – also sports Mega’s new Sleep Experience gallery concept. well located in an urban market and will be a showcase of The store also features a lounge complete with a self-serve what BrandSource is and will serve as proof that this type of coffee bar. “This offers a relaxing environment to discuss her store can and will generate volume and profit,” he said. next purchase,” she noted, adding the washrooms feature hotel- style hand towels to enhance the at-home feeling. The change KINDRED SPIRIT tables also offer diapers for harried parents. Walk through the front door at Meubles & Nous in Saint- The store is owned by Richard Laplante, his son Marc-Olivier Georges de Beauce – a small city of 33,000 or so people 100 Laplante and Brian Janna. The senior Laplante and Janna are kilometres south of Quebec City – and the similarities to seasoned home furnishings retailers but are new to Mega Group BrandSource Ottawa are almost immediately apparent, in- and BrandSource Canada. The younger Laplante serves as the cluding the fact it’s in a new building. The two are obviously company’s controller. kindred spirits. Sales associates are all equipped with iPads, allowing them to But the differences between the two are also important. respond immediately to most every question a customer might Most significant is Meubles & Nous is what Mega calls a ask. Among the floor’s more prominent furniture suppliers are BrandSource ‘authorized’ dealer. Owners Michel Tardif and Palliser, El Ran, Bugatti Design, Magnussen Home and Ashley. Karline Turcotte receive almost the same level of service The mattress assortment includes collections from Sealy and and support as a full-fledged Ameublesment BrandSource Tempur-Pedic, among others. (known as BrandSource Home Furnishings throughout Eng- “We’re very excited with the collection we’ve assembled with lish Canada) member store, but it doesn’t carry the banner as the help of BrandSource. We’ve added Canadian-made products part of its corporate identity. to our collection as well as a variety of brands to respond to each Tardif, who was elected to Mega’s board of directors in customer’s taste,” Richard Laplante said. “We wanted a unique 2011, and Turotte acquired what was then a 62-year old retail- and ‘wow!’ store and we think we’ve got it.” er called Meubles Jacques Veilleux in 2008. Earlier this year, “This new store has lots of advantages for us,” Brian Janna they launched a new branding initiative for the store, includ- added. “BrandSource responds to the customers by offering ing moving into a new 27,000 square foot building under a them unsurpassed customer services and customized solutions new name – an investment totalling some $4 million. fitted to their taste” For Meubles & Nous, Vallières created four distinct colour- Michael Vancura, Mega’s executive vice president of retail, coded sections for different styles of furniture as well as gal- said Laplante and Janna were two examples of the types of leries for bedding and major appliances. people Mega want to attract to the co-operatively owned buying “The owners wanted us to develop a signature style for and marketing group. them,” she said. “The store was divided into four different}

28 > HGO merchandiser ANNI

1962-2012

YEARS

1962-2012

HomeGoodsOnline.ca < 29 The interior layout of Meubles & Nous is designed to allow the consumer to move about easily. Aisles through the store are well signed and colour coded the one store that required no design work as it was complet- to reflect the varying styles it offers. ed renovated just two years before. What makes this store, which can be found in New Glasglow, Nova Scotia, is that in addition to furniture and mattresses, it is also one of the area’s premier floor covering retailers. It is also a member of consumer electronics specialist Audio Video Unlimited as well as white goods division, Appliances Unlimited. The fourth addition was the newly rebranded Ameuble- ment BrandSource Desrocher in Ste-Thérèse, Quebec, on the northern outskirts of Montreal. Formerly known as Meubles Dubois, this 10,000 square foot store was acquired by the husband and wife team of Ghislain Guindon and Andrée Labrosse and their children, Geneviève Guindon and Marc-Olivier Guindon – who will be the new store’s manager – in August 2013. This is the family’s third outlet, which includes the first Ameublement BrandSource Desrochers in Plaisance, Que- bec – about two-thirds of the way from Montreal to Toronto. Their third outlet is Meubles La Détente, a high-end store in areas with different collections. Main areas were conceived to Gatineau, Quebec that serves the National Capital Region. create a unique concept – called quartiers – and were named Most retail experts agree: renovation and refurbishment Movi, Vivia, Klass, and Urba. All have different styles which are generates new sales dollars and new profits for the retailer. consistent throughout the areas. Urba, for example, features fur- With its new design direction for BrandSource Canada, Mega niture with a modern touch.” Group is hopefully setting the stage for member growth. The mattress department is called Rèva. Since rolling out the network in March 2012, BrandSource The store features colour co-ordinated signs, maps, and path- has added some 13 outlets it number, bringing the total to ways to direct visiting customers to the area she’s looking for. 156 or so. Only two names in big ticket have more stores in These colour motifs are also found and repeated in all featured Canada: the aforementioned Leon’s, which with acquisition advertising and flyers, including the store’s web site www.meu( - of arch-rival The Brick in March 2013, now operates some blesetnous.com). 311 stores under its various banners. Big ticket leasing spe- Like BrandSource Ottawa, Meubles & Nous features a work- cialist Easyhome operates some 183 corporate stores in Can- ing coffee bar that serves customers throughout the day. ada as well as 52 franchise locations across North America. Another BrandSource store is expected to open in British REVITALIZING THE STORE Columbia over the next few weeks. Michael Vancura noted During the closing weeks of 2013, two other long-time Mega Mega’s target for 2014 is to add another ten stores to the Group members converted to the BrandSource Canada concept. BrandSource Canada network. HGO What is now called Chediac BrandSource Home Furnishings is a second generation family business operated by John Che- MICHAEL J. KNELL is publisher and editor of Home Goods diac, Vivi Chediac and their sister Renée Cumminger. This was Online.

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obusformemattress.com HomeGoodsOnline.ca < 31 Bob Kay (centre), chairman and founder of Springwall Sleep Products, is seen here with his sons Boyd (left) and Greg (right). Kay is the 2014 recipient of the Canadian Home Furnishings Association’s Lifetime Achievement Award.

Keeping up with BOB KAY N JANUARY 2014, SACKVILLE, NEW BRUNSWICK- dipped his toes into a startling number of unrelated ventures — born mattress mogul and outstanding entrepreneur Bob often quite successfully. A quick glance at this CV would make Kay will become the 15th recipient of the Canadian Home anyone feel lazy, as he presided over a growing company while Furnishings Alliance’s Lifetime Achievement Award, indulging his interests in bottling Coca Cola; holding and de- Ijoining such industry stalwarts as the late Orville Mead and velopment companies; cable companies; cell phone service Art DeFehr, chief executive officer of Palliser Furniture. companies; and, restaurants. The CHFA established the award in 2000 to recognize those Kay, who majored in business administration at Sackville’s individuals who over their lifetime have made exemplary and Mount Allison University before landing a job as an industrial sustained contributions to the Canadian furniture and home rubber products salesman, fell into the furniture world when furnishings industry as well as the communities in which they his affinity for selling put him in touch with local furniture live. It’s hard to argue that Kay, who has now left most of the sales reps and, later on, the president of the now defunct Bev- day-to-day heavy lifting to his sons Boyd and Greg, doesn’t fit erly Bedding Company in Toronto. the bill. “They hired me as sales supervisor and I was there for three While Kay’s primary passion and focus has always been years,” Kay recalls. “After that, I came back [to Moncton] to Springwall (which produces the Chiropractic, H2 Chiroprac- buy a small mattress manufacturing concern. My father and tic and Steven & Chris mattresses brands, among others), he’s grandfather had worked in stove manufacturing and I was al-

32 > HGO merchandiser t SPOTLIGHT

the president of the entire Springwall brand. Under his stew- ardship, the once small Maritime concern grew to include major manufacturing facilities in Mississauga, Ontario and Cal- gary in addition to the company’s headquarters in Scoudouc, just outside of Moncton. Springwall now boasts 250 employees and is probably the largest Canadian-owned and operated mattress manufacturer. In addition to independent furniture and mattress retailers, the company includes both Sears Canada and The Brick among its retail partners. Over the years, Kay made a few changes to the brand, but says his alterations were far from radical. “There was nothing major, just constant realignment,” he says. “We just kept expanding the Chiropractic and Springwall brand. We closed and opened plants, just the regular parts of running a business.” But small changes or not, something about Kay’s vision resonated with retailers and consumers, and he attributes the brand’s longevity to the product. “It’s a good product and we stand behind it.” Building an eternally marketable product is hard enough It’s rare to meet an entrepreneur when it’s your sole focus, so it seems like it would be difficult to sustain one company while jumping – with aplomb and great who has kept one business success – into other ventures. afloat for half a century, let While Kay was building Springwall, he was active in the local Coca-Cola bottling plant – Tennant Beverages N.B. Ltd. – as alone several. For Bob Kay, well as in Stephen International Inc., a holding and develop- chairman and founder of ment company, which he joined as a director and shareholder beginning 1966. In 1974, he launched Cable Service Ltd. along Springwall Sleep Products, with ten other shareholders (he eventually became the sole growing several successful owner). Kay ran the cable company for almost 20 years, study- Keeping up ing the field with engineers and obtaining a license to provide businesses at once — while cable television to the greater Moncton area. The company staying focused on mattresses — launched pay-tv in 1983 and debuted a community service channel that allowed local groups to broadcast homegrown was a welcome challenge. content. He sold the company a decade later. While running Springwall and Cable Service, he launched BY ASHLEY NEWPORT Celserve Communications, the first cellular telephone service with BOB KAY in New Brunswick. In 1993, he got the opportunity to indulge his interest in development launching condominium builder ways around [manufacturing] or close to it. I think it’s in my Cambridge Developments Inc. Two years later, he opened blood. When I got into mattresses, it carried on from there.” Maverick’s Steakhouse and Grill – a fine dining restaurant And carry on it did. On April 23, 1964, Atlantic Sleep Prod- that’s now run by his grandson Ryan Kay. ucts was born. Although the beginning was challenging — ac- Kay also immersed himself in charitable and commun- cording to a 1985 article in the Atlantic Insight, the company ity work by getting involved in the Canadian Federation of only netted $150,000 in sales its first year — Atlantic grew by Independent Business, Young President’s Organization, the staying on trend and focusing on its chiropractic line. Moncton YMCA, Friends of the Moncton Hospital, PEI Boys “[The Chiropractic sleep sets] were developed by Spring- and Girls Club and supporting Saint Mary’s University in Hali- wall in Minneapolis with a chiropractic school that had a test- fax. He also established the Robert G. Kay/Killam Properties ing laboratory,” Kay explains. “They built a mattress that was Inc. Entrance Scholarship Fund at Mount Allison University. the right type of sleeping mattress, and we were able to obtain When asked why anyone would want to juggle several de- the name Chiropractic and the endorsement of the American manding enterprises at once, Kay is nonplussed. Chiropractic Association.” “Why spend energy climbing Mount Everest? I don’t know. After first establishing Atlantic Sleep Products, Kay began When opportunities came along that interested me and were buying Springwall licenses. By 1997, he owned all of the com- a challenge, I had to take them,” he says. “In the 90s I worked pany’s licenses in Canada, the U.S. and beyond and became with an open door policy in business and many people used }

HomeGoodsOnline.ca < 33 The ‘Geneva’ seen here is part of the Chiropractic collection manufactured by alive and thriving is one of Kay’s proudest Springwall Sleep Products. This 11-inch achievements. deep mattress features seven inches “[One of my greatest achievements] is having of bio foam, supported by two inches of a 50-year-old company that I started. My sons its Convergency-brands latex and two now run the business and handle the day-to-day inches of AquaGel memory foam. It is also encased with an air flow-through system. and make decisions while I stand aside. I still at- The mattress is complimented with by the tend board meetings and put my two cents in and company’s DuraSystem foundation. we’ve managed to get along in that process very well. It’s a family achievement, and sometimes it’s hard for a family to do that.” As for family, both Boyd and Greg Kay credit their father with inspiring their business sense. Part of the H2 Chiropractic collection, “My dad was born an entrepreneur the ‘Peerless’ is constructed using a and I have benefited greatly from his 2550 stacked coil innerspring system. energetic and innovative spirit,” says It is also foam encased with an air- flow system and its plush pillow-top Greg Kay. “In business, I was impressed construction includes the company’s with his leadership and his way of do- AquaGel memory foam. ing things such as his vertical integra- tion of manufacturing processes and his constant search for new and better ways of doing things. He is a true builder, be it mattresses, buildings, systems. As a father, he has been a good role model and instilled in me a good work ethic.” Family businesses – like any business – have their benefits, but they also have unique challen- ges in the sense that it’s sometimes not possible to leave work at work. For Kay, it’s important to understand both the perks and fallbacks of running a close-knit, family-run operation. “The great benefit in a family organization is the family sticks together and you’re not concerned about losing your top people. I think it’s also a challenge to try to stay a family. Some- times families don’t get along that well. But [companies run by families that get along] have strong companies and develop a family-staff. Our Moncton plant manager has been with us for over 30 years. My assistant has been with me for almost 20 years. We have lots of very long- Bob Kay (third from my open door instead of others, so I moved the term employees, and that stops a lot of turmoil right} is seen here Springwall plant into the city and ended up with in business,” says Kay. celebrating the 25th some extra time.” As for lack of turmoil, Boyd Kay is also pleased anniversary Springwall Sleep Products with a And while Kay still has hands in some big with his time in his family-run, distinctly Can- group of head office staff name operations – such as the publicly-held Kil- adian operation. member. The company lam Properties, an owner and manager of apart- “I have known Bob Kay for over 50 years, work- will be 50 in 2014. ment buildings and manufactured home coming for and with him since I was five-years-old,” munities, and shredding company Redishred says Boyd Kay. “I even lived in his home for quite Capital Corp. – it’s Springwall that carries on his some time! His honesty and integrity, along with legacy. So, with so many ventures under his belt, a very direct style, always lets you know where it seems prudent to ask: why mattresses? you stand. From raising cattle and buffalo to “Because of the style and constantly changing driving trucks to working in the upholstery and environment,” he says. “It’s not same old, same Springwall factories, it was all an enriching and old type of manufacturing. It’s not like tires, rewarding experience. I always felt someone had where the circle just never goes away. It’s more my back. I look forward to working another 30 challenging.” years with RG.” What’s also challenging is maintaining a While it seems likely that Springwall will family business, but keeping the company still be churning out its celebrated mattresses

34 > HGO merchandiser in 2043 – the company boasts very low returns compared to other major retailers – Kay acknow- ledges that the playing field has changed since he first stepped up to the plate in the 60s. “It would be tough [to start a Springwall] in ALL ABOUT BOB 2013,” he says. “Not because people can’t do it, our industry has talented people, but because Some business associates weigh in on their the customer base has shrunk. There used to experiences with Bob Kay be a lot of independent retailers, but the market has been taken over by big retailers and if you’re LARRY NELSON, president and chief executive officer of the Lounsbury small, you often belong to a group and you’re Group of Moncton, New Brunswick, the owner of the five-unit Lounsbury dealing with whoever is running the group. If Furniture: “I have known Mr. Kay for over 45 years. He was and is a pioneer you’re a start-up, you have to get under the arm in the bedding business, starting out as a very small local manufacturer of a large retailer and have an in before starting a and growing that business into one of the largest and oldest bedding business. I see that as the main problem. Finan- companies in North America. cing isn’t any easier these days and everything “His word is his bond, a handshake will seal any deal. He has been a you’re dealing with is big – big banks, big retail- personal inspiration to me, with his sage advice, along with his great grasp ers. Mom and Pop operations have difficulty of what is going on in the marketplace, always giving solutions to the with financing and reaching customers, which is problems our industry might be facing at any particular point in time. something that’s happened in most industries.” “Another quality I have most enjoyed is his ability to ask your opinion, a Having said that, Kay remains optimistic skill he has honed from his many business successes and also from a few about the industry’s future. missed opportunities. “I’m hopeful for it,” he says. “It goes through “He is a realist who has given many individuals great opportunities to phases and I don’t agree with some of the new become better people. materials [coming into the market]. There’s “We need more people like Mr. Kay; he deserves any and all accolades too much focus on memory foam. My idea of that come his way.” a good sleeping surface is firmer than some of the products out there today. But there’s ALLEN SKALING, secretary-treasurer of Springwall Sleep Products: always phases and changes because some- “I have worked for Bob Kay for over 39 years. Bob is a hands-on person one comes along with new materials that can who is able to assess a situation quickly and get to the heart of the change the industry quickly. The industry in issue and put it in perspective. He leaves the details of what to do to general has changed a lot over the past five to his employees. He has always said that he never faults an employee for seven years but I believe it’s stabilizing. It making a decision, unless he neglects to fix a previous decision that was will find its way and make better and bet- either wrong or only partially right. He is a tough negotiator, but once ter products.” the deal is struck he lives up to the deal. He has taught me that if you As for Bob Kay himself, it seems like have to substitute, you never sub down, always up. Your reputation is stepping away from the day-to-day oper- on the line and second best is not good enough. This holds true in ations would be a challenge for a man every business he is involved. who filled his sparse spare time with “I do not believe he will ever ‘retire’. If something piques complex business ventures. While Kay his interest he is going to get involved – enthusiasm and says that he has indeed left the heavy determination will always override age.” lifting to the next generation of family members (and to the others who now LAINE REYNOLDS, chairman of the Canadian Home Furnishings run his side projects), he says he’s still Alliance and vice president of sales for Superstyle Furniture: got enough going on to keep him on his “Bob Kay is a successful, high-energy business entrepreneur who toes. through his vision and leadership has developed the Springwall “Oh, I keep busy, believe me!” he says. brand into a significant bedding resource in a highly competitive “With meetings and projects I keep busy sector of our industry. In recognizing his extensive professional every day.” HGO accomplishments and his commitment and dedication to community involvement, Bob is a most deserving recipient of the A frequent contributor to HGO Merchan- CHFA Lifetime Achievement Award. diser, ASHLEY NEWPORT is a Toronto- “Many people have benefitted from Bob Kay’s risk taking based freelance journalist who pri- spirit. In the true style of an entrepreneur he is able to perceive marily writes for trade and business opportunities and take advantage of them. Bob Kay is not publications. Her specialties include afraid to take risks into the ‘unknowns’ of business, but always food, hospitality and emerging social/ with a calculated assessment of the possible outcomes, and business trends. respect for the value of budgets and the planning process.”

HomeGoodsOnline.ca < 35 BY THE NUMBERS u MODEST The other major news story of interest to furniture, mattress and major appliance retailers is the continuing sad saga that is Sears Canada, which continued to struggle throughout 2013. The multi-channel retailer turned much of its growth prime downtown real estate into cash throughout the year and invested little or none of the proceeds into the process of returning itself to its glory days as a this country’s ‘go to’ retailer. AHEAD The company also admitted that by the end of the third quarter, its sales of major appliances Furniture store sales should grow modestly had fallen 2.5% year-over-year and sales in its in 2013. So should those of home furnishings ‘home and hardlines’ segment (which includes furniture and mattresses) was down 8.9%. stores. The consumer’s net worth is improving On the other hand, it unveiled a new store con- and the housing market continues to be cept for its Sears Home network albeit at only two of its 40-odd locations. While the concepts them- relatively strong. These should result in a very selves earned considerable praise, the question is measured level of growth for big ticket retailers will it be expanded across the rest of the network? The really big news on the retail scene in 2013 in the months ahead. BY MICHAEL J. KNELL was the entry of cheap-chic specialist Target into the Canadian market. Their splash wasn’t as big as expected, but when linked to the impending arrival of other big U.S. retail names – including NE THING IS CERTAIN: 2013 Nordstrum and Saks – has ignited concern about won’t set new sales records for the an impending American invasion. Fortunately, owners and operators of furniture, most of these big names are not active furniture, mattress and major appliance mattress and major appliance merchants. With stores in this country. This isn’t to the exception of the already established Ashley Osay things haven’t improved over 2012, they have, Furniture Home Stores and La-Z-Boy Furniture but the growth rates seen in these heady years be- Galleries, there has been little expressed desire fore the Great Recession of 2008 aren’t likely to by other members of the Top 100 U.S. furniture come back in the foreseeable future. retailers to enter the Canadian market. While there are certainly exceptions to be found, most retailers – whether the owner of a THE STATE OF THE comparatively small family-owned enterprise or CANADIAN CONSUMER the leader of our largest full-line furniture mer- For the second or third consecutive year (de- chant – have found growth hard to come by and, in pending on how one views the data), the Cana- some cases, extraordinary growth has come from dian consumer showed few signs of returning business activities other than the merchandising to the spending habits she employed before the and marketing of our industry’s core product lines. meltdown of 2008. But this doesn’t mean there Perhaps the industry’s most significant single isn’t any good news. The most significant piece event of 2013 was the acquisition of The Brick, being that, according to Statistics Canada, 69% of the Edmonton-headquartered high-impact pro- all Canadian households own their home – giv- moter, by its arch-rival, the Toronto-based family ing her a sense of financial stability not shared controlled Leon’s Furniture in a deal valued at just by her cousins in the United States. over $700 million, which incidentally may be the Equally important, on a per capita basis, the largest deal of its type in the industry’s history. typical Canadian consumer’s net worth breached

36 > HGO merchandiser the $200,000 mark for the first time ever in 2013 with household net worth coming in at twice that. Offsetting these advances are several factors, perhaps the most important of which is average household debt which rose to $1.64 for every $1 of disposable income in the closing months of 2013 – a new record. Furthermore, median household income is stuck in a rut at $68,000 – a figure that has changed little in the past five years. While overall household spending was up Seen here are the four 2.7% in 2011 – the last year for which figures are executives that steered available – spending on household furnishings the sale of The Brick, fell 2.3% to $864, although spending on major ap- other measure. The three major indices pub- the Edmonton-based high impact promoter, pliances was up 7.7% to $448. lished in this country – by the Conference Board to its arch-rival, Leon’s With unemployment stuck at just over 7% of Canada, TNS Canada and Neilsen Canada – Furniture of Toronto. for most of 2013, consumers remain concerned all feature a ‘major purchases question’, which From left to right are: about job security, which when coupled with in- basically asks “is now a good time to make a Bill Gregson, then come stagnation and rising debt levels is caus- major purchase such as a house, car or other big executive chairman of The Brick; Marc ing her to be more cautious, especially when it ticket item?” J. Leon, chairman of comes to furniture, mattresses and, to some ex- All three surveys show that those saying now Leon’s Furniture; Vi tent, major appliances. is not a good time to make a major purchase Konkle, now the former In recent years, consumer confidence has be- outnumber – by a relatively small, but nonethe- president and CEO of come the most important bellwether to watch less real margin – those holding the opposing The Brick; and, Terry Leon, president and CEO when forecasting the fortunes of furniture, mat- view. In fact, the TNS survey shows its ‘buy in- of Leon’s Furniture. tress and major appliance retailers – much more dex’ fell to the lowest level seen in several years (CNW Group/Leon’s so that the state of the housing market or any in October 2013. } Furniture Limited)

HomeGoodsOnline.ca < 37 point forecast of 448,900 units to be sold by the Canadian Real Estate Association’s Multiple List- ing Service (MLS) this year – which is essentially unchanged from the 453,372 units sold in 2012. In 2014, the point forecast is expected to gain 4.2% to 467,600 units. The national average price for a house sold through the MLS is expected to reach $374,800 at the end of 2013, a year-over-year gain of 2.7%. It is forecast to gain a further 2.1% to $382,800 in 2014. The second traditional driver is interest rates. Here, the news for big ticket retailers remains favourable as the Bank of Canada isn’t expected to allow rates to rise significantly over the next 12 to 18 months. However, the data suggests low interest rates have done more to fuel the housing market and automotive sector, both of which have outperformed both the economy as-a-whole and the retail sector as-a-whole for past few years. Indeed, CREA The publicly-held and family-managed Leon’s TRADITIONAL DRIVERS STABLE has attributed much of 2013’s sales activity to Furniture became one Conventional industry wisdom has always consumers seeking to enter the housing mar- of the largest furniture, linked housing starts and sales to retail sales of ket ahead of any upticks in mortgage lending mattress and major furniture, mattress and major appliances. While rates, which actually saw some minor increases appliance retailers it’s not as powerful an indicator as it once was, in the second half of the year. in North America when it completed its people who buy homes eventually and usually acquisition of arch- furnish them, so it remains important to under- FURNITURE AND HOME rival The Brick in late stand the direction the housing market is taking. FURNISHINGS STORE SALES March 2013. Seen The much anticipated ‘housing bubble’ failed Statistics Canada’s monthly Retail Trade report here is their store in to burst in 2013, indeed there is an emerging details sales by type of store and is probably the Kitchener, Ontario. view among economists and academics that the industry’s best ongoing performance barometer. Canadian housing market isn’t overvalued and It should be remembered Statistics Canada won’t crash because the underlying economic defines a furniture store as a retail establishment fundamentals support the current pricing and that generates 51% or more of its annual revenue value model. If this view holds sway, this is good from the sale of furniture and mattresses. The news indeed for Canadian furniture, mattress balance can be anything at all, but the typical and major appliance retailers. store’s product profile includes major appliances, The Canada Mortgage & Housing Corpora- consumer electronics, floor coverings and other tion (CMHC) is forecasting housing starts will home furnishings – all to varying degrees. end up at 182,800 units in 2013 – a 15% drop from Just prior to press time, Statistics Canada re- the 214,827 units built in 2012 and the first time ported actual (not seasonally adjusted) furniture in almost a decade where they haven’t at least ap- store sales for the first nine months of 2013 were proached the 200,000 mark. The point forecast $7.20 billion, an uptick of 2.7% over the $7.03 bil- for next year is 186,600 units. Most experts agree lion for the same period of 2012, marking the this level of starts is in line with Canada’s demo- third consecutive year of improvement in the graphic fundamentals; that is, it supports the January to September period. pace of new household formation in this country. Home furnishings stores – which sell every- For the resale market, CMHC is offering a thing from floor covering to lamps and lighting,

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

Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sept-13

Furniture stores 704947 650117 722271 761908 785142 799586 826758 829836 835617 808489 815420 915784 728510 658965 756027 728197 795918 816100 836264 855249 850990 789554 832980 886437 740352 641507 760005 779173 846184 839723 863601 881654 850915

Home furnishings stores 391654 348018 428275 438354 447892 470071 447580 486763 461727 496410 527152 627368 401223 387525 439708 426525 451641 461243 475096 490253 449926 507233 579363 629953 434344 369776 432422 437918 467803 454598 482412 498136 482636

38 > HGO merchandiser linens, decorative accessories and wall art – rung- by at least 2% in 2013. After all, it’s less expensive up year-to-date sales for the first three quarters for the consumer to change out the lamps and of $4.06 billion, up 2.3% compared to $3.98 billion pillows in her living room than it is to replace an for the prior year. entire upholstery suite. The third member of the big ticket home Electronics and appliance stores are generally group – electronics and appliance stores – expected to suffer their third year of declining weren’t having as good a year as through to the sales in 2013. They fell 6.0% last year to $14.0 bil- end of September were $9.94 billion, down 3.9% lion, and unless the Holiday Season is very good from the $10.3 billion rung-up during the com- to them they will probably not make that mark. parable period of 2012. Considering the furniture, mattress and major How are these merchants going to end out the appliance retailers’ traditional business drivers Sears Canada turned a year? That’s hard to say, especially since furni- are somewhat in their favour, 2014 should be an- number of their prime ture stores recorded a marginal 0.8% sales uptick other year of modest growth. But it will probably store locations into cash by selling the leases to $9.53 billion in 2012 but still well below the be 2016 before sales are back to their 2008 lev- back to their landlords. high water mark of $10.2 billion left in 2008. It els. Allowing for inflation (albeit very modest), it This has caused much would not be unreasonable to suggest 2013 will could be 2018 before the industry has recovered speculation about the end up slightly – say 1.5% – ahead of 2012. from the Great Recession. At least, things are future of the multi- channel retailer, which Home furnishings stores fared much better moving in the right direction. HGO continues to be a leader as their 2012 sales totaled $5.69 billion, a gain of in the sales of furniture, 2.1% over the $5.57 billion for 2011. And the pace MICHAEL J. KNELL is publisher and editor of mattresses and major they’re going suggests their sales will advance Home Goods Online. appliances.

Electronics and appliance stores 1067409 956324 1148365 1071996 1107170 1122182 1144935 1245728 1263133 1215159 1389186 2251857 1056285 955301 1121660 977070 1029305 1094829 1057408 1203939 1172131 1092506 1374134 1953203 1083723 945932 1117242 1070297 1100326 1101506 1116648 1230714 1173423 Source: Statistics Canada Monthly Retail Trade Survey HomeGoodsOnline.ca < 39 HGO Merchandiser is published by Windsor Bay Communications Inc. P.O. Box 3023, 120 Ontario St. Brighton, ON K0K 1H0 T: 613.475.4704 F: 613.475.0829 [email protected]

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