Prairie Hospitality

Michael Knell’s HomeGoodsOnline.ca

HGOSummer 2013 merchandiserVolume Two, Issue 4

ALL ROADS LEAD TO HIGH POINT IT’S ALL ABOUT GEL (MATTRESSES, THAT IS) MACRAE ON “WHY BUY CANADIAN?”

FRONT PORCH INTERIORS Prairie Hospitality

CONTENTS>>>

FROM THE EDITOR bigger and better innovations in 6The most important lesson this bedding. Ashley Newport examines issue’s Profile subject – Shannon the importance of gel technology Houff, owner of Front Porch Interiors and what it means to mattress in Wawota, Saskatchewan – can teach retailers and consumers. this industry is a simple reminder: there’s a lot of joy to be found as a ADVERTISERS’ retailer. Her furniture store may not 28 INDEX be the largest in Saskatchewan, but she brings out-of-the-box ideas and SOCIAL SCENE: enthusiasm to her market. That alone 30MEGA GROUP: makes her an inspiration. HANGING OUT IN VANCOUVER PROFILE: Our new Social Scene section shares 8PRAIRIE HOSPITALITY, photos – taken by François Boisvert – FRONT PORCH STYLE from the recent 2013 annual general Shannon Houff, owner of Front meeting and conference held by Porch Interiors in Wawota, Mega Group, this country’s largest Saskatchewan, has no shortage of big ticket home buying and skills. She’s waited tables, farmed marketing group. cattle and managed a doctor’s office. 8 Now she’s finally fulfilling her ON RETAIL: dream of sharing her innate sense of 33 WHY BUY sophisticated style with customers CANADIAN? in her beloved prairie community. In this issue's ‘On Retail’ essay, A profile by Ashley Newport. contributor Alixe MacRae examines 30 the benefits – particularly for MARKET REVIEW: independent retailers – for buying, 16 ALL ROADS LEAD flooring and promoting Canadian- TO HIGH POINT made furniture. Most of them have For a number of Canadian furniture to do with cash flow. and mattress manufacturers having a presence at the world’s largest BY THE NUMBERS: furniture trade event is simply a 34 PERFORMANCE matter of being where the customers INDICATORS are. As the U.S. economy slowly The latest Annual Retail Survey recovers, their future brightens. And from Statistics Canada shows that it doesn’t hurt that lots of Canadian while they are fewer in number, retailers come to High Point as well. independent furniture retailers are This examination of the High Point outperforming the national chains Market and its importance to the in a number of areas on a store Canadian furniture industry was versus store basis. 33 written by first-time contributor Marc Barnes. ON OUR COVER Shannon Houff, the owner of Front Porch Interiors MATTRESSES: in Wawota, Saskatchewan describes 24 ALL ABOUT GEL herself as a “normal cowgirl” who, Gel has become a mainstay in the when she isn’t running her 4,000 square mattress industry since Serta got the foot furniture and design store can cool blue ball rolling back in 2011. often be found helping out on the family Most manufacturers laud its cooling ranch – she’s even been known to effect and staying power, but a few brand a calf or two. industry insiders are hoping for even

4 > HGO merchandiser HomeGoodsOnline.ca < 5 FROM THE EDITOR>>>

THE JOY HGO merchandiser OF RETAILING SUMMER 2013 • VOLUME TWO, ISSUE 3 ISSN 2291-4765 IN THIS ISSUE WE PROFILE A SELF-DESCRIBED “NORMAL www.HomeGoodsOnline.ca COWGIRL” WHO HAS A LOT TO TEACH OUR INDUSTRY ABOUT PUBLISHER & EDITOR HOW MUCH FUN IT CAN BE AS AN INDEPENDENT FURNITURE Michael J. Knell RETAILER, EVEN IN A SMALL, RURAL TOWN. [email protected]

MANAGING EDITOR T’S NO SECRET THAT RETAIL HAS BEEN A TOUGH Anthony E. Bengel slog for the past couple of years. It seems the consumer is more [email protected] interested in buying a new car than in buying new furniture or a I CONTRIBUTORS new mattress or new appliances. The statistics are ugly. Marc Barnes, François Boisvert, Then you meet Shannon Houff, the owner of Front Porch Interiors Alixe MacRae, Ashley Newman in Wawota, Saskatchewan, and your faith in the future of our industry – particularly at the independent retail level – is restored. Perhaps ART DIRECTOR most impressive is the obvious joy she takes in owning and running Samantha Edwards Sam I Am Creative her business. [email protected] MICHAEL J. KNELL Truth be told, we need more people like her in our industry. In Ashley Newport’s profile, we’re reminded that a willingness to work IT DIRECTOR hard, to learn new things, and the desire to be creative in meeting the Jayme Cousins www.inhouselogic.com needs of your customers – who are also your friends and neighbours [email protected] – goes a long way to achieving success. She also is an outside-the-box thinker. When you’re operating a 4,000-square-foot store in a town PUBLISHED BY with a population of less than 700, you need to be both creative and Windsor Bay Communications Inc. outside-the-box. P.O. Box 3023, 120 Ontario Street Brighton, Ontario K0K 1H0 Shannon Houff has a few things to teach the rest of us. HerLadies’ T: 613.475.4704 Night Out is probably one of the most innovative promotions ever F: 613.475.0829 staged by a small independent retailer. At least I don’t know of another Michael J. Knell, Managing Partner store that hosts a similar event. She’s also combating the stereotype PUBLISHERS OF that rural Canadians are consumers of dull, brown furniture. She’s HGO This Week showing they also have an interest in design and colour. They too want Home Goods Online.ca

a beautiful home. © 2013 Windsor Bay Communications Inc. I’ve been around this business for the better part of three decades All rights reserved. and I’ve met very few people like Shannon Houff. This doesn’t mean Windsor Bay Communications does not accept she doesn’t face the same challenges as other retailers. She does, in any responsibility or liability for any mistakes or spades. Considering the small size of her trading area, a lot of those misprints herein, regardless of whether such errors challenges are compounded from the norm several times over. But the are the result of negligence, accident or any other cause whatsoever. Reproduction, in whole or in part, sheer joy she brings to retailing is something a lot of us have forgotten. of this magazine is strictly forbidden without the prior written permission of the publisher.

AFFILIATE MEMBER michael j. knell Publisher & Editor [email protected]

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WHI_ Accents_ad.indd 1 2013-06-17 4:10 PM Just because the store serves a rural community, that doesn’t mean its residents are uninterested in good design. In fact, owner Shannon Houff is making a name for herself knowing her neighbours do, indeed, appreciate good design.

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SHANNON HOUFF, OWNER OF FRONT PORCH INTERIORS IN WAWOTA, SASKATCHEWAN, HAS NO SHORTAGE OF SKILLS. SHE’S WAITED TABLES, FARMED CATTLE AND MANAGED A DOCTOR’S OFFICE. NOW SHE’S FINALLY FULFILLING HER DREAM OF SHARING HER INNATE SENSE OF SOPHISTICATED STYLE WITH CUSTOMERS IN HER BELOVED PRAIRIE COMMUNITY. | BY ASHLEY NEWPORT

HANNON HOUFF, THE FRIENDLY, Most importantly, she had to understand the unique enthusiastic owner of Front Porch needs of that market. Interiors, has tried her hand at a stunning “I've always had a natural leaning towards design,” variety of vocations. The prairie native has she says. “It’s a part of who I am. You can learn Sworked in many industries, few of which are related anything, but if something is in your blood and  Shannon Houff, the to either interior design or furniture retailing. bones, you can’t get away from it.” owner of Front Porch “I’ve worked at a race track, waited tables, worked Houff ’s flair for home décor manifested itself Interiors, describes in payroll for a trucking company, worked in retail early in life. Her parents caught on to her love of herself as a “normal and managed a doctor’s office,” she says. “You learn design when she produced detailed drawings of the cowgirl” who isn’t afraid something from everything, and I’ve always enjoyed family’s old barn, complete with suggestions on how to unload the truck, working with the public.” to turn it into the perfect loft. assemble the coffee The working-with-the-public part is important, as “I’m a designer,” she says. “But I’m also a regular tables or brand the cows Houff had to brave skepticism and outright cynicism person. I’m not necessarily what people think a on her family farm just in launching the 4,000-square-foot store in 2010 designer is like or looks like.” outside of town. But in Wawota, Saskatchewan. To prove the doubters If one were to ask people on the street to describe her passion is helping wrong, she had to be confident of her ability to sell a typical interior decorator, the word “urban” her customers create elegant, sophisticated furniture to a rural clientele. might come up, since design often is considered a beautiful living spaces.

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Purchase any Serta® iComfort® mattress between August 14th, 2013 and September 8th, 2013 and receive either a free standard box spring of the same size as the mattress purchased or up to $400 off a qualified Serta® Adjustable Foundation. Savings offers on the Serta Adjustable Foundations will vary by product type and size. Offer available only at participating retailers in the United States, the District of Columbia and Canada. This offer is not able to be combined with any other offer. Void where prohibited by law. Visit www.serta.com to find participating retailers; see store for details. ©2013 Serta Inc. www.sertacanada.com HomeGoodsOnline.ca < 11  Accessories are city-based trade serving the affluent from high-end opening her own store. But she didn’t transition from a vital part of Front boutique stores. But, as Houff illustrates, a sense of waiting tables to operating a furniture store overnight. Porch Interior’s product fashion and style can just as easily come from a cattle Before Front Porch Interiors took shape, Houff and a offering. (Above right) farm owner as an artsy urbanite. friend launched Latigo Linens, a company catering to This bedroom suite And speaking of cattle farms, Houff moved in the style needs of Western homeowners. is from Canadian 2003 to the farm she always wanted and now shares “There were no Western home linens, so we case goods resource with her husband, Travis, and their daughters – Julia, designed specialty ones and displayed them at home Magnussen Home. 10, and Clara, 8 – when the couple decided to leave parties and trade shows,” she says. Medicine Hat in search of literally greener pastures. How did the Saskatoon-born Houff go from In fact, it’s not unheard of for her to spend her off designing linens to owning and operating a furniture hours branding cattle in the Back 40. store? By taking cues from her community, she says. Shortly after the move, mad cow disease re- “I was working part-time for a gentleman who reared its ugly head in Western Canada, wiping owned a homebuilding business, and also taking an out her family’s new livelihood and leaving her esthetician course in Saskatoon. I talked to the head with a pressing need to find work in a region where hairdresser of a salon I was working at, and she was employment opportunities weren’t abundant. like a dog with a bone about my design ideas. She “Mad cow disease took everything we had put me in touch with people who needed design invested and threw it in the toilet,” Houff recalls. “If help, and after a while I thought, ‘Here I am, putting you’re not from a rural community, you don’t know packages together and then sending people off to the how hard something like that is. But I’ve always been city to buy. Why am I throwing stores such bones a resourceful person. I waited tables, but the store when the customers aren’t always getting what they was a great opportunity. Many people are attached want? Why not put a store here?’ ” to a job because of money, but we had no money, so So, in 2005, Houff rented the front of a the timing was perfect!” greenhouse and started a much smaller furniture So with a potent mixture of need, want, operation called From the Inside Out. As the years opportunity and a belief she could bring a niche passed, she began to outgrow the greenhouse and set market to a small town – Wawota boasts a population her sights on a nearby John Deere factory store that of 700 people – and make it work, Houff set about promised a better, grander space.

12 > HGO merchandiser She finds questions about her “typical customer” a little silly. “I have so many typicals,” she says. “I don’t Pink Scarf want to limit myself to one specific type of person.” Express Her open-minded approach allows her to cater to everybody's needs. She’ll find lower-end pieces for Since the furniture customers seeking less-expensive furniture, but she industry’s customer won’t display those pieces on the floor. is often female, it “We really care about what people think of us,” makes sense that she says. “We’re not here to lure you with a $299 Shannon Houff, couch. Customers young and old realize that if owner of Front Porch they spend more, a piece will last longer. People also remember a store more than a manufacturer's Interiors, has chosen brand, and people are more educated about quality typically feminine furniture and are more aware of smoke and mirrors. brand-awareness When people come to my store, they know they’re activities. Similar going to get the best that we know of.” to Ladies’ Night While it’s clear the store attracts people by Out, the Pink Scarf appealing to their good taste, it's the warmth and “everywoman” approach Houff and her staff take Express is a bus that makes for loyal patrons. tour that focuses on “We’re set apart by our approach to our customer,” shopping. she says. “We genuinely care and we’re willing to show “We started them things they may not know are out there.” participating two Houff ’s customers may include the very people years ago,” Houff who once gently warned her that opening a fashion- forward furniture store might backfire in a town says. “It began with with potentially little interest in the concept. Those a couple of ladies in views have proved groundless. She's busy booking Saskatchewan who “When I put my mind to something, I do it,” appointments with customers who want her to do decided they would she says. “I got that space, and we (her and a everything from helping them choose the right sofa rather do their partner) dissolved our business and I opened to entire-room makeovers. Christmas shopping Front Porch Interiors.” In a small town, keeping in touch with the locals, The store, which Houff runs with her “sidekick” and keeping the store at the top of their minds, in small towns, and Cheryl Branvold, caters to eclectic tastes in the is important, and Houff has been creative in her it snowballed rural community by not quite embracing the town’s community outreach. Particularly popular have been from there. Each aesthetic. “We do everything,” Houff says. “We her Ladies’ Night Out events. The first one began business pays to unload the truck. I even put the coffee tables together. with an information session in a local church during have the buses come “Most people expect a furniture store in our the store’s first year of business. Now,Ladies’ Night to their store. town to be filled with brown furniture lined up in Out can draw up to 200 attendees and may take rows, but this is a design store,” she continues. “It’s place five or more times a year. “Last year we had beautiful. We did a good job.” The night – which costs $25 to attend – is all six buses, and we Front Porch, with pieces from resources such about indulging in traditionally feminine pursuits. sold out the tour in as Mobital, Ren-Wil, Palliser, Kingsdown, Ashley, Guests are treated to cocktails and a home-cooked half a day. I've had Thomasville and others, also offers lighting and dinner complete with appetizers and dessert, good sales from the other accessories. While the variety of merchandise followed by a trip to Front Porch Interiors. Guests tour. I look at this keeps the store competitive, it also has the “wow” see the store’s holiday décor (the events are usually factor to help set it apart. scheduled in the fall) and latest trend pieces, and type of thing as great “When people walk through the door, they’re qualify to win prizes. advertising. I think shocked by what they see,” Houff says. “People want The benefits of the events are twofold – Houff anything you do to come see us; they want to be taken care of. We connects with her neighbors and customers, and that promotes either want them to feel like we want to get to the bottom the store is showcased in a fun and memorable way. the store or the of what they need. It’s more the store's atmosphere “Ladies enjoy being entertained,” she says. “It’s social, community helps.” that brings people to us. We have what the city has at as most ladies come out with their girlfriends. It’s a better prices.” good vibe.” What Houff also offers is the personal touch, The sense of community and interpersonal which is important when serving familiar clientele. connection also has marked Houff ’s experience as

HomeGoodsOnline.ca < 13 “Hands down, the best thing is the networking. That’s an invaluable part of Cantrex. The improvement in my business since joining This view sales floor of Front Cantrex has to do Porch Interiors gives a sense of with the people. the eclectic nature of the store’s They bring in product assortment. different products and experiences. a member of Cantrex Nationwide, to which she’s The group has belonged for the past year or so. roundtables and “Hands down, the best thing is the networking,” they open up your she says. “That’s an invaluable part of Cantrex. The eyes to a world you improvement in my business since joining Cantrex didn’t even know has to do with the people. They bring in different was there.” products and experiences. The group has roundtables AT A GLANCE and they open up your eyes to a world you didn’t even know was there.” FRONT PORCH INTERIORS While the future looks bright for Houff and her ADDRESS: 407 Railway Avenue, Wawota, store, she admits to some personal challenges. Saskatchewan S0G 5A0 “Sometimes you feel guilty for working outside YEAR ESTABLISHED: 2010 the home,” she says. “As a working couple, we are OWNER: Shannon Houff the minority in this community. There’s sometimes MEMBER: Cantrex Nationwide peer pressure, and it can be difficult to schedule everything. I asked my kids if they were sad that I WEB SITE: www.frontporch-interiors.com worked, and they said they were proud of me.” FACEBOOK: What's next for Houff and her store? www.facebook.com/pages/Front-Porch-Interiors “I’ve always been goal-oriented, and we’ve talked NUMBER OF EMPLOYEES: Four about expansion. I’m also hoping to push the interior NUMBER OF LOCATIONS: One design aspect more. But I’m where I want to be, and SELLING SPACE: 4,000 square feet it would just be great to increase sales every year. I’m blessed to be doing what I do. My kids get to see me KEY SERVICES: Interior decorating advice, in-store and in-home; regular social events/sales set a goal and achieve it. I work with one of my best promotions such as Ladies’ Night Out and shopping friends. We laugh a lot and I don’t take myself too excursions such as the Pink Scarf Express. HGO seriously. We’re real small-town people.” A SAMPLING OF KEY VENDORS: Amisco, Mobital, Eztia, Spring Air/Quality Bed & Springs, Palliser, Stylus – A frequent contributor to HGO Merchandiser, Made-to-Order Sofas, Kingsdown Canada, Canadel, ASHLEY NEWPORT is a Toronto-based freelance Dovetail, Winners Only, Leftbank Art, Mercana Art Décor & Home Furnishing, Dimplex, Magnussen journalist who primarily writes for trade and business Home, Kalora Rugs, Powell Company, Aspenhome, publications. Her specialties include food, hospitality The Light Garden, CA Lighting & Accessories, and emerging social/business trends. Thomasville, Lexington Home Brands, Ren-Wil

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FOR SOME CANADIAN FURNITURE AND MATTRESS MAKERS, HAVING A PRESENCE AT THE WORLD’S LARGEST FURNITURE TRADE SHOW IS SIMPLY A MATTER OF BEING WHERE THE CUSTOMERS ARE. AS THE U.S. ECONOMY SLOWLY RECOVERS, THEIR FUTURE BRIGHTENS. AND IT DOESN’T HURT THAT LOTS OF CANADIAN RETAILERS ALSO COME TO HIGH POINT. BY MARC BARNES All roads lead to High Point

ET IN YOUR CAR IN TORONTO, “A couple of people told me they had the best head south, and some 700 miles or Saturday they ever had,” he says. “The showrooms, 1,127 kilometres later, you’ll be at the in terms of design and care, looked less conservative High Point Market. in how they were decorated. I saw some of the best- GBut Canadian furniture producers and buyers are looking showrooms I've ever seen.” closer than that, in terms of both business and spirit, Tom Conley, president and CEO of the to the central North Carolina city that’s become the High Point Market Authority – the organization largest furniture and home furnishings trade event in responsible for putting on the semi-annual show – the world, according to industry veterans. says High Point has been sold on Canada for years, “Look at the geography. This market is the way to the extent of pursuing a joint marketing program Canadian producers can get their goods before with The Canadian Home Furnishings Market, half the population of the United States,” says Dr. held each January in Toronto and organized by the Richard Bennington, the Paul Broyhill professor Quebec Furniture Manufacturers Association. of home furnishings at High Point University. “We had representatives from our staff who went “Although High Point is a long way for Canadians, up to the Canadian show for a couple of years and it’s not like going to the West Coast to see buyers.” did the joint program, and they came back and had Bennington says that as buyers and sellers nothing but great things to say about the Canadians,” gathered for the April 2013 edition of the High recalls Conley. “The people are warm and friendly and Point Market, he sensed a different mood. we have great friendships with folks from Canada.”

16 > HGO merchandiser  Durham Furniture launched Glen Terrace at the April market. In solid maple, the collection has three beds: a panel bed with an ‘x’ design, shown here, a terrace panel bed with etching and an upholstered panel bed. Eight case pieces, two nightstands and two mirrors complete the group.

All roads lead to  Magnussen Home jumped into the casual dining  seems to be in the beginning stages of recovering Durham Furniture category at this past April’s High Point market with from the recession. introduced Rustic Civility the Loren group seen here. Described as stately “We’re influenced by housing starts and by at the April High Point and reminiscent of a grand English drawing room, it the stock market,” says Conley. “Since 18 months Market. The third group features turned balustrades, glass light cabinet fronts ago, housing starts have had a positive effect on in the company’s Mount High Point and a camel back mirrored hutch. attendance, and the stock market is doing well. Vernon collection, Rustic People feel they have more personal wealth and can Civility is constructed in He says the joint effort has paid off for both spend it.” solid maple and features buyers and sellers. Of the 6,000 or so international TheBusiness Journal in the Piedmont Triad more casual, distressed market visitors from 105 countries that turned out reported market traffic was up nearly 3% compared finishes. For the first for the recent spring market, a little less than half to the spring market last year, with 79,000 attendees time, Durham offered a came from Canada. And when buyers get to High versus 77,000 in 2012. two-tone finish option Point, many view the offerings in showrooms in the Conley expects those numbers to continue to as well as a large-scale 220 Elm building, owned by Canada-based Maple rise, reflecting underlying economic trends. He’s slat sleigh bed, shown Leaf Holdings, with Palliser Furniture CEO Art not willing to predict that things will return to the here. The group includes DeFehr the principal investor. “go-go” years that preceded the recession, but does two beds, six case About 65 Canadian companies exhibit at the believe furniture sales will continue to gain traction. pieces, two nightstands market. They range from mattress specialists and “If the economy holds and if we have a positive and one mirror. furniture manufacturers to rug merchants and attitude, there’s a good chance we will start to have suppliers of art and decorative accessories. Canada some new highs,” says Conley. is the market’s largest target audience for both exhibitors and attendees outside the United States. AT THE MARKET Conley points out the positives: similar The basics for market exhibitors remain much the demographics and politics, free-trade agreements same – go where your key customers are, bring new and a strong Canadian dollar. All of that comes at a and compelling products to show, and do your time when, by most measures, the furniture industry homework before market. Industry veterans will

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1.877.CANTREX Proudly Supporting Independent Canadian Retailers for Over 50 Years! www.cantrex.com HomeGoodsOnline.ca < 19  The High Point Market is also important event for the Toronto-based Sunpan Modern Home, a contemporary furniture resource. Shown here are several of its newest introductions including the Madero console table, Buchanan armchair, Temple Round endtTable, Morocco ottoman, Gotham coffee table, Fitch armchair, and the Benjamin end table, all surrounding the Cathedral sofa.

tell you it's how well you execute those basics that Balance line, designed primarily for condominiums determine success or failure. and smaller living spaces. One advantage of the High Point market, many “This was the best-attended market in Durham’s Canadian producers say, is its frequency – twice a recent history, not only by the quantity but also the year instead of once as in Toronto. quality of the dealers,” says Dilworth, who recently Gord Dilworth, president and CEO of solid- moved his company from the outlying Atrium on wood bedroom specialist Durham Furniture, says Main to the Green Wing of the International Home that participating only in the Toronto show would Furnishings Center. mean potential buyers would see samples of his Cary Benson, president of upholstery specialist company’s offerings only once a year, and that’s not Palliser Furniture, says that of the markets in Toronto,  Sunpan Modern Home good enough in this day and age. Las Vegas and High Point, the latter is the best attended also unveiled the Malibu “The only other way to see us would be photos, and by far. “It's important for us to see Canadian customers wing chair at the last most buyers want to see it firsthand,” he says. “You in High Point, as well as our U.S. customers,” he says. High Point Market. have to keep the momentum going.” At the April market, Palliser introduced a fabric Dilworth believes High Point is a good place collection and added items to its sofa-sleeper and to focus marketing efforts. He used e-mail blasts modular programs. The company showed pieces and other means to build interest, and rolled out aimed at retailers along the east coasts of Canada and two groups this market. They are Glen Terrace, a the United States who are interested in smaller-scaled transitional/contemporary group, and Rustic Civility, pieces for condominiums and apartments, as well as a traditional country farmhouse look added to full-sized pieces for larger homes. Durham's licensed Mount Vernon collection. The two “It’s exhausting and it’s an eight-day marathon, but are available immediately in 25 finishes. it feels good to have a good one and be done,” says These larger-scaled offerings were in part intended, Benson of the recent High Point market. “We won’t he says, to re-assure retailers that Durham is not have another one for six months, and that’s the good abandoning the master bedroom category. Recent news. Still, it sets up the year to have a good market, so introductions have focused on the company’s Perfect it’s worth all the work.”

20 > HGO merchandiser Richard Magnussen, CEO of Magnussen Home, says High Point always has been a good market for his company. “It went way beyond our expectations,” he says of the April event. Magnussen also has a presence in Las Vegas and Toronto, but maintains its largest showroom on the 10th floor of the Main Wing of High Point’s IHFC, and times its major introductions for the April and October markets. This time out, the Hamburg, Ontario-based case goods specialist added a number of occasional tables and bedrooms, while leaping into a brand new category – casual dining. All were well- received, its CEO reports. “Housing starts are decent, which is a good indicator for the furniture industry,” says Magnussen. “Eighty percent of our sales volume is in the U.S., so High Point is an important market for us.” Sundeep Bagga, president of Toronto-based contemporary furniture specialist Sunpan Modern Home, says that other than an in-house event he runs in Toronto, he puts most of his efforts into High Point.  West Brothers added this bedroom to Serra, a solid-walnut collection “Any retailers looking for action from the larger from designer Tovin Blake, at the spring market. Serra was introduced American manufacturers have to shop the High Point at the October 2012 market. This panel bed offers a choice of cushion market,” he says. “If you are looking for better goods, treatments on the headboard, as well as a choice of wood or upholstered you have to shop High Point, and anyone who is footboard and rails. Also featured is under-bed storage. doing major volume will be in High Point.” Bagga says 55% of his sales volume is coming from In Toronto, you have more walk-by retailers who shop  Solid-wood specialist the United States, a number that’s improving along all the booths. You see that sometimes in High Point, West Brothers unveiled with the American economy. Although his current but it's more of an appointment market.” its interpretation of showroom in IHFC’s InterHall is relatively small, This time out, Zedbed – whose showroom is in the modern office at there's a lot of walk-by traffic. As business continues to the IHFC’s Main Wing – showed a new gel mattress, the recent High Point improve, he plans to move to a larger showroom. in which gel pads can be tucked into a total of nine market with Phase, one “Right now, it’s the traffic we need,” he says. “Later pockets on each side of the top of the mattress. of three collections from on, we’ll be a destination.” “You can get more of a cooling sensation by putting designer Tovin Blake. Bagga notes that in addition to the Top 100 U.S. the gel pads directly under your back,” Gélinas says. In solid walnut, the furniture retailers, High Point attracts independent “You can customize your sleep environment. This desk is finished on all retailers and interior designers. That variety means his is a different way to use gel in the mattress.” sides and features three offerings, mainly in the occasional and console table For casual dining powerhouse Canadel, the drawers, file storage categories must reflect a wide diversity. High Point market went quite well this spring, and a pull-out shelf. “Contemporary pieces at good price points with The matching bookcases good design is where there's a void in the marketplace, are finished on both and that’s where we are investing a lot in product sides and its shelves development,” says Bagga. are adjustable. David Gélinas, vice president of marketing for Shawinigan, Quebec-based specialty mattress producer Zedbed, sees the market differently. To him, High Point has always been more of an appointment market. “High Point is still strong and we depend on it,” he adds. Gélinas says the geographic fault lines for attending the major furniture trade events are similar in Canada and the United States. Retailers from central and eastern Canada tend to go more to High Point and Toronto, while those in the West tend to favour Las Vegas. Zedbed participates in all three markets. “It’s good for us to be in High Point,” says Gélinas. “We meet buyers that matter, from quality retailers.

HomeGoodsOnline.ca < 21 Casual dining powerhouse Canadel introduced Loft at the recent High Point show. This collection has a more industrial, rustic look that reflects an emerging urban trend in eastern Canada and the northeastern United States, where old factories have been converted into living spaces. The surfaces says J.P. Deveault, director of marketing and United States into living spaces. Accordingly, the are imperfect and have commercialization for the Louiseville, Quebec-based surfaces are imperfect and have the look of a rougher the look of a rougher manufacturer. The company shows in Toronto, and material, while retaining the high standards of material while retaining exhibits at both High Point and Las Vegas, because workmanship and finishes that Canadel is known for. the high standard of 80% of its buyers are from the United States, where Ken Loh, vice president of sales for A.P. Industries, workmanship and Deveault says things are improving. also says High Point went well this spring. “The finishes that buyers “What we're seeing is that dealers who decided market was well-attended, the reception to all of our expect from Canadel. to quit our products when the economy fell apart are new products was highly respected as having traction now coming back and asking to get our products again,” through to the consumer, and that resulted in strong he says. “Customers are asking for higher-end products.” orders,” he reports. Canadel’s market is in the medium to high-end Even so, economic conditions are still constraining price points. Deveault believes retailers, and by many consumers from considering domestically extension their customers, have tired of cheaply produced goods because of the higher cost. To counter made imports and are now searching for value from that, A.P. Industries introduced a new division, Allure,  In many ways, 220 domestically produced goods. a lower-cost, lower-price line. Elm is where Canada “High Point is a good place to be for sure,” he says. A.P. product can retail for $3,999 to $4,200 has planted its flag in “The problem is not the market. The problem is that for a bedroom set, while an Allure bedroom can High Point. Owned by the environment is changing and we are evolving retail for $1,499. The difference is due to a robotic Palliser CEO Art DeFehr, along with it. Everything has been working in High system called Arthur, which was installed a year the building is home Point for years, so why try to change something that’s and a half ago, replacing five positions on the plant to Canadian furniture been working for so long?” floor. Allure's styling is described as traditional resources Casana, In its National Furniture Mart showroom this transitional leaning toward contemporary, and Buhler Furniture, Huppé spring, Canadel introduced Loft, a collection which has product is offered in seven finishes. and others, in addition an industrial, rustic look, inspired by the conversion of “The goal was to have a starting price point to Palliser. old factories in eastern Canada and the northeastern competitive with imports, and we are now running production for distribution,” Loh says. The recent market was the best the Laurier-Station, Quebec-based adult and youth bedroom producer has seen in three years, he says, drawing buyers ranging from individual interior designers to Top 100 retailers. “High Point will remain the destination until some drastic change in the market forces a change to a more suitable location,” Loh says. The family-owned company's High Point space is in the IHFC; it also shows at the Toronto market. At metal furniture specialist Amisco Industries, Guy Patenaude, vice president of sales, says the efforts producers put into drawing buyers to the market beforehand is the key to success. “This market is a big part of our business,” he says. “High Point was really good for us this year, in every possible way. The attendance was way up from last year’s spring market.” Continues on page 39 22 > HGO merchandiser HomeGoodsOnline.ca < 23 MATTRESSES>>>

All about GEL GEL HAS BECOME A MAINSTAY IN THE MATTRESS INDUSTRY SINCE SERTA GOT THE COOL BLUE BALL ROLLING BACK IN 2011. MOST MANUFACTURERS LAUD ITS COOLING EFFECT AND STAYING POWER, BUT A FEW INDUSTRY INSIDERS ARE HOPING FOR EVEN BIGGER AND BETTER INNOVATIONS IN BEDDING. | BY ASHLEY NEWPORT

 The iComfort line from Serta kicked off the gel phenomenon in 2011. Its tag line – Smarter, Cooler, Better – summed up the benefits gel was believed to offer while making the mattresses seem innovative and cutting edge.

24 > HGO merchandiser Rev Sleep says that a full 60% of its shipments – including the Natura Latex model seen here – are gel infused. With other companies, the percentage is even larger.

 Rev Sleep’s NexGel EL MATTRESSES GRABBED THE brand of gel-infused spotlight nearly two years ago when memory-foam mattresses Serta International launched its uses this honeycomb- expertly marketed iComfort line of shaped gel polymer in memory foam mattresses infused its construction. The Gwith the brand’s MicroSupport gel. It proved a hit crumbling walls are with retailers and consumers after its August 2011 designed to make the introduction, and now almost every bedding resource user feel as if he or she is carries at least some gel models. Many consumers, collection,” says Channell. Serta's Essential, Pureflex, sleeping in zero gravity. when surveyed, say gel products help them sleep cooler. Slumberform, Perfect Sleepers, iSeries, Cool Elegance, The company says it also Serta’s iComfort slogan — Smarter, Cooler, Better Bellagio and, of course, iComfort lines all feature gel. helps with circulation and — sums up how the gel should feel against the body, Other manufacturers quickly jumped on the gel pain management. and has the added benefit of making the mattress bandwagon. seem innovative and cutting edge. “If something has legs, everyone will copy it,” says In reality, gel is just a single component designed Gerry Morris, an author, speaker and sales consultant to enhance the typical innerspring or memory-foam based in Greenville, Texas, who specializes in the mattress. Mainly, it's designed to rectify or offset mattress industry. “You copy something and then the additional heat associated with sleeping on combat it. People said that memory foam felt great memory foam. but was too hot, and that story got out and took hold “Gel is not a mattress,” says Les Channell, national and gel became the solution. It’s all about perception. sales manager for Serta Canada. “It’s a component in It’s an enhanced feel to memory foam. It’s new and the mattress and usually a small one, often under 10%.” blue and you can hold it in your hand.” Still, gel figures prominently in Serta’s products. Valerie Stranix, chief marketing officer of “Right now, we have nine different gel mattress Toronto-based Rev Sleep Corp., says her company collections, and there can be up to 15 models within a has a lot of plans for gel. Rev’s Sommex and

HomeGoodsOnline.ca < 25  Sealy Canada has engineered its own including traditional innerspring, pocketed coil gel-infused memory and specialty mattresses,” says Simon Jervis, vice foam, which has been president of marketing for Sealy Canada. incorporated into almost “We recognize the advantages of PostureGel all its Posturepedic memory foam over that of traditional memory PROBACK collection, foam, so we have switched most of our applications including traditional of memory foam to the advanced PostureGel innerspring models as memory foam,” he says. “We also have been able well as pocketet coil and ObusForme brands feature gel products, with the to incorporate gel into our Smart Latex foam and specialty mattresses. latter boasting the Comfort Wave mattress, with an are using it in many of our product lines, including (Inset) Sealy Canada’s entire gel layer built into the mattress. TheComfort Stearns & Foster, as well as our new Smart Latex ProGel memory foam Wa v e , inspired by the medicinal benefits commonly specialty mattresses.” is infused with Outlast, associated with gel, aims to give sleepers support in Zedbed, the Shawinigan, Quebec-based specialty a material that aids in the lumbar, hip and shoulder regions. ObusForme’s mattress producer, also has an extensive collection of cooling accumulated heat tri-zone iSOGEL is a memory-foam mattress infused gel offerings. during the night. Outlast with gel beads. “Right now, our four series of mattresses (R2, is often compared to ice in Some of Rev’s most unusual gel concoctions ZX, Pure and Latex) have at least one layer on top a drink, which as it melts are found in its NexGel brand. “It’s a gel polymer that offers the properties of gel,” says David Gélinas, absorbs heat, keeping developed for medical use and is shaped like a Zedbed’s director of marketing. “We have about 30 the drink at the desired honeycomb,” Stranix says. “It’s layered into the different kinds of mattresses with gel. It is slowly temperature. mattress and has crumbling walls and makes you becoming the norm. People hear about gel and want feel like you’re sleeping in zero gravity. It helps with products that offer it, so our retailers are asking us to circulation and pain management.” offer more and more. Sealy Canada also has enthusiastically embraced “Our most recent innovation, the G+, lets the the gel revolution. customer control the impact the gel will have on his or “Sealy recognizes the advantages of advanced her body, meaning he or she can decide where the gel gel-infused memory foam, and we've engineered our pockets will be used,” he says. “They can decide they own formulation of PostureGel memory foam into want more support for the lower back or less heat at most of our Sealy Posturepedic PROBACK products, the head. We have four mattresses with this option.”

26 > HGO merchandiser Stranix says a full 60% of Rev’s shipments are gel-infused, and Gélinas says a whopping 98% of Zedbed’s shipments feature some kind of gel. Many manufacturers believe gel is an essential component of any collection, and some expect the amount of gel products in their portfolios to increase. The consensus is that all manufacturers and retailers need to get on board. “I expect it [gel] to grow,” says Serta’s Channell. “Serta, Simmons and Sealy are all gel crazy, so I think you’ll see it grow. The second-tier guys will have gel as well.” As for what portion of a company’s offerings  Zedbed is currently offering four should be gel-oriented, opinions differ. series and some 30 models sporting “A dealer should ideally have three collections at least one layer of gel, including with three models — firm, plush and super-plush — Rainbow, shown here. The Canadian and all those models should have gel,” says Channell. specialty producer believes gel will For Zedbed’s Gélinas, variety is key but there are only become more popular. no hard and fast rules as far as numbers go. “Any retailer should offer a mattress in every comfort category, firm, semi-firm and soft, with gel in order to reach a wider range of consumers,” he says. “I don’t think there are any minimums or The gel parade maximums. It’s more a question of adjustment to Here are some gel products making waves. the competition. You need to have a good range to reach more consumers and be able to present Serta Canada: The iComfort line the gel benefits. Made with three layers of Cool Action gel memory foam, “Some of our retailers currently offer over 12 this mattress features the Pop Top, pairing Cool Action with different mattresses with gel crystals,” Gélinas says. the brand’s KoolComfort memory foam at the top of the “Salespeople need be able to explain why a mattress mattress. This mattress can be used on an adjustable frame. with no gel, sold at the same price, is just as good as Rev Sleep: NexGel Euro Memo mattress those with gel.” Gel is popular not only because it's a substance This mattress features patented honeycomb OrthoGel in the famed Dr. Scholl’s shoe insoles, but because it columns and a plant-based memory foam layer. It’s comes at relatively reasonable, albeit varied, price designed to alleviate muscle tension. points. Rev’s iSOGEL mattresses, for example, can Sealy Canada: Posturepedic PROBACK ProGel run consumers anywhere from $599 to $899, while Made with gel-infused microcapsule memory-foam Comfort Wave price points range up to $1,399. At the high end, a few NexGel models retail at $2,999. technology, ProGel is designed to retain its shape and Pricier mattresses often mean better margins recover faster, encouraging a steadier sleep. for retailers. “Retailers can get better margins Zedbed: R2 Series because gel gives them the ability to be up on The R2 series, like the brand’s ZX, Pure and Latex new technology,” says Stranix. “There is price compression, but it’s not as bad as in other segments collections, offers mattresses with gel properties. The such as memory foam.” high-density, eco-friendly memory foam is designed to Stranix estimates gel has between a 30 percent rapidly revert to its original shape after use. and 40 percent market share in Canada, which she expects to grow. Zedbed’s Gélinas estimates gel's market share at around 60 percent. Others, such “From a consumer standpoint, people respond as Sealy’s Jervis, say it’s impossible to estimate gel's to temperature issues, especially people who live market share, but it’s obviously picking up steam on in warmer climates,” says Tim Hammonds, a sleep most retail floors. specialist with Ashley Furniture. “But gel isn’t the Still, some sleep aficionados believe the gel be all and end all of temperature. Gel in and of itself explosion is as much or more a product of hype and does not do what some people say it does.” on-point marketing than it is a true scientific or Hammonds cites the case of Tempur-Pedic, the medicinal breakthrough. company that changed the mattress world with its

HomeGoodsOnline.ca < 27 So what was that about WHAT’S THE NEXT BIG THING? “other cooling technology”? Hammonds sees an emerging trend towards more temperature-neutralizing hybrid beds made with Tempur-Pedic, the brand that’s eschewed gel, has surveyed different foams, gels and latex, He says they might consumers who use its memory-foam mattresses. The studies, work better for some shoppers. conducted by The Blackstone Group in 2008, 2010 and 2012, “People are always trying to come out with found that only 4% or respondents said heat was an issue. something new, and gel has energized the adjustable Having said that, Tempur-Pedic – now Tempur-Pedic Sealy bed category,” says industry consultant Morris. International, with the completion of its recent acquisition “They’re really taking off now.” of Sealy Inc. – is still working to address the heat issue with Rev's Stranix sees a bright future for gel-enhanced accessories. “The world of polymer development and its TEMPUR Material Cell, which is designed to allow heat to foam application is a growing one, and we’re seeing move away from the body by ensuring the mattress gives the more introductions in these two channels. We’re all warmth a “path of least resistance” to travel through. focusing on naturally derived components and there Tempur-Pedic also argues that gel breaks down, allowing have been new developments in fabrics. There has heat near the body. also been experimentation with probiotic-infused fabrics, wool fabrics and scented fabrics.” Sealy’s Jervis agrees with Hammonds that mixing pioneering introduction of memory-foam mattresses, and matching is picking up speed. and which still refuses to use gel. “Tempur-Pedic “Hybrid mattresses are definitely the next break- says the science isn’t there, but consumers don’t hear through in mattress technology,” he says. “It is just that,” he says. beginning to emerge as the most exciting thing to While Hammonds argues consumer response to happen to mattresses in many years. We are currently gel is at least partly a by-product of slick marketing, launching the Posturepedic MyCloud hybrid, which he does say that given gel’s current appeal, it would is a combination of half foam, including PostureGel be to a manufacturer’s detriment not to test the memory foam, and half innerspring. We believe this product, or at least not play up their brand’s use of category will gain popularity with retailers. It’s the other cooling technologies. best of both worlds.” HGO “Tempur-Pedic should have jumped on the bandwagon by saying they had cooling technology,” – A frequent contributor to the HGO Merchandiser, he says. “We know, through studies and social media, ASHLEY NEWPORT is a Toronto-based freelance that a story, whether it’s accurate or not, will stick. journalist who primarily writes for trade and business People might say gel helps them sleep cooler even if publications. Her specialties include food, hospitality it doesn’t.” and emerging social/business trends.

Pages 2-3 Pages 10-11 Page 23 Page 35 Phoenix AMD International Serta Canada/Star Bedding Magnussen Home Furnishings Canada Counts 41 Butler Court Products 66 Hincks St, Unit 1 Windsor Bay Bowmanville, ON L1C 4P8 40 Graniteridge Road, Unit #2 New Hamburg, ON N3A 2A3 Communications Inc. T: 800.661.7313 F: 905.427.2166 Concord, ON L4K 5M8 T: 519.662.3040 F: 800.267.3278 P.O. Box 3023 www.phoenixamd.com T: 800.663.8540 www.magnussen.com Brighton, ON K0K 1H0 www.sertacanada.com T: 613.475.4704 F: 613.475.0829 Page 5 Page 29 www.CanadaCounts.ca Zedbed Page 15 ObusForme 5352 rue Burrill, P.O. Box. 21066 Natura World c/o Rev Sleep Corporation Shawinigan, Quebec c/o Rev Sleep Corporation 53 Bakersfield Street G9N 8M7, Canada 53 Bakersfield Street Toronto, ON M3J 1Z4

AD INDEX T: 819.539.1112 F: 866.533.1151 Toronto, ON M3J 1Z4 T: 800.567.7933 F: 888.567.7934 www.zedbed.com T: 800.567.7933 F: 888.567.7934 www.obusforme.com www.naturaworld.com Page 7 Page 32 Worldwide Homefurnishings Pages 18-19 Durham Furniture 200 Romina Drive Cantrex Nationwide 450 Lambton Street W Concord, ON L4K 4Z7 3075 Thimens Blvd, Suite 300 D u r h a m , O N N 0 G 1 R 0 T: 905.660.9957 F: 905.660.9657 St-Laurent QC H4R 1Y4 T: 519.369.2345 F: 519.369.6515 www.whionline.com T: 877.226.8739 F: 514.745.1741 www.durhamfurniture.com . www.cantrex.com

28 > HGO merchandiser SAY GOOD MORNING to a fresh start each day!

Every OBUSFORME® mattress is ergonomically designed to contour to the curves of your body for correct sleep posture and spinal alignment.

Call us today for an appointment with your local representative and for details on how you can become an authorized OBUSFORME® dealer. (800) 567-7933 obusformemattress.com HomeGoodsOnline.ca < 29 SOCIAL SCENE>>> Steve Amis of Springwall Sleep Products is seen here with Beth Dugan of IMAX Corp. MEGA GROUP: Hanging Out in Vancouver

EGA GROUP, THIS COUNTRY’S largest co-operatively owned buying Mand marketing group for big ticket home goods, held its 2013 annual general meeting and conference at the Fairmont Hotel in beautiful downtown Vancouver in early May. The annual four-day event was attended by some 320 people, including Mega shareholders, members, suppliers and senior staff members. It’s not only the group’s most important annual event; it’s one of the largest furniture industry gatherings in Canada. At this year’s event, members were briefed about the current state of affairs within both the Todd Smith (centre), general group and the industry as a whole; were inspired merchandise manager of Mega by the Afterburner team, a U.S.-based group of Group, presents the 2013 former fighter pilots who show how their “zero Supplier Recognition Award in tolerance for error” training model can be applied the bedding category to John to business planning and execution; learned more Stasiw of Simmons Canada. about selling mattresses from Bob Meunkel of Serta Looking on at left is Simmons International; honoured excellence among their sales manager Jim Warnock. suppliers; and spent time getting re-acquainted with old friends and new colleagues. HGO

Jason Johnson from Sounds Fantastic in Moncton, New Brunswick at the shareholder’s meeting.

 Richard Wall of Wall’s BrandSource Home Furnishings in Virgil, Ontario and Phil Brewer of Cox Communications in Saint John, New Brunswick are seen here with Mega Group president and chief executive officer Benoit Simard.

PHOTOS BY FRANÇOIS BOISVERT/MEGA GROUP 30 > HGO merchandiser Mega Group also recognized its suppliers for excellence at this year’s meeting. Here, Todd Smith (left), general merchandise manager, presents the 2013 Supplier  Jim Coleman of Coleman’s BrandSource Home Furnishings in Corner Brook, Recognition Award in the Newfoundland), Donald Wigelsworth of Midwest Furniture Rentals in Grande Prairie, service category to Dawn Alberta; and, Colin MacPherson of Burkes BrandSource Home Furnishings, in Sydney, Rowe, vice president of Nova Scotia are seen here hanging out at the opening reception. Phoenix AMD International.

Todd Smith (left), general merchandise manager of Mega Group, presents the 2013 Supplier Recognition Award in the case goods category to Ken Napier, vice president of Canadian sales  Mega Group was greeter upon their arrival at the for Ashley Furniture. Hotel Fairmont Vancouver by this handsome gentleman.

Here, Todd Smith (left), Mega’s general merchandise  manager presents the 2013 Supplier Recognition Award in Wayne Hambly (right), of Hambly’s BrandSource Home Furnishings in Charlottetown, the appliance category to Peter Lazenkas of Mabe Canada. Prince Edward Island and Mega’s current chairman of the board is seen here chatting with Kevin Leier, the group’s chief financial officer as he readies to call the meeting to order.

HomeGoodsOnline.ca < 31 32 > HGO merchandiser <<

Why buy Canadian? THINGS ARE CHANGING IN CHINA AND THE REST OF ASIA. COSTS ARE RISING, ESPECIALLY WAGES AND SHIPPING. THERE ARE ADVANTAGES TO BUYING CANADIAN WHEN MERCHANDISING YOUR FLOOR, PARTICULARLY THE POTENTIAL IMPROVEMENTS IN CASH FLOW.

BY ALIXE MACRAE

HEN IN PETRA ON VACATION A product from Third World countries. While driving costs few years back, I tried to buy Jordanian- down is undoubtedly a good thing, most people would Wmade souvenirs. Believe it or not, that probably say the lives lost were worth more than the wasn’t as easy as it might sound, although I did finally pennies saved on the final bill for the items in question. find some, buried amongst a plethora of goods sporting In fact, it wouldn’t surprise me if the tragedy hurts the ubiquitous “Made in China” label. When visiting Joe Fresh’s profitability for years to come, even though the Baseball Hall of Fame in Cooperstown, N.Y., I went garment workers in Bangladesh are only paid the looking for a T-shirt that was “Made in the USA.” It outrageous sum of 22 cents an hour – far lower than took 45 minutes, but I found one. At US$20, it wasn’t the 33 cents workers earn in Cambodia or the 51 cents overpriced, but I’ll wager the markup was a lot lower an hour earned in India. According to KI-Media, it than those imported from who-knows-where displayed alongside. will take months, even years for the Bangladeshi industry to regain Over the past two decades, in the search for higher margins that market despite assurances from a fair sample of corporate and lower prices, retailers have been sourcing product – in many executives that they will not only rebuild the factories, but will categories, not just furniture – from low-wage countries, mostly inspect them more faithfully. on the other side of the Pacific Rim and mainly, when it comes But this is only one part of the story. The obverse of this to the product on our floors, from what is properly called The particular coin can be found in China, whose foray into furniture People’s Republic of China. Everyone who’s been in our industry manufacturing has produced such overwhelming structural change for more than about a week knows why this happened and what the in both Canada and the United States. consequences have been. According to a recent report published on Bloomberg’s web site, Although the recent tragedy in Bangladesh didn’t and doesn’t the days of cheap product coming out of China – and indeed the affect this country’s furniture, mattress and major appliance rest of Asia – may be over. Wages doubled between 2000 and 2011. industries, it does provide insight into the downside of sourcing The report quotes Ernie Kohn, executive director of Koda – a

HomeGoodsOnline.ca < 33 When you order from a Canadian manufacturer, you can order one or more – the old “one to show, one to go” formula is making a comeback. How many would you have to order to fill a container Do you know why and what from overseas? And what would be the ROA, or return on assets? To figure that out, use ThisMoney.com’s formula: net profit margin times asset turnover. Do the calculation and see what results. Buying the Canadian consumer is buying? Canadian is much more profitable! Consider the just-mentioned broken chair problem. If they had been sourced from a Canadian manufacturer, they would have been replaced immediately. And the factory likely would have paid the Home Goods Online does! shipping. No waiting, no hassle, just a satisfied retailer with happy customers. If allowed into the customers’ homes, those broken chairs would CANADA COUNTS IS OUR INDUSTRY’S FIRST-EVER LOOK INTO THE MIND OF have been returned in spades, and our customers would have slammed our store to everyone they knew. Even though our vendor THE CANADIAN CONSUMER. WE ASKED MORE 7,600 OF CONSUMERS FROM reimbursed us, we still had “dead” inventory. In a scenario such as this, it was all too possible the original COAST-TO-COAST AND ASKED THEM ABOUT THE FURNITURE, MATTRESS AND manufacturer in China could have gone out of business or jumped APPLIANCE SHOPPING EXPERIENCE. Each year, the Chesterfield Warehouse, a small upholstery boutique in into electronics. The paperwork, phone calls and materials needed Stratford, Ontario, has a Made-in-Canada furniture sale on Canada Day. to sort this problem out would have been horrendously expensive. What will that claim be 10 years from now? The retailer will eat the Singapore-based furniture manufacturer that counts Pottery Barn, loss, and it won’t be a great lunch. In this 40-page report, you will: Williams-Sonoma and Cost Plus among its U.S. retail clients – as But don’t think this problem is confined solely to China. I once saying retailers who don’t like his company’s recent price increase can asked the president of a large Canadian furniture manufacturer and • Learn where the Canadian consumer take it or leave it. importer if I could see his United States price list. He refused. Guess plans to shop for furniture, mattresses Kohn also said Koda isn’t even passing along the full cost of rising what that told me? He needed to learn not to gouge his Canadian and appliances wages across Asia. customers, since it was obvious he was selling the same product for The other critical factor when buying from Asia is the cost of less south of the border. Learn how much the Canadian consumer getting it into your warehouse and onto your floor. The best things in The other key advantage to buying Canadian is the improvement • life may be free, but for everything else it’s the cost, plus shipping and in cash flow. With a Canadian manufacturer, chances are the expects to pay for furniture, mattresses Canada Counts handling. And guess what, these costs aren’t going down and aren’t independent retailer can more effectively “sell and buy” – that is, A SURVEY OF CANADIAN and appliances CONSUMER BUYING likely to ever to go down. sell that sofa, bedroom suite or dining room to the customer before INTENTIONS FOR FURNITURE, Evidence of this can be found in the increasing stock prices of ordering it from the manufacturer, especially with today’s advanced Learn about her preferred store type; and, MATTRESSES, MAJOR the major Asian shipping companies. Their shares are recording quick-ship programs. This is the ideal situation in terms of cash flow, • APPLIANCES, TELEVISIONS AND OTHER BIG TICKET outlandish year-to-date gains of 20.5% to 37.5%. This alone is an and if terms are negotiable (or you’re a member of a buying group), Learn about the important factors HOME GOODS indicator that demand is increasing, so prices will go up. you can negotiate the best deal possible. • Both increasing wages in China and higher shipping costs A former national manager with Sears Canada first introduced influencing the buying decision will directly affect the financial performance of every independent the sell-and-buy concept in major appliances almost two decades furniture retailer that chooses to buy imported goods, whether ago. Profitability in that category jumped. It’s a system Sears still uses by direct container or from a Canadian distributor. Before you today, and so do many others. Every Canadian manufacturer, distributor order that container of brown and black leather sofas, take time Some overseas vendors, especially those with warehouses in to calculate your true landed cost, which includes the initial North America, are able to implement a limited sell/buy program, and retailer will findCanada Counts to be cost, duty and shipping, plus the time it takes to actually put the but in my experience they’re more costly than those from Canadian program together. producers. an invaluable planning guide in this tough Compounding these problems is the after-sale service problem. Remember what Sophie Tucker said about cash flow: “From birth Speak to anyone who’s had to order a part from China. If they’re to age 18, a girl needs good parents; from 18 to 35 she needs good economy. You simply can’t be without it. lucky, there’s only a three or four month wait. This will tie up your looks; from 35 to 55 she needs a good personality; and from 55 on inventory, your customers will not be impressed, your reputation will she needs cash.” suffer and the suite will languish in your warehouse. Cash flow is the life blood of every furniture retailer. My Back when I was an active merchandiser, my store received an experience has taught me cash flow is maximized when buying from CANADA COUNTS order of broken chairs from China. Our supplier’s subcontractor a Canadian manufacturer. The report covers the nation as a IS AVAILABLE FOR decided a two-cent discount was worth shifting production to a new Done right, it’s a lot cheaper to fly the Canadian flag when whole, as well as chapters on each of factory. The chairs were garbage and nothing could be done to fix merchandising your floor. Be smart, be profitable. Buy Canadian. HGO the major regions: Western Canada; $1,500 them. Our vendor suffered, we suffered and our customers walked to PLUS H.S.T. another retailer. Home Goods Online Ontario; Quebec and Atlantic Canada. It – ’s most widely read blogger/contributor; CLICK HERE Issues like these have prompted a small but growing desire on the ALIXE MACRAE is one of this country’s best-known merchandisers. opens with an introductory essay on the TO LEARN MORE. part of many Canadian furniture retailers to come home and buy She has held senior posts at such well-known Canadian retailers as from Canadian manufacturers. It’s about time. Stoney Creek Furniture, Sears Canada and The Bay. current state of the Canadian consumer.

34 > HGO merchandiser Do you know why and what the Canadian consumer is buying? Home Goods Online does!

CANADA COUNTS IS OUR INDUSTRY’S FIRST-EVER LOOK INTO THE MIND OF THE CANADIAN CONSUMER. WE ASKED MORE 7,600 OF CONSUMERS FROM COAST-TO-COAST AND ASKED THEM ABOUT THE FURNITURE, MATTRESS AND APPLIANCE SHOPPING EXPERIENCE.

In this 40-page report, you will: • Learn where the Canadian consumer plans to shop for furniture, mattresses and appliances • Learn how much the Canadian consumer expects to pay for furniture, mattresses Canada Counts A SURVEY OF CANADIAN and appliances CONSUMER BUYING INTENTIONS FOR FURNITURE, MATTRESSES, MAJOR • Learn about her preferred store type; and, APPLIANCES, TELEVISIONS AND OTHER BIG TICKET • Learn about the important factors HOME GOODS influencing the buying decision

Every Canadian manufacturer, distributor and retailer will findCanada Counts to be an invaluable planning guide in this tough economy. You simply can’t be without it.

CANADA COUNTS The report covers the nation as a IS AVAILABLE FOR whole, as well as chapters on each of the major regions: Western Canada; $1,500 PLUS H.S.T. Ontario; Quebec and Atlantic Canada. It CLICK HERE opens with an introductory essay on the TO LEARN MORE. current state of the Canadian consumer.

HomeGoodsOnline.ca < 35 BY THE NUMBERS>>>

Independents stay strong as chains add stores WHILE THE NUMBER OF INDEPENDENT STORES HAS DECLINED OVER THE PAST FEW YEARS, THESE MERCHANTS ARE OUTPERFORMING THE NATIONAL CHAINS IN A NUMBER OF KEY AREAS, PARTICULARLY IN CONTROLLING COSTS. ADDING NEW STORES DOESN’T SEEM TO HAVE HELPED THE CHAINS MUCH

BY MICHAEL J. KNELL

T WILL COME AS NO SURPRISE TO ANYONE IN appliances, consumer electronics (particularly televisions and audio this country’s furniture and mattress industry that there systems) and floor covering. were far fewer independent retailers operating in Canada at StatsCan also divides retailers into two broad categories: the end of 2011 than at the end of 2008, our industry’s top chain stores and non-chain stores, which HGO refers to as benchmark year. independent stores. A chain store operates more than four stores; IDuring the same period, the number of stores operated by an independent, no more than four freestanding outlets. national and regional chains climbed 15%, but it will be a surprise This means that two members of Canada's Top Five full-line to many that this expanded presence doesn’t seem to have done furniture retailers are not included in furniture store statistics – them much good. this country’s IKEA and Sears stores. Both are classified as general That’s two of the conclusions to be drawn from the latest merchandise stores. Annual Retail Trade Survey published by Statistics Canada. The Included in the numbers are Leon’s Furniture; its newly federal bean counter has just released results of the 2011 survey, acquired subsidiary The Brick; Brault & Martineau; and BMTC which offers some interesting insights into the state of big-ticket Group’s EconoMax and Ameublesment Tanguay banners. Also home goods retailing in this country. (It takes about 18 months for included are such mattress specialists as Sleep Country Canada and the agency to pull together the report. Results of the 2012 survey Mattress Mattress. should be available during the late spring of 2014.) The survey doesn’t cover such performance benchmarks as sales mix, traffic counts and advertising spending. KEY DEFINITIONS Finally, the survey reports in current Canadian dollars, In analyzing the data, here are a few things to keep in mind. unadjusted for inflation. Some would say this means the industry First, StatsCan defines a furniture store as a retail establishment has even farther to go before it returns to 2008 revenues. that generates at least 51% of its annual revenue from the sale of furniture (indoor and outdoor) and mattresses. The balance can STORES AND SALES come from any other product category but, generally speaking, it In 2008, this country’s 4,458 furniture stores generated operating involves sales of big-ticket home goods categories, including major revenues of slightly more than $10 billion. At the end of 2011, the

36 > HGO merchandiser Independents stay strong as chains add stores

store count had fallen to 4,183 and revenues were down to $9.57 CONTAINING COSTS billion. In 2008, average store revenue was $2.25 million, rising Managing the costs of doing business is always top-of-mind with to $2.29 million per unit at the end of 2011 – not bad, but not all all retailers. Statistics Canada looks at three key areas: the cost of that good when compared to stores in other major retail categories. labour, the cost of goods sold, and operating expenses. In all three More detailed numbers are given in the chart accompanying categories, the survey reveals the independents are outperforming this story. the chains on a store-by-store basis. The chain stores had combined revenues of $6.27 billion in In 2008, the industry’s cost of goods sold amounted to $6.03 2008, generated by 924 stores. Although recovered somewhat from billion. In 2011, it had fallen to $5.72 billion. the two prior years, sales at the end of 2011 were $6.16 billion, For the chains, the $3.81 billion spent on goods in 2008 fell to below the 2008 level, and generated by 1,061 units, an increase of $3.74 billion in 2011. After falling 6.2% in 2009, the cost of goods 137 stores since 2008. Average revenue per unit fell from $6.78 sold climbed 2.1% and 2.5% in 2010 and 2011, respectively. million to $5.81 million over the period. The independents appear to be doing a better job of controlling Here’s the kicker: The additional units failed to significantly costs of goods sold. It dropped from $2.21 billion in 2008 to $1.98 improve market share. In 2008, chains had a market share of 63%. billion in 2011, the third consecutive year of decline. At the end of 2011, it was 65% – hardly a robust increase. Wages and benefits are another area where independents seem At first blush, independent stores had a rough ride between to have done a better job of controlling costs. As an industry, 2008 and 2011. The 3,532 stores had combined revenues of $3.77 furniture retailers spent $1.6 billion on the cost of labour in 2008, billion at the end of 2008. At the end of 2011, combined revenues which slipped to $1.57 billion in 2011. had fallen to $3.41 billion, while the store count dropped by 412 But the cost of labour rose dramatically for the chains – from units to 3,122. $931.2 million in 2008 to $974.5 million in 2011. Of course, the Thus, average revenue per store actually increased slightly from 137 new stores they opened during that time had to be staffed. $1.07 million to $1.09 million, evidence of the resilience of the For the independents, the cost of labour was $670.4 million in 2008 independent store channel and its continuing popularity with and $596.4 million in 2011, the first year these expenditures has risen Canadian consumers. after falling 5.3% and 8.5%, respectively, in the previous two years.

HomeGoodsOnline.ca < 37 In operating expenses, independents again appear to be doing Key Performance Measures for Canadian Furniture Stores better. Furniture stores had total operating expenses of $3.58 2008 to 2011 (All dollar figures in current $C millions, except where noted) billion in 2008, which fell to $3.49 billion in 2011. Performance Category 2008 2009 2010 2011 Chain stores incurred operating expenses of $2.15 billion in STORE TYPE 2008, climbing to $2.17 billion in 2011, perhaps also attributable OPERATING REVENUE to those 137 new units. For independents, 2008 operating expenses All stores 10042.0 9445.8 9672.1 9574.4 of $2.21 billion were down to $1.98 billion in 2011, the third Percentage change -5.9 2.4 consecutive year of decline. Chain stores 6268.7 5884.1 6107.0 6162.3 Percentage change -6.1 3.8 0.9 MARGINS, PROFITS AND SALES PER Market share 63.0 63.0 64.0 65.0 SQUARE FOOT Independent stores 3773.3 3561.7 3565.1 3412.1 In two of these three measures, the chain stores outperformed the Percentage change -5.6 2.9 -4.2 independents, but both have seen minor improvements in both COST OF LABOUR gross margin percentage and sales per square foot. All stores 1601.6 1484.9 1483.6 1570.9 In 2008, furniture stores had a collective gross margin of 40%. Percentage change -7.3 0.0 5.8 In 2011, it was 40.2%. The figures have remained essentially stable, at 39.6% in 2009 and 40.5% in 2010. Chain stores 931.2 850.0 908.8 974.5 Chain stores had a gross margin of 39.1% in 2008, creeping Percentage change -8.7 6.2 7.9 up to 39.3% in 2011, a slight retreat from 40.2% in 2010. The Independent stores 670.4 634.9 580.9 596.4 independents also had a fairly consistent gross margin over those Percentage change -5.3 -8.5 2.7 four operating years – from 41.3% in 2008 to 41.9% in 2011. COST OF GOODS SOLD Although they were outperformed in all three major cost areas, All stores 6029.4 5705.4 5756.4 5724.4 the chain stores outperformed the independents in operating Percentage change -5.4 0.9 -0.6 profit. Industry-wide profits went from 4.3% in 2008 to 3.8% in Chain stores 3815.0 3577.6 3651.9 3741.3 2011, peaking at 5.4% in 2010. Percentage change -6.2 2.1 2.5 Chain stores recorded operating profits of 4.8% in 2008, Independent stores 2214.5 2127.8 2104.5 1982.1 dipping to 4.1% in 2011, still a higher figure than for the Percentage change -3.9 -1.1 -5.8 independents. The independents were at 3.6% in 2008 and 3.2% OPERATING EXPENSES in 2011. But operating profits actually improved for independents in 2011 after dropping to 2.3% and 2.6% in the prior two years. All stores 3576.7 3327.6 3393.1 3486.7 The chain stores saw their operating profits fall in 2011 from 7% in Percentage change -6.9 1.9 2.7 2010. Chain stores 2154.2 1974.0 2026.6 2165.5 The chain stores also outperformed the industry on the critical Percentage change -8.4 2.7 6.9 sales-per-square-foot measure. The industry collectively had sales Independent stores 1422.5 1353.6 1366.4 1321.3 per square foot of $219 in 2008, and after peaking at $245 in 2010, Percentage change -4.8 0.9 -3.3 settled at $238 in 2011. NUMBER OF STORES Chain stores recorded three consecutive years of declines in All stores 4458 4357 4195 4183 sales per square foot, falling from $273 in 2008 to $257 in 2011, Percentage change -2.3 -3.7 0 but those figures were substantially higher than those for the Chain stores 924 953 966 1061 independents. The independents had sales per square foot of $157 Percentage change 3.1 0.1 9.8 in 2008, falling to $139 in 2009, climbing to $217 in 2010, then Independent stores 3534 3404 3229 3122 dropping to $205 in 2011. Percentage change -3.7 -5.1 -3.3 CONCLUSIONS GROSS MARGIN (%) If nothing else, the Annual Retail Trade Survey indicates the All stores 40.0 39.6 40.5 40.2 independent furniture store is not likely to become extinct any Chain stores 39.1 39.2 40.2 39.3 time soon. The unit growth of the chains hasn’t eroded that much Independent stores 41.3 40.3 41.0 41.9 of their market share. OPERATING PROFIT (%) The independent store operator seems to have greater flexibility Total all stores 4.3 4.4 5.4 3.8 when it comes to controlling both operating expenses and wages. Chain stores 4.8 5.6 7.0 4.1 While the difference isn’t all that great, his gross margins are Non-chain stores 3.6 2.3 2.6 3.2 consistently better, and despite a setback in 2011 from 2010, the SALES BY SQUARE FOOT HGO trend curve for sales per square foot seems to be in his favour. Total all stores 219.0 201.0 245.0 238.0 Chain stores 273.0 260.0 261.0 257.0 – MICHAEL J. KNELL is the publisher Non-chain stores 157.0 139.0 217.0 205.0 and editor of Home Goods Online. Source: Statistics Canada’s Annual Retail Survey; Windsor Bay Communications Survey covers all stores classified under North American Industrial Classification System (NAICS) 4421 Note: Dollar figures are based on Statistics Canada estimates

38 > HGO merchandiser Key Performance Measures for Canadian Furniture Stores 2008 to 2011 (All dollar figures in current $C millions, except where noted)

Performance Category STORE TYPE 2008 2009 2010 2011 OPERATING REVENUE All stores 10042.0 9445.8 9672.1 9574.4 Percentage change -5.9 2.4 Chain stores 6268.7 5884.1 6107.0 6162.3 Percentage change -6.1 3.8 0.9 Market share 63.0 63.0 64.0 65.0 Independent stores 3773.3 3561.7 3565.1 3412.1 Percentage change -5.6 2.9 -4.2 COST OF LABOUR All stores 1601.6 1484.9 1483.6 1570.9 Percentage change -7.3 0.0 5.8 Chain stores 931.2 850.0 908.8 974.5 Percentage change -8.7 6.2 7.9 Independent stores 670.4 634.9 580.9 596.4 Continued from page 22 Percentage change -5.3 -8.5 2.7 COST OF GOODS SOLD AT A GLANCE All stores 6029.4 5705.4 5756.4 5724.4  At the heart of High Patenaude says Amisco, a producer of kitchens, Percentage change -5.4 0.9 -0.6 Point’s market district, dining room and bedrooms, had a lot of new product THE HIGH POINT MARKET the International Home in its IHFC Design Wing showroom and made sure Chain stores 3815.0 3577.6 3651.9 3741.3 The High Point Market Authority is the official Furnishings Center is Percentage change -6.2 2.1 2.5 retailers large and small knew that beforehand. sponsor and organizer of the High Point Market, the largest of the 180 Independent stores 2214.5 2127.8 2104.5 1982.1 “We sent out invitations, they came, and we wrote held in the north-central North Carolina city each or so buildings hosting orders,” he reports. “It’s about planning and having good April and October. Percentage change -3.9 -1.1 -5.8 exhibitors for the semi- programs and being persistent. You cannot go to High OPERATING EXPENSES Featuring over 2,000 exhibitors spanning every annual trade event. It's Point and have nothing new to show. You are dealing category, style and price point of furniture, home All stores 3576.7 3327.6 3393.1 3486.7 also home to a number of with professional buyers, and if you have nothing new to furnishings and decorative accessories, the Percentage change -6.9 1.9 2.7 Canadian furniture, home show, you have ruined yourself for the following show.” wholesale market attracts tens of thousands of visitors from over 100 countries, and has established Chain stores 2154.2 1974.0 2026.6 2165.5 furnishings and decorative Tom Halvorsen, vice president of sales and marketing itself as the world’s leading industry event. Percentage change -8.4 2.7 6.9 accessory resources, for West Brothers, the Hanover, Ontario-based maker of Independent stores 1422.5 1353.6 1366.4 1321.3 including Durham solid-wood bedroom, dining room, entertainment and Some facts about the market • It includes some 180 buildings with about Percentage change Furniture, Magnussen -4.8 0.9 -3.3 occasional furniture, says High Point is the place to be. 11.5 million square feet of exhibit space. NUMBER OF STORES Home, Zedbed, Sunpan That's because both Canadian and American retailers • Approximately 75,000 industry professionals All stores 4458 4357 4195 4183 Model Home and West come each spring and fall, but not everyone is willing to attend each market, including retailers, interiors designers, sales representatives, company Percentage change -2.3 -3.7 0 Brothers and others. travel to Toronto in January. West Brothers shows only at the High Point market. executives and members of the press. Chain stores 924 953 966 1061 • Tens of thousands of new products are Percentage change 3.1 0.1 9.8 It left its showroom in Toronto’s International Centre shown each market. about two years ago. Independent stores 3534 3404 3229 3122 • The official guide lists about 65 exhibitors “We really found the High Point April market to be very from Canada. Percentage change -3.7 -5.1 -3.3 promising in traffic, in new accounts and in orders written,” • Some 10% of attendees are international, GROSS MARGIN (%) says Halvorsen. “We had pretty high expectations and our including nearly 3,000 from Canada. All stores 40.0 39.6 40.5 40.2 • Canada is the largest non-U.S. source of expectations were pretty close to met.” both exhibitors and attendees. Chain stores 39.1 39.2 40.2 39.3 An IHFC tenant, West Brothers’ main focus at the Independent stores 41.3 40.3 41.0 41.9 April market was a new concept in home office called Contact information ADDRESS: 164 South Main St., Suite 700, OPERATING PROFIT (%) Workspace, comprising three collections, with desks and High Point, NC 27260 Total all stores 4.3 4.4 5.4 3.8 storage units intended to look more like home décor. PHONE: (336) 869-1000 Chain stores 4.8 5.6 7.0 4.1 Halvorsen says the recent economic downturn WEB SITE: www.highpointmarket.org TWITTER CHANNEL: @hpmarketnews Non-chain stores 3.6 2.3 2.6 3.2 resulted in pent-up demand among consumers, and he TWITTER HASHTAG: #hpmkt SALES BY SQUARE FOOT noticed it this spring. “This was the first (market) in a Future dates Total all stores 219.0 201.0 245.0 238.0 couple of years where I haven’t experienced pessimism on either side of the border,” he says. “There was a 2013: Oct. 19-24 Chain stores 273.0 260.0 261.0 257.0 2014: April 5-10; Oct. 18-23 sense, an expectation that things are getting better.” HGO Non-chain stores 157.0 139.0 217.0 205.0 2015: April 18-23; Oct. 17-22 2016: April 16-21; Oct. 15-20 – MARC BARNES is a freelance writer 2017: April 22-27; Oct. 14-19 based in Greensboro, North Carolina.

HomeGoodsOnline.ca < 39 HomeGoodsOnline.ca

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 40 > HGO merchandiser