Art Defehr: TWO LIVES, WELL LIVED TCHFM MARKET VOICES the MARKET’S NEW NORMAL REV: the REBIRTH of a CANADIAN MATTRESS MAKER

Michael Knell’s HomeGoodsOnline.ca

HGOSpring 2013 merchandiserVolume Two, Issue 3

ALIXE MACRAE ON SEARS CANADA AND THE BROKEN BRAND PROMISE

Art DeFehr: TWO LIVES, WELL LIVED TCHFM MARKET VOICES THE MARKET’S NEW NORMAL REV: THE REBIRTH OF A CANADIAN MATTRESS MAKER

HomeGoodsOnline.ca < 1

CONTENTS>>>

MARKET REVIEW: 20 MARKET’S COMFORTABLE BLING Regular contributor Alixe MacRae reviews the fashion and style found on the floor at this year’s Canadian Home Furnishings Market. She found there was no devil in the details but the details were plenty as were the new product opportunities for retailers in the know and on the prowl for new sales and profits. MARKET’S 26 NEW NORMAL Looking at TCHFM from a business perspective, our editor opines while the 20 market may have been lightly attended, independent retailers shopping the show clearly saw the need to floor better-quality FROM THE EDITOR goods and continued to move away from 6 In this issue, we salute Art imported goods, particularly upholstery. DeFehr, a man who has given his all twice in one lifetime, once to the WE ASKED: company founded by his father and 28 MARKET VOICES once to a variety of humanitarian For the first time,Home Goods Online causes that have stirred his passions. conducted “man-on-the-street” interviews Also on the agenda is our review in the halls of the International Centre of this year’s Canadian Home during this year’s Toronto market, asking Furnishings Market; Alixe MacRae’s exhibitors and attendees about their take on the future of Sears Canada; impressions of the only national industry and, a look at Canada’s newest event of its kind in Canada. Here’s a mattress manufacturer – Rev Sleep. sample of what they had to say. PROFILE: MATTRESSES: 8 ART DEFEHR: 32 DREAMING BIG TWO LIVES WELL LIVED Valerie Stranix and her team are building He built Canada’s largest furniture a new Canadian mattress powerhouse resource, but that wasn’t enough for whose name, Rev Sleep, is taken from the Art DeFehr. He also devoted himself French word for dream. It is centred on 32 to a wide range of humanitarian four different brands covering all of the causes, from leading the fight to consumers’ most desired and demanded rescue a devastated Somalia to features, benefits and price points. building a university in Russia. 8 Recently, DeFehr celebrated his ON RETAIL: 70th birthday and decided to take 35 BREAKING THE a step back from the day-to-day BRAND PROMISE management of Palliser Furniture to HGO regular contributor Alixe MacRae spend time with his wife Leona and notes anyone who reads a newspaper pursue his other interests. It proved knows Sears Canada isn’t doing well. This a good opportunity to look at his former insider points out the once-great contributions to our industry. retailer has sold off or diluted nearly all the brands that made it a force to be ADVERTISERS’ reckoned with. In short, Sears forgot its 16 INDEX brand promise to the consumer.

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

Living well HGO merchandiser SPRING 2013 • VOLUME TWO, ISSUE 3 IN THIS ISSUE WE PROFILE AND SALUTE A MAN WHO HAS ISSN 2291-4765 GIVEN HIS ALL TWICE IN ONE LIFETIME. ONCE TO THE www.HomeGoodsOnline.ca COMPANY FOUNDED BY HIS FATHER AND ONCE TO A VARIETY PUBLISHER & EDITOR OF HUMANITARIAN CAUSES THAT STIRRED HIS PASSION Michael J. Knell [email protected]

’VE KNOWN ART DEFEHR FOR THE BETTER PART OF 25 MANAGING EDITOR years. He was one of the first people I met when I joined this Anthony E. Bengel Iindustry and was only recently that I began to understand just [email protected] how much he’s done since graduating from Harvard’s School of CONTRIBUTING EDITORS Business all those years ago. For many people, building a company is Alixe MacRae the work of a lifetime. But Art has given a second lifetime’s worth Ashley Newman of effort to a variety of humanitarian causes. As a member of the Mennonite Central Committee, he went ART DIRECTOR to Bangladesh in the aftermath of that country’s civil war to direct Samantha Edwards Sam I Am Creative MICHAEL J. KNELL an agricultural program that is operating today. He then went to [email protected] Cambodia as part of a team bringing relief supplies to its people after the fall of the Khmer Rouge dictatorship. And how many people in IT DIRECTOR our industry have been named a United Nations High Commission, Jayme Cousins www.inhouselogic.com as Art was to Somalia when no one else wanted the job. [email protected] And as you will read in our profile a few pages hence, he’s done so much more than that. He truly deserves to be in the Order of PUBLISHED BY Canada and it was more than fitting that the Canadian Home Windsor Bay Communications Inc. Furnishings Alliance honoured him with the Lifetime Achievement P.O. Box 3023, 120 Ontario Street Brighton, Ontario K0K 1H0 Award in 2012. T: 613.475.4704 He tells me that he’s going to take easier now that’s he has F: 613.475.0829 reached his 70th birthday. He’s going to spend more time with his Michael J. Knell, Managing Partner wife Leona at their new home in Mexico and stop to play with his PUBLISHERS OF grandchildren more often. But I suspect Art’s idea of taking it easy HGO This Week would be the equivalent of embarking on a new career for most Home Goods Online.ca

other people. © 2013 Windsor Bay Communications Inc. I’m proud to call him my friend and am delighted to have the All rights reserved. opportunity to share his accomplishments with his colleagues and Windsor Bay Communications does not accept customers throughout the Canadian furniture industry. any responsibility or liability for any mistakes or misprints herein, regardless of whether such errors are the result of negligence, accident or any other cause whatsoever. Reproduction, in whole or in part, of this magazine is strictly forbidden without the prior written permission of the publisher.

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

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WHI_ spring 2013 ad_v2.indd 1 2013-04-04 5:26 PM PROFILE>>> Art DeFehr: two lives well lived

HE BUILT CANADA’S LARGEST FURNITURE RESOURCE, BUT THAT WASN’T ENOUGH FOR ART DEFEHR. HE ALSO DEVOTED HIMSELF TO A WIDE RANGE OF HUMANITARIAN CAUSES, FROM LEADING THE FIGHT TO RESCUE A DEVASTATED SOMALIA TO BUILDING A UNIVERSITY IN RUSSIA. BY MICHAEL J. KNELL

RT DEFEHR ESSENTIALLY HAS LIVED TWO PARALLEL lives, thanks in part to the Federal Bureau of Investigation. AThe U.S. law enforcement agency was not amused when, as a university student, DeFehr marched in support of the anti-Vietnam War movement and the civil rights efforts of the late Dr. Martin Luther King. The FBI gave him a poor security rating, effectively scuppering his plans to join Canada’s Foreign Service as a diplomat. Instead, DeFehr spent the past 40-plus years leading Palliser Furniture, the family business founded by his father in 1944. Today, Palliser remains Canada’s largest furniture resource, with factories in DeFehr's hometown of Winnipeg and in Mexico and Indonesia. But DeFehr didn't let his dreams of public service die. While he never became a Canadian ambassador, he has led humanitarian efforts around the world, often in the midst of chaos and upheaval, spending as much  Art DeFehr is seen here in Cambodia sometime time over the past several decades on these efforts as on running Palliser. in 1980 or 1981. At the time, he was part of the DeFehr, who recently celebrated his 70th birthday, has stepped away Landbridge Program, which brought relief supplies from day-to-day duties at Palliser to focus on his other interests and spend to the people of war-torn country at the end of the more time with his wife, Leona, at their new home in the historic San Khmer Rouge dictatorship. “This was probably the Miguel de Allende district of Mexico. They continue to maintain their most difficult assignment,” he recalls. “We were family home in Winnipeg as well as a summer get-away on the shore of the trying to help nearly a million refugees.” nearby Lake of the Woods. Industry veteran Cary Benson has been named

8 > HGO merchandiser Art DeFehr in his Winnipeg office.

 Art and Leona DeFehr near their home in historic San Miguel de Allende district of Mexico.

president of Palliser, although DeFehr remains chairman and CEO. Being a successful furniture manufacturer gave him the freedom and the means to pursue his humanitarian interests, he says, while the latter probably made him a better business executive. “Business gave me a sense of reality that my counterparts in humanitarian organizations often did not have,” DeFehr said in an interview with Home Goods Online. “On the other hand, my work with people and places in difficulty always kept my values in perspective. Making money is essential to keeping a business alive, but it really served no other purpose for me. I doubt if that made me a better business person in the eyes of my colleagues and competitors. “While the furniture business allowed for some self-expression, it was limited by the reality of the market and Palliser’s position as a mid-market manufacturer,” he says. “This is one of the reasons why I enjoyed spending about half my life outside the industry taking on assignments in places  Art DeFehr (centre) is seen here with his brothers, like Somalia or Cambodia. The furniture business was important in that it Dave and Frank in one of the old Winnipeg production provided the financial stability that permitted me to be a free agent in the facilities sometime in the late 1970s. other half of my life. My friends in the international world cannot believe that I actually run a manufacturing business.” (continued on page 12)

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©2013 Serta Inc. www.sertacanada.com HomeGoodsOnline.ca < 11 THE CHALLENGES OF FURNITURE Leading Palliser was never dull, DeFehr says. Challenges of all shapes and sizes presented themselves over the years. He sees furniture as more than a commodity to be made, marketed and sold like so many widgets. It's a creative process. In 2000, Art DeFehr “I’ve always viewed business and furniture as a series of problems to was named Entrepreneur be solved – I enjoyed that. Manufacturing allows for creativity in terms of the Year by Manitoba of technique, in applying new technologies, in using global connections Business magazine. to create something. It also allows you to be close to real people who are Here, he is seen on the producing the product.” cover of the magazine’s Although not a designer, he enjoys the design process. “I like to May 2000 edition. combine design ideas with technology to create solutions that are economical and practical,” DeFehr says, recalling that Palliser pioneered the use of laminates in North America. “We also were the first to deliberately bring ideas and technology from Europe and apply them to the North American market. “Our entry into the leather business is a good example. Most North American manufacturers were reticent to challenge the Italian modern leather when it began arriving in the 1980s and early 1990s. With our Canadian market foundation, which was generally more accepting of modern styling, we were early leaders in modern leather, and that helped us gain placements across North America. It’s also the foundation of our current business.” Another source of pride is the 220 Elm showroom building in downtown High Point. “This was another opportunity to express design ideas in a different way,” DeFehr says. “The building is one of the few that did not get into financial Palliser built it upholstery factory in Saltillo, Mexico, trouble during the recent recession. There is great loyalty to the building. using the design ideas of well-known modern Mexican “We also built a factory in Saltillo, Mexico, using the design ideas of architect Luis Barragan. Today, the move to Mexico is well-known modern Mexican architect Luis Barragan. That gives me great studied by M.B.A. students across Canada. personal satisfaction.” BUILDING AND RESTRUCTURING A COMPANY Since 1984, the year DeFehr was named president and CEO, Palliser has seen ups and downs but remained an industry leader. Today, Palliser Furniture Upholstery has annual sales of about $140 million. “To create and operate a financially successful business over time is always an achievement,” he says. “Palliser, its predecessor and its spinoffs, represent a great deal of innovation and creativity in the industry.” In 2006, DeFehr did something that’s practically unheard of in the modern corporate environment. He made Palliser itself smaller, turning what was five operating divisions into five independent companies that had to survive on their own. And surviving they are. Palliser Upholstery, Casana Furniture, DeFehr Furniture, EQ3 and Arconas are all doing well in |their niches. Earlier, Palliser was the first North American furniture company to develop casual oak case goods (for a number of years, it was the category’s largest producer), and the first to operate its own Here’s an aerial view of the company’s first-ever presentation particleboard plant. at a furniture industry trade show in Winnipeg, circa 1966. At the “We were early participants in Asia, but took a time, the company was still called A.A. DeFehr Furniture. different route in terms of our emphasis,” DeFehr

12 > HGO merchandiser A life without borders

Art DeFehr says his business to serve on its board of directors. IDE has others to discuss world problems and accomplishments have been deeply programs in Bangladesh, India, Nepal, possible solutions. satisfying, but the work that fired his soul Cambodia, Vietnam and southern Africa. These days, DeFehr is focused and imagination sometimes has been DeFehr also has been active in on improving Canada’s immigration found in remote corners of the world, and Habitat for Humanity since its founding, policy, and is a booster of the Provincial in the midst of conflict or disaster. and counts former U.S. President Nominee Program in Manitoba – “I marched with Martin Luther King Jimmy Carter among his numerous “a program that has had dramatic and I am very proud of that,” he said in acquaintances. results,” he says. Developed as a co- an interview several years ago. His work around the world has had operative effort by the provincial and A devout Mennonite, the 70-year-old an impact on Palliser’s evolution and federal governments – with strong input DeFehr has been deeply involved in growth, he says. “We’ve acted globally from industry – the program fast-tracks human rights issues most of his life. for the past 40 years,” DeFehr says. potential immigrants who have the As a member of the Mennonite Central Palliser’s market focus always has skills, education and work experience Committee, he was the first director of been North America, but the company needed to make an immediate a still-ongoing agricultural restoration has researched ideas, sourced raw economic contribution to the province and innovation project in Bangladesh, materials and manufactured as far or territory that nominates them. launched immediately after that afield as Indonesia and Mexico. “And Immigration and related issues are country’s civil war and a devastating Palliser always has seen itself as a important to DeFehr. tsunami. DeFehr directed the project bridge between North America and “Early on, Palliser had programs that from 1972 to 1974. Europe in terms of styling,” he adds. allowed a new refugee or immigrant to In 1980 and 1981, he was part He says his experiences have deeply operate effectively without the English of the Landbridge Program, which affected him as a person, adding, language and prior skills, and our brought relief supplies to the people “I believe it also made me sensitive ability to employ thousands of first- of Cambodia at the end of the Khmer to people issues.” Palliser’s 2,500 generation Canadians stands out as a Rouge dictatorship. “This was probably employees hail from 80 countries and signal achievement,” he says. Palliser the most difficult assignment,” he speak some 40 languages. has received numerous awards for these recalls. “We were trying to help nearly a DeFehr also has been active in the efforts, including several for having the million refugees.” Canadian furniture industry and in the best English-in-the-workplace programs. He then served as the United Nations High Commissioner for Refugees to “I believe it also made me sensitive to people issues.” Somalia in 1982 and 1983, directing aid to over 400,000 refugees in a very Palliser’s 2,500 employees hail from 80 countries and speak difficult political environment. During some 40 languages. this mission he became friends with Kofi Annan, secretary general of the business community at large. He was “This allowed me to blend my United Nations from 1997 to 2006. chairman of an initiative to establish international interests with the After the fall of Eastern European a German-style technical university business, and is the achievement in communism in the early 1990s, DeFehr in Canada’s wood products sector. which I take the greatest personal helped establish an independent The program was established at the satisfaction,” DeFehr says. business community in Russia, University of British Columbia and is “My grandparents, parents, both including starting a high-tech farm funded by both government and industry. daughters, one son-in-law, were all equipment plant and founding what In addition to memberships in the either refugees or immigrants. Of is now known as LCC International Manitoba Business Council and the 19 members of my direct lineage – University, a fully accredited English- Canadian Council of Chief Executives, grandparents to grandchildren who . speaking university in Klaipeda, he has been a member of the World live or lived in Canada – only three Lithuania. Both DeFehr and his wife, Economic Forum and is still a member were born in Canada. The stories of Leona, serve on its board of directors. of the Trilateral Commission, one of loss, struggle and a new country were For many years he was president of 18 Canadians in that 450-member what I was raised on. I’ve also had the International Development Enterprises, organization. Founded by David opportunity to experience it directly a Canadian organization that provides Rockefeller, the commission brings through my own children and my work market-oriented solutions to together business people, academics, with refugees and other people who did developmental problems. He continues professionals, government officials and not win the ‘lottery of birth’.”

HomeGoodsOnline.ca < 13 Art DeFehr receives the medal designating him an Officer of the Order of Canada from then Governor-General Adrienne Clarkson. He was admitted to the order in 2004.

recalls. “We built our own facility in Indonesia in 1997.” That plant is still operating as a key supplier to EQ3. “Our 1998 decision to go to Mexico to make upholstery rather than to China is now being studied by every MBA student in Canada,” he says. “In light of everything that’s happened in the world since the 2008 recession, it’s a decision that stands up very well.” THE FUTURE OF PALLISER AND A RICHLY REWARDED LIFE CANADA’S FURNITURE INDUSTRY The list of accolades and honors bestowed DeFehr was active in the discussions that resulted in the original on Art DeFehr is indeed a lengthy one. Canada-U.S. Free Trade Agreement, and the North American Free Trade From the North American furniture industry, he has received the following: Agreement that followed. He believes free trade was a good idea, but no one could have foreseen what would happen a decade-and-a-half later. 2012: Lifetime Achievement Award “The real issue today is not free trade but globalization – a word that from the Canadian Home didn’t exist in 1995, and a phenomenon that was not understood in Furnishings Alliance. advance and happened too quickly,” he says. 2003: Spirit of Life Award from the “The Canadian furniture industry today is in a difficult situation,” National Home Furnishings DeFehr says, pointing out that whatever pools of capital existed to Industry Chapter of the City of Hope, support furniture making have been largely exhausted, and there appears for contributions to the cancer to be little interest in rebuilding the industry. treatment and research center’s humanitarian goals. “A second problem is that the Canadian furniture industry does not have a stable international financial system or stable terms of trade,” 2002: Pillar of the Industry Award from leaving the industry vulnerable to outside forces. the Independent Home Furnishings Representatives Association. “As long as our political masters believe that a resource-based economy should be allowed to find its own level, anyone wanting to build an OTHER HONORS INCLUDE: export-focused Canadian furniture factory is probably being somewhat 2009: Named to the Canadian foolish,” DeFehr says. Manufacturers Hall of Fame. Canadian manufacturers also face a troubled domestic retail community. 2001: Lifetime Achievement Award “We have a very concentrated retail industry, where the dominate from the Entrepreneur of the players all have a low-price strategy,” DeFehr says. “That does not make Year program of what was then them good candidates for a domestic supply strategy.” Ernst & Young. 2001: Named Entrepreneur of the Year by Manitoba Business magazine. 2002: Honorary doctorate of laws from the University College of Cape Breton. 1998: Honorary doctorate of laws from his alma mater, the University of Manitoba. 2003: Honorary diploma from Manitoba’s Red River College. 2011: Culture of Service Award from another alma mater, Goshen College. Perhaps the most prestigious award DeFehr has received was his appointment as an Officer of the Order of Canada in 2004, the highest honor that can be bestowed on a Canadian citizen for service to his country and to society at large. Art DeFehr is seen here receiving his honorary doctorate of laws from the In 2011, he was named an Officer of the University College of Cape Breton in Sydney, Nova Scotia in 2002. The college Order of Manitoba. also honored General Romeo Dallaire, (now Senator Romeo Dallaire) former commander of U.N. Forces in Rwanda. Both men were saluted as peacekeepers.

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(800) 567-7933 naturaworld.comHomeGoodsOnline.ca < 15 “To create and operate a financially successful business over time is always an achievement. Palliser, its predecessor and its spinoffs, represent a great deal of innovation and creativity in the industry.” – art defehr

Thus, DeFehr doesn’t believe the Canadian furniture industry is likely to produce another mega-player, as it did in the year’s following the initial free-trade agreement, when unfettered access to the U.S. market created a number of manufacturers with volumes over $100 million. Before Palliser restructured in 2006, the company averaged annual sales in the $400 million to $500 million range. In 2012, only two or three other Canadian furniture manufacturers are believed to have annual sales above $100 million. With one or two exceptions, most Canadian furniture makers are either single-factory producers or specialists in a particular product category and are hemmed in by economic and monetary forces beyond their control, DeFehr says. “Palliser is positioned to grow in the years ahead,” he adds. “Our positioning in both Mexico and Canada is unique and allows us to develop different strategies from our competitors. I believe we have an excellent management team in place, and I have to leave it to them to decide what moves are best for the business. “Many of the values important to me are imbedded in the company, and I believe those will survive and be honored by future management.” HGO

Art DeFehr receiving the Lifetime Achievement Award.

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1.877.CANTREX Proudly Supporting Independent Canadian Retailers for Over 50 Years! www.cantrex.com HomeGoodsOnline.ca < 19 The Gabrielle bed from Magnussen Home showed off two key detail trends this market: added storage under bed and an upholstered headboard.

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VEN FOR THOSE WITH TRISKAIDEKAPHOBIA – THE MORBID FEAR OF the number 13 – this year’s Canadian Home Furnishings Market was fabulous when it came to product. Buyers just had to look for the really good stuff. That may have required a little more walking in the halls of the International Centre, and visiting the Eshrinking number of outside showrooms, but it was well worth the effort. One of the key elements seen throughout the 300-plus exhibitor presentations was detail – and there was no “devil in the details” this market. The first detail that struck this eye was bling, and lots of it. For example, Ontario-based Elegant Chair Designs showed its new Eagle chair, with its crystal buttons, and a dog bed called Tiger that promises to wow consumers. Other products sporting bling included several from NCA Designs, whose display once again was a show-stopper sporting a slew of accessories — the must-have category for every independent furniture retailer this year. Nail heads were abundant, usually as an understated design element but occasionally as the main attraction. Superstyle, for instance, showed a couple of great nailhead chairs. Several resources also used decorative ribbon fabric as a detail, including Brentwood Classics on one or two new pieces for the Kimberley Seldon collection, and Décor-Rest. Ribbons also added punch to neutral colours. And this was one of the most colourful markets in recent years. Several exhibitors used colour to make the showroom pop. Brentwood Classics was brave enough to feature a pink-and-white zebra sectional. Fashion director Diana Sisto also used Jonathan Adler prints to great effect on a couple of new chairs. Casual dining specialist Acme Chrome did as well. Both achieved stunning results. Also making good use of colour was Décor-Rest’s Cobistyle collection, while NCA showed off a multi-patterned sectional. The lesson for retailers is simple: Don’t be boring! If you must show beige and brown, jazz it up with hot coloured pillows. Palliser took classic designs and made them hot in their Runway collection. And using premium construction techniques didn’t hurt either. As always, Normand Couture showed an unerring sense of colour and style, whatever the product. Who else in Canada has won four Pinnacle Awards from the American Society of Furniture Designers? Quilting also was hot this market. Brentwood Classics used it on velvet, while Superstyle showed it on linen. Speaking of velvet, one of the best examples of its use was seen on an

HomeGoodsOnline.ca < 21 “People bought things that were unique, that were different from what they already have on their floors. This was driven because of the sameness 1 coming out of China. ” – jason harris, stylus made-to-order sofas

amazing new sofabed from Simmons Upholstery In Mazin Furniture’s showroom, I counted seven Canada, Superstyle’s younger sister. beds with under-bed storage, and at a range of price Upholstered headboards continued to have a strong points. Durham Furniture, the Canadian producer of 1. This four-seat sofa, presence as this year’s market. Elte, perhaps one of high-end solid-wood bedroom, featured under-bed the model 2135 from Toronto’s better-known destination retailers and one storage throughout its Perfect Balance line. Décor Rest, is another that’s almost always ahead of the trend curve, has had Reclaimed wood, or what appears to be, made its good example of another them on the floor for 10 years or more. The one thing presence felt this market. Mountain House Furniture, noticeable market retailers need to understand about this category: There Tuff Avenue and CDI International were among trend that saw neutral has to be a range of models and price points on the those showing strength in this segment. Huppé also upholstery covers pop floor. The store display can’t just focus on the higher made a statement by using it in several new bedrooms, with the addition of price points, or the consumer will shop elsewhere. while Artage International used it on several best- colourful accent cushions. Right now, and probably for the next few years, selling, modern storage coffee tables. 2. The Eagle chair from upholstered headboards will be a part of every In my view, every retailer should have at least one Elegant Chair Designs. category, from kids’ beds to serious adult sets. One or two reclaimed wood pieces on the floor. Your 3. Traditional styling is Quebec manufacturer even claimed his would absorb “green” customers will gravitate to it, but you need to making a comeback, as noise, although I didn’t ask what the source of the tell the story not just right, but well. seen here in the Model noise would be. Maybe a loud TV? Whether in upholstery or case goods, the ability 6300 sofa from Décor Storage continues to be in demand in bedroom, to customize was big this year. It’s also one of the Rest, albeit with today’s dining room, occasional and even accent upholstery. strong points of most Canadian manufacturers, giving condo-inspired sizing. After all, downtown condos are getting smaller; they’ll them a much-needed edge both at home and it their soon be like Paris hotel rooms. In my day job, I move primary export market, the United States. senior citizens into retirement residences, which When it comes to wood, think Canadel or any of usually have no space for out-of-season clothing, let the divisions of BDM+ Furniture, such as Bermex, alone anything else. So I’m always looking for “dead Dinec or Bertanie. This is where their expertise air” — storage ottomans, under-bed drawers, shelving shines, and this gives retailers the opportunity to — anything to create storage. evolve beyond competing solely on price. Offering

22 > HGO merchandiser HomeGoodsOnline.ca < 23 3. This dog bed, called Tiger, from Elegant Chair Designs showed plenty of bling – an emerging trend designed to capture the consumers attention.

3 1

“For us, the show was good even though traffic was down. We are taking market share away from the importers. A lot of business is coming 2 back to North America.” – faizel sunderji, dynasty furniture

1. This sectional is part customizable product shows the store can satisfy These guys and gals are smart, and they don’t look like of the Runway collection each and every consumer's need, meaning there’s no the old men in suits our industry is famous for. from Palliser. It proves need to underprice. Perhaps the overriding trend at this year’s market colourful cushions are Is traditional a dying breed of styling? Décor-Rest was, “Make me comfortable,” whether it was a needed to give a sense of doesn’t think so. They added a traditional frame stressless chair or a sleep-inducing mattress. With so bling to middle-of-the- to their line because customers were asking for it. many Canadians suffering from back problems, we road beige fabrics. It's smaller scale and therefore ideal for downsizing have a great opportunity to help solve them. 2. This pink and white traditionalists. The lesson for other manufacturers For example, Collection A 2000 had a great, made- zebra sectional from is to listen to the customer and act. For retailers, it’s in-Canada stressless chair. Mattresses, long a prime Brentwood Classics remember that Canadian factories give you options source of high-margin dollars, also were making waves really showed the that importers don’t and can’t. on the comfort front. Good examples included new power of colour at this The most successful vendors and retailers I spoke lines from NexGel and Zedbed. Latex is yesterday’s year’s Canadian Home with at market credited their success to selling better news, so be current and be profitable. Furnishings Market. product. Some pundits predict China’s labour rate will There was enough at the 2013 edition of the double by 2015, so price increases on imports probably Canadian Home Furnishings Market to make this the are unavoidable, unless furniture resources move their most profitable year ever for retailers who truly took factories to Bangladesh, Cambodia or Myanmar. This in what was available. Remember, the top line doesn’t may mean the race to the bottom of the pricing ladder cut it. It’s the bottom line that matters. HGO in almost every furniture category is coming to an end. Retailers need to educate sales associates about the – Home Goods Online’s most widely read value behind higher prices. Start by visiting Crate & blogger/contributor, ALIXE MACRAE, is one of this Barrel, which has no fear of higher prices and thrives on country's best-known merchandisers. She has held generous margins. While you’re there, notice what their senior posts at such well-known Canadian retailers as young buyers are putting on the floor, and from whom. Stoney Creek Furniture, Sears Canada and The Bay.

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

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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 < 25 MARKET’S NEW NORMAL THIS YEAR’S CANADIAN HOME FURNISHINGS MARKET MAY HAVE BEEN LIGHTLY ATTENDED, BUT INDEPENDENT RETAILERS SHOPPING THE SHOW CLEARLY SAW THE NEED TO FLOOR BETTER-QUALITY GOODS, AND CONTINUED TO MOVE AWAY FROM IMPORTED GOODS, PARTICULARLY IN UPHOLSTERY. MICHAEL J. KNELL

ight attendance coupled with reasonably strong order- “The traffic patterns have changed,” said Christa writing has been declared the “new normal” by the Albrecht, vice president of sales for Canada and the Lmajority of furniture exhibitors at The Canadian Home eastern United States at case goods producer Magnussen Furnishing Market, this country’s only national furniture Home. “Eastern Canada drives the traffic here, but the industry event. majors are still supporting this market.” It can be reasonably argued that what happened in the Most observers believe that attendance at this market in halls of Toronto’s International Centre this past January recent years has been driven by the buying groups. Three reflected a retail marketplace that could be described of the four big groups – Cantrex Nationwide, Dufresne as lethargic. Retail Solutions Group and Mega Group/Brand Source – According to Statistics Canada, furniture store sales use TCHFM to launch their merchandising, marketing and totaled $9.53 billion in 2012, up a measly 0.8% over the promotion programs for the year. $9.45 billion rung up in 2011. The forecasts for this year The Quebec Furniture Manufacturers Association, don’t seem all that bullish. With luck, furniture stores will owners and operators of TCFHM, reported some 325 see growth of between 1.5% and 2% this year. companies exhibited at this market, about the same as Meanwhile, home furnishings stores – which sell last year. Of these, about 40 showed for the first time. The everything from floor covering to lamps and lighting, QFMA doesn’t publish attendance figures. decorative accessories and wall art – had sales of $5.69 The consensus among exhibitors is that traffic billion in 2012, a gain of 2.1%. At best, these merchants are continued to trend downwards, but that those retailers expected to see another 2% gain this year. walking the halls were there to do business. Among Exhibitors noted that traffic patterns for TCHFM have independent retailers, in particular, two buying trends changed in recent years, mainly because of what appears to gained momentum – the move to floor better-quality and be a growing desire on the part of many independent furniture better-priced goods, and the move away from imports, retailers from Manitoba, Saskatchewan, Alberta and British especially in upholstery. Columbia to attend the winter market in Las Vegas. Several factory executives said that many larger independents have evolved their buying strategies to the “People bought things that were point where TCHFM either isn’t as critical to their planning, unique, that were different from or only requires visits of one or two days, not the five days set aside just a few years ago. what they already have on their “For us, this market is more about eastern Canada,” floors. This was driven because of said Jason Harris, vice president of sales for contemporary upholstery specialist Stylus Made-to-Order Sofas, based in the sameness coming out of China.” Vancouver. “There seemed to be less traffic in the halls but – jason harris, stylus we still saw who we needed to see. Las Vegas is going to be well attended by Western Canada.” made-to-order sofas

26 > HGO merchandiser “For us, the show was good even though traffic was down. We are taking market share away from MARKET’S the importers. A lot of business is coming back to North America.” – faizel sunderji, dynasty NEW NORMAL furniture

wanted better goods because they don’t want to fight where no one wins.” Kevin Sisson, vice president and chief operating officer of bedding major Sealy Canada, said, “It was a good market. We did as much business as we did last year,” Several senior executives noted business for most adding retailers bought the company's show specials in independent retailers in most parts of the country was force. He also noted Sealy’s new zoned pocketed coil/gel tough in November and December, although sales perked hybrid My Cloud collection generated a lot of buzz. up considerably during Boxing Week. That uptick prompted “Traffic was sparse but the orders were there,” said retailers to go from “cautious” to “careful” when it came to Ronnie Mehta, president of Worldwide Homefurnishings, buying decisions, but they still needed strong reasons to an importer based in Toronto. “They were definitely looking buy. for better-quality goods. The volume they sell isn’t going “People bought things that were unique, that were up, so they need to get their key price points up.” different from what they already have on their floors,” Mehta also noted a disturbing trend: “A number of Harris said, pointing to a 46-inch deep sofa new to the dealers told us they were closing their doors because the Stylus lineup that received lots of attention. “This was furniture business isn’t as exciting as it used to be.” driven because of the sameness coming out of China. “For us, the show was good even though traffic was There was not a lot of talk about price.” down,” said Faizel Sunderji, president of Calgary, Alberta- Independent retailers also seemed to be focused on based upholstery maker Dynasty Furniture, which had 100 increasing their average ticket, vendors said. new fabrics and 20 new frames at market. “We are taking Solid-wood specialist BG Furniture came back to the market share away from the importers. A lot of business is International Centre after several years in an outside coming back to North America.” showroom, a move President Adam Hofmann said was Virtually no exhibitor expects 2013 to be a banner year more than worthwhile. at retail. Many pointed out there’s little in the news or in “We saw a lot more traffic other than our regular the economy to suggest this will be a good year. But the customers,” he said, adding retailers were demanding new attitudes expressed at market by retailers were not as goods, such as BG’s collection made with ash, an open- glum as might be expected. grain wood. BG also broadened its occasional assortment, “I would call it hopeful,” said Sealy Canada’s Sisson. adding a number of entertainment centres, sideboards and “This is the new normal. Retailers are seeking new ways similar pieces with Dimplex fireboxes. to grow their business, which explains the rising interest in “A lot of retailers told me the imports weren’t working specialty bedding.” anymore,” Hofmann said. “They told me, 'I need to trade Worldwide’s Mehta said, “The first half is going to be up,’ and ‘I need to re-balance my floor.' Retailers really a continuation of the last quarter of 2012, but I’m very seemed to like us doing unique things.” positive for the second half of 2013.” Independent retailers also were looking for simplicity, BG’s Hofmann summed up buyer attitudes this way: particularly when it comes to flowing the goods. For “They seemed to be more confident about their business in Magnussen, this meant strong, growing interest in its 2013, but not bullish.” Quickflex program, Albrecht said, which allows retailers The next edition of The Canadian Home Furnishings to bring in goods by the cubic foot, rather than buying an Market will be January 11 to 14, 2014. HGO entire container. “We were very happy with this market,” she said. – Michael J. Knell is the publisher and editor of the HGO “Retailers wanted better price points on their floor. They Merchandiser.

HomeGoodsOnline.ca < 27 WE ASKED>>> TCHFM market voices FOR THE FIRST TIME, HOME GOODS ONLINE CONDUCTED “MAN-ON- THE-STREET” INTERVIEWS IN THE HALLS OF THE INTERNATIONAL CENTRE DURING THIS YEAR’S TORONTO MARKET, ASKING EXHIBITORS AND ATTENDEES ABOUT THEIR IMPRESSIONS OF THE ONLY NATIONAL INDUSTRY EVENT OF ITS KIND IN CANADA. | BY ASHLEY NEWPORT Faisal and Karina Sunderji of Dynasty Furniture are seen HE 2013 EDITION OF THE CANADIAN HOME FURNISHINGS MARKET IS here in their space at this year’s Canadian Home Furnishings likely to be remembered because of the weather. Considering it was Toronto in January, Market in Toronto. exhibitors and attendees alike were astonished by the spring-like climate that awaited their arrival at the International Centre. For four days, some 300 or so exhibitors – including about 60 new faces – put their Tbest foot forward in the mad rush to persuade retail buyers and interior designers to buy. Home Goods Online stopped people at random and asked them about their market. Respondents included exhibiting manufactures and distributors, store owners, buyers and designers. Not surprisingly, their answers covered a broad spectrum, from proclaiming the market a smashing success with impressive traffic and eye-catching new pieces, to branding it lackluster, “same old same old,” offering little in the way of excitement and interest. Here's a sampling of responses.

Albert Marrache, president of Karina Sunderji Albert Marrache Phoenix AMD International. seeing more new players. We were Vice president President thinking the market would be Dynasty Furniture Phoenix AMD International shrinking, but new players are Calgary, Alberta Bowmanville, Ontario popping up every year.” “One of the things we noticed “Retailers are trying to find is that we can provide fashion more profit and are looking Simon Wasserlauf orientation at a unique level for different ways (to do that). Tapis Cosmos Carpets that’s not seen commonly in However, there’s less attendance Pointe-Claire, Quebec the marketplace. We have some and, unfortunately, we’re not “There are items we don’t fashion-forward yet still salable presenting enough ideas to make have that are available in the looks. We’re getting very good retailers come to the shows and States, especially some modern Valerie Stranix, chief responses to our new collection. see something new so they can furniture, nice leather goods and marketing officer of REV Sleep Corporation, producers of It has different seating that’s make more profit.” abstract area rugs, which the Natura World, Nex Gel, specially engineered for comfort. are available down there. Things Obusforme and Sommex It’s in a place where we’re not Valerie Stranix are different in Florida, and I’ve brands of mattresses. seeing a lot of other products in Chief marketing officer seen things in New York that are that same category. Rev Sleep Corp. also different. We’re lacking Toronto “In colours, we’re seeing a some things here. I did notice lot of grays and charcoals, with “We’ve got the weather on our some new designs in shag rugs.” forays into blues and navies and side this year, so it seems like we’re peacock blues. We’re seeing a seeing an increase in foot traffic. In Marcel Gorashio resurgence of comfort colours. the past, this show has been cursed President We’re seeing variations of gold, by the Saturday freezing rain Cotton House Toronto and shiny patterning on some of phenomenon. One of the things the accent fabrics. We’re seeing we’re noticing is the continuing “Thus far, I’ve seen some Simon Wasserlauf, president of clean, crisp, contemporary, strong presence of mattress interesting furniture, and the best Tapis Cosmos Carpets. uncomplicated lines.” manufacturers at the show. We’re stuff is the old world furniture

28 > HGO merchandiser What have you noticed most at the market? What’s the best thing you’ve seen, and what haven't Seham Marchese, vice president you seen that you'd like to see? of sales for Laila’s, a Toronto- Q based art supplier.

that’s starting to come back. I’d Khushwinder (Inder) Singh Marco Van Dam like to see more independents Divine Sleep Products President in our industry as customers. Etobicoke, Ontario TW Studio Ancaster, Ontario I’m seeing a lot of big-box stores “It’s a good market. Everybody’s displacing independents, and telling me we're still in a “The best thing I’ve seen is the small bedding stores we deal recession, but I’m not seeing it. a trend towards traditional with are going to the wayside, If your target market is good, furniture. Back to older styles. which is a shame.” you’re doing good. People But other than that, that’s about Jason Kent, marketing manager are still selling mattresses and all I’ve seen. The show’s been for Greenway Home Products, Seham Marchese buying mattresses. Some people slower; it’s become smaller. a producer of fireplaces, media Vice president of sales are lowering the prices like Buyers don’t buy as much. I’d like consoles and occasional furniture based in Guelph, Ontario. Laila’s Inc. crazy. If people would set up to see the markets pick up.” Mississauga, Ontario their prices according to good “This time around, the buyers are margins and profits, the market Paul Dromgole supporting the exhibitors and the would be doing better.” Buyer show, and seeing the products Heist London, Ontario and going through the booths, David Gelinas rather than just strolling along Marketing director “This is my first time, and it’s and looking. They’re actually ZedBed good to see new colours and Shawinigan, Quebec going into the booths and seeing swatches, and new, innovative the product and placing orders “The best thing I’ve seen is products. I’m a big fan of Pink on the spot, not saying they want ZedBed – seriously. It’s a small & Brown and their stuff, and David Gélinas, marketing to wait until the next show. market with a lot of Quebec the reproduction mid-century director for specialty mattress maker Zedbed. “One thing that’s missing manufacturers, so it’s good to modern products that we is, the exhibitors are not see a lot of new manufacturers specialize in. So far, the market shopping the colour trends. from the United States. There doesn’t appear to be missing Some exhibitors are doing the are new faces at the market. I anything.” same thing over and over, and would like to see more mattress furniture is now more fashion manufacturers. On my side, it Patrick Gabriel forward. They’re bringing in would be good to see Serta and Buyer the same product they brought Tempur-Pedic here. It would Park Home Furniture Hamilton, Ontario in at the last show, and a lot of bring more people in who are the buyers are complaining looking for mattresses.” “I was quite impressed with one about that.” of our mattress suppliers, Galaxy Ann Marie Hodder (left), Ann Marie Hodder Home Bedding. There’s a quilted buyer and E. Nurk Atkinson, manager of Notre Dame Home Buyer Jason Kent mattress that’s quite unique.” Furnishings in Lewisporte, Notre Dame Home Furnishings Greenway Home Products Newfoundland. Guelph, Ontario Lewisporte, Newfoundland Ken Easby “This year, the white-on- “We’ve been coming for years, Buyer white-on-white trend has and not a lot has changed. We Gold Reflections Fine Jewelery & Specialty Gifts really changed, and we’ve got see consistency, and we’re used Bowmanville, Ontario colour and big patterns and big to the system. We see the same damask prints, and even some suppliers, and all the suppliers are “So far, I haven't seen any one of the traditional stuff has come obviously doing well. It’s a positive particular favourite, but I come back. Not Baroque, but there’s experience that way. We’d like to here to have a general look. I’ve more detail in the furniture. see more suppliers come back to seen a few things I’ve enjoyed, What I haven’t seen is a lot of this show. Ashley and La-Z-Boy but no standouts yet. I’m looking Paul Dromgole, buyer and owner interactivity with technology, aren’t here anymore, so we miss for display cases, display units of Heist, a furniture retailer in smart phones and the like.” some of the big players.” and hockey paraphernalia.” London, Ontario.

HomeGoodsOnline.ca < 29 Do you know why and what What have you noticed most at the market? Patrick Gabriel and Pamela Spragg of Park Home Furniture What’s the best thing you’ve seen, and what haven't the Canadian consumer is buying? in Hamilton, Ontario. Qyou seen that you'd like to see? Home Goods Online does!

Michael Parsa Kenny Eom Michelle Peer Mattress Mall CEO Buyer Richmond Hill, Ontario Bethel International Sum of Designs CANADA COUNTS IS OUR INDUSTRY’S FIRST-EVER LOOK INTO THE MIND OF Markham, Ontario Whitby, Ontario “There are new looks, and people THE CANADIAN CONSUMER. WE ASKED MORE 7,600 OF CONSUMERS FROM are getting trendier and paying “There are a lot of transitional “I’d like to see more mid to high- Ken Easby, co-owner of Gold attention to details, whereas items on the way, and I’m finding end goods, and more stuff for COAST-TO-COAST AND ASKED THEM ABOUT THE FURNITURE, MATTRESS AND Reflections Fine Jewellery before it was business as usual. a lot of very strong crystals and rec rooms. There are no pool or APPLIANCE SHOPPING EXPERIENCE. & Speciality Gifts, located in They’re listening to the market. chandeliers. Traditional furniture fooseball tables or game-type Bowmanville, Ontario. For example, some of the and accessories are strong, and pieces for rec rooms, and there mattresses we’ve looked at are there are some one-of-a-kind are a lot of consumers looking addressing people’s needs as far pieces, like mirrored and stainless for those pieces for finished In this 40-page report, you will: as firmness, softness and even the steel furniture. You don’t see too basements.” HGO colour and texture of the fabric much variety of products at this • Learn where the Canadian consumer are concerned. show, and that’s a problem here. plans to shop for furniture, mattresses “I know I can’t see everything I would hope to see more variety and appliances here, since this market covers of products in the future.” a lot of categories, but I was Learn how much the Canadian consumer hoping to see more Canadian Christina Springer • Michael Parsa of Mattress Mall, manufacturers. I’m also seeing Buyer expects to pay for furniture, mattresses Canada Counts Snugglers Furniture Richmond Hill, Ontario. a decline in traditional wooden A SURVEY OF CANADIAN Waterloo, Ontario and appliances CONSUMER BUYING furniture, and people still want INTENTIONS FOR FURNITURE, that. I’m seeing a big decline “I’ve really enjoyed the MATTRESSES, MAJOR Learn about her preferred store type; and, APPLIANCES, TELEVISIONS in that kind of furniture at this contemporary lines and the Christina Springer of Snugglers • AND OTHER BIG TICKET show.” different types of woods. It’s nice Furniture in Waterloo, Ontario. Learn about the important factors HOME GOODS and refreshing. I’ve seen nice • Luc Crawford entertainment units and pieces influencing the buying decision Buyer with really nice, contemporary Luc Crawford Design lines. Those lines are what I like. Ottawa, Ontario It’s a very good cross section, and Every Canadian manufacturer, distributor Luc Crawford, owner of Luc “The trends are in keeping there’s a lot of product out there, Crawford Design in Ottawa. with the demand for recycled which is really nice.” and retailer will findCanada Counts to be products; a lot of recycled wood, a lot of refurbished antiques. Karen Burnett an invaluable planning guide in this tough Northern Expression Most lines are slightly traditional, Karen Burnett of Northern Haliburton, Ontario but there are extremely avant- Expressions, Haliburton, economy. You simply can’t be without it. garde pieces, and retro is coming “I'm seeing a lot of new retro Ontario. back as well. products, and things that are “I’d like to see more fashion- maintenance-free are big. The forward finishes and products. market is diversifying. We carry CANADA COUNTS I’m finding a lot of suppliers are high-density recycled plastic, The report covers the nation as a IS AVAILABLE FOR Kenny Eom, CEO of lighting, selling the same product, and and there’s no other place in whole, as well as chapters on each of accessory and metal furniture the only difference is the price. our marketplace that has our the major regions: Western Canada; $1,500 importer/distributor Bethel I know the Toronto market is product.” PLUS H.S.T. International. competitive, but it should be Ontario; Quebec and Atlantic Canada. It CLICK HERE more like High Point and Vegas. Michelle Peer and Donna Price, opens with an introductory essay on the TO LEARN MORE. There needs to be more high-end design consultants for Sum of products as well.” Designs, Whitby, Ontario. current state of the Canadian consumer.

30 > 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 < 31 Dreaming BIG VALERIE STRANIX AND HER TEAM ARE BUILDING A NEW CANADIAN MATTRESS POWERHOUSE; BASED ON FOUR DIFFERENT BRANDS COVERING ALL OF THE CONSUMERS’ MOST DESIRED AND DEMANDED FEATURES, BENEFITS AND PRICE POINTS. | MICHAEL J. KNELL

Chris French (left), VERY FURNITURE RETAILER KNOWS – then the economy stalled forcing another change chief operating officer whether he’s an independent store owner- in the conversation – one where price re-entered of Rev Sleep, Valerie operator, manager of a sleep shop, or a the discussion. Consumers still wanted all the Stranix, chief marketing officer; and, Ed buyer for one of the major chains – how things they were getting, but they wanted them at Farquharson, executive Evitally important the mattress category is to his substantially lower prices. vice president of sales; organization’s top and bottom line. The usually It’s in this competitive environment Valerie are seen outside white stuffed rectangle traditionally produces the Stranix, chief marketing officer, and the senior company’s permanent highest average gross margin of any product category management team – including Chris French, chief U.S. showroom in the World Market Center on the floor. operating officer, and Ed Farquharson, executive vice in Las Vegas. Acquiring This makes managing the assortment on the president of sales; the brain trust leading what was Natura World in the first floor to ensure the presentation covers off as many then called Spring Air Sommex Corporation (SAS), quarter of 2012 gave of the customer’s needs and wants as possible now Rev Sleep Corporation – found themselves in the Canadian mattress critical to a healthy bottom line. Those wants the autumn of 2011. maker an entree into the American market. and needs, particularly in this economy run the At the end of 2011, the industry has suffered gambit from comfort and styling to price and then its fourth consecutive year of decline. Retail sales, back again. which peaked in 2008 at $1.80 billion, had fallen For the decade proceeding the grand recession to $1.60 billion, according to data published by of 2008, the mattress industry changed the tenor Statistics Canada. Meanwhile, manufacturing of its conversation with the consumer, something shipments for 2011 were $741.3 million, a far cry that it hadn’t been able to do in the prior century. from the $922.2 million shipped in 2008. (It should It was all about getting a good night’s sleep. But be noted shipments include those for not just the

32 > HGO merchandiser <<

retail/replacement market but for the contract, mattresses that allows us to address this important hospitality and health care markets as well.) and still growing segment of the market as well as a Stranix, French and Farquharson decided they the production of an exciting array of pillows and needed to rebuild SAS into a Canadian mattress top-of-bed items.” manufacturer capable of competing effectively in In addition to its state-of-the-art equipment the new realities of the post-recession economy. and single-needle quilting capability (something While they didn’t have to start entirely from the company didn’t have), the acquisition also gave scratch – the company was, and probably still is one SAS entry into the U.S. market for the first time in of the two largest Canadian owned and operated its history. mattress manufacturers (the other being Springwall “Natura has a strong presence in the U.S. Sleep Products) – they needed to revitalize the market. There is a loyal customer base there and we stable of brands they were bringing to the market. look forward to building the business with them,” This, in turn, would allow them to not only expand Stranix says. “However, Natura also has a presence in Canada, but into the United States and beyond in Canada and it’s a brand that resonates well with as well. independent retailers in this country. There is also The rebuilding process began when SAS acquired tremendous potential with Natura and NexGel.” the North American rights to the ObusForme That strength prompted SAS to open a mattress brand in 2010. Previously, the rights were permanent showroom in the World Market Center held by Simmons Canada but after it was re-acquired last summer and exhibit at the semi-annual Las by the Atlanta-based Simmons Bedding Company a Vegas Market, which over the past couple of years few years ago, the line wasn’t aggressively promoted has positioned itself as the North American bedding in the marketplace. industry’s leading trade event. SAS also used the Stranix points out ObusForme, which was summer 2012 edition of the market to introduce its created in Toronto in the early 1980s, “is among ObusForme mattress brand to retailers in the U.S. the most recommended brands among healthcare At the 2013 Canadian Home Furnishings practitioners today, giving consumers terrific value Market, the brand introduced a refreshed and from a trusted group of experts.” refocused line of mattresses; a retail pillow display; This is the company’s “good for your back” brand and, a touch/feel display to make educating the and is continuing to develop a full assortment consumer an interactive experience. believing it will find a powerful niche among Stranix noted SAS, now Rev, parted ways with consumers throughout North America. Earlier this Spring Air in mid-2012, choosing to concentrate on year, a number of new tickings and components were its core group of brands, which includes Sommex, added to the Obusforme brand including Comfort the premiere line of mattresses sold in Quebec. Wave, a gel and latex zoned topper that will be “Sommex is our heritage brand, which we build in offered on a number of models. Trois-Rivières,” she says, “Sommex encompasses the The next step in the rebuilding process was to essence and culture of Quebec with its focus on up- acquire Natura World – which has been producing to-date home fashion looks and quality of design naturally healthy, wool-filled and wool-covered and construction.” mattresses, top-of-bed and pillows since 1995 – out First launched in 1974, Sommex will now be of bankruptcy in the first quarter of 2012. Along marketed to retailers across the country. with latex specialist’s Cambridge, Ontario factory, The final piece of the puzzle was to create a new SAS also acquired its luxury NexGel brand. corporate identity. After months of reflection, the “The acquisition of Natura delivered a number company adopted Rev, which is derived from the Rev is built around of key elements,” Stranix explains. “This is a top-end French noun for dream – rêve. four brands: (seen below) Natura World brand that gives our company a product line-up with Stranix notes the new corporate name reflects NexGel, ObusForme offerings at all points of the pricing spectrum. It is the company’s basic belief that a supportive mattress and Sommex, its also gave us an industry leading array of specialty fuels a healthy, energetic and vibrant life. heritage brand.

HomeGoodsOnline.ca < 33 “We have a strong team of professionals who can deliver the product on time while getting new product to market quickly. We will continue to focus on innovation while continually striving for greater efficiencies.”– valerie stranix

“Rev was born out many years of making continually striving for greater efficiencies. With this mattresses and bedding, studying and learning how mandate, we can offer greater value at a wide range of different bodies respond to a variety of support price points to our network of retailers.” systems and we’re confident our 2013 products are as Unlike the years before the recession struck, when tough as a pro athlete’s performance gear, consistent consumers showed a willingness to spend more and able to go the distance when you need it the money than ever before on a new mattress, recent most,” she said when announcing the new name this years have seen the industry’s average sales-ticket past January. shrink considerably. It’s a trend Stranix acknowledges Moving forward, Stranix says Rev will be and wants to see reversed. positioned as a “premier mattress manufacturer with “We do see the trend towards price compression. a stable of significant brands, which we will continue Advertised retail price points have been significantly to supply to the market place and that meet the lower over the past year or two than in the past,” she needs of our customers.” says. “We are trying to help the situation by offering However, she also acknowledges the goods times unique sleep items with demonstrable features that haven’t come back yet. will resonate with consumers and help increase “We see a crowded marketplace with many awareness of the importance of sleep. One important manufacturers fighting it out for shrinking retail element of the Natura deal was its ability to deliver floor space. It’s a tough go for many who can’t meet the higher price point product.” the demands of today’s whirlwind pace,” she says, Growth will come, Stranix believes. Rev brands Valerie Stranix is adding she’s confident Rev has a solid game plan that are currently on the floor with a broad cross seen here at this should serve it well, especially as the economy – and section of this country’s leading national retail year’s Canadian consumer demand – recovers. banners including Sleep Country Canada, Sears Home Furnishings “We have a strong team of professionals who Canada, Leon’s Furniture, Brault & Martineau, and Market in Toronto with can deliver the product on time while getting BrandSource Canada, among others. The company the company’s new introductions under the new product to market quickly,” Stranix remarks. also has a following among independent retailers Natura World brand. “We will continue to focus on innovation while such as Stoney Creek Furniture and Edmonton’s Rogers Sleep Shop, a NexGel gallery. The company is also working with a number of online retailers. “We plan on investing in our U.S. market and opening up channels internationally. We have a global opportunity with our brands,” Stranix says, adding, “We are currently working to develop our digital side, which will support our retailers – both brick and mortar and online.” Stranix believes Rev is off to a good start with its four brand strategy and that over the coming few years, the company will be Canada’s premier mattress manufacturer.

EDITOR’S NOTE: Canada’s mattress industry saw its first uptick in 2012 as manufacturers’ shipments were up 3.2% to $764.7 million and retail sales reached $1.60 billion, a year-over-year gain of 6.7%. HGO

– MICHAEL J. KNELL is the editor and publisher of Home Goods Online.

34 > HGO merchandiser <<< ON RETAIL

SEARS CANADA: Breaking the brand promise ANYONE WHO READS A NEWSPAPER KNOWS SEARS CANADA ISN’T

DOING WELL. THIS FORMER INSIDER POINTS OUT THE ONCE-GREAT  An exterior view of RETAILER HAS SOLD OFF OR DILUTED NEARLY ALL THE BRANDS THAT the only new Sears MADE IT A FORCE TO BE RECKONED WITH. IN SHORT, SEARS FORGOT Home store to be unveiled in the past ITS BRAND PROMISE TO THE CONSUMER. | BY ALIXE MACRAE few years. Located in Ottawa’s Pinecrest Shopping Centre, it’s hat makes a store special? The brands the web site About.com, over 362 billion Oreos have the largest in the it offers? The service it provides? Its been sold since it was introduced in 1912, making it network with 78,000 Wprices? Its selection? the best-selling cookie in history. square feet of space. It After spending most of my adult life in retail, I Another famous brand is Tide, which apparently features some 400 SKUs can confidently say it’s all about the brand. A store’s has more than 30% of the domestic liquid-detergent of major appliances service can be trumped and prices are a race to the market, and a world-wide market share of between as well as 50 SKUs of bottom, especially in today’s economy. Selection 40% and 44% in the categories in which it competes. mattresses – the largest is also a tough one to win on. Someone can always And it never competes on price. such assortments in open a specialty store, and that advantage will go the Consider the power of several other brands: any single Sears way of the Dodo bird. • Wikipedia recently reported that Dove soap was the Canada location. But brands have a power all their own. most trusted brand in India in 2011. It also has more For example, Oreo – touted as “milk’s favourite than 13 million “likes” on its Facebook page. cookie” – is now the best-selling cookie in the • What about President’s Choice, the house brand People’s Republic of China, even though their for the Loblaw group of supermarkets? The brand version is supposedly less sweet than America’s, accounts for 18.5% of the company’s revenue, where it’s also the best-selling cookie. According to compared to 11% for the competing national

HomeGoodsOnline.ca < 35 Sears – on both sides of the border – is dying for a simple reason. They forgot their brand promises. That’s the lesson every furniture, mattress and appliance retailer in the country, regardless of how big the store is or how many outlets are in the network, has to understand.

brands. No wonder its tag line is “worth switching Trusted Brand” and the “Brand with the Highest supermarkets for.” It also has more than 212,000 Expectations” in 2007. It's also the brand both “likes” on Facebook. NASCAR and the Do It Yourself (DIY) cable-TV This brings us to Sears. No other retailer in network use. North America has exemplified the concept of “the Yet, it appears Sears Holdings Chairman and store as brand” more forcefully over the past few CEO Edward Lampert intends to sell Craftsman decades. What’s more, it was the stable housing tools in Costco stores. How dumb can you get? some of the most trusted consumer brands. In fact, It appears you can get very rich and be very Sears dominated the market in the categories these dumb. Craftsman is a great brand and was always brands served. Among them: Craftsman tools, associated with Sears. It wasn’t that long ago that Kenmore appliances, Allstate Insurance, DieHard sales associates selling Craftsman product were paid batteries, Toughskins kids clothing, EasyLiving and largely on commission, and some of them earned WeatherBeater paints. Each of these was unique. three times more than their store managers. Where are they today? Not long ago, I went to the It was brands like Craftsman that built Sears into Sears Canada outlet in Toronto’s Yorkdale Shopping a powerhouse with a loyal customer base. Centre – one of the premiere shopping destinations It’s no secret that I used to work at Sears, and still in Canada. I was looking to buy a hammer. Sears has have friends who do. But reading what the analysts been selling hammers under the Craftsman brand for are now saying is discouraging, to say the least. Here Mattresses has been decades. But on this trip, I couldn’t find one and no are a couple of examples: designated a ‘hero’ sales associate approached me. “Sears went online in 1997, but their entire category by the I then went to Canadian Tire, where there were at culture is essentially broken,” Cheryl Hanna wrote leadership at Sears least 40 different styles of hammers on display. on Customerlink.com this past February. “It’s been Canada, meaning this According to Wikipedia, Craftsman rates second suggested that Sears re-invent itself to focus on men. one product category only to Waterford Crystal in terms of perceived After all, Craftsman tools have always been a male where they intend to quality. So, why does Sears Holdings (and, by Christmas present staple, for all those weekend lead the market across extension, Sears Canada) seem to be abdicating this home chores. Experts say get rid of the women’s country. Seen here is the brand, which according to the financial industry web clothes and jewelry and stock up on Lands’ End refurbished mattress site Seeking Alpha, still has 33% of the hand tool merchandise, which appeals to men. Invest in some department at the store in market and 14% of the power tool market? By the expert staff training, raise salaries to attract the Newmarket, Ontario. way, Craftsman was named both “America’s Most best sales personnel, concentrate on the company’s culture and rebuild an organization that once dazzled shoppers across the United States.” Then there’s Kaitlin T. Gallucci at Talentzoo. com: “There is no reason for anyone to go to a Sears’s store.” Ouch! “His (Lampert’s) strategy is consistent – every year he gets rid of assets. He monetizes good assets,” Howard Davidowitz, principal of the retail consulting firm Davidowitz & Associates, told narse.org, the web site of the National Association of Retired Sears Employees in March. “If (Sears Holdings) hadn’t sold its assets, it would be in bankruptcy. That’s what’s keeping them in business. They are not fixing up stores or opening stores. They just sell assets and cut costs.” This also is true of Sears Canada. The profits in its most recent fiscal year can all be attributed to the sale of leases on three premium downtown locations – in Vancouver, Calgary and Ottawa – back to the landlord. Moving into those spaces will be Nordstrom’s first three Canadian outlets.

36 > HGO merchandiser Another Sears’s brand, Kenmore, is still a powerhouse. Manufactured by the big appliance makers, Kenmore models often boast exclusive features not available on the so-called name brand versions of the same product. In 2007, Kenmore’s market share was estimated at 29.5% – miles ahead of the other brands. Sadly, that’s down from 40% a few years earlier. Kenmore once encompassed small appliances – toasters and the like – but branding meant higher prices, so it was discontinued. With proper promotion and sales training, I believe branded small appliances could have generated higher profits. Most people have forgotten that until it was sold in 1993, Allstate Insurance was a very profitable division of Sears. (Allstate generated US$296 million in 2010, according to the Insurance Bureau.) It was a great brand that has gone on to make big profits for both, those brand promises – both with consumers  Sears Canada is someone else. This was another case of short-term and suppliers – were broken. The result is pretty pulling out all the stops profits leading to long-term losses for Sears. Sure, much what we’ve been reading in the news of late. to defend its position as Allstate has seen its ups and downs – especially with It’s been suggested that Target is the next big Canada’s largest retailer the ongoing weather-related tragedies in the U.S. – competitive challenge to Sears in Canada. I don’t of major appliances, but its overall performance is very strong. totally buy into that. I recently visited one of Target's including revamping the DieHard has been the dominant brand in car new stores in Toronto and can’t say I was all that majap departments in at batteries for a long time. It captured market share impressed. While Target offers a “price match least four of its mainline because Sears promised a DieHard battery “would guarantee,” all that really means is they will match department stores last forever” – that is, for as long as the customer competitors advertised prices. in southern Ontario, kept the car it was originally installed in. This Target has developed its own line of lamps and including this one in brand promise eventually was discontinued because home accessories, so it’s difficult to compare this line Newmarket. consumers began keeping their cars longer. Even so, with others. My immediate impression is that, unless it’s still a powerful brand. Try entering DieHard in you’re buying kids’ clothing, their prices are too high. the Google search bar. Wal-Mart is cheaper. If I were to grocery shop at Several years ago, Sears sold its hugely profitable Target, I would be armed with everyone else’s flyer. credit card division. What’s not well known is that At the end of the day, Sears – on both sides of the credit card propped up the company’s very the border – is dying for a simple reason. They unprofitable consumer electronics business (which forgot their brand promises. That’s the lesson every lost some $8 million a year in the 1970s). For some furniture, mattress and appliance retailer in the reason, Sears never switched out the space in favour country, regardless of how big the store is or how of profit-generating categories like Craftsman tools. many outlets are in the network, has to understand. Sears also owned two of the most profitable Sears isn’t as successful as it used to be because it brands of paint, EasyLiving and WeatherBeater. isn’t Sears anymore, at least the one the consumer Both were made by Sico, a Canadian manufacturer. remembers and wants. (I know because I was the paint buyer for nine The decline of Sears is bad for the home goods months.) As training taught us, paint should be only industry. It still is among the top four Canadian one-third of the total ticket, because people need sellers of furniture, mattresses and major appliances. brushes, drop cloths, rollers and a bunch of other A lot of furniture manufacturers, for example, rely things when they start a renovation project. on Sears for cash flow and steady orders. If that Back in the 1980s, a Canadian company retooled changes, those suppliers could be in trouble. its entire plant because they had the exclusive Can Sears, especially Sears Canada, come back? contract to make Sears paint. With dollar signs in If senior management doesn’t run out of time, it’s their eyes, the factory let all of their other accounts possible. But they have to remember and keep their go. Then, at renewal, Sears found someone who brand promise. HGO would make it cheaper. All of a sudden, the company was left with a paint factory they couldn’t use. – Home Goods Online’s most widely read blogger/ Today, Sears is suffering. At one time Sears was contributor, Alixe MacRae is one of this country's not only a brand unto itself, it was the home of some best-known merchandisers. She has held senior of the most demanded brands in the marketplace. posts at such well-known Canadian retailers as Stoney But over time, whether out of greed or arrogance or Creek Furniture, Sears Canada and The Bay.

HomeGoodsOnline.ca < 37 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 38 > HGO merchandiser