HGO Merchandiser Fall_Winter 2015-2016

Michael Knell’s

HGO merchandiser HomeGoodsOnline.ca

FALL/WINTER 2015-16

Volume Four, Issue 5

applegate & james KEEPING RETAIL FUN

Canada’s mattress industry: a slow recovery

C.R. Plastics: green and stylish

Making 2016 the BEST YEAR EVER

CONTENTS

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SOCIAL SCENE FURNITURE BANK The Three S’s have passed into the his- WOWS WITH ITS ANNUAL tory books. The Simmons, Serta and CHAIR AFFAIR

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16 22

EDITOR’S LETTER THE CHANGE IS AFOOT

Sealy triad are thing of the past. Of all the things I’ve learnt while prepping Part One of HGO’s report on the state of Canada’s mattress industry – which can be found elsewhere in this issue – this was the one fact that really brought home how much the industry has changed, particularly over the past decade. Thoughts from HGO’s editor, Michael Knell

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SPOTLIGHT KEEPING THINGS COLOURFULLY, STYLISHLY GREEN

Green has been a powerful concept across Canada’s furniture industry for some time now. While most everyone is — thankfully and fortunately — jumping on the environmentally friendly bandwagon, some companies have been producing sustainable pieces that put the earth first for quite some time. An emerging power in the casual and outdoor furniture sector, C.R. Plastic Products is one of them. It was started that way 21 years ago. Our report is by Ashley Newport.

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PROFILE KEEPING IT FUN

For someone transiting out of homelessness or escaping an abusive situation or fleeing a crisis, furniture is more than some to sit and sleep on or eat at. It represents the very essence of a normal life, something the Furniture Bank is working hard to provide. Ashley Newport reports.

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BY THE NUMBERS THE MATTRESS INDUSTRY: A SLOW RECOVERY

There’s a lot we don’t know about Canada’s mattress industry. In fact, no one can say just how many manufacturers there are. But the data shows the industry hasn’t bounced back from 2008’s infamous recession. In Part One of our series, we provide an overview of manufacturing and a look at the apparent market. Our report was written by HGO editor Michael J. Knell.

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INDUSTRY CALENDAR & ADVERTISERS’ INDEX

ON RETAIL MAKING 2016 THE The old saying goes, “if you love what BEST YEAR EVER you do, you’ll never work a day in your life.” No one embodies that idea more than Jim Ordowich, the owner Applegate & James Furniture, who often describes himself as the Ronald McDonald of furniture – at least in Haldimand County. He keeps the spark alive with videos, news segments and chocolatethemed events and more. And, it doesn’t seem that he’s going to slow down any time soon. Our profile is from regular contributor Ashley Newport.

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Great businesses aren’t owned and operated by people who got lucky. They’re owned by people who think about their business and plan every move they make. They learn to get rid of the rosecoloured glasses and look at things with clarity. Donald Cooper believes a retailer’s success is, in large part, driven by his ability to plan and implement new ideas and not just sell product on the floor. From contributing editor Donald Cooper.

ON OUR COVER: Jim Ordowich, owner of Applegate & James believes that is you love what you do; you’ll never work a day in your life. As he told Ashley Newport, that’s the approach he’s been taking since he first opened his Caledonia, Ontario furniture store in 1989.

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EDITOR’S LETTER

HGO merchandiser MICHAEL J. KNELL

FALL 2015/WINTER 2016 • VOLUME FOUR, ISSUE 5 ISSN 2291-4765

www.HomeGoodsOnline.ca

The change is afoot The Three S’s have passed into the history books. The Simmons, Serta and Sealy triad are thing of the past. Of all the things I’ve learnt while prepping Part One of HGO’s report on the state of Canada’s mattress industry – which can be found elsewhere in this issue – this was the one fact that really brought home how much the industry has changed, particularly over the past decade.

A

S MA N Y O F YO U K N OW, I ’ V E B E E N W R I T I N G A B O U T T H E

furniture, mattress and major appliance industries for the best part of three decades now. We’ve very accustomed to the idea that is a very stable industry, sales go up and down, styles come and go, interest rates vary but nothing ever really changes. Once in a while, someone will go bankrupt. Once in a while, someone new will enter the market. But, it seems to me very long period of stability is coming to an end.

There’s change afoot. It wasn’t that long ago that the mattress industry was made up of networks of independent franchise owners who operated under license but over the past decade it has become very corporate. In fact, the industry is controlled by just two large corporations each of which owns two of the four most popular mattress brands.

I’m not suggesting for a moment this is a bad thing. It’s a reaction to the realities of the world economy when it comes to competing for the consumer’s attention and disposal dollar. It’s also about being able to compete for manufacturing inputs and being able to buy sufficiently in bulk to get the best price (the steel producers and the foam pourers do have others they can sell).

There is no way of predicting what the long term impact of the industry’s new structure will be. What is certain is there will be even more consolidations as the years go by. It’s also clear there are similar changes taking place at retail, although these will be more difficult to quantify. So, stay tuned. We’ll learn about it together.

PUBLISHER & EDITOR Michael J. Knell mknell@homegoodsonline.ca MARKETING DIRECTOR Corrie-Ann Knell marketing@homegoodsonline.ca MANAGING EDITOR Anthony E. Bengel tony@homegoodsonline.ca CONTRIBUTORS Donald Cooper Ashley Newman ART DIRECTOR Samantha Edwards Sam I Am Creative samiamcreative@bell.net IT DIRECTOR Jayme Cousins In House Logic websmith@inhouselogic.com PUBLISHED BY Windsor Bay Communications Inc. P.O. Box 3023, 120 Ontario Street Brighton, Ontario K0K 1H0 T: 613.475.4704 F: 613.475.0829 Michael J. Knell, Managing Partner PUBLISHERS OF

HGO This Week Home Goods Online.ca

© 2016 Windsor Bay Communications Inc. All rights reserved.

Windsor Bay Communications does not accept 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.

AFFILIATE MEMBER

Michael J. Knell Publisher & Editor mknell@homegoodsonline.ca

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SPOTLIGHT

Keeping things colourfully,

stylishly

GREEN T Green has been a powerful concept across Canada’s furniture industry for some time now. While most everyone is — thankfully and fortunately — jumping on the environmentally friendly bandwagon, some companies have been producing sustainable pieces that put the earth first for quite some time.

C.R. Plastic Products is one of them.

It was started that way 21 years ago.

BY ASHLEY NEWPORT

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HE ENVIRONMENTAL MOVEMENT HAS BECOME

a vital force for change over the past couple of decades. It principles are becoming deeply ingrained into society’s attitudes and expectations. Indeed, as this article went to press there were just days left until the opening of the Paris Climate Change Conference, sponsored by the United Nations and in which Canada would be a full participant for the first time in almost a decade.

But it wasn’t all that long ago people were mindlessly tossing discarded plastic into landfills and quick-service restaurants were serving chicken nuggets in thick, non-biodegradable Styrofoam containers. It was during this time – that is, the early 1990s – Jamie Bailey founded the Stratford, Ontario-based C.R. Plastics Inc., a company dedicated to manufacturing furniture from recycled plastic.

His goal was a simple one: to produce chic, functional pieces that not only complimented a home, cottage or yard, but also kept plastic out of landfills and minimized the felling of trees.

“The company started 21 years ago,” Ted Scott, CRP’s vice-president of sales and marketing said during an interview with the HGO Merchandiser. “Our president and

Opposite: C.R. Plastics flagship Adirondack chair in yellow – in Canada it’s most often called a Muskoka chair. It’s part of the company’s Generation collection. Above: The company’s Stratford collection chair and sofa with white frame and indigo blue Sunbrella fabric with a 48-inch coffee table.

co-founder was a wood worker in the Stratford area and he was frustrated with some of the shortcomings with wood. Being an environmentalist, he started looking at other materials and discovered the European process of recycling plastic. He started [the business] in his garage and made an Adirondack (or, more properly in Canada a Muskoka) chair made with plastics he formulated from recycled materials.”

The process to create the furniture is complex (Scott says certain aspects are still and will remain a trade secret), but the pieces are all made with recycled products – no new materials are used.

“We take plastic that’s destined for a blue box or landfill,” he explains. “[We use] high-density polyethylene, grind it up, liquefy it and add upholstery and colour. In Canada, every lid on a water bottle is high-density polyethylene. It’s also found in orange juice containers, diaper boxes, etc. We buy it and grind it all up.”

When Bailey started CRP in 1994, the importance of recycling was just beginning to take hold but hadn’t yet become the commonplace practise it is today. “[It started] at the beginning of recycling for sure,” says Scott. “In the 90s, it was a disposable world. Everything went into a landfill or a dump.”

While it might seem difficult to essentially sell what some consider refurbished garbage, it’s not as hard — especially now — to sell sustainability. What remains a challenge (at least in theory) is producing something that’s not only green to the core, but also fashionable and unique. On that front, CRP succeeds and boasts an extensive product line that goes beyond the cottage staple that is the colourful Adirondack chair.

C.R. Plastics is expecting to move into this new 300,000 square foot manufacturing facility and head office in Stratford, Ontario sometime before the end of 2015.

The company, which has the deep-seating and upholstered Stratford chair, rocking chairs, dining chairs, stools, pub chairs, tables, benches, accessories, a heat powered lamp and a Friendship Bench (more on that later), has built what’s almost a world-wide retail network, and boasts several outlets in the Greater Toronto Area – its own backyard – alone. CRP specialises in distinctly one-of-a-kind outdoor furniture that taps into both social and aesthetic trends. It also helps people find alternatives to the dwindling amount of high quality wood outdoor available – particularly in the middle to high-end price points.

“Before, you could buy a maple or oak piece,” Scott says.

“Today, you don’t get that wood anymore. So, if you’re looking for outdoor furniture, the cedars and redwoods are protected materials. Years ago, if you wanted that kind of furniture, you could get it. Jamie wanted to replace that } HomeGoodsOnline.ca

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Left: The company’s unique robot-driven Adirondack assembly.

Right: A view of CR Plastics’ advanced mold extrusion process that leaves its plastic lumber with a warm, grain finish.

“Our product is premium and customers will spend a little more time in the showroom with our retailers. We want to provide top quality product with green and recycling in mind.”

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demand by using a reusable resource. He made a dent in the amount of plastics that go to waste. We recycle the equivalent of seven million milk jugs a year. We have an initiative to recycle water bottle caps and we have access to 1.8 million pounds for sourcing and that’s just from Ontario.”

While the idea was always solid, it was hard for just two people — Bailey and his partner (in both business and life) Trudy Wiseman — to grow the company on their own. According to Scott, the couple initially drove their merchandise around Canada and the United States, showing it to potential retail partners. They worked out of their home before upgrading to a 10,000 square foot facility about 10 years ago.

Then, about five years ago, the pair decided they needed even more help if they wanted to continue growing.

“They needed more people and more automation,” Scott explains.

To help raise awareness and potentially lock down some funding, the couple went on the highly popular CBC reality show Dragon’s Den in 2010.

While the Dragons were impressed by the concept and showed interest in helping, the couple ultimately decided not to go through with offer they received. “Nothing happened from a financial standpoint, but it brought huge awareness to our company on a national level,” Scott says.

Shortly after appearing on the show, many people — including professionals skilled in sales, marketing and financial management — got in touch with the couple and offered their talents.

“Since we formed our new pillars of management, we’ve gone through extreme growth,” Scott says. “We’re going from 40,000 square feet to 300,000 square feet in Stratford on 38 acres of property that we’ve purchased and we should be in in December. We’ve just been so busy.”

Since its beginning CPR has had a presence in the U.S., mainly because in the warmer states — Florida, particularly — are full of people who need chic, vibrant outdoor furniture and need to be able to buy it all year round.

“We’ve shipped to the U.S. from the beginning because a lot of business was in the southern states,” Scott explains. “We also sell to Europe. Our business is about 50% U.S., 40% Canada and 10% international, primarily Europe. Our business is mainly with specialty retailers, mostly brick and mortar, ‘mom and pop’ shops. We also have a close association with buying groups and work closely with Cantrex Nationwide. In Toronto, you can easily find a high-end outdoor furniture retailer who carries our product.”

As to why they continue to target smaller retailers, Scott says it’s just keeping with the original business model.

“That’s where our business started and it’s a natural fit for us,” he points out. “We have over 1,000 retailers in Canada and the U.S. – specialty retailers add value and customer service. Our product is premium and customers will spend a little more time in the showroom with our retailers. We want to provide top quality product with green and recycling in mind. We’re being careful as we grow and our international business is growing in leaps and bounds. We’re selling in France, the UK, Belgium and Switzerland and we’ll continue to grow. We recently got an inquiry from Belarus and we’re available in Bermuda and the Bahamas.”

And while CRP specializes in — fittingly enough — natural furniture that belongs in, well, nature, its products have also piqued the interest of mainstream retailers who focus on indoor furniture.

“We’re a part of Cantrex and they have over 1,000 members and most of them are not in the outdoor category. There’s always something a retailer can bring in to be competitive and we have indoor places looking into the outdoor category. Outdoor recycled furniture is more than just Muskoka chairs. There’s a huge array of products that an [indoor] furniture store would show interest in,” he says. }

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The Addy dining group including arm chairs and pedestal table in lime green.

The company’s St. Tropez lounge chairs around its 42-inch rectangular cocktail table. All are featured in chocolate and beige.

Most of CRP’s assortment can be described as uniquely chic and certainly tosses aside the oft-held notion that outdoor furniture is plain, ugly and utilitarian – that it’s just a table or chair that can be tossed around like a ragdoll during a harsh thunderstorm or can be rolled out in the dirt and grime without much consequence. These days, outdoor furniture is, in many ways considered an extension of the home’s indoor aesthetic. It can be large, comfy and upholstered in bold and on-trend fabrics.

“Our Stratford collection is distributed by some indoor furniture companies,” Scott says.

Seen here are the members of C.R. Plastics senior manager group (in front, seated from left to right): Bruce Ballantyne, vice president of finance; company co-founder Trudy Wiseman; company founder, president and chief executive officer Jamie Bailey; and, Ted Scott, vice president of sales and marketing. Standing are: Petros Kontos, operations manager (left); and, Brad Girvin, maintenance and facilities manager.

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The Stratford collection is indeed stylish, boasting a dark finish and bold upholstery that’s available in five different colours. The line offers a chair, a love seat, a sofa, a coffee table, side table and signature cushion. For homeowners who want to lounge (or rather, retailers who serve homeowners who want to put a chaise lounge beside their pool or piece of the lake), the St. Tropez collection offers both living and dining pieces.

In 2016, the brand will be launching their Bay Breeze collection.

“It’s a coastal deep seating collection with blue, aqua and white colours,” is how Scott describes it, adding he believes, “It opens up the door to a different kind of dealer.”

While did hasn’t participated recently in the Canadian Furniture Show, C.R. Plastics maintains a full market schedule. It has two permanent showrooms in the U.S. – one in Showplace which opens twice yearly for the High Point Market with the other in America’s Mart for the semi-annual Atlanta International Gift & Home Furnishings Market. They also participate in the International Pool, Spa & Patio Expo held annually in Las Vegas; the International Casual Furniture Market, held each September in Chicago’s Merchandise Mart; and, Spoga+Gafa, the European outdoor furniture show held annually in Cologne, Germany.

“Spoga is the biggest casual show in Europe and attracts over 6,000 visitors,” Scott says.

As for what the future holds, CRP is working on expanding its collections and has a few fun and useful pieces available.

“We have four different lines, such as the Generation Line, Stratford, St. Tropez and Bay Breeze collections,” he continues. “We have pub tables with bar stools. If you want to watch

TINY GIRL, BIG DREAM Earlier, we mentioned the Friendship bench and you might have wondered what that was. The brightly coloured Adirondack bench was made by C.R. Plastics in partnership with young antibullying activist Acacia Woodley.

Woodley’s organization, Tiny Girl, Big Dream, aims to create spaces — marked by her trademark friendship benches — where students can go to seek company and support. Woodley only has two fingers on her left hand and was bullied as a result. After eventually befriending the girl who tormented her and learning she had problems too, she decided that both bullies and victims needed help.

She told the Stratford Beacon Herald, "A friendship bench is a special bench that anyone can go to when they're having a bad day or need someone to talk to.”

As of 2014, CRP had built 45 benches and one enormous one for Woodley’s organisation. There are currently a dozen benches in Stratford and they manufacture the products for free.

Tiny Girl, Big Dream Inc. was launched just over three years ago when Acacia, then 10 years old and born without complete arms, had a dream in which children of all ages would reach out to one another in friendship. She wanted to create a place where a child can go when being bullied or having a bad day so others will know that child needs a friend

and show support by sitting with them on the bench.

She began by telling everyone she met about her dream and before long she had a group of people helping her to achieve it. The original hand-painted bench was placed at her school, but as it was made of wood it wasn’t sufficiently durable for Acacia’s needs, her mother, Amber Woodley, told a U.S. business publication in early 2014.

After holding discussions with an organisation called Knowledge Exchange, Acacia and her mother was introduced to C.R. Plastics, which created the colourful Friendship Bench from 100% recycled plastic.

Since then, Acacia and the Friendship bench have been donated to schools and made appearances at furniture markets across North America, including the Canadian Furniture Show this past June as the guest of Cantrex Nationwide.

Tiny Girl, Big Dream presented one of the first Friendship benches to Sandy Hook Elementary School in Newtown, Connecticut – the sight of the awful and heart-wrenching mass shooting in December 2012.

“Her dream is to get them in every school across the country,” Amber Woodley says.

Each bench is hand-painted with words of encouragement and positive

the Jays (this interview took place before the Toronto Blue Jays sadly exited the playoffs), you want a pub table. We have Adirondack loveseats and garden benches. Our contemporary St. Tropez line has chaise lounges, loveseats and formal dining.”

In terms of non-furniture products, the brand offers the stackable Bottle O — a recycled plastic bottle caddy that can store wine, liquor and beer bottles and can function as both a display piece and a handy carrier. They also offer cup holders, wine glass holders and a heat powered lamp.

With a growing lineup of products and accelerating growth — and, of course, an imminent move to a bigger space — what does everyone at CRP hope to do over the next few years?

Anti-bullying activist Acacia Woodley of Tiny Girl, Big Dream is seen here with the giant-size Adirondack-style friendship bench created for her by C.R. Plastics.

character traits. Each school receives a friendship kit with a rainbow-colored wristband, sporting the words “I am amazing” for each child at that school.

Schools are encouraged to make friendship reports, noting ongoing acts of kindness and forwarding them to Tiny Girl, Big Dream, where it’s acknowledged on its web site. As each bench is introduced, the school receives a video in which Acacia explains the bench and its purpose.

“At Tiny Girl, Big Dream Inc., we believe in helping children reach out and support each other,” Amber said. “By building each other up, positive traits are brought out in our kids. We believe that if we put as much emphasis on the positive things happening in the world around us, recognizing and appreciating those that go out of their way to help others, the days of bullying and violence will become a thing of the past.

“For us, we’re closely knit to our retailers and we provide what they ask for. [We’re] expanding our lines and looking at neat and new ideas, like more motion and swivel varieties.”

Scott says, adding, “We have patents on swivel technology. Our number one consideration is comfort and durability. We provide products that our competition doesn’t offer and we manufacture North American-made products. The consumer helps guide us, too.” HGO A regular contributor to HGO Merchandiser, ASHLEY NEWPORT is a Toronto-based freelance journalist who writes primarily for trade and business publications. Her specialties include food, hospitality and emerging social/business trends.

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PROFILE

Keeping it FUN

The old saying goes, “if you love what you do, you’ll never work a day in your life.” No one embodies that idea more than Jim Ordowich, the owner Applegate & James Furniture, who often describes himself as the Ronald McDonald of furniture – at least in Haldimand County. He keeps the spark alive with videos, news segments and chocolate-themed events and more.

And, it doesn’t seem that he’s going to slow down any time soon.

BY ASHLEY NEWPORT

The exterior of Applegate & James, a single unit independent retailer located in Caledonia, Ontario, which is south of Hamilton and on the north shore of Lake Erie.

O

OV E R T H E PA S T 2 6 Y E A R S ,

Applegate & James has gone from selling almost exclusively country style furniture – which at the time was in high demand – to offering a fuller assortment of tradition, modern and transitional goods. But in many ways, these independent retailer’s success and longevity can be attributed to it true point of difference in the marketplace, that is it’s uniquely extroverted owner.

You might also think, given its double-jointed name that it’s run by two people – not so.

“I’m the James,” the affable Jim Ordowich jokes. “Applegate is a mythical person hired to field customer service complaints. We don’t need him.”

The name of the store, which is located in Caledonia, Ontario not far and south of Hamilton, actually came about when Ordowich was spit balling suggestions with his family at his son’s 10th birthday party in 1989.

“I started throwing out names,” he recalls.

“People liked Applegate & Yardly, but that sounded too familiar to me, like someone out there already had it. I wanted to change it and it became Applegate & James. It drew in that mid-level customer, the one who isn’t looking for a super cheap or super expensive piece of furniture. I needed a name that was portable, that I could take with me if I moved.”

And move he did.

The store initially took shape in the nearby community of Binbrook, occupying a modest 2,400 square foot space. The store grew over time and that growth necessitated a move to Caledonia and several showroom expansions over the course of several years. In 2010, the brand moved into its current 200,000 square foot space and became the biggest furniture and home décor store in Haldimand County.

RUNNING AMOK AT STONEY CREEK FURNITURE

As for how Ordowich entered the tumultuous and challenging furniture business, that’s also an interesting story.

“I got into the industry for all the wrong reasons,” he says. “I wanted to be my own boss. I knew Dennis Novosel (the president and owner of Stoney Creek Furniture) through a high school friend and we were talking when I found out that he was going on a ton of business trips for free. I asked to work for him part-time for free to learn the business.”

Not only were the potential trips free, so was the furniture he needed for his family home.

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“Novosel’s store at the time was small; it was a converted gas station. He would buy me lunch and eventually he started paying me,” Ordowich remembers. “Dennis being Dennis, he gave me free furniture and just had me work it off. At the time, I didn’t see myself opening a store, so I had to quit for my family and had to borrow $3,000 to pay him back for the furniture he gave me.”

Eventually, Novosel moved to a larger location and expanded his operation. As he grew bigger, he asked Ordowich – who was unhappy in the job he’d taken to better support his growing family – if he was interested in coming back on board.

“He allowed me to run amok and he taught me a lot of things I still do to this day. I was lucky to be with him from his early years to where he is now and I got him started doing more shows.

I absolutely loved that job.”

While Ordowich was happy working with Novosel, there came an itch for change. “I was burned out and he was heading in one direction towards a large destination mega-store that became very successful. I wanted something smaller. Dennis loaned me furniture and he spoke well of me to suppliers.”

STARTING OUT AND SETTING HIMSELF APART

While the support from Novosel certainly helped, Ordowich points out the stress of a start-up business can feel insurmountable. Fortunately for him, he didn’t only have a dependable mentor to rely on; he had a supportive life partner to encourage him.

“After a lot of years with a start-up, most people want to throw in the towel around year three or four,” he says. “But I saw light at the end of the tunnel. My wife, Pat, was the big earner in our family and she was the one who told me to go into business by myself. I’m very proud of my wife. She’s a nurse who spent 14 years commuting from Hamilton to Buffalo to get her bachelor’s and master’s degrees and none of where we are now would be possible without her support. You need someone who has your back. In year three, I considered throwing in the towel. She turned it around for me and allowed me to press on.”

The support of his family also includes the long-time help of his sister and colleague – Cathy Viegas.

“We got through our childhoods without killing each other – just barely,” he jokes. “She’s }

Top: Jim Ordowich is seen here in his story, Applegate & James, which he first opened in 1989.

Bottom: An inside look at Applegate & James, which covers some 200,000 square feet of retail space, making it one of the largest furniture and mattress stores in Canada. Most industry observers believe the typical independent furniture store has less than 25,000 square feet.

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Right: Jim Ordowich is seen here with CHCH-TV reporter Lori DeAngelis filming one of his occasional segments on furniture for the Hamilton station’s morning show.

In one episode, he took viewers to see how leather furniture is made at LeatherCraft’s Toronto-area factory and showroom.

my right hand. I trust her and she is to me what Left: Thanks to the efforts I was to Dennis. She makes good decisions and of Jim Ordowich’s right ture commercials aren’t rare, they aren’t often consults with me. She’ll argue with me too and hand man (or, rather, sister), special and the retailer usually isn’t a character our reps say it’s the most entertaining thing in Cathy Viegas, accessories to be remembered. In his case, the commercials the world. She’s got a great eye and consumers are always plentiful on became brand builders and cast Ordowich as love her. I’m lucky to have her. When you start, the floor at Applegate & something of a southwestern Ontario celebrity you need friends and relatives to help you. As James, such as seen here in his right. Many of the commercials he made you grow your needs change and people’s roles surrounding this dining were a prelude to news segments and were need to change.” room vignette from Canadian written and filled to not only sell the brand but Ordowich admits retailers who show creativ- manufacturer Canadel. to educate the consumer. After participating in ity and engaging showmanship impresses him a series of home shows for several years, Ordomost. He’s a true believer in retail as theatre. wich’s commercials started appearing in CHCH (a Hamilton“If I had to pick an inspiring retailer, it would be Jordan’s area television superstation) newscasts.

Furniture in Boston,” he says. “They once had a sign that said “It started with my wife,” he says. “I did home shows ‘every business is show business’. They have fountain diswith Stoney Creek Furniture and I thought they were great. plays like the Bellagio in Las Vegas, a theatre and a trapeze I looked into CHCH and I did a presentation for them. We school. A worker that I ran into at a hotel said their store is made a commercial and the day it ran, I went to the Ancaster fun. I’ve brought people to see their store and it never fails to home show and people recognized me. TV reach is double the impress. It’s so neat and people get it.” home show and it’s a hell of a lot less work. I’m now the RonWhile Applegate and James might not be offering trapeze ald McDonald of the furniture industry in my community.” lessons, it does try to diversify sections within the store by After the commercial expanded his market penetration in adding unique touches such as different colours or music. the Haldimand area, Ordowich decided to go further.

“We’ll have a nautical look here and a big city look there “CHCH has a morning show and it was a good fit for what I with different music,” he says. “We have three different areas wanted. Commercials are good, but they can be corny. I wantwhere the music is different. The leather section has more ed to be a little less goofy and more knowledgeable.” blues and the entryway has more eclectic music.”

Ordowich has appeared on the CHCH morning show sevOrdowich also does a few other things to set his store eral times and most recently participated in a segment that apart. He’s a big presence in the community, starring in his showed viewers how leather furniture. It was made at the own commercials as well as being featured on the local news LeatherCraft Furniture factory and showroom in Toronto. (more on that later), but he’s also reliant on the basics of retail “People learned that we know what we’re talking about. and its hallmark adherence to good, clear customer service.

We have this segment playing in our leather area of the “I think in any good store, it’s about filling the customer’s store,” he says. needs. People are emotional and they’ll buy something they Ordowich also appeared in an educational segment on refall in love with. You should be guiding them and finding out cliners, a move that led to the sale of over 20 pieces in the their needs and wants. We let them wander and check in on days after it aired. them. We’re laidback, but we engage with them. The customAs an aside, it should be noted Ordowich doesn’t just sell er will decide what he or she likes.” furniture, he also writes and does some stand-up comedy. This seems pretty natural for a guy who’s appeared in commercials BECOMING THE RONALD MCDONALD and news segments and who lovingly called himself an idiot OF FURNITURE for opening a store during a recession on his web site.

Ordowich has never been shy about marketing — and his greIn fact, he went on-stage and performed his first fivegarious and educational approach has paid off. While furniminute routine at the Yuk Yuk’s Comedy Club in Toronto, }

18 HGO merchandiser

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“Four years ago, we started Chocolate Night.

We mailed out an ad and we had a large amount of people lined up outside. We do it the first or second weekend of October and one of our guys sold $19,000 in furniture in one night.” during it amateur night this past November. “Comedy is nervewracking, but it’s good to try it,” he says of the experience.

As for other funky marketing tactics, Ordowich hosts Chocolate Nights.

“Four years ago, we started Chocolate Night,” he says. “We mailed out an ad and we had a large amount of people lined up outside. We do it the first or second weekend of October and one of our guys sold $19,000 in furniture in one night.”

While television is certainly working for Ordowich, commercials might seem a little passé in an increasingly digital world. While he acknowledges the importance of an online presence, he’s not entirely sold on all the proposed benefits of web-based marketing and social media marketing in particular.

“The web is of limited value,” he believes, pointing out, “The customer needs to sit on the sofa.”

That said having no web presence isn’t ideal.

“I think you have to be online because the consumer will look you up before coming by, especially if they’re new or from further away. It’s replacing the Yellow Pages,” he says.

“It’s a directional thing, but the reach is broad. A guy from Australia won’t buy my furniture, so I focus on the people near me. I think a good presentation is important.”

As for whether Applegate & James will have its own page on Facebook, Ordowich doesn’t see the company zeroing in on social media any time soon. “There’s value [in social media] for certain situations, but I don’t see people getting too excited about furniture online. YouTube has some application, though.”

STAYING RELEVANT AND COMPETITIVE

It’s no secret the selling furniture and mattresses can be tough way to make a living, especially for independent retailers. Since Ordowich is one of them, he has some thoughts on staying relevant and competitive.

“You’ve got to be sharper and think harder,” he says. “2014 was our best year in terms of sales and the bottom line. I plan out my budget for the next year ahead of time by looking at things at the end of each month and seeing what we did and what worked and I fashion new plans as a result. It’s good to look at patterns.”

20 HGO merchandiser

He also thinks it’s imporAnother peak at the floor of tant for manufacturers to tap Applegate & James where the into the consumer’s attraction product assortment is firmly to bold branding – particularly fixed in the upper-middle to young consumers. “People love lower high-end prices points brand names. To me, if I had – the so-called ‘better’ and a couch with good fabric that ‘best’ of retailer. Owner Jim was being promoted by a celebOrdowich doesn’t believe rity, I’d put my name right on it. in competing on price as There’s opportunity there that outstanding customer service we need to embrace.” is his preferred calling card.

He also maintains there’s a need to market furniture to people in their 20s and 30s – especially young families – who are often written off as struggling IKEA consumers. After all, if millennials can afford today’s high-tech smart phones, they can probably afford pricier and more durable furniture.

As for what the future holds for both himself, personally, and for Applegate & James, his uncertainty is laced with optimism and his desire to live in the now. For like a growing number of independent retailers in Canada, his three children have chosen not to follow him into the industry.

“I’m 65, but we’re seeing our best years and expansion would make sense. But we’ve got to reconcile that with the fact that there’s no one to follow in my footsteps. I’m going to be vibrant and active and keep the business going. I get antsy and I get bored. I’ll always do something new. I’m full of ideas and running out of time,” he says, laughing.

While there’s no telling what will happen once Ordowich does retire, he continues to have fun while leaving the day to day running of his store in the hands of his trusted team.

“It’s very important to have fun at work,” he says. “I spent 10 years doing something I hated. I just have a grade 12 education. I read a lot and study, but those 10 years have stuck with me. If you love what you do and can live on the money, do it. You have to have vision and passion.” HGO A regular contributor to HGO Merchandiser, ASHLEY NEWPORT is a Toronto-based freelance journalist who writes primarily for trade and business publications. Her specialties include food, hospitality and emerging social/business trends.

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SOCIAL SCENE These wing back chairs were re-purposed by the designer and television duo Glen Peloso and Jamie Alexander, principals of the Toronto-based Peloso Alexander Interiors, for this year’s Chair Affair.

Furniture Bank WOWS with its annual Chair Affair For someone transiting out of homelessness or escaping an abusive situation or fleeing a crisis, furniture is more than some to sit and sleep on or eat at.

It represents the very essence of a normal life, something the Furniture Bank is working hard to provide. BY ASHLEY NEWPORT

F

O R A SU RPRI S I N G N UM B E R O F P EOP L E

furniture is more than a utilitarian commodity – it’s a dream. Fewer still ever stop to think what furniture can mean to someone transitioning out of homelessness or escaping an abusive household or fleeing a war-torn country. For many of us, furniture is a necessity we take for granted. For the homeless and underprivileged, it’s an unobtainable luxury that imbues a home with normalcy, comfort and, most importantly, dignity.

It’s fitting then that the Furniture Bank’s recently held and annual Chair Affair raised an impressive $67,000 (as of press time) by celebrating both the beauty and artistry of home goods and the inspiring mission of the organisation behind the benefit.

22 HGO merchandiser

The Toronto-based Furniture Bank, a charity serving the Greater Toronto Area and beyond, has been connecting low-income and needy members of the community with gently used donated furniture since the late 1990s (it was incorporated as a charity in 1998).

The organisation, which boasts a 28,000 square foot warehouse and offers clients a genuine shopping experience with a showroom tour conducted by staff, typically covers the lion’s share of its operating costs by charging roughly $250 per pick-up (prices vary). While it’s comforting to know pickups alone can keep the organisation afloat, Furniture Bank celebrates and augments its mission with a fundraiser that calls on members of the deign community and furniture industry insiders for more direct support as the needs it fulfills and the number of clients it serves grows every year.

This sofa was auctioned off by the Furniture Bank at its recent Chair Affair. It was created for the event by the Toronto-based interior designer and television personality Jane Lockhart.

Dan Kershaw, the organisation’s executive director, was elated by this year’s amount raised. “It’s virtually double what we raised last year,” he said in an interview.

For the first time, the five-year old Chair Affair was held in the International Centre, which is home to the Canadian Furniture Show (this country’s only national furniture industry trade event). Kershaw believes that despite its relative youth, the event’s reach and prestige seems to be on the rise.

“We’re expecting it to become a regular thing that people in the industry can look forward to every year. We’ve put a lot of energy into going to trade shows and reaching out to designers and saying ‘hey, we exist and we all love furniture and we need the support’,” Kershaw says. “We had 40 designers and 15 were new.”

The Furniture Bank had a small display at this year’s Canadian Furniture Show.

For those unsure what exactly Chair Affair means, the title is relatively self-explanatory. At every benefit, local designers design a chair and auction it off. This year, stunning pieces were created and sold by a slew of contributors such as the Parkdale Trading Company, a Toronto-based furniture restoration specialist; interior decorator Yvonne Whelan; interior designer and television personality Jane Lockhart; Sharon Grech, designer and spokesperson for Benjamin Moore; Janice Fedak of Janice Fedak Colour and Design; and, designers and television personalities Glen Peloso and Jamie Alexander, principals of the Torontobased Peloso Alexander Interiors.

The gala was hosted by comedian Graham Chittenden – well known for his appearances on television’s Just for Laughs and on CBC Radio’s The Debaters. It also featured

This chair re-purposed by Rodrigo Andrade and Kiran Thind of Toronto’s Parkdale Trading Company brought in the night’s highest bid of $3,600. It was bought by Sandra Rinomato of Property Virgins.

high profile auctioneers such as well-known Toronto politician Olivia Chow and HGTV host Sandra Rinomato. Pieces produced by the Miziwe Biik Aboriginal Employment and Training participants (who are part of the organisation’s ‘Leg up Skills Training and Employment Program’, which aims to provide opportunities to people with employment barriers) were also available.

“For many [designers], they didn’t know what we were about, but the more they learned, the more they wanted to get involved,” Kershaw says.

CHAIR AFFAIR BY THE NUMBERS

Each year, the event grows bigger.

This year’s Chair Affair welcomed the participation of some 40 designers and Kershaw notes the $67,000 raised – which is $10,000 more than originally planned – is enough to furnish some 250 family homes.

The single largest bid on a piece of furniture was $4,000 for a sofa created for the event by Jane Lockart, including a $1,000 matching gift from Peloso and Alexander. In all, some $28,900 was raised in this year’s live auction.

The 2015 Chair Affair hosted some 550 attendees and was supported by 17 sponsors and 45 volunteers.

This year’s top six chairs went for a combined $15,350.

The chair re-purposed by Parkdale Trading brought in $3,600 and was bought by Sandra Rinomato of Property Virgins while Lockhart’s chair went for $3,000 to the Toronto branch of You Move Me!, a local moving company.

This is a big improvement over the 2014 event which was supported by 36 designers and raised $35,000 and hosted some 350 attendees. } HomeGoodsOnline.ca

23

The $67,000 raised – which is $10,000 more than originally planned – is enough to furnish some 250 family homes.

Left: Janice Fedak of Janice Fedak Colour and Design created this piece for the Chair Affair.

Right: Sharon Grech, designer and spokesperson for Benjamin Moore paint created this chair and table ensemble for the event.

“Previously, it was held at [Toronto’s] Palais Royale, which had a maximum capacity of 300 people. The International Centre gave us the room and we filled the conference centre. It was our first year with a bigger name MC. We’re big advocates of hearing laughs at Furniture Bank and we wanted to repeat that humor at the event,” he says.

The growth of the event is encouraging, especially since more and more people are finding out about – and needing – the services it provides.

THE GREATER NEED

“We’ve seen a 60% increase in refugees and we see that as a considerable challenge and we need businesses and consumers to be aware that we are in desperate need. We’ve helped over 7,000 people this year and there are an estimated 200,000 people in this city who need our support and that’s before the expected refugees from Syria,” Kershaw explains. “The refugee increase has been happening since before it became an issue in the press. If I do the math, it could mean we’re doubling what we do in a year, meaning we’d have to go from eight trucks to 16. If what you have is in good shape, we need it.”

Another benefit of the, well, benefit are the long-term partnerships it can facilitate.

“Yes, the event is chartable, but I met the head of Sealy and people from Whirlpool and these partnerships actively

24 HGO merchandiser

help us accomplish our mission. We would love even more partnerships,” Kershaw says.

He was also candid about how exhausting it was to plan – and pull off – Furniture Bank’s biggest bash yet. Fatigue aside, he was relieved the party was a hit and is already preparing for next year. As for what’s on tap for 2016, Kershaw says the mental wheels are in motion and suggestions and recommendations are being looked at.

“How do we make 2016 better for everyone?” he asks.

“We’re happy to innovate. We all love furniture and should get behind it and give people the pieces they need to establish a true home. We reached out to people for feedback and guests provided some helpful suggestions. We’ll go back to our designers in January.”

As for what extra funds mean to Furniture Bank, Kershaw says it’s all about expanding their services.

“Donations help us expand our fleet to do pick-ups and extend our hours so clients can come all year round, five days a week. Funds allow us to invest in ourselves,” he says, pointing out the cost to acquire a truck runs as high as $75,000. HGO A regular contributor to HGO Merchandiser, ASHLEY NEWPORT is a Toronto-based freelance journalist who writes primarily for trade and business publications. Her specialties include food, hospitality and emerging social/business trends.

HomeGoodsOnline.ca

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26 HGO merchandiser

BY THE NUMBERS

Tempur Sealy Canada has been focusing considerable effort in recent years to the revitalisation of its Stearns & Foster brand collection of high-end mattresses, such as the model seen here.

THE MATTRESS INDUSTRY: A SLOW RECOVERY There’s a lot we don’t know about Canada’s mattress industry. In fact, no one can say just how many manufacturers there are. But the data shows the industry hasn’t bounced back from 2008’s infamous recession. In Part One of our series, we provide an overview of manufacturing and a look at the apparent market.

F

BY MICHAEL J. KNELL OR THE PAST DECADE, AND PERHAPS EVEN

longer, mattresses have accounted for 21% of the typical Canadian furniture retailer’s annual sales. Most observers believe mattresses produce the highest and most sustainable gross margins, even though there is actually little in the way of hard evidence to support the supposition. In fact, when it comes to mattress manufacturing in Canada, it’s surprising how little is really known about the depth and breadth of the industry.

Here’s one good example. No one really knows how many mattresses manufacturers are actually operating in Canada

– that is, companies shipping product that falls under the North American Industrial Classification System (NAICS) code 337910. We also don’t know how many other mattress resources, mainly importers, competing in the market. We certainly don’t know how many people they employ or what their total added-value is to either the overall furniture industry or the economy as a whole.

According to latest update Industry Canada’s database there are about 40 companies making mattresses across the country. A closer review of the list unveils a majority of these manufacturers who appear to be strictly focused on serving the regional markets in which they live. } HomeGoodsOnline.ca

27

APPARENT MARKET FOR MATTRESSES 2007 to 2014 (Full Year) In Millions of Canadian Dollars NAICS 337910 2007

2008

2009

2010

2011

2012

2013

2014

Domestic Shipments Percentage change

987.6

922.2 -6.6

751.8 -18.5

758.0 0.8

741.3 -2.2

700.3 -5.5

832.8 13.0

832.1 -0.9

Imports (all countries) Percentage change

94.3

120.0 27.5

113.4 -5.6

115.3 1.7

129.7 12.5

141.0 8.7

152.7 8.3

151.7 -0.4

From the United States Percentage change

52.9

70.4 33.1

63.9 -9.2

64.3 0.6

77.5 20.5

76.4 -1.4

77.0 0.8

75.6 -1.8

From China (People’s Republic) Percentage change

24.4

26.8 9.8

26.5 -1.1

26.1 -1.5

28.2 18.0

39.0 38.3

42.1 7.9

39.6 -5.9

Exports (all countries) Percentage change

41.9

35.8 -14.5

34.3 -4.1

39.2 14.3

36.5 -6.8

33.3 -8.8

37.1 11.4

36.2 -2.4

To the United States Percentage change

35.1

30.7 -12.5

27.6 -10.1

31.8 15.2

29.0 -8.8

30.0 0.3

30.4 1.3

30.8 1.3

Total Apparent Market Percentage Change

1040.0

1010.0 0.0

830.9 -17.7

834.1 0.0

834.5 0.0

808.0 -3.2

948.4 14.8

947.6 0.0

Imports - Market Share

9.0

11.9

13.6

13.8

15.5

17.4

16.1

16.0

Note: All figures given in current Canadian dollars (millions) Sources: Statistics Canada; Industry Canada; Home Goods Online/Windsor Bay Communications ©

A case in point would be North Star Bedding, which bills itself as the largest manufacturer of mattresses in Northern Ontario. From its home base in Sudbury, this independent producer manufactures custom-made mattresses for individual customers but also has a thriving business serving the hospitality industry. In many ways, North Star seems to operate as both a manufacturer and a retailer.

Another of these manufacturer/retailers is Matelas Dauphin, which has been making its own product assortment for at least 40 years and currently has its own 15-store network throughout Quebec. Like North Star, it has an active commercial division, supplying hotels and others in the hospitality sector but unlike most of these small bedding enterprises, Dauphin is also an authorised TempurPedic retailer.

A third example would be The Foam Shop, which is headquartered in Surrey, British Columbia. In addition to its nine-store network, this company also has a commercial division and also produces foam for a variety of applications, including custom upholstery.

While companies such as these three make up about half of Industry Canada’s list, it should also be noted they aren’t industry powerhouses by any means. According to Industry Canada, the largest of them has annual revenues of $5 million or less. Indeed, these 20 or so independent businesses probably have average annual sales around the $3 million mark.

28 HGO merchandiser

THE MAJOR PLAYERS

Canada’s mattress marketplace is dominated by just two U.S. corporations, each of which controls two distinct brands. Not so long ago, each of these brands was truly independent of each other. But as economic conditions evolved – driven largely by the 2008 financial meltdown – consolidation became the operating reality as these companies looked for greater efficiencies and higher profits. These changes put an effective end to what industry insiders had always called, with some degree of affection, ‘The Three S’s’ – the brands most commonly known as Sealy, Simmons and Serta.

Only one of the two corporate entities is publicly owned – Tempur Sealy International, the Lexington, Kentucky-based owners of the Sealy and TempurPedic labels. The other is privately held. As its name, Serta Simmons Bedding LLC implies, it owns and operates Serta and Simmons, from their head offices in Chicago and Atlanta, respectively.

In Canada, the former is known as Tempur Sealy Canada (TSC) and the latter is SSH Bedding Canada (SSH).

These two corporations produce today’s four best known and most in-demand brands not just in Canada but in the United States as well. TSC produces the Sealy and Tempur-Pedic lines while SSH makes Serta and Simmons.

Between them, TSC and SSH dominate the Canadian market and accounted for roughly 60% of all domestic mattress shipments in 2014. Collectively,

Home Goods Online estimates the value of their 2014 shipments at $496.7 million, which is about 20.1% greater than the $413.1 million shipped in 2013. This also gave them a collective 52.3% share of the apparent market for 2014.

Figures for shipments, imports and exports for the full 2015 calendar year weren’t available as this edition of the Merchandiser went to press.

These estimates are complicated by a number of factors. The one with the greatest immediate impact is the exchange rate between the Canadian and U.S. dollars, which for a variety of reasons had been fluctuating widely during this period until the price of oil began its steady slide in mid-2014. Another is a lack of companygenerated information about their performance in Canada. Even though it’s publicly-held and its Canadian subsidiary is one of its star performers, Tempur-Sealy International rarely refers to it in its quarterly and annual reports.

While their methodology is somewhat different, the U.S. industry publication Furniture Today gave these two corporations and their four brands a collective market share of 69%, based on U.S. domestic shipments, in that country in 2014. }

APPARENT MARKET FOR MATTRESSES 01 January to 30 September 2012 to 2015 In Current Millions of Canadian Dollars NAICS 337910 2012

2013

2014

2015

Domestic Shipments Percentage change

519.4

643.4 23.9

620.3 -3.6

669.1 7.7

Imports (all countries) Percentage change

109.2

114.4 4.7

117.2 2.4

141.7 20.9

From the United States Percentage change

59.0

58.7 -0.5

58.1 -1.0

73.6 26.7

From China (People’s Republic) Percentage change

29.1

34.3 17.9

29.8 -13.1

33.0 10.7

Exports (all countries) Percentage change

26.9

29.3 8.9

26.6 -9.2

35.2 32.3

To the United States Percentage Change

24.4

22.5 -7.8

22.7 2.2

29.6 30.4

Total Apparent Market Percentage Change

601.7

728.5 21.1

710.9 -2.4

775.6 9.1

Imports - Percentage of Market

18.1

15.7

16.5

18.3

Sources: Industry Canada, Statistics Canada, Home Goods Online/ Windsor Bay Communications Inc. © 2015

Tempur Sealy Canada has been focusing considerable effort in recent years to the revitalisation of its Stearns & Foster brand collection of high-end mattresses, such as the model seen here.

HomeGoodsOnline.ca

29

LIKE NOTHING ELSE

Nothing feels like a Tempur-Pedic

®

The unique TEMPUR® material responds to your body temperature and adapts to your weight and unique shape, to give you uninterrupted comfort, personalized support, and proper body alignment for your best night’s sleep.

Today, there are many memory foam mattresses, but there is still only one Tempur-Pedic.® Even in a more crowded field, nothing adapts, conforms, and supports like TEMPUR® material.

30 HGO merchandiser

©2015 Tempur-Pedic Management Inc. All rights reserved. TM Trademark 2015 to Tempur-Pedic Inc.

Serta was the largest brand in the U.S. market by sales volume in 2014. However in Canada, HGO believes this distinction belongs to Sealy with 2014 shipments valued at approximately $215 million, which may also include sales of Tempur-Pedic labelled product. This would give Sealy a market share of 23.6%, based on the apparent market for mattresses in 2014.

While it is difficult to accurately gauge the strength of the Tempur-Pedic label in Canada, it’s not believed to be as strong on this side of the 49th parallel as it is in the U.S., where its market share is about 12%. The brand has grown significantly since TSI acquired its Canadian distributor in 2010, when sales of the specialty mattress brand were estimated at about $9 million annually. In the intervening five years, the brand has grown and is now featured on the floors of many national chains.

Serta is firmly in second place, accounting for about 18.5% of all domestic shipments in 2014 – or about 16.3% of the apparent market that year.

Simmons, the other occupant of the SSH stable, rounds the top of the leader board, commanding an estimated 14.1% share of domestic shipments for 2014 – or, roughly 12.4% of the apparent market.

THE SECOND TIER

The recent exit of Sommex Bedding Corporation – which was reportedly forced into bank-

ruptcy by its creditors – won’t have a real impact on the performance of the overall mattress market in this country.

However, it means there is one less thoroughly Canadian mattress maker, producing as it did the Natura and Sommex labels.

Sommex was also part of what HGO refers to as the industry’s second tier – which was comprised of three companies with truly national distribution.

The remaining pair includes Kingsdown Canada, the Toronto-based mattress maker. This privately held company, which operates production facilities in Toronto, Calgary and Vancouver, is completely independent of Kingsdown in the U.S. and operates under a perpetual license.

Springwall Sleep Products is now the only thoroughly Canadian mattress producer that can claim membership in the Top Five. It may also be the only family-owned and operated producer with a dominant position in the Canadian market. From its factories in Moncton, Toronto and Calgary, it produces under several labels.

The most well-known of these is Chiropractic.

Neither company reveals its sales volume, but when their distribution at retail is considered – for example, both sell to Sears Canada while Springwall also does business with The Brick and Kingsdown supplies both Leon’s and Sleep Country Canada – it wouldn’t be unreasonable to estimate their joint market share at about }

A good example of a hybrid mattress, the Vogue Ultra from Canadian specialty mattress maker Zedbed creates a cooling sleep surface, with comfort and support, by infusing the gel-crystal into the mattress’s opencell structure.

HomeGoodsOnline.ca

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SleepMaker is part of the Premier collection from Marshall Mattress, one of the few thoroughly Canadian high-end mattress makers left in the country. This pillow-top, two-sided sleep set can be found at retailers such as Hudson’s Bay and James Reid Furniture in Kingston, Ontario.

32 HGO merchandiser

20% of domestic shipments or 17.5% of the apparent market in 2014. It could also be as high as 25% or 22.2% respectively.

It should also be noted that the two U.S. ‘second tier’ players – Select Comfort and Corsicana Bedding – are not active in the Canadian market.

THE REMAINING PLAYERS

After these five, the players start getting smaller by comparison and few have national distribution. One that does is King Koil Canada, which was acquired by Satpanth Capital in 2009. It’s the same firm that also owns Park Avenue Furniture, the Calgary-based furniture manufacturer and importer, which also produces the Posture Beauty line of mattresses in Western Canada.

At the time of the acquisition, King Koil Canada claimed to have shipments of approximately $70 million annually. It’s difficult to determine whether or not the company has maintained that strength in the market but considering the list of retailer partners listed on its web site (Sears Canada, Tepperman’s, Leon’s, Bad Boy and BrandSource Canada), it wouldn’t be unreasonable to assume so.

King Koil is also a U.S. brand that is manufactured under license in Canada.

Two thoroughly Canadian mattress makers are worth mentioning.

The Toronto-based Marshall Mattress is the oldest producer in the country and is also cred-

ited with inventing pocket coil construction.

Family owned and operated, Marshall is a highend producer whose single largest retail partner is Hudson’s Bay. Annual shipments are believed to be under $10 million.

Zedbed has been making quite a name for itself over the past few years. This Shawiniganbased producer is also family owned and operated. It focuses making eco-friendly foam mattresses, mainly in the upper-middle to high-end price points. With the recent demise of Sommex and its Natura brand assortment, it is also the only thoroughly Canadian mattress producer with a permanent showroom at the World Market Center and the semi-annual Las Vegas Market.

THE APPARENT MARKET

In many ways, the apparent market is a more accurate and gives a better sense of how the industry is performing. The reason, it is a much simpler. There are no taxes, freight charges, mark-ups or other variables to distort the numbers. Measured by what retailers usually call ‘first cost’, the apparent market is based on prices at the factory door.

The apparent market is the value of domestic shipments, less the value of exports plus the value of imports – all measured, as previously stated at, by prices at the factory door.

It certainly provides a better measure by which to evaluate the performance of the indus-

While the figures for the complete 2015 year won’t be available for a few months, it suggests mattress manufacturing is slowing beginning to recover from the effects of the 2008 meltdown.

It’s taken a while. try and may also a more reliable and accurate measure of consumer demand than retail sales.

As mentioned previously, there are a lot of facts the industry don’t know about itself and shifting the through the data to determine the growth of the apparent in recent years doesn’t answer a lot of them. For example, there’s little or no data on the split between the various construction types currently popular with the consumer nor does it tell us the number of units shipped annually and it certainly doesn’t provide any insight in the average unit selling price – all of which would be handy things to know when evaluating the past and present performance of the industry.

Examining the chart accompanying this essay shows one inescapable fact. Through to the end of 2014 neither domestic shipments nor the total apparent market for mattresses in Canada has returned to the pre-recession high as recorded in 2007.

Indeed, shipments fell in five of the seven years between 2008 and 2014 and at the end of that year were still $150 million behind the record set in 2007.

In 2007, shipments totaled $987.6 million. In 2014 – the last year for which complete annual figures are known – shipments were $832.1, which were actually down a slight 0.9% from the 2013.

During that same period, the total apparent market either fell or was flat in each of those years. The only exception was 2013, when the apparent market grew 14.8%. Yet, as of the end of 2014, the apparent market was still $92 million current dollars behind where it was in 2007.

The apparent market hit a high-water mark of $1.04 billion in 2007. After a flat 2008, it dropped like a stone in 2009 and over the next few years clawed its way back to $947.6 million in 2014.

While domestic shipments floundered for six years before moving forward in 2013 (only to lose a relatively small step in 2014), mattress imports have been growing almost steadily since 2007. This is a major shift as there wasn’t much in the way of international trade in mattresses in the decade or so after the signing of the North American Free Trade Agreement.

Canada’s primary source is the United States, which accounted consistently for be-

tween 50% and 60% of all mattresses imports over the past eight years.

The other major source has been the People’s Republic of China, which accounts for an average of about 22% of mattress imports.

The mattress industry in this country hasn’t been export-oriented. It hasn’t been a necessity for the brands at the top of the industry’s food chain since their U.S. parents already dominant the market south of the border.

While many others have flirted with entering the U.S., only a handful are actively competing that marketplace. In addition to Zedbed, others included the Edmonton-based Araam Inc., the Canadian licensee for Hypnos – the British luxury brand – and the Montreal-headquartered Primo International.

Industry exports totalled $36.2 million in 2014. Some 86% of these shipments were sent to retailers in the U.S.

A QUICK UPDATE

There’s good news for the Canadian mattress industry. Preliminary data covering the first nine months of the year is showing an uptick in both domestic shipments and the apparent market.

Shipments for the January to September period were $669.1 million, a gain of 6.9% over the comparable period last year. Exports were up 32.3% to $35.2 million with sales to U.S. retailers gaining 30.4% to $29.2 million.

Imports were also up – 20.9% to $141.7 million.

Shipments from the U.S. were up 26.7% to $73.6 million while those from China gains 10.7% to $35.0 million.

The apparent market through the first nine months totalled $775.6 million, a 9.1% uptick over the comparable period in 2014.

While the figures for the complete 2015 year won’t be available for a few months, it suggests mattress manufacturing is slowing beginning to recover from the effects of the 2008 meltdown. It’s taken a while. HGO MICHAEL J. KNELL is the publisher and editor

of Home Goods Online and all of its platforms.

He has observed, researched and written about Canada’s furniture, mattress and major appliance industries for almost three decades.

EDITOR’S NOTE: In our next issue, we’ll take an overview look at the Canadian retail market for mattresses and how it has changed and evolved in recent years.

HomeGoodsOnline.ca

33

INDUSTRY CALENDAR February 25 to 28, 2016

March 13 to 16, 2016

TUPELO FURNITURE MARKET

PRIMETIME CANTREX NATIONWIDE

Tupelo, Mississippi tupelofurnituremarket.com

Orange County Convention Center Orlando, Florida nationwideprimetime.com

February 21 to 24, 2016 January 18 to 24, 2016

January 24 to 28, 2016

IMM COLOGNE THE INTERNATIONAL INTERIORS SHOW

LAS VEGAS MARKET

Koelnmesse GmbH Cologne, Germany imm-cologne.com January 19 to 21, 2016 KITCHEN & BATH INDUSTRY SHOW

Las Vegas Convention Center Las Vegas kbis.com

World Market Center Las Vegas, Nevada lasvegasmarket.com January 30 to February 2, 2016 TORONTO WINTER FURNITURE SHOW

Outside showrooms Toronto & Mississauga chfaweb.org January 31 to February 4, 2016

INTERIOR DESIGN SHOW

TORONTO GIFT FAIR CANADIAN GIFT & TABLEWARE ASSN.

Metro Toronto Convention Centre North Toronto interiordesignshow.com

International Centre Toronto Congress Centre Mississauga, Ontario cangift.org

January 21 to 24, 2016

ALBERTA GIFT FAIR CANADIAN GIFT & TABLEWARE ASSN.

March 1 to 5, 2016

Edmonton Expo Centre Edmonton, Alberta cangift.org

MALAYSIAN INTERNATIONAL FURNITURE FAIR

Putra World Trade Centre Kuala Lumpur, Malaysia www.miff.com.my

March 9 to 12, 2016 ISPA EXPO INTERNATIONAL SLEEP PRODUCTS ASSN.

March 20 to 23, 2016 QUEBEC GIFT SHOW CANADIAN GIFT & TABLEWARE ASSN.

Orange County Convention Center Orlando, Florida sleepproducts.org

Place Bonaventure Montreal cangift.org April 16 to 21, 2016 HIGH POINT MARKET

High Point, North Carolina highpointmarket.org

ADVERTISERS’ INDEX Page 11 Zucora 552 Clarke Road London, ON N5V 3K5 T: 800.388.2640 www.zucora.com

Page 21 Magniflex 1000 5th St., Suite 220 Miami Beach, FL 33139 T: 905.481.0940 www.magniflex.com

Page 5 Stearns & Foster Tempur Sealy Canada 145 Milner Avenue Scarborough, ON M1S 3R1 T: 800.268.4414 www.stearnsandfoster.ca

Pages 14-15 Serta Canada/ Star Bedding Products 40 Graniteridge Road, Unit #2 Concord, ON L4K 5M8 T: 800.663.8540 www.sertacanada.com

Page 25 Protect-A-Bed 1500 S. Wolf Road Wheeling, IL 60090 T: 519.822.4022 www.protectabed.com

Page 7 Las Vegas Market 475 S. Grand Central Pkwy.

Las Vegas, NV 89106 T: 702.599.9621 F: 702.599.9622 www.lasvegasmarket.com

Page 19 Canadian Furniture Show 101-1111 Saint-Urbain Montreal QC H2Z 1Y6 T: 514.866.3631 F: 514.871.9900 canadianfurnitureshow.com

Pages 2-3 Phoenix AMD International 41 Butler Court Bowmanville, ON L1C 4P8 T: 800.661.7313 F: 905.427.2166 www.phoenixamd.com

34 HGO merchandiser

Page 29 Malaysian International Furniture Fair Putra World Trade Centre Kuala Lampur, Malaysia www.miff.com.my

Page 32 Tempur-Pedic Tempur Sealy Canada 145 Milner Avenue Scarborough, ON M1S 3R1 T: 800.268.4414 www.tempurpedic.ca Page 38 Domus Vita Design 50 Acadia Ave. Suite 100 Markham, ON L3R OB3 T: 905.513.6687 www.domusvitadesign.com Page 40 Home Goods Online P.O. Box 3023 Brighton, ON K0K 1H0 T: 613.475.4704 F: 613.475.0829 www.HomeGoods Online.ca

ON RETAIL

MAKING 2016

the best year ever

Great businesses aren’t owned and operated by people who got lucky. They’re owned by people who think about their business and plan every move they make.

They learn to get rid of the rose-coloured glasses and look at things with clarity.

Donald Cooper believes a retailer’s success is, in large part, driven by his ability to plan and implement new ideas and not just sell product on the floor.

B

BY DONALD COOPER

EDITOR’S NOTE: For additional help in creating a clear vision for the future of your business, check out Donald’s transformational Vision Critical Guide at www.donaldcooper.com.

For $24 you get a complete 34-page guide and implementation tools to create a clear vision, mission and ‘commitment to action’ for your business that will inform, focus, challenge and inspire you and everyone on your team.

usiness success is not an accident.

It’s the result of being realistic about where we are now, clear about what we commit to become in the next three to five years and then committing to visualise, plan, decide, implement and diligently follow-up to create that more extraordinary future.

Now is the time to work ‘ON’ your business – not just ‘IN’ it. What will your sales and profit commitments be for the coming year? How will you improve the customer experience, operational efficiency and staff engagement?

How will you differentiate yourself in a crowded and cynical marketplace? Specifically what needs fixing, changing or doing to make all of that happen?

To get started, sit down with a few of the best minds and hearts in your business and invest a few hours to answer the 12 simple questions listed below. Don’t talk about goals, targets, aims and objectives. These are weak and wishy-washy words that leave way too much ‘wiggle room’ to not perform. Talk about commitments. Change the language in your business. When you change your language, you change your culture – and your results.

For each commitment made, determine what specific activities, actions, changes or initiatives that must be implemented to get you where you’ve committed the business to be. Then, determine specifically what will be done, by whom and by when as well as how it will be measured and rewarded to make that happen. This may sound like a lot of work but it’s what management is all about.

Stop retreating to the familiar, doing the ‘easy day-to-day stuff’ and hoping for better results. Remember, we get what we work for – not what we hope for.

THE POWER OF GETTING SPECIFIC

THE 12 QUESTIONS

The more clear and specific you get about your commitments, the better your results will be.

Here are three examples of what clear and specific commitments look like:

1. We will increase sales by $800,000 in the next 12 months, while not increasing sales and marketing expenses by more than 4%; 2. We will reduce operating expense by $50,000 in the next six months without diminishing our customer service or employment experience; and, 3. We will improve delivery on ‘rush orders’ by four hours within 3 months without increasing our shipping expenses by more than $12,000 a year.

These 12 questions listed below are simple.

Many of the answers won’t be. Where necessary, allocate homework and research assignments to members of your team to gather } HomeGoodsOnline.ca

35

more information and generate new ideas. Perhaps the important part of each question is the one where someone is tasked with the responsibility for carrying out that particular part of the project followed by the deadline for its successful completion. Here are your 12 questions: 1. What bottom line profit do we commit to generate this year that will keep us financially healthy and allow us to fairly reward everyone on our team for their time, effort and investment in the business?

What sales and gross margin must we achieve to generate that bottom line?

2. What are the six to ten most important things we need to do to improve or grow our business this year, so that we achieve our sales, gross margin and profit commitment? How will we implement these changes and by when? Who will be responsible for each of the activities or changes that we agree to implement?

3. What are three to six things we do regularly that tick off our target customers or destroy customer trust? What will we do to eliminate them? How could we not just ‘fix’ these things but turn them around so wonderfully that they actually become a powerful competitive advantage? By when do we commit to do this? Who will be responsible for each of them?

4. What additional products or services would make us more helpful and/or more valuable to our target customers? How can we profitably develop, add and implement these? By when do we commit to do this and who will be responsible for each of them?

5. What are three to six important things our competitors do better than us? What will we do to fix that so that we’re clearly better than them? By when do we commit to determine what those things are and what we’ll do to be either better than our competitors at them or to counter with other more relevant value propositions? By when do we commit to do this and who will be responsible for each of them?

6. What three to six extraordinary things could we do to make doing business with us not all about price? What functional or emotional value can we create? What extraordinary service or amenities can we add that will ‘grab’ our target customers and fundamentally change the game? What has never been done before in our industry that would blow our customers away? By when do we commit to have some bold, innovative ideas about this possibility?

Who will be responsible for analyzing each idea put forward?

7. We are what we communicate. So, what three to six gutsy things will we do this year to more effectively promote our business, ‘grab’ our target customers and communicate our total value offering? By when do we commit to have developed this bold and more effective way of communicating our compelling value story? Who will be responsible for analyzing each idea put forward?

8. What our six biggest expense items on which we

36 HGO merchandiser

can save money this year? How and by when will we achieve those savings? Who will be responsible for this project?

9. What are the three to six things we can do to become ‘greener’ in the next year and beyond? Who will be responsible for collecting and analyzing the ideas generated and supervising implementation of each idea that is approved? By when will we implement the approved ideas?

10. What are the three to six things that can be done to improve internal written and verbal communications so as to operate more effectively as well as improve employee engagement and clarity about our commitments to customers, to each other and to the bottom line? Who will be responsible for collecting and analyzing the ideas generated and supervising implementation of each idea that is approved? By when will we implement the approved ideas?

11. What are the most important new technologies that we need to bring into our business in the next 12 months? As we look to technology to give us the operating efficiency and competitive advantage we need, it will be useful not to lump ‘technology’ into one big confusing mess, but rather to examine how technology can help us in each specific area and function of our business.

12. As owner/operators, we can’t grow our business without growing our people. What training, development or mentoring does each person on the team need to help them grow themselves and help grow the business, serve customers more wonderfully and operate more effectively? By when will we have determined what that training, development or mentoring will be, and how we will implement it for each person? Who will be responsible for this important project?

THE NINE POINT CHECKLIST

Below is a checklist developed for retailers and other independent business people as they explore the possibilities of technology and how it can help them. Don’t be afraid to seek outside help and every business should have one or more trusted technology heroes to help it stay ahead of the pack.

As you review the list, note each one with real possibilities for your store. Then investigate, make commitments and take action. Some of these possibilities may not apply to your particular business, but many will.

1. Technologies that will help design and create new and better products and services; 2. Technologies that will help produce or operate more efficiently and with higher and more consistent quality; 3. The technologies of logistics that will help more quickly, efficiently and accurately deliver products or services to existing customers – and perhaps to a wider customer base; 4. Technologies that will help improve the speed,

quality, depth, breadth, individuality and consistency of the customer service and experience we deliver; 5. Technologies that help more efficiently communicate our compelling value message to customers and prospects as a group and as individuals; 6. Technologies that allow us to listen to as well as to understand, engage and respond to our customers as a group and as individuals; 7. The equipment, systems and process technologies that allow us to operate, control and manage every aspect of our business more effectively; 8. Technologies that help the business operate in a more environmentally responsible, less wasteful and more sustainable way; and, 9. The technology of researching industry ‘best practices’ and emerging business models.

every part of their business. The next item on the agenda is to decide what will be done with this information and when? Do we have a technology hero or two who constantly coaches and challenges us to get ahead and stay ahead in both operational technology as well as marketing and social media technology?

And the 12 important questions detailed earlier are designed to get the independent business owner thinking about how to make the coming year the best ever. Remember, for each idea you come up with and commit to; be clear about what will be done, by whom, by when and how will the results be measured and rewarded to make it happen.

Failure to implement effectively is one of the biggest challenges in most businesses today. Remember, businesses do not die from a single shot to the head. They die, slowly but surely, from a thousand uncompleted tasks. HGO

This last one is easy. It’s called Google. We can use the world’s best known and most powerful search engine to study competitive web sites and articles; discover who in our industry – regardless of where they are in the world – is doing innovative new things and unveil new disruptive business models with the potential to become our new worst enemy.

These are nine ways technology can help independent retailers, in particular, create a competitive advantage in

A regular contributor to Home Goods Online, DONALD COOPER, MBA, has been both a world-class manufacturer and an award-winning retailer. Now a Toronto-based business speaker and coach, he helps business owners and managers rethink, refocus and re-energize their business to create compelling customer value, clarity of purpose and long-term profitability. For more information, or to subscribe to his free, monthly management e-newsletter, go to www.donaldcooper.com

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FURNITURE • BEDDING • APPLIANCES • CONSUMER ELECTRONICS • ACCESSORIES 38 HGO merchandiserLAMPS & LIGHTING • FLOOR COVERING • RETAIL SERVICES