HGO Merchandiser Summer 2013

Michael Knell’s

HGO merchandiser Summer 2013

HomeGoodsOnline.ca

Volume Two, Issue 4

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

FRONT PORCH INTERIORS

Prairie Hospitality

CONTENTS>>>

6FROM THE EDITOR

The most important lesson this issue’s Profile subject – Shannon Houff, owner of Front Porch Interiors in Wawota, Saskatchewan – can teach this industry is a simple reminder: there’s a lot of joy to be found as a retailer. Her furniture store may not be the largest in Saskatchewan, but she brings out-of-the-box ideas and enthusiasm to her market. That alone makes her an inspiration.

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PROFILE: PRAIRIE HOSPITALITY, FRONT PORCH STYLE

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Shannon Houff, owner of Front Porch Interiors in Wawota, Saskatchewan, has no shortage of skills. She’s waited tables, farmed cattle and managed a doctor’s office.

Now she’s finally fulfilling her dream of sharing her innate sense of sophisticated style with customers in her beloved prairie community.

A profile by Ashley Newport.

MARKET REVIEW: 16 ALL ROADS LEAD TO HIGH POINT For a number of Canadian furniture and mattress manufacturers having a presence at the world’s largest furniture trade event is simply a matter of being where the customers are. As the U.S. economy slowly recovers, their future brightens. And it doesn’t hurt that lots of Canadian retailers come to High Point as well.

This examination of the High Point Market and its importance to the Canadian furniture industry was written by first-time contributor Marc Barnes.

24 MATTRESSES: ALL ABOUT GEL

Gel has become a mainstay in the mattress industry since Serta got the cool blue ball rolling back in 2011.

Most manufacturers laud its cooling effect and staying power, but a few industry insiders are hoping for even

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bigger and better innovations in bedding. Ashley Newport examines the importance of gel technology and what it means to mattress retailers and consumers.

28 ADVERTISERS’ INDEX SOCIAL SCENE: 30 MEGA GROUP: HANGING OUT IN VANCOUVER

Our new Social Scene section shares photos – taken by François Boisvert – from the recent 2013 annual general meeting and conference held by Mega Group, this country’s largest big ticket home buying and marketing group.

ON RETAIL: 33 WHY BUY CANADIAN? In this issue's ‘On Retail’ essay, contributor Alixe MacRae examines the benefits – particularly for independent retailers – for buying, flooring and promoting Canadianmade furniture. Most of them have to do with cash flow.

BY THE NUMBERS: 34 PERFORMANCE INDICATORS The latest Annual Retail Survey from Statistics Canada shows that while they are fewer in number, independent furniture retailers are outperforming the national chains in a number of areas on a store versus store basis.

ON OUR COVER Shannon Houff, the owner of Front Porch Interiors in Wawota, Saskatchewan describes herself as a “normal cowgirl” who, when she isn’t running her 4,000 square foot furniture and design store can often be found helping out on the family ranch – she’s even been known to brand a calf or two.

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FROM THE EDITOR>>>

THE JOY OF RETAILING IN THIS ISSUE WE PROFILE A SELF-DESCRIBED “NORMAL COWGIRL” WHO HAS A LOT TO TEACH OUR INDUSTRY ABOUT HOW MUCH FUN IT CAN BE AS AN INDEPENDENT FURNITURE RETAILER, EVEN IN A SMALL, RURAL TOWN.

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T’S NO SECRET THAT RETAIL HAS BEEN A TOUGH

MICHAEL J. KNELL

slog for the past couple of years. It seems the consumer is more interested in buying a new car than in buying new furniture or a new mattress or new appliances. The statistics are ugly.

Then you meet Shannon Houff, the owner of Front Porch Interiors in Wawota, Saskatchewan, and your faith in the future of our industry – particularly at the independent retail level – is restored. Perhaps most impressive is the obvious joy she takes in owning and running her business.

Truth be told, we need more people like her in our industry. In Ashley Newport’s profile, we’re reminded that a willingness to work hard, to learn new things, and the desire to be creative in meeting the needs of your customers – who are also your friends and neighbours – goes a long way to achieving success. She also is an outside-the-box thinker. When you’re operating a 4,000-square-foot store in a town with a population of less than 700, you need to be both creative and outside-the-box.

Shannon Houff has a few things to teach the rest of us. Her Ladies’ Night Out is probably one of the most innovative promotions ever staged by a small independent retailer. At least I don’t know of another store that hosts a similar event. She’s also combating the stereotype that rural Canadians are consumers of dull, brown furniture. She’s showing they also have an interest in design and colour. They too want a beautiful home.

I’ve been around this business for the better part of three decades and I’ve met very few people like Shannon Houff. This doesn’t mean she doesn’t face the same challenges as other retailers. She does, in spades. Considering the small size of her trading area, a lot of those challenges are compounded from the norm several times over. But the sheer joy she brings to retailing is something a lot of us have forgotten.

HGO merchandiser SUMMER 2013 • VOLUME TWO, ISSUE 3 ISSN 2291-4765

www.HomeGoodsOnline.ca PUBLISHER & EDITOR Michael J. Knell mknell@homegoodsonline.ca MANAGING EDITOR Anthony E. Bengel tony@homegoodsonline.ca CONTRIBUTORS Marc Barnes, François Boisvert, Alixe MacRae, Ashley Newman ART DIRECTOR Samantha Edwards Sam I Am Creative samiamcreative@bell.net IT DIRECTOR Jayme Cousins www.inhouselogic.com 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 © 2013 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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Just because the store serves a rural community, that doesn’t mean its residents are uninterested in good design. In fact, owner Shannon Houff is making a name for herself knowing her neighbours do, indeed, appreciate good design.

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<<<PROFILE

Prairie hospitality,

Front Porch style

 The exterior of Front Porch Interiors in Wawota, Saskatchewan, a small community about 250 kilometres east of Regina, which is more than a furniture store according to owner Shannon Houff. It’s also a design store with about 4,000 square feet of selling space.

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

S

HANNON HOUFF, THE FRIENDLY,

enthusiastic owner of Front Porch Interiors, has tried her hand at a stunning variety of vocations. The prairie native has worked in many industries, few of which are related to either interior design or furniture retailing.

“I’ve worked at a race track, waited tables, worked in payroll for a trucking company, worked in retail and managed a doctor’s office,” she says. “You learn something from everything, and I’ve always enjoyed working with the public.”

The working-with-the-public part is important, as Houff had to brave skepticism and outright cynicism in launching the 4,000-square-foot store in 2010 in Wawota, Saskatchewan. To prove the doubters wrong, she had to be confident of her ability to sell elegant, sophisticated furniture to a rural clientele.

Most importantly, she had to understand the unique needs of that market.

“I've always had a natural leaning towards design,” she says. “It’s a part of who I am. You can learn anything, but if something is in your blood and bones, you can’t get away from it.”

Houff ’s flair for home décor manifested itself early in life. Her parents caught on to her love of design when she produced detailed drawings of the family’s old barn, complete with suggestions on how to turn it into the perfect loft.

“I’m a designer,” she says. “But I’m also a regular person. I’m not necessarily what people think a designer is like or looks like.”

If one were to ask people on the street to describe a typical interior decorator, the word “urban” might come up, since design often is considered a

 Shannon Houff, the owner of Front Porch Interiors, describes herself as a “normal cowgirl” who isn’t afraid to unload the truck, assemble the coffee tables or brand the cows on her family farm just outside of town. But her passion is helping her customers create beautiful living spaces.

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 Accessories are a vital part of Front Porch Interior’s product offering. (Above right) This bedroom suite is from Canadian case goods resource Magnussen Home.

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city-based trade serving the affluent from high-end boutique stores. But, as Houff illustrates, a sense of fashion and style can just as easily come from a cattle farm owner as an artsy urbanite.

And speaking of cattle farms, Houff moved in 2003 to the farm she always wanted and now shares with her husband, Travis, and their daughters – Julia, 10, and Clara, 8 – when the couple decided to leave Medicine Hat in search of literally greener pastures.

In fact, it’s not unheard of for her to spend her off hours branding cattle in the Back 40.

Shortly after the move, mad cow disease rereared its ugly head in Western Canada, wiping out her family’s new livelihood and leaving her with a pressing need to find work in a region where employment opportunities weren’t abundant.

“Mad cow disease took everything we had invested and threw it in the toilet,” Houff recalls. “If you’re not from a rural community, you don’t know how hard something like that is. But I’ve always been a resourceful person. I waited tables, but the store was a great opportunity. Many people are attached to a job because of money, but we had no money, so the timing was perfect!”

So with a potent mixture of need, want, opportunity and a belief she could bring a niche market to a small town – Wawota boasts a population of 700 people – and make it work, Houff set about

opening her own store. But she didn’t transition from waiting tables to operating a furniture store overnight.

Before Front Porch Interiors took shape, Houff and a friend launched Latigo Linens, a company catering to the style needs of Western homeowners.

“There were no Western home linens, so we designed specialty ones and displayed them at home parties and trade shows,” she says.

How did the Saskatoon-born Houff go from designing linens to owning and operating a furniture store? By taking cues from her community, she says.

“I was working part-time for a gentleman who owned a homebuilding business, and also taking an esthetician course in Saskatoon. I talked to the head hairdresser of a salon I was working at, and she was like a dog with a bone about my design ideas. She put me in touch with people who needed design help, and after a while I thought, ‘Here I am, putting packages together and then sending people off to the city to buy. Why am I throwing stores such bones when the customers aren’t always getting what they want? Why not put a store here?’ ” So, in 2005, Houff rented the front of a greenhouse and started a much smaller furniture operation called From the Inside Out. As the years passed, she began to outgrow the greenhouse and set her sights on a nearby John Deere factory store that promised a better, grander space.

“When I put my mind to something, I do it,” she says. “I got that space, and we (her and a partner) dissolved our business and I opened Front Porch Interiors.”

The store, which Houff runs with her “sidekick” Cheryl Branvold, caters to eclectic tastes in the rural community by not quite embracing the town’s aesthetic. “We do everything,” Houff says. “We unload the truck. I even put the coffee tables together.

“Most people expect a furniture store in our town to be filled with brown furniture lined up in rows, but this is a design store,” she continues. “It’s beautiful. We did a good job.”

Front Porch, with pieces from resources such as Mobital, Ren-Wil, Palliser, Kingsdown, Ashley, Thomasville and others, also offers lighting and other accessories. While the variety of merchandise keeps the store competitive, it also has the “wow” factor to help set it apart.

“When people walk through the door, they’re shocked by what they see,” Houff says. “People want to come see us; they want to be taken care of. We want them to feel like we want to get to the bottom of what they need. It’s more the store's atmosphere that brings people to us. We have what the city has at better prices.”

What Houff also offers is the personal touch, which is important when serving familiar clientele.

She finds questions about her “typical customer” a little silly. “I have so many typicals,” she says. “I don’t want to limit myself to one specific type of person.”

Her open-minded approach allows her to cater to everybody's needs. She’ll find lower-end pieces for customers seeking less-expensive furniture, but she won’t display those pieces on the floor.

“We really care about what people think of us,” she says. “We’re not here to lure you with a $299 couch. Customers young and old realize that if they spend more, a piece will last longer. People also remember a store more than a manufacturer's brand, and people are more educated about quality furniture and are more aware of smoke and mirrors.

When people come to my store, they know they’re going to get the best that we know of.”

While it’s clear the store attracts people by appealing to their good taste, it's the warmth and “everywoman” approach Houff and her staff take that makes for loyal patrons.

“We’re set apart by our approach to our customer,” she says. “We genuinely care and we’re willing to show them things they may not know are out there.”

Houff ’s customers may include the very people who once gently warned her that opening a fashionforward furniture store might backfire in a town with potentially little interest in the concept. Those views have proved groundless. She's busy booking appointments with customers who want her to do everything from helping them choose the right sofa to entire-room makeovers.

In a small town, keeping in touch with the locals, and keeping the store at the top of their minds, is important, and Houff has been creative in her community outreach. Particularly popular have been her Ladies’ Night Out events. The first one began with an information session in a local church during the store’s first year of business. Now, Ladies’ Night Out can draw up to 200 attendees and may take place five or more times a year.

The night – which costs $25 to attend – is all about indulging in traditionally feminine pursuits.

Guests are treated to cocktails and a home-cooked dinner complete with appetizers and dessert, followed by a trip to Front Porch Interiors. Guests see the store’s holiday décor (the events are usually scheduled in the fall) and latest trend pieces, and qualify to win prizes.

The benefits of the events are twofold – Houff connects with her neighbors and customers, and the store is showcased in a fun and memorable way.

“Ladies enjoy being entertained,” she says. “It’s social, as most ladies come out with their girlfriends. It’s a good vibe.”

The sense of community and interpersonal connection also has marked Houff ’s experience as

Pink Scarf Express Since the furniture industry’s customer is often female, it makes sense that Shannon Houff, owner of Front Porch Interiors, has chosen typically feminine brand-awareness activities. Similar to Ladies’ Night Out, the Pink Scarf Express is a bus tour that focuses on shopping.

“We started participating two years ago,” Houff says. “It began with a couple of ladies in Saskatchewan who decided they would rather do their Christmas shopping in small towns, and it snowballed from there. Each business pays to have the buses come to their store.

“Last year we had six buses, and we sold out the tour in half a day. I've had good sales from the tour. I look at this type of thing as great advertising. I think anything you do that promotes either the store or the community helps.”

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“Hands down, the best thing is the networking.

That’s an invaluable part of Cantrex.

The improvement in my business since joining Cantrex has to do with the people.

They bring in different products and experiences.

The group has roundtables and they open up your eyes to a world you didn’t even know was there.”

This view sales floor of Front Porch Interiors gives a sense of the eclectic nature of the store’s product assortment.

a member of Cantrex Nationwide, to which she’s belonged for the past year or so.

“Hands down, the best thing is the networking,” she says. “That’s an invaluable part of Cantrex. The improvement in my business since joining Cantrex has to do with the people. They bring in different products and experiences. The group has roundtables and they open up your eyes to a world you didn’t even know was there.”

While the future looks bright for Houff and her store, she admits to some personal challenges.

“Sometimes you feel guilty for working outside the home,” she says. “As a working couple, we are the minority in this community. There’s sometimes peer pressure, and it can be difficult to schedule everything. I asked my kids if they were sad that I worked, and they said they were proud of me.”

What's next for Houff and her store?

“I’ve always been goal-oriented, and we’ve talked about expansion. I’m also hoping to push the interior design aspect more. But I’m where I want to be, and it would just be great to increase sales every year. I’m blessed to be doing what I do. My kids get to see me set a goal and achieve it. I work with one of my best friends. We laugh a lot and I don’t take myself too seriously. We’re real small-town people.” HGO – A frequent contributor to HGO Merchandiser, ASHLEY NEWPORT is a Toronto-based freelance journalist who primarily writes for trade and business publications. Her specialties include food, hospitality and emerging social/business trends.

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AT A GLANCE FRONT PORCH INTERIORS ADDRESS: 407 Railway Avenue, Wawota,

Saskatchewan S0G 5A0 YEAR ESTABLISHED: 2010 OWNER: Shannon Houff MEMBER: Cantrex Nationwide WEB SITE: www.frontporch-interiors.com FACEBOOK:

www.facebook.com/pages/Front-Porch-Interiors NUMBER OF EMPLOYEES: Four NUMBER OF LOCATIONS: One SELLING SPACE: 4,000 square feet KEY SERVICES: Interior decorating advice, in-store

and in-home; regular social events/sales promotions such as Ladies’ Night Out and shopping excursions such as the Pink Scarf Express.

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MARKET REVIEW>>>

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

BY MARC BARNES

All roads lead to

High Point G

ET IN YOUR CAR IN TORONTO,

head south, and some 700 miles or 1,127 kilometres later, you’ll be at the High Point Market.

But Canadian furniture producers and buyers are closer than that, in terms of both business and spirit, to the central North Carolina city that’s become the largest furniture and home furnishings trade event in the world, according to industry veterans.

“Look at the geography. This market is the way Canadian producers can get their goods before half the population of the United States,” says Dr. Richard Bennington, the Paul Broyhill professor of home furnishings at High Point University.

“Although High Point is a long way for Canadians, it’s not like going to the West Coast to see buyers.”

Bennington says that as buyers and sellers gathered for the April 2013 edition of the High Point Market, he sensed a different mood.

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“A couple of people told me they had the best Saturday they ever had,” he says. “The showrooms, in terms of design and care, looked less conservative in how they were decorated. I saw some of the bestlooking showrooms I've ever seen.”

Tom Conley, president and CEO of the High Point Market Authority – the organization responsible for putting on the semi-annual show – says High Point has been sold on Canada for years, to the extent of pursuing a joint marketing program with The Canadian Home Furnishings Market, held each January in Toronto and organized by the Quebec Furniture Manufacturers Association.

“We had representatives from our staff who went up to the Canadian show for a couple of years and did the joint program, and they came back and had nothing but great things to say about the Canadians,” recalls Conley. “The people are warm and friendly and we have great friendships with folks from Canada.”

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

 Magnussen Home jumped into the casual dining category at this past April’s High Point market with the Loren group seen here. Described as stately and reminiscent of a grand English drawing room, it features turned balustrades, glass light cabinet fronts and a camel back mirrored hutch.

He says the joint effort has paid off for both buyers and sellers. Of the 6,000 or so international market visitors from 105 countries that turned out for the recent spring market, a little less than half came from Canada. And when buyers get to High Point, many view the offerings in showrooms in the 220 Elm building, owned by Canada-based Maple Leaf Holdings, with Palliser Furniture CEO Art DeFehr the principal investor.

About 65 Canadian companies exhibit at the market. They range from mattress specialists and furniture manufacturers to rug merchants and suppliers of art and decorative accessories. Canada is the market’s largest target audience for both exhibitors and attendees outside the United States.

Conley points out the positives: similar demographics and politics, free-trade agreements and a strong Canadian dollar. All of that comes at a time when, by most measures, the furniture industry

seems to be in the beginning stages of recovering from the recession.

“We’re influenced by housing starts and by the stock market,” says Conley. “Since 18 months ago, housing starts have had a positive effect on attendance, and the stock market is doing well.

People feel they have more personal wealth and can spend it.”

The Business Journal in the Piedmont Triad reported market traffic was up nearly 3% compared to the spring market last year, with 79,000 attendees versus 77,000 in 2012.

Conley expects those numbers to continue to rise, reflecting underlying economic trends. He’s not willing to predict that things will return to the “go-go” years that preceded the recession, but does believe furniture sales will continue to gain traction.

“If the economy holds and if we have a positive attitude, there’s a good chance we will start to have some new highs,” says Conley.

 Durham Furniture introduced Rustic Civility at the April High Point Market. The third group in the company’s Mount Vernon collection, Rustic Civility is constructed in solid maple and features more casual, distressed finishes. For the first time, Durham offered a two-tone finish option as well as a large-scale slat sleigh bed, shown here. The group includes two beds, six case pieces, two nightstands and one mirror.

AT THE MARKET The basics for market exhibitors remain much the same – go where your key customers are, bring new and compelling products to show, and do your homework before market. Industry veterans will HomeGoodsOnline.ca

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 The High Point Market is also important event for the Toronto-based Sunpan Modern Home, a contemporary furniture resource. Shown here are several of its newest introductions including the Madero console table, Buchanan armchair, Temple Round endtTable, Morocco ottoman, Gotham coffee table, Fitch armchair, and the Benjamin end table, all surrounding the Cathedral sofa.

 Sunpan Modern Home also unveiled the Malibu wing chair at the last High Point Market.

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tell you it's how well you execute those basics that determine success or failure.

One advantage of the High Point market, many Canadian producers say, is its frequency – twice a year instead of once as in Toronto.

Gord Dilworth, president and CEO of solidwood bedroom specialist Durham Furniture, says that participating only in the Toronto show would mean potential buyers would see samples of his company’s offerings only once a year, and that’s not good enough in this day and age.

“The only other way to see us would be photos, and most buyers want to see it firsthand,” he says. “You have to keep the momentum going.”

Dilworth believes High Point is a good place to focus marketing efforts. He used e-mail blasts and other means to build interest, and rolled out two groups this market. They are Glen Terrace, a transitional/contemporary group, and Rustic Civility, a traditional country farmhouse look added to Durham's licensed Mount Vernon collection. The two are available immediately in 25 finishes.

These larger-scaled offerings were in part intended, he says, to re-assure retailers that Durham is not abandoning the master bedroom category. Recent introductions have focused on the company’s Perfect

Balance line, designed primarily for condominiums and smaller living spaces.

“This was the best-attended market in Durham’s recent history, not only by the quantity but also the quality of the dealers,” says Dilworth, who recently moved his company from the outlying Atrium on Main to the Green Wing of the International Home Furnishings Center.

Cary Benson, president of upholstery specialist Palliser Furniture, says that of the markets in Toronto, Las Vegas and High Point, the latter is the best attended by far. “It's important for us to see Canadian customers in High Point, as well as our U.S. customers,” he says.

At the April market, Palliser introduced a fabric collection and added items to its sofa-sleeper and modular programs. The company showed pieces aimed at retailers along the east coasts of Canada and the United States who are interested in smaller-scaled pieces for condominiums and apartments, as well as full-sized pieces for larger homes.

“It’s exhausting and it’s an eight-day marathon, but it feels good to have a good one and be done,” says Benson of the recent High Point market. “We won’t have another one for six months, and that’s the good news. Still, it sets up the year to have a good market, so it’s worth all the work.”

Richard Magnussen, CEO of Magnussen Home, says High Point always has been a good market for his company. “It went way beyond our expectations,” he says of the April event.

Magnussen also has a presence in Las Vegas and Toronto, but maintains its largest showroom on the 10th floor of the Main Wing of High Point’s IHFC, and times its major introductions for the April and October markets. This time out, the Hamburg, Ontario-based case goods specialist added a number of occasional tables and bedrooms, while leaping into a brand new category – casual dining. All were wellreceived, its CEO reports.

“Housing starts are decent, which is a good indicator for the furniture industry,” says Magnussen.

“Eighty percent of our sales volume is in the U.S., so High Point is an important market for us.”

Sundeep Bagga, president of Toronto-based contemporary furniture specialist Sunpan Modern Home, says that other than an in-house event he runs in Toronto, he puts most of his efforts into High Point.

“Any retailers looking for action from the larger American manufacturers have to shop the High Point market,” he says. “If you are looking for better goods, you have to shop High Point, and anyone who is doing major volume will be in High Point.”

Bagga says 55% of his sales volume is coming from the United States, a number that’s improving along with the American economy. Although his current showroom in IHFC’s InterHall is relatively small, there's a lot of walk-by traffic. As business continues to improve, he plans to move to a larger showroom.

“Right now, it’s the traffic we need,” he says. “Later on, we’ll be a destination.”

Bagga notes that in addition to the Top 100 U.S. furniture retailers, High Point attracts independent retailers and interior designers. That variety means his offerings, mainly in the occasional and console table categories must reflect a wide diversity.

“Contemporary pieces at good price points with good design is where there's a void in the marketplace, and that’s where we are investing a lot in product development,” says Bagga.

David Gélinas, vice president of marketing for Shawinigan, Quebec-based specialty mattress producer Zedbed, sees the market differently.

To him, High Point has always been more of an appointment market. “High Point is still strong and we depend on it,” he adds.

Gélinas says the geographic fault lines for attending the major furniture trade events are similar in Canada and the United States. Retailers from central and eastern Canada tend to go more to High Point and Toronto, while those in the West tend to favour Las Vegas. Zedbed participates in all three markets.

“It’s good for us to be in High Point,” says Gélinas.

“We meet buyers that matter, from quality retailers.

 West Brothers added this bedroom to Serra, a solid-walnut collection from designer Tovin Blake, at the spring market. Serra was introduced at the October 2012 market. This panel bed offers a choice of cushion treatments on the headboard, as well as a choice of wood or upholstered footboard and rails. Also featured is under-bed storage.

In Toronto, you have more walk-by retailers who shop all the booths. You see that sometimes in High Point, but it's more of an appointment market.”

This time out, Zedbed – whose showroom is in the IHFC’s Main Wing – showed a new gel mattress, in which gel pads can be tucked into a total of nine pockets on each side of the top of the mattress.

“You can get more of a cooling sensation by putting the gel pads directly under your back,” Gélinas says.

“You can customize your sleep environment. This is a different way to use gel in the mattress.”

For casual dining powerhouse Canadel, the High Point market went quite well this spring,

 Solid-wood specialist West Brothers unveiled its interpretation of the modern office at the recent High Point market with Phase, one of three collections from designer Tovin Blake.

In solid walnut, the desk is finished on all sides and features three drawers, file storage and a pull-out shelf.

The matching bookcases are finished on both sides and its shelves are adjustable.

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 Casual dining powerhouse Canadel introduced Loft at the recent High Point show.

This collection has a more industrial, rustic look that reflects an emerging urban trend in eastern Canada and the northeastern United States, where old factories have been converted into living spaces. The surfaces are imperfect and have the look of a rougher material while retaining the high standard of workmanship and finishes that buyers expect from Canadel.

 In many ways, 220 Elm is where Canada has planted its flag in High Point. Owned by Palliser CEO Art DeFehr, the building is home to Canadian furniture resources Casana, Buhler Furniture, Huppé and others, in addition to Palliser.

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says J.P. Deveault, director of marketing and commercialization for the Louiseville, Quebec-based manufacturer. The company shows in Toronto, and exhibits at both High Point and Las Vegas, because 80% of its buyers are from the United States, where Deveault says things are improving.

“What we're seeing is that dealers who decided to quit our products when the economy fell apart are now coming back and asking to get our products again,” he says. “Customers are asking for higher-end products.”

Canadel’s market is in the medium to high-end price points. Deveault believes retailers, and by extension their customers, have tired of cheaply made imports and are now searching for value from domestically produced goods.

“High Point is a good place to be for sure,” he says.

“The problem is not the market. The problem is that the environment is changing and we are evolving along with it. Everything has been working in High Point for years, so why try to change something that’s been working for so long?”

In its National Furniture Mart showroom this spring, Canadel introduced Loft, a collection which has an industrial, rustic look, inspired by the conversion of old factories in eastern Canada and the northeastern

United States into living spaces. Accordingly, the surfaces are imperfect and have the look of a rougher material, while retaining the high standards of workmanship and finishes that Canadel is known for.

Ken Loh, vice president of sales for A.P. Industries, also says High Point went well this spring. “The market was well-attended, the reception to all of our new products was highly respected as having traction through to the consumer, and that resulted in strong orders,” he reports.

Even so, economic conditions are still constraining many consumers from considering domestically produced goods because of the higher cost. To counter that, A.P. Industries introduced a new division, Allure, a lower-cost, lower-price line.

A.P. product can retail for $3,999 to $4,200 for a bedroom set, while an Allure bedroom can retail for $1,499. The difference is due to a robotic system called Arthur, which was installed a year and a half ago, replacing five positions on the plant floor. Allure's styling is described as traditional transitional leaning toward contemporary, and product is offered in seven finishes.

“The goal was to have a starting price point competitive with imports, and we are now running production for distribution,” Loh says.

The recent market was the best the Laurier-Station, Quebec-based adult and youth bedroom producer has seen in three years, he says, drawing buyers ranging from individual interior designers to Top 100 retailers.

“High Point will remain the destination until some drastic change in the market forces a change to a more suitable location,” Loh says. The family-owned company's High Point space is in the IHFC; it also shows at the Toronto market.

At metal furniture specialist Amisco Industries, Guy Patenaude, vice president of sales, says the efforts producers put into drawing buyers to the market beforehand is the key to success. “This market is a big part of our business,” he says. “High Point was really good for us this year, in every possible way. The attendance was way up from last year’s spring market.”

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MATTRESSES>>>

All about GEL

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

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

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

G

EL MATTRESSES GRABBED THE

spotlight nearly two years ago when Serta International launched its expertly marketed iComfort line of memory foam mattresses infused with the brand’s MicroSupport gel. It proved a hit with retailers and consumers after its August 2011 introduction, and now almost every bedding resource carries at least some gel models. Many consumers, when surveyed, say gel products help them sleep cooler.

Serta’s iComfort slogan — Smarter, Cooler, Better — sums up how the gel should feel against the body, and has the added benefit of making the mattress seem innovative and cutting edge.

In reality, gel is just a single component designed to enhance the typical innerspring or memory-foam mattress. Mainly, it's designed to rectify or offset the additional heat associated with sleeping on memory foam.

“Gel is not a mattress,” says Les Channell, national sales manager for Serta Canada. “It’s a component in the mattress and usually a small one, often under 10%.”

Still, gel figures prominently in Serta’s products.

“Right now, we have nine different gel mattress collections, and there can be up to 15 models within a

collection,” says Channell. Serta's Essential, Pureflex, Slumberform, Perfect Sleepers, iSeries, Cool Elegance, Bellagio and, of course, iComfort lines all feature gel.

Other manufacturers quickly jumped on the gel bandwagon.

“If something has legs, everyone will copy it,” says Gerry Morris, an author, speaker and sales consultant based in Greenville, Texas, who specializes in the mattress industry. “You copy something and then combat it. People said that memory foam felt great but was too hot, and that story got out and took hold and gel became the solution. It’s all about perception.

It’s an enhanced feel to memory foam. It’s new and blue and you can hold it in your hand.”

Valerie Stranix, chief marketing officer of Toronto-based Rev Sleep Corp., says her company has a lot of plans for gel. Rev’s Sommex and

 Rev Sleep’s NexGel brand of gel-infused memory-foam mattresses uses this honeycombshaped gel polymer in its construction. The crumbling walls are designed to make the user feel as if he or she is sleeping in zero gravity.

The company says it also helps with circulation and pain management.

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 Sealy Canada has engineered its own gel-infused memory foam, which has been incorporated into almost all its Posturepedic PROBACK collection, including traditional innerspring models as well as pocketet coil and specialty mattresses.

(Inset) Sealy Canada’s ProGel memory foam is infused with Outlast, a material that aids in cooling accumulated heat during the night. Outlast is often compared to ice in a drink, which as it melts absorbs heat, keeping the drink at the desired temperature.

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ObusForme brands feature gel products, with the latter boasting the Comfort Wave mattress, with an entire gel layer built into the mattress. The Comfort Wave, inspired by the medicinal benefits commonly associated with gel, aims to give sleepers support in the lumbar, hip and shoulder regions. ObusForme’s tri-zone iSOGEL is a memory-foam mattress infused with gel beads.

Some of Rev’s most unusual gel concoctions are found in its NexGel brand. “It’s a gel polymer developed for medical use and is shaped like a honeycomb,” Stranix says. “It’s layered into the mattress and has crumbling walls and makes you feel like you’re sleeping in zero gravity. It helps with circulation and pain management.”

Sealy Canada also has enthusiastically embraced the gel revolution.

“Sealy recognizes the advantages of advanced gel-infused memory foam, and we've engineered our own formulation of PostureGel memory foam into most of our Sealy Posturepedic PROBACK products,

including traditional innerspring, pocketed coil and specialty mattresses,” says Simon Jervis, vice president of marketing for Sealy Canada.

“We recognize the advantages of PostureGel memory foam over that of traditional memory foam, so we have switched most of our applications of memory foam to the advanced PostureGel memory foam,” he says. “We also have been able to incorporate gel into our Smart Latex foam and are using it in many of our product lines, including Stearns & Foster, as well as our new Smart Latex specialty mattresses.”

Zedbed, the Shawinigan, Quebec-based specialty mattress producer, also has an extensive collection of gel offerings.

“Right now, our four series of mattresses (R2, ZX, Pure and Latex) have at least one layer on top that offers the properties of gel,” says David Gélinas, Zedbed’s director of marketing. “We have about 30 different kinds of mattresses with gel. It is slowly becoming the norm. People hear about gel and want products that offer it, so our retailers are asking us to offer more and more.

“Our most recent innovation, the G+, lets the customer control the impact the gel will have on his or her body, meaning he or she can decide where the gel pockets will be used,” he says. “They can decide they want more support for the lower back or less heat at the head. We have four mattresses with this option.”

Stranix says a full 60% of Rev’s shipments are gel-infused, and Gélinas says a whopping 98% of Zedbed’s shipments feature some kind of gel. Many manufacturers believe gel is an essential component of any collection, and some expect the amount of gel products in their portfolios to increase. The consensus is that all manufacturers and retailers need to get on board.

“I expect it [gel] to grow,” says Serta’s Channell.

“Serta, Simmons and Sealy are all gel crazy, so I think you’ll see it grow. The second-tier guys will have gel as well.”

As for what portion of a company’s offerings should be gel-oriented, opinions differ.

“A dealer should ideally have three collections with three models — firm, plush and super-plush — and all those models should have gel,” says Channell.

For Zedbed’s Gélinas, variety is key but there are no hard and fast rules as far as numbers go.

“Any retailer should offer a mattress in every comfort category, firm, semi-firm and soft, with gel in order to reach a wider range of consumers,” he says. “I don’t think there are any minimums or maximums. It’s more a question of adjustment to the competition. You need to have a good range to

reach more consumers and be able to present the gel benefits.

“Some of our retailers currently offer over 12 different mattresses with gel crystals,” Gélinas says.

“Salespeople need be able to explain why a mattress with no gel, sold at the same price, is just as good as those with gel.”

Gel is popular not only because it's a substance in the famed Dr. Scholl’s shoe insoles, but because it

comes at relatively reasonable, albeit varied, price points. Rev’s iSOGEL mattresses, for example, can run consumers anywhere from $599 to $899, while Comfort Wave price points range up to $1,399. At the high end, a few NexGel models retail at $2,999.

Pricier mattresses often mean better margins for retailers. “Retailers can get better margins

because gel gives them the ability to be up on new technology,” says Stranix. “There is price compression, but it’s not as bad as in other segments such as memory foam.”

Stranix estimates gel has between a 30 percent and 40 percent market share in Canada, which she expects to grow. Zedbed’s Gélinas estimates gel's market share at around 60 percent. Others, such as Sealy’s Jervis, say it’s impossible to estimate gel's market share, but it’s obviously picking up steam on most retail floors.

Still, some sleep aficionados believe the gel explosion is as much or more a product of hype and on-point marketing than it is a true scientific or medicinal breakthrough.

 Zedbed is currently offering four series and some 30 models sporting at least one layer of gel, including Rainbow, shown here. The Canadian specialty producer believes gel will only become more popular.

The gel parade Here are some gel products making waves.

Serta Canada: The iComfort line Made with three layers of Cool Action gel memory foam, this mattress features the Pop Top, pairing Cool Action with the brand’s KoolComfort memory foam at the top of the mattress. This mattress can be used on an adjustable frame.

Rev Sleep: NexGel Euro Memo mattress This mattress features patented honeycomb OrthoGel columns and a plant-based memory foam layer. It’s designed to alleviate muscle tension.

Sealy Canada: Posturepedic PROBACK ProGel Made with gel-infused microcapsule memory-foam technology, ProGel is designed to retain its shape and recover faster, encouraging a steadier sleep.

Zedbed: R2 Series The R2 series, like the brand’s ZX, Pure and Latex collections, offers mattresses with gel properties. The high-density, eco-friendly memory foam is designed to rapidly revert to its original shape after use.

“From a consumer standpoint, people respond to temperature issues, especially people who live in warmer climates,” says Tim Hammonds, a sleep specialist with Ashley Furniture. “But gel isn’t the be all and end all of temperature. Gel in and of itself does not do what some people say it does.”

Hammonds cites the case of Tempur-Pedic, the company that changed the mattress world with its HomeGoodsOnline.ca

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So what was that about “other cooling technology”?

Tempur-Pedic, the brand that’s eschewed gel, has surveyed consumers who use its memory-foam mattresses. The studies, conducted by The Blackstone Group in 2008, 2010 and 2012, found that only 4% or respondents said heat was an issue.

Having said that, Tempur-Pedic – now Tempur-Pedic Sealy International, with the completion of its recent acquisition of Sealy Inc. – is still working to address the heat issue with its TEMPUR Material Cell, which is designed to allow heat to move away from the body by ensuring the mattress gives the warmth a “path of least resistance” to travel through.

Tempur-Pedic also argues that gel breaks down, allowing heat near the body.

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pioneering introduction of memory-foam mattresses, and which still refuses to use gel. “Tempur-Pedic says the science isn’t there, but consumers don’t hear that,” he says.

While Hammonds argues consumer response to gel is at least partly a by-product of slick marketing, he does say that given gel’s current appeal, it would be to a manufacturer’s detriment not to test the product, or at least not play up their brand’s use of other cooling technologies.

“Tempur-Pedic should have jumped on the bandwagon by saying they had cooling technology,” he says. “We know, through studies and social media, that a story, whether it’s accurate or not, will stick.

People might say gel helps them sleep cooler even if it doesn’t.”

Pages 2-3 Phoenix AMD International 41 Butler Court Bowmanville, ON L1C 4P8 T: 800.661.7313 F: 905.427.2166 www.phoenixamd.com Page 5 Zedbed 5352 rue Burrill, P.O. Box. 21066 Shawinigan, Quebec G9N 8M7, Canada T: 819.539.1112 F: 866.533.1151 www.zedbed.com Page 7 Worldwide Homefurnishings 200 Romina Drive Concord, ON L4K 4Z7 T: 905.660.9957 F: 905.660.9657 www.whionline.com .

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Pages 10-11 Serta Canada/Star Bedding Products 40 Graniteridge Road, Unit #2 Concord, ON L4K 5M8 T: 800.663.8540 www.sertacanada.com Page 15 Natura World c/o Rev Sleep Corporation 53 Bakersfield Street Toronto, ON M3J 1Z4 T: 800.567.7933 F: 888.567.7934 www.naturaworld.com Pages 18-19 Cantrex Nationwide 3075 Thimens Blvd, Suite 300 St-Laurent QC H4R 1Y4 T: 877.226.8739 F: 514.745.1741 www.cantrex.com

WHAT’S THE NEXT BIG THING? Hammonds sees an emerging trend towards more temperature-neutralizing hybrid beds made with different foams, gels and latex, He says they might work better for some shoppers.

“People are always trying to come out with something new, and gel has energized the adjustable bed category,” says industry consultant Morris.

“They’re really taking off now.”

Rev's Stranix sees a bright future for gel-enhanced accessories. “The world of polymer development and foam application is a growing one, and we’re seeing more introductions in these two channels. We’re all focusing on naturally derived components and there have been new developments in fabrics. There has also been experimentation with probiotic-infused fabrics, wool fabrics and scented fabrics.”

Sealy’s Jervis agrees with Hammonds that mixing and matching is picking up speed.

“Hybrid mattresses are definitely the next breakthrough in mattress technology,” he says. “It is just beginning to emerge as the most exciting thing to happen to mattresses in many years. We are currently launching the Posturepedic MyCloud hybrid, which is a combination of half foam, including PostureGel memory foam, and half innerspring. We believe this category will gain popularity with retailers. It’s the best of both worlds.” HGO – A frequent contributor to the HGO Merchandiser, ASHLEY NEWPORT is a Toronto-based freelance

journalist who primarily writes for trade and business publications. Her specialties include food, hospitality and emerging social/business trends.

Page 23 Magnussen Home Furnishings 66 Hincks St, Unit 1 New Hamburg, ON N3A 2A3 T: 519.662.3040 F: 800.267.3278 www.magnussen.com Page 29 ObusForme c/o Rev Sleep Corporation 53 Bakersfield Street Toronto, ON M3J 1Z4 T: 800.567.7933 F: 888.567.7934 www.obusforme.com Page 32 Durham Furniture 450 Lambton Street W Durham, ON N0G 1R0 T: 519.369.2345 F: 519.369.6515 www.durhamfurniture.com

Page 35 Canada Counts Windsor Bay Communications Inc. P.O. Box 3023 Brighton, ON K0K 1H0 T: 613.475.4704 F: 613.475.0829 www.CanadaCounts.ca

SAY GOOD MORNING to a fresh start each day!

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

Call us today for an appointment with your local representative and for details on how you can become an authorized OBUSFORME® dealer. (800) 567-7933

obusformemattress.com

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SOCIAL SCENE>>>

Steve Amis of Springwall Sleep Products is seen here with Beth Dugan of IMAX Corp.

MEGA GROUP:

Hanging Out in Vancouver M EGA GROUP, THIS COUNTRY ’S

largest co-operatively owned buying and marketing group for big ticket home goods, held its 2013 annual general meeting and conference at the Fairmont Hotel in beautiful downtown Vancouver in early May. The annual four-day event was attended by some 320 people, including Mega shareholders, members, suppliers and senior staff members. It’s not only the group’s most important annual event; it’s one of the largest furniture industry gatherings in Canada.

At this year’s event, members were briefed about the current state of affairs within both the group and the industry as a whole; were inspired by the Afterburner team, a U.S.-based group of former fighter pilots who show how their “zero tolerance for error” training model can be applied to business planning and execution; learned more about selling mattresses from Bob Meunkel of Serta International; honoured excellence among their suppliers; and spent time getting re-acquainted with old friends and new colleagues. HGO

Todd Smith (centre), general merchandise manager of Mega Group, presents the 2013 Supplier Recognition Award in the bedding category to John Stasiw of Simmons Canada.

Looking on at left is Simmons sales manager Jim Warnock.

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

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

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PHOTOS BY FRANÇOIS BOISVERT/MEGA GROUP

Mega Group also recognized its suppliers for excellence at this year’s meeting. Here, Todd Smith (left), general merchandise manager, presents the 2013 Supplier Recognition Award in the service category to Dawn Rowe, vice president of Phoenix AMD International.

 Mega Group was greeter upon their arrival at the

 Jim Coleman of Coleman’s BrandSource Home Furnishings in Corner Brook, Newfoundland), Donald Wigelsworth of Midwest Furniture Rentals in Grande Prairie, Alberta; and, Colin MacPherson of Burkes BrandSource Home Furnishings, in Sydney, Nova Scotia are seen here hanging out at the opening reception.

Todd Smith (left), general merchandise manager of Mega Group, presents the 2013 Supplier Recognition Award in the case goods category to Ken Napier, vice president of Canadian sales for Ashley Furniture.

Hotel Fairmont Vancouver by this handsome gentleman.

Here, Todd Smith (left), Mega’s general merchandise manager presents the 2013 Supplier Recognition Award in the appliance category to Peter Lazenkas of Mabe Canada.

 Wayne Hambly (right), of Hambly’s BrandSource Home Furnishings in Charlottetown, Prince Edward Island and Mega’s current chairman of the board is seen here chatting with Kevin Leier, the group’s chief financial officer as he readies to call the meeting to order.

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<<<ON RETAIL

Why buy Canadian?

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

BY ALIXE MACRAE

W

HEN IN PETRA ON VACATION A

few years back, I tried to buy Jordanianmade souvenirs. Believe it or not, that wasn’t as easy as it might sound, although I did finally find some, buried amongst a plethora of goods sporting the ubiquitous “Made in China” label. When visiting the Baseball Hall of Fame in Cooperstown, N.Y., I went looking for a T-shirt that was “Made in the USA.” It took 45 minutes, but I found one. At US$20, it wasn’t overpriced, but I’ll wager the markup was a lot lower than those imported from who-knows-where displayed alongside.

Over the past two decades, in the search for higher margins and lower prices, retailers have been sourcing product – in many categories, not just furniture – from low-wage countries, mostly on the other side of the Pacific Rim and mainly, when it comes to the product on our floors, from what is properly called The People’s Republic of China. Everyone who’s been in our industry for more than about a week knows why this happened and what the consequences have been.

Although the recent tragedy in Bangladesh didn’t and doesn’t affect this country’s furniture, mattress and major appliance industries, it does provide insight into the downside of sourcing

product from Third World countries. While driving costs down is undoubtedly a good thing, most people would probably say the lives lost were worth more than the pennies saved on the final bill for the items in question.

In fact, it wouldn’t surprise me if the tragedy hurts Joe Fresh’s profitability for years to come, even though garment workers in Bangladesh are only paid the outrageous sum of 22 cents an hour – far lower than the 33 cents workers earn in Cambodia or the 51 cents an hour earned in India. According to KI-Media, it will take months, even years for the Bangladeshi industry to regain that market despite assurances from a fair sample of corporate executives that they will not only rebuild the factories, but will inspect them more faithfully.

But this is only one part of the story. The obverse of this particular coin can be found in China, whose foray into furniture manufacturing has produced such overwhelming structural change in both Canada and the United States.

According to a recent report published on Bloomberg’s web site, the days of cheap product coming out of China – and indeed the rest of Asia – may be over. Wages doubled between 2000 and 2011.

The report quotes Ernie Kohn, executive director of Koda – a HomeGoodsOnline.ca

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Each year, the Chesterfield Warehouse, a small upholstery boutique in Stratford, Ontario, has a Made-in-Canada furniture sale on Canada Day.

Singapore-based furniture manufacturer that counts Pottery Barn, Williams-Sonoma and Cost Plus among its U.S. retail clients – as saying retailers who don’t like his company’s recent price increase can take it or leave it.

Kohn also said Koda isn’t even passing along the full cost of rising wages across Asia.

The other critical factor when buying from Asia is the cost of getting it into your warehouse and onto your floor. The best things in life may be free, but for everything else it’s the cost, plus shipping and handling. And guess what, these costs aren’t going down and aren’t likely to ever to go down.

Evidence of this can be found in the increasing stock prices of the major Asian shipping companies. Their shares are recording outlandish year-to-date gains of 20.5% to 37.5%. This alone is an indicator that demand is increasing, so prices will go up.

Both increasing wages in China and higher shipping costs will directly affect the financial performance of every independent furniture retailer that chooses to buy imported goods, whether by direct container or from a Canadian distributor. Before you order that container of brown and black leather sofas, take time to calculate your true landed cost, which includes the initial cost, duty and shipping, plus the time it takes to actually put the program together.

Compounding these problems is the after-sale service problem.

Speak to anyone who’s had to order a part from China. If they’re lucky, there’s only a three or four month wait. This will tie up your inventory, your customers will not be impressed, your reputation will suffer and the suite will languish in your warehouse.

Back when I was an active merchandiser, my store received an order of broken chairs from China. Our supplier’s subcontractor decided a two-cent discount was worth shifting production to a new factory. The chairs were garbage and nothing could be done to fix them. Our vendor suffered, we suffered and our customers walked to another retailer.

Issues like these have prompted a small but growing desire on the part of many Canadian furniture retailers to come home and buy from Canadian manufacturers. It’s about time.

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When you order from a Canadian manufacturer, you can order one or more – the old “one to show, one to go” formula is making a comeback. How many would you have to order to fill a container from overseas? And what would be the ROA, or return on assets?

To figure that out, use ThisMoney.com’s formula: net profit margin times asset turnover. Do the calculation and see what results. Buying Canadian is much more profitable!

Consider the just-mentioned broken chair problem. If they had been sourced from a Canadian manufacturer, they would have been replaced immediately. And the factory likely would have paid the shipping. No waiting, no hassle, just a satisfied retailer with happy customers.

If allowed into the customers’ homes, those broken chairs would have been returned in spades, and our customers would have slammed our store to everyone they knew. Even though our vendor reimbursed us, we still had “dead” inventory.

In a scenario such as this, it was all too possible the original manufacturer in China could have gone out of business or jumped into electronics. The paperwork, phone calls and materials needed to sort this problem out would have been horrendously expensive.

What will that claim be 10 years from now? The retailer will eat the loss, and it won’t be a great lunch.

But don’t think this problem is confined solely to China. I once asked the president of a large Canadian furniture manufacturer and importer if I could see his United States price list. He refused. Guess what that told me? He needed to learn not to gouge his Canadian customers, since it was obvious he was selling the same product for less south of the border.

The other key advantage to buying Canadian is the improvement in cash flow. With a Canadian manufacturer, chances are the independent retailer can more effectively “sell and buy” – that is, sell that sofa, bedroom suite or dining room to the customer before ordering it from the manufacturer, especially with today’s advanced quick-ship programs. This is the ideal situation in terms of cash flow, and if terms are negotiable (or you’re a member of a buying group), you can negotiate the best deal possible.

A former national manager with Sears Canada first introduced the sell-and-buy concept in major appliances almost two decades ago. Profitability in that category jumped. It’s a system Sears still uses today, and so do many others.

Some overseas vendors, especially those with warehouses in North America, are able to implement a limited sell/buy program, but in my experience they’re more costly than those from Canadian producers.

Remember what Sophie Tucker said about cash flow: “From birth to age 18, a girl needs good parents; from 18 to 35 she needs good looks; from 35 to 55 she needs a good personality; and from 55 on she needs cash.”

Cash flow is the life blood of every furniture retailer. My experience has taught me cash flow is maximized when buying from a Canadian manufacturer.

Done right, it’s a lot cheaper to fly the Canadian flag when merchandising your floor. Be smart, be profitable. Buy Canadian. HGO – Home Goods Online’s most widely read blogger/contributor;

ALIXE MACRAE is one of this country’s best-known merchandisers.

She has held senior posts at such well-known Canadian retailers as Stoney Creek Furniture, Sears Canada and The Bay.

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 and appliances

Canada Counts

• Learn about her preferred store type; and, • Learn about the important factors

A SURVEY OF CANADIAN CONSUMER BUYING INTENTIONS FOR FURNITU RE, MATTRESSES , MA JOR APPLIANCES , TELEVISIONS AND OTHER BIG TICKET HOME GOOD S

influencing the buying decision

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

The report covers the nation as a whole, as well as chapters on each of the major regions: Western Canada; Ontario; Quebec and Atlantic Canada. It opens with an introductory essay on the current state of the Canadian consumer.

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BY THE NUMBERS>>>

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

Indepen as ch

BY MICHAEL J. KNELL

I

T WILL COME AS NO SURPRISE TO ANYONE IN

this country’s furniture and mattress industry that there were far fewer independent retailers operating in Canada at the end of 2011 than at the end of 2008, our industry’s top benchmark year.

During the same period, the number of stores operated by national and regional chains climbed 15%, but it will be a surprise to many that this expanded presence doesn’t seem to have done them much good.

That’s two of the conclusions to be drawn from the latest Annual Retail Trade Survey published by Statistics Canada. The federal bean counter has just released results of the 2011 survey, which offers some interesting insights into the state of big-ticket home goods retailing in this country. (It takes about 18 months for the agency to pull together the report. Results of the 2012 survey should be available during the late spring of 2014.)

KEY DEFINITIONS In analyzing the data, here are a few things to keep in mind.

First, StatsCan defines a furniture store as a retail establishment that generates at least 51% of its annual revenue from the sale of furniture (indoor and outdoor) and mattresses. The balance can come from any other product category but, generally speaking, it involves sales of big-ticket home goods categories, including major

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HGO merchandiser

appliances, consumer electronics (particularly televisions and audio systems) and floor covering.

StatsCan also divides retailers into two broad categories: chain stores and non-chain stores, which HGO refers to as independent stores. A chain store operates more than four stores; an independent, no more than four freestanding outlets.

This means that two members of Canada's Top Five full-line furniture retailers are not included in furniture store statistics – this country’s IKEA and Sears stores. Both are classified as general merchandise stores.

Included in the numbers are Leon’s Furniture; its newly acquired subsidiary The Brick; Brault & Martineau; and BMTC Group’s EconoMax and Ameublesment Tanguay banners. Also included are such mattress specialists as Sleep Country Canada and Mattress Mattress.

The survey doesn’t cover such performance benchmarks as sales mix, traffic counts and advertising spending.

Finally, the survey reports in current Canadian dollars, unadjusted for inflation. Some would say this means the industry has even farther to go before it returns to 2008 revenues.

STORES AND SALES In 2008, this country’s 4,458 furniture stores generated operating revenues of slightly more than $10 billion. At the end of 2011, the

ndents stay strong hains add stores

store count had fallen to 4,183 and revenues were down to $9.57 billion. In 2008, average store revenue was $2.25 million, rising to $2.29 million per unit at the end of 2011 – not bad, but not all that good when compared to stores in other major retail categories.

More detailed numbers are given in the chart accompanying this story.

The chain stores had combined revenues of $6.27 billion in 2008, generated by 924 stores. Although recovered somewhat from the two prior years, sales at the end of 2011 were $6.16 billion, below the 2008 level, and generated by 1,061 units, an increase of 137 stores since 2008. Average revenue per unit fell from $6.78 million to $5.81 million over the period.

Here’s the kicker: The additional units failed to significantly improve market share. In 2008, chains had a market share of 63%.

At the end of 2011, it was 65% – hardly a robust increase.

At first blush, independent stores had a rough ride between 2008 and 2011. The 3,532 stores had combined revenues of $3.77 billion at the end of 2008. At the end of 2011, combined revenues had fallen to $3.41 billion, while the store count dropped by 412 units to 3,122.

Thus, average revenue per store actually increased slightly from $1.07 million to $1.09 million, evidence of the resilience of the independent store channel and its continuing popularity with Canadian consumers.

CONTAINING COSTS Managing the costs of doing business is always top-of-mind with all retailers. Statistics Canada looks at three key areas: the cost of labour, the cost of goods sold, and operating expenses. In all three categories, the survey reveals the independents are outperforming the chains on a store-by-store basis.

In 2008, the industry’s cost of goods sold amounted to $6.03 billion. In 2011, it had fallen to $5.72 billion.

For the chains, the $3.81 billion spent on goods in 2008 fell to $3.74 billion in 2011. After falling 6.2% in 2009, the cost of goods sold climbed 2.1% and 2.5% in 2010 and 2011, respectively.

The independents appear to be doing a better job of controlling costs of goods sold. It dropped from $2.21 billion in 2008 to $1.98 billion in 2011, the third consecutive year of decline.

Wages and benefits are another area where independents seem to have done a better job of controlling costs. As an industry, furniture retailers spent $1.6 billion on the cost of labour in 2008, which slipped to $1.57 billion in 2011.

But the cost of labour rose dramatically for the chains – from $931.2 million in 2008 to $974.5 million in 2011. Of course, the 137 new stores they opened during that time had to be staffed.

For the independents, the cost of labour was $670.4 million in 2008 and $596.4 million in 2011, the first year these expenditures has risen after falling 5.3% and 8.5%, respectively, in the previous two years.

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In operating expenses, independents again appear to be doing better. Furniture stores had total operating expenses of $3.58 billion in 2008, which fell to $3.49 billion in 2011.

Chain stores incurred operating expenses of $2.15 billion in 2008, climbing to $2.17 billion in 2011, perhaps also attributable to those 137 new units. For independents, 2008 operating expenses of $2.21 billion were down to $1.98 billion in 2011, the third consecutive year of decline.

MARGINS, PROFITS AND SALES PER SQUARE FOOT In two of these three measures, the chain stores outperformed the independents, but both have seen minor improvements in both gross margin percentage and sales per square foot.

In 2008, furniture stores had a collective gross margin of 40%.

In 2011, it was 40.2%. The figures have remained essentially stable, at 39.6% in 2009 and 40.5% in 2010.

Chain stores had a gross margin of 39.1% in 2008, creeping up to 39.3% in 2011, a slight retreat from 40.2% in 2010. The independents also had a fairly consistent gross margin over those four operating years – from 41.3% in 2008 to 41.9% in 2011.

Although they were outperformed in all three major cost areas, the chain stores outperformed the independents in operating profit. Industry-wide profits went from 4.3% in 2008 to 3.8% in 2011, peaking at 5.4% in 2010.

Chain stores recorded operating profits of 4.8% in 2008, dipping to 4.1% in 2011, still a higher figure than for the independents. The independents were at 3.6% in 2008 and 3.2% in 2011. But operating profits actually improved for independents in 2011 after dropping to 2.3% and 2.6% in the prior two years.

The chain stores saw their operating profits fall in 2011 from 7% in 2010.

The chain stores also outperformed the industry on the critical sales-per-square-foot measure. The industry collectively had sales per square foot of $219 in 2008, and after peaking at $245 in 2010, settled at $238 in 2011.

Chain stores recorded three consecutive years of declines in sales per square foot, falling from $273 in 2008 to $257 in 2011, but those figures were substantially higher than those for the independents. The independents had sales per square foot of $157 in 2008, falling to $139 in 2009, climbing to $217 in 2010, then dropping to $205 in 2011.

CONCLUSIONS

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

STORE TYPE

2008

2009

2010

2011

10042.0

9445.8

9672.1

9574.4

-5.9

2.4

5884.1

6107.0

-6.1

3.8

0.9

63.0

63.0

64.0

65.0

3773.3

3561.7

3565.1

3412.1

-5.6

2.9

-4.2

1484.9

1483.6

1570.9

-7.3

0.0

5.8

931.2

850.0

908.8

974.5

-8.7

6.2

7.9

670.4

634.9

580.9

596.4

-5.3

-8.5

2.7

5705.4

5756.4

5724.4

-5.4

0.9

-0.6

3577.6

3651.9

3741.3

-6.2

2.1

2.5

2127.8

2104.5

1982.1

-3.9

-1.1

-5.8

3576.7

3327.6

3393.1

3486.7

-6.9

1.9

2.7

2154.2

1974.0

2026.6

2165.5

-8.4

2.7

6.9

1422.5

1353.6

1366.4

1321.3

-4.8

0.9

-3.3

4357

4195

4183

-2.3

-3.7

0

953

966

1061

3.1

0.1

9.8

3404

3229

3122

-3.7

-5.1

-3.3

OPERATING REVENUE All stores Percentage change

Chain stores

6268.7

Percentage change Market share

Independent stores Percentage change

6162.3

COST OF LABOUR All stores

1601.6 Percentage change

Chain stores Percentage change

Independent stores Percentage change

COST OF GOODS SOLD All stores

6029.4 Percentage change

Chain stores

3815.0

Percentage change

Independent stores

2214.5

Percentage change

OPERATING EXPENSES All stores Percentage change

Chain stores Percentage change

Independent stores Percentage change

NUMBER OF STORES All stores

4458 Percentage change

Chain stores

924

Percentage change

Independent stores

3534

Percentage change

GROSS MARGIN (%)

If nothing else, the Annual Retail Trade Survey indicates the independent furniture store is not likely to become extinct any time soon. The unit growth of the chains hasn’t eroded that much of their market share.

The independent store operator seems to have greater flexibility when it comes to controlling both operating expenses and wages.

While the difference isn’t all that great, his gross margins are consistently better, and despite a setback in 2011 from 2010, the trend curve for sales per square foot seems to be in his favour. HGO – MICHAEL J. KNELL is the publisher and editor of Home Goods Online.

All stores

40.0

39.6

40.5

40.2

Chain stores

39.1

39.2

40.2

39.3

Independent stores

41.3

40.3

41.0

41.9

Total all stores

4.3

4.4

5.4

3.8

Chain stores

4.8

5.6

7.0

4.1

Non-chain stores

3.6

2.3

2.6

3.2

Total all stores

219.0

201.0

245.0

238.0

Chain stores

273.0

260.0

261.0

257.0

Non-chain stores

157.0

139.0

217.0

205.0

OPERATING PROFIT (%)

SALES BY SQUARE FOOT

Source: Statistics Canada’s Annual Retail Survey; Windsor Bay Communications Survey covers all stores classified under North American Industrial Classification System (NAICS) 4421 Note: Dollar figures are based on Statistics Canada estimates

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Continued from page 22

 At the heart of High Point’s market district, the International Home Furnishings Center is the largest of the 180 or so buildings hosting exhibitors for the semiannual trade event. It's also home to a number of Canadian furniture, home furnishings and decorative accessory resources, including Durham Furniture, Magnussen Home, Zedbed, Sunpan Model Home and West Brothers and others.

Patenaude says Amisco, a producer of kitchens, dining room and bedrooms, had a lot of new product in its IHFC Design Wing showroom and made sure retailers large and small knew that beforehand.

“We sent out invitations, they came, and we wrote orders,” he reports. “It’s about planning and having good programs and being persistent. You cannot go to High Point and have nothing new to show. You are dealing with professional buyers, and if you have nothing new to show, you have ruined yourself for the following show.”

Tom Halvorsen, vice president of sales and marketing for West Brothers, the Hanover, Ontario-based maker of solid-wood bedroom, dining room, entertainment and occasional furniture, says High Point is the place to be.

That's because both Canadian and American retailers come each spring and fall, but not everyone is willing to travel to Toronto in January.

West Brothers shows only at the High Point market.

It left its showroom in Toronto’s International Centre about two years ago.

“We really found the High Point April market to be very promising in traffic, in new accounts and in orders written,” says Halvorsen. “We had pretty high expectations and our expectations were pretty close to met.”

An IHFC tenant, West Brothers’ main focus at the April market was a new concept in home office called Workspace, comprising three collections, with desks and storage units intended to look more like home décor.

Halvorsen says the recent economic downturn resulted in pent-up demand among consumers, and he noticed it this spring. “This was the first (market) in a couple of years where I haven’t experienced pessimism on either side of the border,” he says. “There was a sense, an expectation that things are getting better.” HGO – MARC BARNES is a freelance writer based in Greensboro, North Carolina.

AT A GLANCE THE HIGH POINT MARKET The High Point Market Authority is the official sponsor and organizer of the High Point Market, held in the north-central North Carolina city each April and October.

Featuring over 2,000 exhibitors spanning every category, style and price point of furniture, home furnishings and decorative accessories, the wholesale market attracts tens of thousands of visitors from over 100 countries, and has established itself as the world’s leading industry event.

Some facts about the market • It includes some 180 buildings with about 11.5 million square feet of exhibit space.

• Approximately 75,000 industry professionals attend each market, including retailers, interiors designers, sales representatives, company executives and members of the press.

• Tens of thousands of new products are shown each market.

• The official guide lists about 65 exhibitors from Canada.

• Some 10% of attendees are international, including nearly 3,000 from Canada.

• Canada is the largest non-U.S. source of both exhibitors and attendees.

Contact information ADDRESS: 164 South Main St., Suite 700, High Point, NC 27260 PHONE: (336) 869-1000 WEB SITE: www.highpointmarket.org TWITTER CHANNEL: @hpmarketnews TWITTER HASHTAG: #hpmkt Future dates 2013: Oct. 19-24 2014: April 5-10; Oct. 18-23 2015: April 18-23; Oct. 17-22 2016: April 16-21; Oct. 15-20 2017: April 22-27; Oct. 14-19

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HomeGoodsOnline.ca

HGO Merchandiser is published by

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Windsor Bay Communications Inc. P.O. Box 3023, 120 Ontario St. Brighton, ON K0K 1H0 T: HGO 613.475.4704 F: 613.475.0829 merchandiser

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