HGO Spring 2024

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HOME GOODS MERCHANDISER

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VOLUME 12 ISSUE 1 | SPRING 2024 UNDERSTANDING BUYING BEHAVIOUR PM 40063056 INTEREST IN MATTRESS SUSTAINABILITY COZEY TAKES THE LEAP TO BRICK-AND-MORTAR +
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feature stories

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COSYING UP TO COZEY

Toronto’s retail scene just got a chic upgrade with Cozey opening its first-ever physical location, launching the once purely online furniture company into the omnichannel stratosphere.

10

THE SHIFT IN SHOPPING

The pandemic altered consumer behaviour and buying patterns for big-ticket home goods, but its impact wasn’t permanent, as rising interest rates and inflation have shifted the winds of change.

32

ENVIRONMENTALLY SOUND SLEEP SOLUTIONS

New consumer research conducted by the Better Sleep Council reveals consumers and retailers’ understanding of, and attitudes toward, sustainability in mattresses and other sleep products.

14

DECODING THE CONSUMER WALLET

Not all consumers are equal in retail. Generational cohorts spend their money differently in terms of dollar amounts and types of purchases in the home refresh market, which includes furnishings, appliances and decorative accessories.

42

WHITE-GLOVE SERVICE FOR RETAILERS

Vancouver-based upholstery resource Amax Leather Canada has introduced a new program that is designed to help brick-and-mortar stores boost sales while lowering overhead costs.

contents
front to back 4 FROM THE EDITOR 6 BY THE NUMBERS 10 THE CONSUMER 24 IN FOCUS 30 TRENDSPOTTING 32 SLEEP SHOP 34 THE SUPPLY CHAIN 40 RETAIL MATTERS 46 OBSERVATIONS

A NEW CHAPTER BEGINS

Welcome to the first MediaEdge-produced issue of Home Goods Merchandiser. I am both excited and honoured to take over the editorial reins from Michael Knell, who has steered the publication since its inception and established it as the unequivocal voice of the Canadian furniture, mattress and major appliance industries. While Michael has retired as the magazine’s chief, he remains in an active role as editor emeritus, serving as a trusted advisor to the MediaEdge team and an esteemed writer.

Ensconced in the big-ticket home goods industry for more than three decades, Michael’s knowledge is far more vast than mine; however, my life experience lends itself to the position bestowed upon me. Professionally, my career at MediaEdge spans 17 years, during which I’ve served at the helm of multiple titles, including, at present, Canada’s floor covering magazine Coverings. Beyond this, I am an interior decorator/designer by trade and a self-professed home goods enthusiast who is committed to carrying on Michael’s legacy work and leading the valued brand into its next chapter.

The newly redesigned magazine will provide a steady supply of engaging, meaningful content that you have come to expect and rely on to remain in the know. Committed to maintaining the brand’s original vision, we have carried over certain columns and contributing writers, and added new elements in this next stage of the publication’s evolution. I hope Home Goods Merchandiser will continue to be an essential part of your professional life — a resource that you depend on to keep up with the big-ticket home goods industry’s changing landscape.

In this issue, as in those past, we profile a Canadian company that has made an indelible mark on the industry. Launched during the height of the global pandemic, sofa-in-a-box company Cozey has quickly risen to become a leader in modular furniture. The Montreal-based startup recently expanded beyond being an online-only retailer to open its first physical showroom this past March.

Also returned is By the Numbers, which takes a deep dive into industry data and statistics. Michael delves into the state of the furniture retail sector in this first column of 2024. Business coach Donald Cooper is back, too, with the goal of helping retailers attract quality customers, close more sales and add dollars to their bottom line. Here, Donald discusses the different types of customer value.

Regular additions to the magazine include Trendspotting, which, as the name implies, showcases categoryspecific trends and explores what’s driving them, and Observations, where key leaders from throughout Canada’s furniture, mattress and major appliance industries share their insights and provide advice on timely, relevant topics. This issue, we look at the top upholstery fabric trends and four industry experts reflect on 2023, and share their thoughts on 2024, respectively.

I would like to thank everyone who contributed editorial and their insights to this issue. Knowledge shared allows for learning, ongoing discussion and professional growth.

If there are any topics you’d like to see covered in the future, please let me know. Your feedback is always welcome.

PUBLISHER

Kate Byers kateb@mediaedge.ca

PRESIDENT Kevin Brown kevinb@mediaedge.ca

ART DIRECTOR

Annette Carlucci annettec@mediaedge.ca

PRODUCTION

COORDINATOR

Ines Louis Inesl@mediaedge.ca

PROGRAMMATIC

ACCOUNT MANAGER

Rhea Sood rheas@mediaedge.ca

EDITOR Clare Tattersall claret@mediaedge.ca

EDITOR EMERITUS

Michael J. Knell mknell@mediaedge.ca

GRAPHIC DESIGNER

Thuy Huynh-Guinane roxyh@mediaedge.ca

DIGITAL MARKETING DIRECTOR Abhinav Dadarkar abhinavd@mediaedge.ca

SOCIAL MEDIA DIRECTOR Steve Chester stevec@mediaedge.ca

Home Goods Merchandiser is published four times annually — Spring, Summer, Fall and Winter — for Canada’s bigticket home goods industries. Subscriptions are free to qualified participants in Canada’s big-ticket home goods industries. Subscribe at www.homegoodsonline.ca. Readers from outside Canada may purchase subscriptions for $40 Cdn. For subscription inquiries, e-mail circulation@mediaedge.ca. Return undeliverable Canadian addresses to: Home Goods Merchandiser 2001 Sheppard Avenue East, Suite 500, Toronto, Ontario M2J 4Z8 MediaEdge Communications and Home Goods Merchandiser disclaim any warranty as to the accuracy, completeness or currency of the contents of this publication and disclaims all liability in respect to the results of any action taken or not taken in reliance upon information in this publication. The opinions of the columnists and writers are their own and are in no way influenced by or representative of the opinions of Home Goods Merchandiser or MediaEdge Communications.

Copyright 2024

Canada Post Canadian Publications Mail

Sales Product Agreement No. 40063056

ISSN 2291-4765

Published by circulation@mediaedge.ca

4 | HOME GOODS MERCHANDISER SPRING 2024
from the editor
2001 Sheppard Avenue East, Suite 500, Toronto, Ontario M2J 4Z8 © 2024 by MediaEdge Communications. All rights reserved.

RETAIL RESET

Furniture

store sales drop-off following explosion of business activity experienced during pandemic years

IN MANY WAYS, FURNITURE RETAILING IN Canada has remained remarkably stable over the past five years. While the global Covid-19 pandemic gave the sector a now evident and seemingly temporary boost in top line sales, an overview reveals the number of brick-andmortar furniture stores — defined as a retail establishment generating 51 per cent or more of its annual revenue from the sale of furniture, including mattresses, by Statistics Canada — hasn’t changed all that much during this time.

According to the national statistical office, at the end of 2019, the last full business year before the onset of the pandemic, there were 3,268 brick-and-mortar furniture stores operating in

the country. At the end of 2023, there were 3,253. This drop could be considered extremely minor when compared to other retail segments, such as clothing and convenience stores, particularly those operated by independent merchants.

It should be noted the 3,253 includes the 12 stores operated across southern Ontario by Lastman’s Bad Boy, which declared bankruptcy in November 2023, and closed its doors permanently before the end of 2024’s first quarter following a court authorized liquidation sale.

Even closely allied retail segments suffered greater losses. For example, the number of brickand-mortar electronics and appliance stores fell to 2,541 in December 2023, from 2,814 at the end of

2019 — a decline of almost 10 per cent. The industry saw similar losses among brick-and-mortar floor covering and home furnishings stores, too.

However, while Statistics Canada has a good handle on the number of brick-and-mortar retail establishments that can be found across the country, there is no such census for their e-commerce-only competitors. It’s unclear how many entities like Wayfair, Article, Rove Concepts, Goodmorning.com and Polysleep are active in the Canadian market, though it’s estimated there’s between 75 and 80.

This country’s four publicly held furniture retailers — Leon’s Furniture Ltd. (LFL), Sleep Country Canada Holdings Inc. (SCC), BMTC

6 | HOME GOODS MERCHANDISER SPRING 2024
by the numbers

Group and Easyhome (part of non-prime consumer lending specialist GoEasy) — operated a total of 768 brick-and-mortar stores at the end of 2023, accounting for approximately 25 per cent of furniture stores across the country.

Add to this the 16 full-service stores operated by Ikea Canada, this country’s second largest furniture retailer. There are also several other retailers with more than a handful of storefronts in Canada. Among these are Montreal-based contemporary furniture specialist Structube (75 stores); Urban Barn, part of Vancouver-headquartered investment firm the Stern Group (57 stores); and Ontario-based discount chain Surplus Furniture & Mattress Warehouse (33 stores).

Also worth mentioning is Ashley Furniture HomeStore, a chain of 65 or so independently owned-and-operated factory authorized stores that are part of a global network operated by the Wisconsin-based furniture manufacturer. Some 38 of those licensed stores belong to Winnipeg’s the Dufresne Group, which also runs the 15-unit strong Dufresne Furniture & Appliances.

Functioning in a similar vein are the estimated 140 independently owned storefronts serving consumers under the BrandSource Canada banner operated by Mega Group, the Saskatoon-based member-owned buying and marketing group.

In addition to not tracking the number of e-commerce furniture and mattress purveyors actively competing in the Canadian market, Statistics Canada no longer reports the number of chain and non-chain stores as part of its annual retail trade survey. (A non-chain retailer was one with fewer than four storefronts.) Based on estimates, the number of independent furniture, mattress and appliance retailers —

those operating a single store, perhaps two — is somewhere between 1,600 and 1,800, although it could realistically be lower.

FURNITURE STORE SALES

For many retail sectors, most notably members of the hospitality sector like travel agencies, restaurants, cinemas and other entertainment venues, the pandemic was an economic disaster and one from which they are still recovering. This was not the case for furniture stores.

In 2019, the last full year before the pandemic, furniture store sales totalled a then-recordsetting $12.81 billion. Surprisingly, despite government shutdowns coupled with other pandemic-related restrictions, sales in 2020 were essentially flat at $12.8 billion, even though total ‘local-based’ retail store sales fell 8.6 per cent that year. They also outperformed those classified as home furnishings stores, which saw their collective sales fall 6.9 per cent that year to $7.12 billion.

Furniture store sales experienced their best growth year in 2021, when they advanced 15.7 per cent to $14.81 billion, before ending 2022 at $15.34 billion. In 2023, furniture store sales retracted to $14.34 billion.

However, further evidence of the industry’s stability can be found in this simple statistic: despite the ups and downs caused by the pandemic, the furniture store segment’s share of the overall Canadian retail wallet hovered around two per cent in each of the five years between 2019-2023.

For at least the past decade, furniture retailing in this country has been dominated by two major players, each of which commands a mar-

homegoodsonline.ca | 7
2019 2020 2021 2022 2023 Furniture retailers $12,807.4 $12,803.4 $14,811.5 $15,338.1 $14,344.1 percentage change year-over-year nil +15.7% +3.6% -6.5% Floor covering, window treatment and other home furnishings retailers $7,646.8 $7,120.2 $8,387.6 $9,035.5 $8,395.4 percentage change year-over-year -6.9% +17.8% +7.7% -7.1% Electronics and appliance dealers $17,023.5 $18,307.3 $19,254.7 $19,847.0 $21,230.8 percentage change year-over-year +7.5% +5.2% +3.1% +7.0%
Canadian Big-ticket Store Sales
by the numbers Sources: Statistics Canada and company records *Product categories are those defined by the North American Product Classification System **In current, not seasonally adjusted, Canadian dollars (millions)

ket share of just over 20 per cent and annual revenues near the $3 billion mark: LFL, the publicly held operator of Leon’s, The Brick and Appliance Canada; and Ikea Canada, part of the global furnishings network operated by Ingka Group headquartered in the Netherlands.

The only other member of the segment with sales greater than $900 million — and a six per cent national market share — is the Torontobased and publicly traded SCC, operators of Sleep Country, Dormez-vous, Endy and Hush.

One retailer is believed to have a national market share of five per cent or greater with annual sales of more than $700 million: BMTC Group, the largest furniture retailer in Quebec. Based in Montreal, the publicly held company cut its store count to 25 during 2023, and consolidated operations under the Ameublements Tanguay banner.

All four of these companies were ranked in the 2021 top 100 report published by the Centre for the Study of Commercial Activity, part of the Rogers School of Management at what is now called Toronto Metropolitan University. Those studies also mentioned two other furniture retailers: Ashley Furniture HomeStores, whose sales were estimated at $450 million in 2020; and JYSK, with 61 stores and sales that year of $278 million.

THE POST-PANDEMIC DECLINE

After two years of unprecedented growth, furniture store sales declined 6.5 per cent in 2023. Most observers attribute the drop to lower housing starts and sales, higher interest rates, declines in consumer confidence and the uptick in household debt.

According to the Canadian Real Estate Association (CREA), sales via its Multiple Listing Service system fell 11 per cent in 2023, to 443,511 units — the

fewest since 2008. Compounding this, Canada Mortgage and Housing Corporation (CMHC) has reported total housing starts dropped seven per cent to 223,513 units in 2023, while starts of single-family homes fell 25 per cent to 42,951 units.

Before last year’s declines, Canada’s housing market was the fuel firing the overall economy before morphing into what most experts consider one of the leading contributors to the rampant inflation suffered in the immediate aftermath of the pandemic. That, in turn, led to uptick in interest rates imposed by the Bank of Canada.

This led TD Economics to proclaim in a recently published report that “shelter inflation is now the single largest contributor to Canadian inflation.”

During 2022, the best year ever for Canadian furniture stores, the average interest rate for a five-year fixed mortgage was 4.9 per cent. Interest rates had been under four per cent for much of the previous decade, during which furniture store sales grew at a steady pace. In 2023, they rose to an average of 5.8 per cent. This year, they are expected to fall slightly.

At the end of 2023, the consumer confidence index published by the Conference Board of Canada reported the number of respondents who believe now is a good time to make a major purchase, such as a car, piece of furniture or an appliance, had fallen to a new record low of nine of every 100 consumers.

Adding to this tale of woe is a report from the Bank of Canada that revealed average household debt reached a record-high $1.87 for every $1 of disposable income last year.

In a recent report to shareholders, MarieBerthe Des Groseillers, president and CEO of BMTC Group, acknowledged furniture retailers

benefitted from the restrictions imposed by governments during the pandemic. Forced to stay home, Canadian consumers spent money on improving their living spaces — funds that in ‘ordinary’ times would have been spent on travel and entertainment. As restrictions lifted, inflation rose, forcing those same consumers to make different choices.

Des Groseillers warned shareholders “the high rate of inflation in terms of the cost of food, the cost of gas and the rise in interest rates will have a direct impact on consumer spending.”

LOOKING FOR MODEST GROWTH AHEAD

While the economic headwinds remain stronger than most would like, furniture store owners and operators should be encouraged to remain cautiously optimistic about their prospects for 2024 and 2025.

Both CREA and CMHC are forecasting housing starts and housing sales will begin to recover this year and next. CREA expects sales will climb 10.4 per cent to 489,661 units in 2024, and by another 7.3 per cent in 2025. CMHC recently noted housing starts are on pace to advance by an estimated nine per cent this year.

Inflation, particularly when it comes to consumer sensitive categories like groceries and fuel, has moderated and appears to be within reach of the Bank of Canada’s target rate of two per cent.

Another potential source for increased furniture store sales is population growth. In the decade preceding the pandemic, Canada welcomed between 200,000 and 300,000 immigrants into the country each year. World events have caused Canada to accept more than 1.5 million new people into the country over the past two years, according to some estimates. While it’s possible a sizeable number will eventually return to their countries of origin, some experts believe as many as 50 or 60 per cent will seek to make Canada their permanent home.

This uptick in population, coupled with growth in housing sales and construction, will have a positive impact on overall economic growth, which many observers believe will become more noticeable in the second half of 2024 and into 2025.

What’s more, analysts following Canada’s two largest publicly held furniture retailers, LFL and SCC, are estimating each will see their revenues increase at least three per cent both this year and next, which suggests the market itself will grow companionably.

When all combined with cooling inflation rates, this should ensure the stability that the Canadian furniture retail sector has enjoyed for the past decade.

8 | HOME GOODS MERCHANDISER SPRING 2024
by the numbers

The Shift in Shopping

A look back and forward at consumer buying trends for big-ticket home goods

OF THE 18 OR SO RETAIL SECTORS TRACKED regularly by Statistics Canada and economists, it can be argued no two are more subject to the prevailing and often fickle winds of consumer confidence than furniture stores and those selling home furnishings.

Buying a new upholstery suite for the living room or a solid wood dining room set is often viewed as highly postpone-able, especially if there are other pressing financial needs. But this doesn’t usually hold true for consumers

when a refrigerator is failing, an oven is on the fritz or a washing machine is misbehaving, especially if the extended service plan has expired. And the speed at which most people will replace their smartphones, televisions and other electronic devices can only be described as mind-blowing.

But that changed (momentarily) when Covid19 appeared. During pandemic lockdowns, the consumer looked around the home they were confined to and since they couldn’t dine at their

favourite restaurant or take the Caribbean cruise they’d been planning, they took some of the dollars previously designated for those purposes to spiff up their living space. That was good for this country’s furniture, mattress and major appliance retailers.

According to the retail commodity survey (RCS) produced by Statistics Canada, in the months following those lockdowns, consumer spending on indoor furniture, mattresses, major appliances, decorative accessories, televisions, audio-visual

10 | HOME GOODS MERCHANDISER SPRING 2024 the consumer

equipment and floor coverings attained new record highs.

For example, the Canadian consumer spent a collective $2.06 billion on mattresses in 2019, the year before the pandemic. While slightly less was spent in 2020, the lockdowns and travel restrictions imposed in the following two years drove spending in that category to $2.75 billion in 2022. Consumer spending on mattresses grew for the third consecutive year in 2023, to a preliminary $3.02 billion — a new record and 10.1 per cent higher than the previous year.

The trend is being repeated in other major home goods categories. Spending on indoor furniture set a record high of $8.72 billion in 2022, climbing 21.2 per cent year-over-year. The uptick was more modest in 2023, rising 2.3 per cent to $8.92 billion.

The anomaly here is major appliances. Consumer spending on white goods peaked at $7.74 billion in 2021, before falling 6.8 per cent to $7.21 billion in 2022. The slide continued in 2023, as spending fell 2.1 per cent to $7.09 billion, the lowest level seen since before the pandemic.

It should be noted the RCS is different from Statistics Canada’s monthly retail trade survey (MRTS). The RCS measures what the Canadian consumerspendsonawidevarietyofcommodities, regardless of where they make that purchase, be it at a local independent full-line furniture store or from a transaction capable digital merchant. And

it no longer breaks out mattress and indoor furniture spending by consumers in furniture stores. These days, the channels are much broader.

On the other hand, the MRTS measures retail store sales, if the merchant is location-based (brick-and-mortar) or a transaction capable digital/e-commerce specialist.

CURRENT STATE OF THE CONSUMER

As 2023 ended, most expert observers — whether from the Conference Board of Canada, Bank of Canada or one of the major chartered banks — appeared to agree the Canadian consumer went home for the Christmas holiday break both battered and beleaguered. The emerging consensus suggests it will take several years before the damage done by the Covid-19 pandemic can be repaired and the economy returns to normal growth patterns.

Consumer spending on furniture, mattresses and major appliances — indeed, most big-ticket home goods — has traditionally been driven by interest rates, housing sales and household debt.

Before the pandemic, inflation wasn’t a top-ofmind issue for either policy-makers or economists. In the two decades before the onset of Covid-19, prices were remarkably stable, rarely straying above the central bank’s target inflation rate of two per cent annually. But in 2021, national

“There are several factors suggesting that even though furniture, mattress and major appliance sales will fall over the coming months, the decline won’t be as disastrous as many have feared.”
homegoodsonline.ca | 11 the consumer

inflation skyrocketed to 3.4 per cent before leaping to 6.8 per cent the following year.

Everyone who works in the furniture, mattress and major appliance sector, whether at the manufacturing and distribution level or at retail, knows what growing inflation leads to: higher interest rates.

The combination of skyrocketing inflation and higher interest rates meant other traditional drivers of furniture, mattress and major appliance sales — the housing market and household debt — were severely impacted and not in a good way. According to figures from the Canadian Real Estate Association (CREA), housing sales reached an all-time high of 666,319 in 2021, and then declined substantially in each of the following two years.

Housing starts reached their own record high of 271,298 units in 2021, according to Canada Mortgage and Housing Corporation (CMHC). They, too, have fallen each of the past two years.

Higher interest rates have also restricted the consumer’s ability to spend as it has driven household debt to new heights. The Bank of Canada recently reported the average Canadian household owes $1.87, including mortgage payments, for every dollar of disposable income

earned. However, other studies conducted by the central bank reveal average household debt climbs to more than $2.25 for every dollar of disposable income earned when the debtor is between the ages of 25 and 45 — the stage of life when the typical furniture, mattress and major appliance consumer is the most active.

While the Canadian consumer is stressed, there are several factors suggesting that even though furniture, mattress and major appliance sales will fall over the coming months, the decline won’t be as disastrous as many have feared and a return to more normal growth patterns are on the horizon.

For example, housing starts and sales are expected to begin advancing, albeit slowly, in 2024 and 2025. CMHC is forecasting new home construction to rise 5.6 per cent this year to 223,783 units before gaining another 5.2 per cent in 2025.

Meanwhile, CREA foresees home sales will jump approximately 10 per cent in 2024, and by another 7.3 per cent next year. After falling 3.6 per cent in 2023, the realtors’ group expects the national average price to advance to $694,000 this year, a gain of 2.3 per cent, and an additional four per cent in 2025.

In a related observation, most economists anticipate average mortgage interest rates to come

down slightly over the next two years, after rising significantly in 2022 and 2023. While somewhat lower than a decade ago, approximately 34 per cent of Canadian homeowners are mortgage free. There are also several other factors favouring the consumer’s ability to spend on furniture, mattresses and major appliances. On a macrolevel, despite the negative impact of inflation and interest rates, the Canadian economy has not entered a recession. Inflation is expected to fall to the Bank of Canada’s target of two per cent annually either in the second half of 2024, or in early 2025.

Unemployment continues at historic lows — 5.8 per cent this past December, according to Statistics Canada. In fact, Canada’s economy added a half-million jobs last year. And the average weekly wage rose four per cent on a year-over-year basis to just above $1,200 this past November.

All of this is good news for Canadian retailers of furniture, mattresses and major appliances. Indeed, the Conference Board of Canada anticipates consumer spending on furnishings, appliances and other household durables will make modest gains of 0.6 per cent this year and 1.9 per cent in 2025, after falling 6.3 per cent in 2023.

12 | HOME GOODS MERCHANDISER SPRING 2024
the consumer
Consumer spending on mattresses grew for the third consecutive year in 2023, to a preliminary $3.02 billion.
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DECODING THE CONSUMER WALLET

A

deep dive into Canadian shopper demographics, spending behaviours in

the home refresh market

CANADIANS SHELLED OUT ALMOST $50 billion last year sprucing up their houses and apartments. This included spending on indoor and outdoor home furnishings, large and small household appliances, as well as on home decor items and accessories. Furthermore, products in these categories were sold at more than 19,000 retailer locations across Canada.

There were approximately 15 million Canadian households at the end of 2023, with the average household spending $3,277 on products within

these categories. While these categories form a significant portion of the overall home refresh market, it is important to note the balance includes spend on home renovations and repairs along with household electronics, not addressed here, worth an additional $83 billion.

KEY CONSUMER GROUPS

While $50 billion is still a sizeable figure, not all consumers’ spending behaviours are identical, as a significant portion of those dollars are

concentrated within a few specific segments. These consumer segments, which also happen to fall within the top 25 per cent of income earners, include wealthy boomers and empty nesters; larger middle-aged families; culturally diverse suburban families; and younger urban singles and couples in highrises.

This subset of consumers represents only 4.4 million (29 per cent) of Canada’s 15 million households, but they spent 40 per cent of the dollars ($20 billion) on these product categories.

14 | HOME GOODS MERCHANDISER SPRING 2024 the consumer

This translates into an average spend per household of $4,545 per year — 38 per cent more than the Canadian average of $3,277.

However, each of these groups spends differently. For example, the wealthiest boomers and empty nesters spent far above average, approximately $5,200 per year or 60 per cent more per household on home refresh categories. Middle-aged families spent less, closer to $4,000, but placed their spending emphasis on larger appliances and decor. Large diverse families spent $4,700 and focused spend on furniture specifically. Meanwhile, younger households, some of whom may also reside in rental properties, spent $4,400 primarily on furniture, small appliances and decor. Fewer dollars were laid out on large appliances owing to lower incidence of home ownership for this segment.

ATTITUDES AND MOTIVATIONS

Specific attitudes and motivations that drove purchases also diverge. Wealthy boomer and empty nester households along with middle-aged families were more functional and utilitarian in their outlook and shopping behaviours, placing less emphasis on status and ostentatiousness. The younger diverse families, singles and couples were motivated more by the importance of aesthetics, adoption of smart technologies in the home, and defining themselves and their sense of status via their home environment.

Just as spending power varies by target group, so do shopping habits, such as the way different segments search for and gather product information and how they prefer to interact with retail staff or choose to pay for their purchases.

Older families and empty nesters often prefer gathering product information in person or online via home computer, though they are less inclined to research products using live chat. They are comfortable with purchasing in person and online via computer, but less likely to do so using a mobile device. Like their older counterparts, middle-aged families also showed reluctance to use live chat for research and then purchase using a mobile device.

Large diverse families prefer speaking with an individual over the phone or using live chat

homegoodsonline.ca | 15 the consumer
TOP: Wealthy boomers and empty nesters are the biggest spenders in the home refresh market. Last year, this demographic group spent $5,200 — 60 per cent more per household on home refresh categories. BOTTOM: Larger middle-aged families spent close to $4,000 in 2023 in the home refresh market, with purchases focused on larger appliances and decor.

IMPACT OF IMMIGRATION

The influence of new Canadians is also compelling, as the numbers of new immigrants grew significantly last year. According to Statistics Canada, international migration accounted for nearly all population growth in 2023, owing to the arrival of 472,000 permanent residents and 805,000 non-permanent residents. This resulted in the fastest year-over-year growth in Canada’s population since 1957, pushing the country beyond the 40-million population mark last summer. These 1.27 million new arrivals in 2023 alone represent almost $1.7 billion in potential spend within home refresh categories.

for research, but were more at ease with using mobile devices for both research and purchase.

Younger singles and couples felt they didn’t need to research or transact in person, and were much more relaxed about using all varieties of digital channels for these purposes.

OLDER CANADIANS AND SECONDARY MARKETS

Amongst the four consumer segments, wealthy boomers and empty nesters represent potentially the most valuable block of consumers in the home refresh space. This group spends the most on a per household basis and is also a growing segment as Canada’s population ages rapidly. In fact, from a wealth perspective, the share of aggregate income contributed by those aged 55-64 grew 40 per cent from 2011-2021. For those over 65, it grew by 70 per cent.

A significant portion of this growth in spending power comes directly from the sheer number of individuals who have moved up the population pyramid into these older age groups. In 2018, 6.3 million Canadians were aged 65 years or older. By 2023, this number grew to almost 7.6 million. Over the next decade, seniors are expected to swell to almost 10 million in 2033. Not only are their numbers forecasted to grow dramatically, but this group’s proportion of the total population is also anticipated to increase to 22 per cent by 2033, from 17 per cent in 2018.

What also stands out for this group is their migratory behaviour, revealing some compelling

insights about where many boomers have chosen to settle come retirement. Retailers in the home refresh space should take note that Canada’s secondary markets represent key destinations for wealthy empty nesters who have decided to make their new homes in these smaller but already established retirement and recreational communities. Growing communities with above average spend on home refresh categories that are also experiencing an influx of older population groups include Kelowna, Vernon and Kamloops in British Columbia, and Wellington County, Barrie and Carleton Place in Ontario.

Moving residences typically unleashes the process of outfitting new homes, often with brandnew furniture, appliances and other home goods. This target group spent on average $5,200 per household on home refresh goods last year, with furniture accounting for just over 42 per cent or $2,200 of that spend, closely followed by small appliances and decor at $2,100, and large appliances at $900.

Unsurprisingly, many of these new Canadians are settling in the country’s largest cities: Toronto, Vancouver and Montreal. However, almost as many immigrants are now calling Kitchener-Waterloo, Ont., home (75,000), compared to Calgary (85,000) — a city virtually three times the size. Nearby medium-sized markets like Windsor, London and the Niagara region also ranked within the top 20 places for immigrants to settle. Also popular were secondary markets located in the Maritime provinces, such as the Cape Breton Regional Municipality in Nova Scotia, Halifax, Moncton, N.B., and Charlottetown, which have surged in population over the past five years.

HOME REFRESH TAKEAWAYS

Retailers should take note of the diversity of consumer groups that are represented in the home refresh space, with varying demographics, spend levels and ensuing habits when it comes to motivations, as well as preferred research and purchase methods and channels.

They also need to be mindful of the growing aging population and keep up to speed on the specific behaviours of this expanding cohort that carries significant wealth.

And don’t forget the potential revenue opportunity in Canada’s secondary markets and their attractiveness to seniors, as well as the importance of immigration as a key driver of Canada’s population growth and the revenue potential of new arrivals.

David Spira is director of account management at Environics Analytics specializing in the retail sector. Established in 2003, Environics Analytics is the premier marketing and analytical services company in Canada, helping thousands of customers across every industry sector turn data and analytics into strategy, insights and results. The Bell Canada company uses best-in-class data, analytics expertise and purpose-built software, including software-as-a-service platforms Envision and Spotlight, to address key challenges in areas like consumer profiling and segmentation, multichannel media planning and execution, trade area analysis, merchandising strategies and site location decision-making. Environics Analytics specifically used its Prizm segmentation system to identify the key consumer groups cited in this article. Prism is a registered trademark of Claritas, LLC.

16 | HOME GOODS MERCHANDISER SPRING 2024
the consumer
Younger urban singles and couples spent, on average, $4,400 last year, primarily on furniture, small appliances and decor. Fewer dollars were laid out on large appliances owing to lower incidence of home ownership for this demographic segment.
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RING IT UP

Most and least popular categories for purchases in 2023

CANADIAN CONSUMERS CONTINUED TO spend more of their hard-earned dollars to buy furniture, mattresses, decorative home furnishings, and televisions and audio-visual equipment in 2023. However, they shelled out fewer dollars for outdoor furniture, floor coverings and major appliances. That’s what the latest data published by Statistics Canada in its retail commodity survey (RCS) suggests. It should be noted the country’s national statistical office no longer provides dollar

volumes by specific channels of distribution. For example, a few years ago, the survey detailed major appliance sales by furniture stores, electronics and appliance stores, general merchandise stores and all retail trade. Citing privacy concerns, the survey now divides retail commodity sales using considerably broader channels of distribution. Furniture stores are now included in a larger category called furniture, home furnishings, elec -

tronics and appliance retailers. On the upside, the survey now includes sales by solely e-commerce businesses as part of ‘all retail’ in its findings.

The survey’s other major drawback is it doesn’t detail unit volumes. So, while mattress dollar sales recorded a new record high in 2023, how many queen-size sets Canadian consumers purchased is unknown, as is whether that was greater or fewer than in previous years.

18 | HOME GOODS MERCHANDISER SPRING 2024
the consumer

GROWTH CATEGORIES

The growth leader in 2023 was mattresses, which saw consumer purchases jump for the third consecutive year to $3.02 billion, a new record and 10.1 per cent higher than the previous year’s $2.75 billion. However, the growth rate has moderated, slowing from the 22.1 per cent seen in 2021.

Consumers spent 77.4 per cent of their mattress dollars or $2.79 billion in the new distribution channel called furniture, home furnishings, electronics and appliance retailers. If history is any guide, furniture stores accounted for most of these sales; at one time, these merchants made 88 per cent of all mattress sales.

Because of privacy concerns, Statistics Canada doesn’t report mattress sales by general merchandise stores — a channel that, among others, includes many of this country’s largest retailers like Walmart, JYSK and HomeSense. All three sell mattresses both in-store and online.

This leaves roughly $234.7 million in mattress sales, some of which can be attributed to general merchandise stores, with e-commerce accounting for the balance.

Retail commodity sales of indoor furniture, including infant and youth furniture, also grew in 2023, for the third consecutive year. Like mattresses, the growth rate slowed considerably as life took on its post-pandemic normal.

Consumer purchases of indoor furniture totalled a new record high of $8.92 billion, a 2.3 per cent gain over 2022, but well off the 21.8 per cent growth rate set in 2021. The split between distribution channels is somewhat more pronounced, although furniture, home furnishings, and electronics and appliance retailers accounted for 86.3 per cent of those sales last year or roughly $7.69 billion.

General merchandise stores, such as Walmart, JYSK, Canadian Tire and the like, accounted for $612.1 million in sales or 6.9 per cent of consumer purchases in 2023.

That leaves $992.2 million in sales without a designated distribution channel. Most industry observers attribute most of these sales to e-commerce ‘stores’ like Rove Concepts, Article, Wayfair and their competitors.

Consumers also purchased $4.88 billion in decorative home furnishings last year, a seven per cent increase over 2022. This category covers a wide

range of products, from lamps and mirrors to occasional tables and accent furniture. What might be surprising is the biggest player in this category is general merchandise stores, which accounted for $1.75 billion or 35.8 per cent of sales last year.

Approximately 34.5 per cent or $1.69 billion of decorative home furnishings sales weren’t attributed to any specific distribution channel. This suggests e-commerce has become the dominant player in the category.

Furniture, home furnishings, and electronics and appliance retailers accounted for 23.1 per cent or $1.13 billion of these sales in 2023.

The other noteworthy player in decorative home furnishings is building material and garden equipment dealers. They sold $319.5 million last year, giving merchants like Home Depot and Home Hardware a market share of 6.5 per cent in the category.

The remaining growth category among bigticket home goods is televisions and audiovisual equipment, which saw consumer purchases climb 10.6 per cent last year to $4.36 billion. Unlike the other growth categories, these purchases rebounded in 2023, after falling in each of the prior two years; however, they have yet to return to the high-water mark of $4.51 billion set in 2020, the year of governmentimposed lockdowns.

In many ways, this is the most broadly distributed of big-ticket home goods, being featured in most furniture stores, electronics and appliance stores, as well as general merchandise stores and across the e-commerce space. Last year, the newly created furniture, home furnishings, and electronics and appliance retailer channel accounted for 71.3 per cent of television sales, with general merchandise stores enjoying a 22.5 per cent share of the market.

BIGGEST LOSERS

No longer housebound, Canadian consumers drastically cut back on purchases of outdoor furniture in 2023. This category fell 34.1 per cent to $1.42 billion after growing significantly in each of the previous three years. However, this was still higher than before the pandemic.

Like televisions and audio-visual equipment, outdoor furniture is sold across several retail

homegoodsonline.ca | 19 the consumer

channels, the largest being general merchandise stores that collectively accounted for 39.5 per cent of outdoor furniture purchases last year or $559 million.

Building material and garden equipment retailers are also major players in this category, with an estimated market share of 28 per cent. For some reason, most traditional full-line furniture stores in this country only began taking the category seriously over the past few years; they now account for approximately 22 per cent of consumer purchases.

In what may be a surprise, Canadian consumer purchases of major appliances — washers, dryers, ranges, refrigerators and dishwashers — fell for the second straight year, according to the RCS, which pegged them at $7.09 billion, down 2.1 per cent from 2022. This category has fallen 8.4 per cent from the record $7.74 billion set in 2021.

Like outdoor furniture, major appliances are distributed across a number of retail channels, the largest of these being furniture, home furnishings, and electronics and appliance retailers, which accounted for 71.1 per cent of category purchases or just over $5.04 billion.

In recent years, building material and garden equipment dealers have aggressively marketed

major appliances. Last year, this category accounted for 16.1 per cent of consumer purchases or $1.14 billion. Many industry observers believe Home Depot may be the largest retailer of major appliances in the country.

Not to be left out, general merchandise stores are also making strides in this category, accounting for 12.1 per cent of consumer purchases last year.

After three years of posting growing sales, floor coverings fell in 2023. The RCS reported they were down 2.5 per cent to $6.31 billion.

The furniture, home furnishings, and electronics and appliance retail channel includes flooring specialists like Carpet One, United Floors and End of the Roll. This channel accounted for 60.4 per cent of consumer purchases or $3.81 billion last year.

Building materials and garden equipment dealers are the other major players in the floor covering category and account for 35.3 per cent of sales or $2.23 billion.

What is clear from the data contained in the survey is consumers are still buying, particularly mattresses, decorative home furnishings and indoor furniture. What is also evident is the pace of growth is slowing somewhat, which shouldn’t be all that surprising in a time of higher interest rates, a slower housing market and higher than normal inflation rates.

Canadian Consumer Purchases of Furniture, Major Appliances and Other Big-ticket Items for the Home

Source: Statistics Canada retail commodity survey (both monthly and quarterly) *Product categories are those defined by the North American Product Classification System **In current, not seasonally adjusted, Canadian dollars (millions)

20 | HOME GOODS MERCHANDISER SPRING 2024
the consumer
2019 2020 2021 2022 2023 Mattresses $2,056.8 $2,015.7 $2,472.5 $2,746.4 $3,023.9 percentage change year-over-year -2.0% +22.2% +11.1% +10.1% Indoor furniture $7,507.4 $6,980.2 $8,503.1 $8,716.8 $8,920.1 percentage change year-over-year -7.0% +21.8% +2.5% +2.3% Outdoor furniture $890.5 $1,435.5 $1,802.9 $2,151.8 $1,417.0 percentage change year-over-year +61.2% +25.6% +16.2% -34.1% Decorative home furnishings $3,577.7 $3,879.6 $4,336.7 $4,558.9 $4,880.3 percentage change year-over-year +8.4% +11.8% +4.8% +7.0% Major home appliances $6,024.5 $7,278.7 $7,742.5 $7,212.7 $7,091.1 percentage change year-over-year +21.2% +6.4% -6.8% -2.1% Televisions and audio-visual equipment $4,338.8 $4,505.8 $4,321.0 $3,892.8 $4,361.0 percentage change year-over-year +3.9% -4.1% -9.9% +10.6% Floor coverings (including wood and tile) $5,037.9 $5,120.4 $5,830.3 $6,471.8 $6,310.9 percentage change year-over-year +1.6% +13.9% +11.0% -2.5%

• Domestic production

Bedroom furniture

Dinette

Stationary furniture

Fabric motion

Leather motion

For
info@minhasfurniture.ca
Where Quality and Comfort Begins MINH S
more information, email us at
.

Cosying Up to Cozey

Montreal startup spearheads furniture innovation, moves beyond solely sofa-in-a-box concept and becomes omnichannel retailer with goal of developing products for the entire home

24 | HOME GOODS MERCHANDISER SPRING 2024
in focus

FEW TORONTO NEIGHBOURHOODS ARE AS charming and truly alive as Trinity Bellwoods. The area’s Victorian homes, chic condo lofts, abundant greenery, plethora of popular restaurants, stylish boutiques and trendy shops make it a go-to destination in the city for creative artists, young professionals, hipsters and fledgling families alike. But its youthful-yet-sophisticated vibe is perhaps no more present than on buzzy West Queen West, named by Vogue as one of the coolest streets in the world. Home to an eclectic mix of retailers, the street’s diversity is what draws people to the major east-west thoroughfare. It’s no wonder Canadian furniture specialist Cozey specifically selected it as the site of its first-ever physical store.

Opened March 14, near the lively corner of Queen and Ossington streets, Cozey’s flagship features 3,600 square feet of showroom space behind its brick-and-mortar facade outfitted with expansive, wood-framed glass windows from which passersby can view almost the entirety of the store’s interior. Upon entering, customers are greeted by a relaxed yet sophisticated space where they can interact with Cozey’s ever-expanding product line. As they meander through the showroom they’ll find a design centre at the back — the ideal spot to pick-up fabric swatches and consult a brand professional who will provide personal support throughout the browsing or buying journey.

“Here, you can touch, feel and see how our designs transform spaces,” says Frédéric Aubé, founder and CEO of the once exclusively e-commerce business.

The Toronto location is part of the company’s strategy to blend the ease of online shopping with the benefits of in-store experiences; it’s an immersive environment that encourages exploration plus the ability to sit, for the first time, on the furniture that has made Cozey a household name.

“While many people are happy buying things online, there’s still a large part of the population

that is not comfortable making a purchase without trying the furniture first,” says Aubé, who cites this as a reason for moving beyond purely online operations, though it’s not the only one.

The permanent store also allows for brand building, particularly among shoppers not already acquainted with the Montreal-based company, and improved customer engagement, creating a greater sense of community and belonging. Plus, if Cozey wants to achieve the heights of Ikea, which Aubé alludes to being the ultimate feat albeit decades away, the direct-toconsumer retailer had to move beyond the strictly digital realm.

While working on the store design, strategy and build, a process that began more than 18 months before the grand opening, Cozey dabbled in offline sales through a small pop-up shop from May-September 2023, at Stackt Market, a short drive or 25-minute walk away. Aubé was eager for his business venture to have a physical presence in Toronto — Cozey’s largest market as the most populated city in the country — and this concept provided the ideal opportunity to test out the new retail experience. The response far exceeded expectations.

“We didn’t think we’d sell much. We thought people would just come in and check out our stuff,” says Aubé. “But we had a few transactions every day. People came to buy $1,000-plus sofas in a 240-square-foot pop-up. It really blew our minds and gave us even more confidence about opening our first standalone location.”

Lessons learned from the pop-up allowed Cozey to make modifications prior to the store’s launch in order to provide best-in-class customer service, which the company prizes itself upon. The retailer gleaned that customers want to see and try many items when shopping, so there needs to be a lot of variety in-store in terms of types of furniture and even within a single category. For example, more than one sofa model must always

homegoodsonline.ca | 25
in focus
Cozey’s 3,600-squarefoot flagship store in Toronto is located at 1026 Queen St. West.

be on display. Also noted was that customers want to complete a transaction at the point of purchase; using a tablet to place an order without simultaneously taking payment and arranging shipping is not desirable.

With these teachings in mind and as Cozey unveiled its premier permanent location, it announced another pop-up store in Quartier Dix30, a commercial lifestyle centre on Montreal’s south shore. Operating from March to April, its rollout set in motion a Canada-wide pop-up store initiative aimed at spanning multiple key cities throughout 2024.

CREATION OF A NEW FLAT-PACK TREND

Cozey’s meteoric rise in the furniture retail space is quite something given the company has only been in existence since June 2020. Aubé was just 23 years old then and still a student at McGill University in Montreal, studying finance and economics. But the timing of the launch of what was originally a sofa-ina-box company on the internet couldn’t have been better as most people were stuck at home, literally. Much of Canada’s population was under some form of quarantine to prevent the spread of Covid-19, the highly infectious disease that had caused a worldwide pandemic.

“All the stores were closed and everybody was looking for furniture,” says Aubé. “Because of our business model, we hold the stock in and ship out directly to the customer’s home, we were able to meet the demand.”

Unlike other online retailers, Cozey doesn’t sell third-party furniture. Rather, it owns every step of the production process, from design in Montreal, to manufacturing in Asia, and distribution in Canada, where it keeps substantial stock to fulfill orders. This allows the company to maintain control over product quality, inventory, service, delivery times and more, and pass these benefits on to the consumer.

Sales within Cozey’s first year were well beyond what Aubé could have imagined. Between June 2020 and July 2021, the young entrepreneur’s startup sold more than 2,400 Original sofas — its sole product at the time offered in just four colours — and grew by 1,200 per cent.

Aubé believes his boxed couch concept caught on with consumers so quickly because of its simplicity, timely doorstep delivery and attractive price point, adding up to a convenient and economical shopping experience.

Cozey’s sofa was purposefully designed to grow or shrink with the consumer’s space. It is fully modular, allowing for initial customization and conversion over time without having to purchase a brand-new couch. The fabric covers are

machine-washable so style switch-ups are a cinch. Shipping is complimentary and super swift, with delivery in only a few days of ordering. Each seat, each module, each arm arrives in a courier-size box. The pieces fit together like Lego blocks for easy assembly; no tools required. The three-seat Original fabric sofa retailed for $945 in 2020, with each additional seat selling for $225. (Today’s pricing starts at $1,195 for a similar three-seater.) Purchase comes with a 30-day risk-free trial. ‘Like new’ returns are refurbished and sold at a 15 per cent discount.

“Cozey is all about providing a great quality sofa at a great price that you can fit into any room, take with you when you move and adjust in time by adding sections,” says Aubé.

Less than eight months after rolling out its introductory offering, Cozey brought a sectional sofa to market with corner and lounging chaise modules, along with plans to further diversify its product portfolio.

But despite its early rise to success, Aubé still faced challenges within the first year of business. While people were more open to and comfortable with making big-ticket home purchases online during the pandemic, the virus that originated in China where Cozey’s sofas are made temporarily shut down its factory and halted operations. When production resumed, it took time to scale back up to full capacity. Lockdowns also significantly slowed the flow of finished goods overseas, and shipping container freight rates soared due to transportation inefficiencies and supply chain inflation.

“Things kept getting worse and worse. At first, we were paying $3,000 US for a container from China to Montreal, and that ballooned to $25,000 US for that same container at the pandemic’s peak in January 2022,” says Aubé, noting this amounted to a 700 per cent surge in shipping costs. “You can imagine the impact on our balance sheet and cash flow. There was a point when we were selling sofas and making absolutely no money. That was really tough.”

Lead times were also affected, worrying Aubé since rapid delivery is a hallmark of the brand.

“They went from 20 days from China to Montreal, to 50 or 60 days,” he continues. “When you have a business whose main goal is to offer a great customer experience but you’re always delayed and can’t meet those expectations, you start to wonder if you’re going to make it even with 30 to 40 per cent growth in sales month-over-month.”

Admitting it was a lot to handle, especially given he was a budding entrepreneur, Aubé set his sights on building a team of people with tons of experience who could help him achieve his

26 | HOME GOODS MERCHANDISER SPRING 2024
in focus
Cozey founder and CEO Frédéric Aubé.

business aspirations as he knew he was onto something big. In January 2021, he hired his first employee, Dominic Létourneau, to dually serve as chief financial officer and chief operating officer. Aubé had been courting his mentor and now business partner for the better part of two years. Létourneau, a private markets analyst at the Caisse de dépôt et placement du Québec (CDPQ), was initially reticent to make the move given where he was in life.

“He was 38 years old, had three kids and a mortgage,” explains Aubé. “He wasn’t going to stop working for CDPQ for an Excel spreadsheet and some ideas.”

Still, Létourneau provided Aubé with guidance, support and advice leading up to and after Cozey’s launch. When Aubé approached him again in summer 2020, Létourneau reconsidered, bringing more than 20 years’ experience working in the financial industry to the brand just months later.

The company’s workforce grew rapidly after the addition of Létourneau, from two employees to 60 in two years. It’s now 115 people strong and includes a sourcing officer that has more than 30 years’ experience in Asia, and a vice-president of product development that has scaled many furniture companies in the past. The customer service team, or what Aubé calls the “customer happiness team,” is by far the largest department with a staff of more than 20. The marketing team is comprised of young talent who are willing to take risks and employ unconventional methods to

reach Cozey’s target market of people and families 25 to 45 years of age.

Aubé says this has been best achieved through the use of paid advertisements and influencers on social media platforms like Instagram, TikTok, Pinterest and Facebook, and leveraging Google ad campaigns to raise brand awareness and then help potential customers find their perfect product. In a Google Canada blog post, the internet giant said Cozey increased its website clickthrough rate by 24 times from 2020 to 2022, with 30 per cent of its customers interacting directly with the company’s Google ads campaigns.

IT ALL STARTS WITH AN IDEA

Coming up on Cozey’s fourth anniversary, Aubé is both delighted and amazed at what has been achieved in such a short amount of time. In addition to crossing the digital-physical divide to open a brick-and-mortar store, the retailer has broadened its product assortment from the single sofa design to include the Ciello and Atmosphere collections, home accent pieces — chairs, ottomans, occasional tables, credenzas, media consoles and other storage solutions — and decorative accessories like pillows, throw blankets and rugs, as well as an outdoor furniture line. Launched in March 2023, the Mistral collection features a modular sofa that can be configured to suit the consumer’s preferences, along with end and coffee tables. Like Cozey’s indoor furniture, no tools are required to put the sofa together,

“You can imagine the impact on our balance sheet and cash flow. There was a point when we were selling sofas and making absolutely no money.”
homegoodsonline.ca | 27
in focus
Cozey’s first-ever sofa, aptly named the Original, was later replaced by the Altus.

Ciello was designed to be a stylish and effective napping essential. Available in two sizes: regular and XL (pictured here).

allowing for quick disassembly for storage throughout winter.

“For us Canadians, outdoor furniture needs to be stored inside our homes for half of the year and it is usually very space-consuming to do so,” says Aubé. “So, we developed an outdoor sofa collection that will allow customers to reconfigure, adapt and expand their product to tailor their needs while being easy to store flat-pack during colder months.”

Also last year, the homegrown furniture sensation announced its push into the United States, a plan that was a year in the works. Focus has been on the Northeast, though product is available to consumers anywhere in the country using a third-party logistics provider. This market region alone offers three times the customer base of Canada, and holds a lot of buying power.

“It’s still very early days but we’re seeing similar metrics at higher growth rates,” says Aubé about U.S. market response. “Canada certainly remains our biggest market by far but the furniture market is 12 times as big in the U.S., so there is enormous potential for our company.”

Expansion of Cozey’s product line and presence south of the border has been made possible by

investment from CDPQ. The global investment group provided $10 million in June 2022, part of a round of financing totalling $15 million.

Previous to this, Cozey was financially fuelled by private investors and personal savings from Aubé’s junior hockey career. His original aspiration was to play at the pro level but the former defenceman in the Quebec Major Junior Hockey League hung up his skates in 2017.

The idea for Cozey was born shortly thereafter. Tired of helping friends move their enormous sofas up and down stairways and through tight doorways in small apartments, Aubé was motivated to solve this problem fraught by many. Working as a financial analyst at Montreal asset manager Tonus Capital, he learned about the now-ubiquitous mattress-in-a-box concept while conducting research on behalf of Dormez-Vous, the Quebec arm of Sleep Country Canada, and something clicked.

“I thought, why not take this and apply it to the furniture industry,” he says.

Upon deeper discovery, Aubé gleaned his idea was not revolutionary; other couch-in-a-box companies existed, just none in Canada.

“I said, well, if nobody’s doing it here, I might be

able to,” reflects Aubé, who already had some experience in the furniture industry.

From 2015-2017, he served on the board of directors of office furniture manufacturer BeStar throughout his father’s ownership. The experience proved useful when designing (and redesigning) the then-unnamed Original prototype. Combined with product testing, the process took 18 months during which Aubé decided on the brand’s name. This was simple compared to figuring out how to combine tool-free assembly with stability, a major hurdle overcome with the help of an industrial designer. Fittingly, the name came to Aubé while, what else, seated, enjoying beers with friends.

“We were cozy, which sparked the idea,” he says, conceding many names were thrown around that fateful night.

The very next day, Aubé searched GoDaddy for available domain names. Cozey.ca was for sale for $4.99.

“I’m like, oh, that’s a pretty good deal,” laughs Aubé.

And perhaps the best purchase he ever made outside of the Cozey sofa, the Atmosphere, that resides in his own home.

28 | HOME GOODS MERCHANDISER SPRING 2024
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MAKING THE CUT

Upholstery furniture styles, colours to prevail in 2024

WHETHER DESIGNING, MANUFACTURING or selling upholstered furniture, keeping up with trends is an essential part of business. Forecasting the relativity of trends is quite the job, as it involves recognizing which are not worthy of investment — predicted fast-moving trends — and those that should be brought into the fold to stay current and add a level of uniqueness to stand apart. Determining how much a chosen trend should be featured in a product assortment and incorporated throughout store merchandise are some of the toughest decisions.

Because most businesses prepare and design multiple seasons ahead, creating quarterly trend lists can assist in planning product lineup. This makes it easier to identify the trends that best align with your direction and vision. Some will have great meaning, especially if they resonate with a majority of your customer base. In the end, it’s customers who decide how successful a trend will be.

Here are nine trends that will filter through the upholstered furniture industry this year in varying degrees.

1The natural effect. Warmer neutrals that are tone-on-tone create a calm and comforting scheme. Nature-inspired earth tones include browns, cognacs and terracotta. Deeper, saturated colours like greens and blues will also be found within various styles of upholstery.

2

Textured wonders. Heavily textured fabrics that offer tactile elements through layering.

3

Ultimate comfort. This tops the list of consumer priorities when it comes to furniture. Plush, deep seating and cozy curl-up sofas and sectionals, many remaining oversized and modular. This is especially true within the soft luxury movement, otherwise known as quiet luxury.

4

Customization. Consumers want an even bigger part of the planning and design process of their furniture. Through choice, they are able to express themselves. Here’s where technology comes in. Some suppliers will offer technology support for their collections to elevate the customization experience. Consumers, with the help of sales staff, will be able to build their sectional on a touch screen and choose the fabric, providing that often needed visual along with the data to process the order.

5

Performance fabrics. Consumers want upholstery they can truly live in. There will be more fabrics that possess qualities like water and stain resistance, ease of care and durability,

thereby offering greater longevity, including washable slipcovers.

6

Rounded forms. In frame design, there is a shift from the standard square models to softer lines and curves, providing a more organic design with fluid shapes.

7

Mix and match. Creative chair designs and bolder colours paired with ‘quieter’ styles to create a more eclectic yet cohesive look.

8

U.K. culture. Within traditional furniture, a British influence is gaining strength — multipatterns with small prints, specifically florals, stripes and plaids. In more transitional designs, curves and flange dominate.

9

Sustainable manufacturing. Consumers are asking for domestic-made products as they contribute to a smaller carbon footprint. They also want eco-friendly elements to be incorporated into upholstered goods. Frames made of certified wood from well-managed forests, soy-based cushion cores and recycled components within fabrics all matter to consumers who are mindful of a healthier planet.

Lori Negrinotti is the merchandise manager at Stoney Creek Furniture, an independently owned and operated business that has been thriving for more than 55 years. With one of the largest showrooms in Southern Ontario, Stoney Creek Furniture is renowned for its wide assortment of quality furnishings and customer-focused team members.

30 | HOME GOODS MERCHANDISER SPRING 2024
trendspotting

Serta-fied Comfort

Easier on the Earth

Environmentally Sound

Sleep Solutions

New research delves into sustainability and the mattress buying experience from consumers’, retailers’ perspectives BY

A BIG PART OF GETTING A GOOD NIGHT’S sleep rests with what you lie on. Investing in a quality mattress is an investment in your health. What’s purchased (and eventually disposed of) can also impact the health of the planet. But does sustainability significantly influence consumers’ mattress-buying decisions? And are consumers and retailers aligned in their views on the topic?

The latest survey conducted by the Better Sleep Council (BSC) sheds light on sustainability trends in mattress choices. In this study, BSC surveyed 1,006 adult consumers and 139 retailers in the United States, to gauge their understanding of, and attitudes toward, sustainability in mattresses and other sleep products.

In the surveyed group, there was strong agreement regarding the importance of environmental consciousness for the future. Approximately 70 per cent of respondents concurred that individuals bear a duty to safeguard the environment. This alignment was further underscored by nearly identical proportions within both groups affirming their belief in this responsibility. Specifically, more than two-thirds of consumers and nearly three-quarters of retailers indicated strong agreement with the notion of individual responsibility for environmental care. Moreover, more than half of respondents in both segments (53 per cent of consumers and 57 per cent of retailers) expressed a deep personal commitment to environmental stewardship.

In terms of recycling practices and attitudes, the majority of retailers demonstrate a commitment to sustainable disposal methods for discarded mattresses, with almost three-quarters opting to recycle or donate these items. Specifically, 46 per cent reported recycling them, while 28 per cent opted to donate mattresses to charitable organizations. Among consumers, more than 80 per cent perceive mattress recycling as being of at least moderate importance. Additionally, a majority of consumers (55 per cent) emphasized the significance of mattress recycling, with more than half considering it either “very important” or “absolutely essential.” This underscores a collective recognition of the environmental relevance of responsible disposal practices.

32 | HOME GOODS MERCHANDISER SPRING 2024
sleep shop

DEMOGRAPHIC DIVIDE

Survey findings reveal distinct trends across different generations of consumers. Younger consumers expressed they were more likely to select products manufactured using environmentally sustainable methods and materials. They also demonstrated a greater willingness to invest in such products, even at higher price points.

Specifically, nearly half of Gen Z consumers and millennials indicated they “often or always” opt for sustainably made products, in contrast to fewer than one-third of Gen Xers and boomers. Moreover, 36 per cent of Gen Z consumers and 47 per cent of millennials said they would pay a premium for sustainably manufactured items. In contrast, only 27 per cent of Gen Xers and 17 per cent of boomers said they “often or always” pay more for sustainably made products. Overall, these findings underscore the growing importance of sustainability considerations in consumer purchasing behaviour, particularly among younger demographic segments.

The survey also reveals consistent patterns across generations regarding purchasing decisions influenced by a company’s ethical practices and values. Notably, more than one-third of Gen Z consumers and nearly half of millennials reported they “often or always” base their purchases on a company’s ethical standards. Conversely, older generations exhibit lower propensity, with 32 per cent of Gen Xers and 28 per cent of boomers likely to make buying decisions based on a company’s ethics and values. Moreover, a significant proportion of Gen Z consumers (34 per cent) and millennials (39 per cent) indicated they “often or always” refrain from purchasing specific brands or products due to ethical or sustainability concerns. The likelihood of older generations, such as Gen Xers (20 per cent) and boomers (18 per cent), ceasing purchases over these same issues was strikingly lower.

CONSUMER CONUNDRUM

Despite concern over the environment, sustainability is not the primary motivating factor for mattress buyers, according to the majority of retailers surveyed. Instead, consumers prioritize durability as the leading sustainability factor when making mattress purchase decisions and have a prevailing preference for long-lasting products, outweighing concerns over potentially harmful chemicals and the ability to recycle or repurpose their mattress at the end of its useful life. Further, the allure of complimentary delivery and pickup services tends to trump considerations related to sustainability for buyers.

There also exists a pervasive skepticism among consumers regarding sustainability claims made by companies, with less than one-third of all consumers expressing trust in such assertions of environmental commitment.

Based on sales interactions in the past year, a substantial proportion of mattress retailers (61 per cent) said discussions about sustainability seldom occur, with these customer conversations typically initiated by the retailers themselves. Only 18 per cent of retailers considered sustainability to be “very or extremely important” in influencing consumer purchase decisions.

The survey findings suggest sustainability has limited influence on retailers’ decisions regarding the mattresses they carry. When it comes to product selection, sustainability ranked low in importance compared to factors like product quality (95 per cent), brand reputation (80 per cent) and supply chain-related factors (72 per cent). Only a minority of retailers (15 per cent) reported that sustainable manufacturing significantly influences which mattresses they decide to sell. Despite sustainability not being a primary motivator, a majority of retailers (77 per cent) offer at least some mattresses

manufactured sustainably. However, only onequarter claimed that “most or all” of the mattresses they stock meet sustainable criteria.

While anticipating an uptick in demand for ecofriendly mattresses over the next half-decade, most retailers feel ill-equipped to engage in discussions about mattress sustainability with customers. Only one-third perceive themselves as “very or extremely” prepared to address the sustainable aspects of the mattresses they sell. Another 45 per cent indicated feeling “somewhat” prepared, while 24 per cent admitted to being “not at all or not too” prepared.

Given this, it is unsurprising that many signalled a need for enhanced education and training initiatives to bridge this knowledge gap. Seventy-one per cent of retailers expressed that educational materials provided by manufacturers would enhance their readiness to discuss sustainability with customers. Moreover, 60 per cent believe incorporating more sustainability learning opportunities into retail sales associate training and implementing point-of-sale consumer education materials and signage in-store would be beneficial.

Beth English is the editorial director of BedTimes magazine, with nearly a decade of experience in the bedding industry. Guided by a passion for storytelling and a keen eye for industry trends, Beth leads the editorial team in providing insightful content to readers worldwide. Prior to joining BedTimes, she held various editorial roles in the publishing industry, honing her skills in communication and content creation.

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sleep shop
One in four consumers who have disposed of a mattress had it removed by a retailer during the delivery of a new mattress. But 63 per cent were unsure if the retailer recycled their old mattress.

A Helping Hand

The rise of last-mile delivery providers and how they’re making life a little easier for furniture, appliance companies BY

IF THERE IS ONE THING THAT HAS dominated discourse in furniture and appliance circles in recent times — and might still bring sweat to a business operator’s furrowed brow — it’s the supply chain.

While the past few years have been particularly challenging for these types of manufacturers and retailers as they have been dealing with rabid demand, backed up ports, scarce shipping containers and sudden influxes of huge amounts of product, companies have been searching for logistics support for some time. Providers of thirdparty and fourth-party logistics, more colloquially known as 3PL and 4PL, have offered some relief.

“We (have) talked to about 15 different manufacturers and most of them use some sort of 3PL or a carrier with 3PL services,” says Gilles Pelletier,

president and CEO of the Quebec Furniture Manufacturers Association (QFMA). “Some use them for the U.S., and some use them for internet services. All 15 that we visited, each of them had different requests or logistic demands.”

As for what a 3PL or 4PL company does, the former offers assets like trucks or warehouses, while the latter, which is seemingly a little rarer, provides tailored logistical solutions designed to meet a company’s needs.

When it comes to how many 3PL or 4PL companies are Canadian-owned and run, it’s difficult to say. According to a report by Allied Market Research, the Canadian 3PL market was valued at $1,580.8 million in 2019. That number is projected to climb to $3,010.7 million by 2027. Companies that use 3PL services span an array of sectors, including

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supply chain

health and nutrition, home decor, beauty and cosmetics, sport and recreation, and more.

Brian Ware, president of Mississauga, Ont.-based Cedric Millar, a fourth-party logistics provider, says it’s tough to determine exactly how many 3PL companies are operating in this country, as well as how many are domestically owned and run.

“Unfortunately, in our business, you get a lot of North American data and not a lot of Canadian specific data,” says Ware. “Essentially, if you look at the definition of 3PL as any company handling goods and providing that service themselves, such as trucking or warehousing, there are literally hundreds across Canada. 4PL is all dependent on the definition you find but there aren’t a lot of 4PL companies in Canada. A lot claim to do it but most are American-owned.”

Ware says 3PL companies specialize in providing supportive assets, while those like Cedric Millar work with companies to understand their needs and strategically partner with the proper providers to find a solution.

“It’s a customized solution for the pain points the company is looking to solve. They do not have assets, nor should they,” he says. “A 4PL needs to focus on solving the pain point and in order to do that, they can’t have a solution pre-determined; (they must) go in with a blank canvas and pull in the providers who can help.”

Ware says a 4PL provider is more of a supply chain aggregator.

“Our job is to build all-star teams,” he explains. “It could be anything from trucking to warehouse companies. But in our case, it could be process or operational expertise or technology, which is taking a much larger role, and it could be business intelligence and analytics.”

QFMA’s Pelletier says there is a pronounced need in the industry for logistical support and that need prompted his association to launch the first supply chain optimization program for the furniture manufacturing sector in Quebec: the better way program.

Launched in 2021, in collaboration with Cedric Millar, the program’s objective is to reduce the ecological footprint of the province’s furniture industry and allow manufacturers to lower their transportation costs.

“The problem with furniture is it’s big and bulky. It’s expensive, very fragile and there can be a lot of damage,” says Pelletier. “As an industry overall, we’re not efficient — we ship everywhere and we’re not doing a good job, so that’s why we came out with the program.”

Ware agrees furniture and appliance companies have unique needs that 3PL and 4PL providers can meet.

Cedric Millar was asked to collaborate with QFMA because their members had expressed concerns around the supply chain before Covid. Companies were grappling with increased freight and fuel costs, lack of technology and visibility, and more.

“We have now met with many QFMA members,” says Ware. “We go in and have a discovery session around their business — where are their customers, what are their challenges, what infrastructure do they have in place. That gives us the story of their business.”

Ware says problems plaguing small, medium and large players in the industry typically centre around higher expenses, inefficient processes, outdated technological infrastructure and the increased cost of getting products to market.

“We have global supply chain instability that pre-dates Covid,” he says. “Covid did not break supply chains; it opened up the cracks that were already there.”

GETTING INTO THE GAME

While it’s difficult to know exactly how many Canadian 3PL and 4PL players are out there due to insufficient data, homegrown companies are jumping into the market and serving furniture and appliance companies.

Mark Ang, co-founder and CEO of GoBolt, a sustainable fulfillment and logistics provider that’s headquartered in Toronto, says he launched his venture after getting a knack for what he calls “complex logistics.”

“When people come into your home, it’s a really personal and involved execution so we have to get good at managing that,” he says.

Prior to introducing GoBolt in 2017, Ang operated last-mile delivery company Second Closet, which eventually transformed into his latest project.

“A 4PL needs to focus on solving the pain point and in order to do that, they can’t have a solution predetermined; (they must) go in with a blank canvas and pull in the providers who can help.”
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the supply chain

“We ended up using big brands who used us and we started a small business-to-business division. We helped deliver big and bulky furniture with white-glove delivery,” he says. “We re-invented ourselves with GoBolt and we support businesses of all shapes and sizes with their supply chain requirements.”

Ang says GoBolt, a vertically-integrated business that doesn’t outsource core aspects of its operations, works with furniture companies like Endy, Structube and Ikea, and serves customers in the appliance, home gym equipment and mattress sectors.

According to Ang, all of GoBolt’s software was built in-house from scratch. Most interestingly, the company increased its electric vehicle fleet substantially in 2023, to meet its goal to provide carbon negative deliveries by the end of last year.

“We’re going to have thousands and thousands of trucks and it didn’t feel right to have so much diesel gas on the road,” he says. “ We made a conscious decision to do this with a sustainable lens.”

So far in 2024, 30 per cent of deliveries have been carried out in electric vehicles.

Much like Pelletier and Ware, Ang says furniture and appliance retailers and manufacturers have unique needs that not every 3PL can meet. Also, few providers pay as much attention to Canada as they should.

“Not everyone does big and bulky. And Canada is a bit of an afterthought (compared to the U.S.), so it doesn’t get a ton of attention or innovation,” says Ang. “When competition is low, innovation is low because there’s no get up and go requirement.”

Ware agrees with Ang. He says Canada is distinct and benefits from a tailored approach.

“I consistently came across leaders within organizations in Canada that were looking for that Canadian approach to their business,” says Ware. “From the moment we launched, there has been a lot of positive feedback and, case in point, we don’t really have a sales team.”

As for what sets Canada apart, he says the landscape different, literally. Ware explains there are a lot of smaller markets in this country and often branch offices don’t get the same level of infrastructure and investments, so they may not have equivalent technology to their American counterparts.

“(Plus), things are different in B.C., Atlantic Canada and Quebec, and understanding regional differences allows you to provide customized solutions,” he says. “It’s hard to do that without drawing from expertise from people in the market.”

Mary Waring, CEO of Coquitlam, B.C.-based Western Logistics, an asset-based carrier (not a 3PL) that specializes exclusively in furniture and has been in business for 32 years, agrees that Canada is

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the supply chain
“As an industry overall, we’re not efficient — we ship everywhere and we’re not doing a good job, so that’s why we came out with the program.”

unique when it comes to transporting home goods.

“A challenge is the fragility of the product. The different sizes and shapes — there’s nothing with a uniform shape and packaging. (Because of this), we feel we’re a good choice in the industry,” says Waring, who notes that unlike a 3PL, Western Logistics doesn’t contract out any work.

“We move the product safely without damages. (And) we know the industry and can cope with the ebbs and flows of the market,” she says. “If they need storage, we provide it. If they don’t need it, we just provide transportation.”

Waring adds that Canada is distinct in another way — rural areas comprise the vast majority of the country, its urban centres are far from one another and weather can be unpredictable.

Western Logistics has a network of terminals that enables it to service the country from coast-to-coast.

“Because we have a network of terminals, we’re able to cover the country (and provide) a wide range of service offerings,” says Waring.

PARTNERING BRINGS PERKS

As for whether using a 3PL or 4PL will save on

costs, industry insiders say that while there can certainly be financial benefits, the biggest bonus is efficiency and flexibility.

“The thing with big and bulky product is you need a lot of space. One container might only fit 30 sofas, so the volume of space needs to be more elastic to meet demand,” says GoBolt’s Ang. “With us, you get access to a national presence, as we’re in all five major cities in Canada. We have a large team aiming to make the shopper and merchant experience better every day. We should feel like an extension of your team. It should feel like as much of your operation as ours.”

Ang adds that companies who use a 3PL take on a little less fiscal risk, too.

“You have a shorter-term contract than you would with a lease on a warehouse and there’s a return on investment to working with a partner who handles the logistics stack,” explains Ang. “We (also) get better rates. We have better negotiating power if we need to ship to somewhere more remote.”

Cedric Millar’s Ware says companies that choose to use a 4PL stand to benefit from the customized approach.

“We certainly have been growing because the 4PL approach is more conducive to the problems companies are going through today,” he says. “There’s a challenge to the status quo happening in Canada and the U.S., and a lot are finding that working with many 3PL providers is not supporting their business. We identify savings that will more than pay for any service that we provide.”

Ware says at this point it’s rare to meet a furniture or appliance company that isn’t using a third-party company for logistical assistance.

“Every furniture company we’ve spoken with is working with a 3PL in some form and in some cases a 4PL.”

QFMA’s Pelletier says that while 3PLs can’t solve all of a company’s problems, they can help with some significant and common ones, such as tracking merchandise and possible damages. He also says they can provide better technology.

“For the most part, technology is not very good. (3PLs and 4PLs) have access to warehousing, trucking and technology. Manufacturers need to be able to keep better track of their merchandise,” he says. “A lot of manufacturers do imports, so that’s another layer and way of shipping. If you do imports, manufacturing, drop shipping, you have a lot of challenges, so a 3PL can help some of that. It’s one less thing to deal with.”

Ashley Newport is a Toronto-based freelance journalist who writes primarily

for trade and business

publications.
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the supply chain

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CUTTING OUT THE MIDDLEMAN

How to create a successful direct-to-consumer strategy for furniture retail BY

40 | HOME GOODS MERCHANDISER SPRING 2024 retail matters

E-COMMERCE RETAILERS, FROM BIG AND bulky items and furniture to small household goods, are continuously striving and competing to create the most efficient customer experience possible. As fast shipping and a seamless mobile shopping experience are now in high demand, retailers must have the fulfillment strategy and technology in place to meet these needs.

Given a staggering 91 per cent of shoppers will look up a brand online before visiting their brick-and-mortar business in person for the first time, according to a Digital.com survey, building a streamlined mobile shopping experience is now critical to winning new customers and driving growth. In this rapidly changing environment, adopting a direct-to-consumer (DTC) strategy will be critical to power success in 2024. It allows retailers to cut unnecessary touchpoints out of their supply chain to speed up shipping, reduce risk and lower costs.

With traditional e-commerce retailing models, merchandise must travel through a myriad of touchpoints — manufacturer, export showroom, the retail store and multiple warehouses — before finally reaching the consumer. By adopting a DTC retail model, merchandise can travel from the manufacturer to an in-market/country warehouse used by the manufacturer and then to the end customer, reducing touchpoints and risk of damages, improving supply chain logistics (less need for warehouses, delivery trucks, labour and space) and speeding up shipping. Establishing a DTC model is a valuable addition to established brick-and-mortar retailers and growing mobile brands. Here are three tips to create a successful strategy.

1

Build a curated catalog of products.

Today’s consumers like to visit a brand’s website and discover a variety of products — act-

ing as the ‘store window’ to drive traffic. Displaying the entire product lineup in an endless aisle can help convert shoppers, presenting them with every product choice at their fingertips.

To avoid offering merchandise in a disorganized or overwhelming manner, retailers must ensure they build a highly curated catalog of products, including a large array of filters, so customers can easily find what they need, and only showcase in-stock items to eliminate common pain points associated with online shopping.

Retailers can employ e-commerce automation solutions — designed to streamline repetitive tasks like manually/individually removing discontinued products — to save time and build a more cohesive catalog. As an effortless e-commerce experience is critical to winning customers, automating the curation and maintenance of the product catalog is a crucial first step in building a smooth DTC strategy.

2

Closely track fulfillment metrics from the start. To guarantee DTC retailing is generating returns, it’s important to track success metrics at every stage in the supply chain. This includes tracking key performance indicators, or KPIs, including time to fulfillment, customer ratings and feedback, shipping costs, profit margins and order accuracy. The practice should be established early in the DTC planning process to ensure it is powering growth, to identify potential pain points and to inform ongoing

strategy. In the furniture industry specifically, supply chain factors like fuel and shipping costs for big and bulky items can change rapidly. Staying on top of these changing factors allows retailers to pivot accordingly to ensure customer satisfaction and maximize profit.

3

Choose the right supplier. Furniture retailers looking to implement DTC fulfillment must confirm their supplier matches their targeted consumer’s needs. Choose product manufacturers that can offer premium quality and competitively fast shipping capabilities since 48 per cent of consumers now expect packages to arrive within two days using standard shipping, according to voice and analytic supply chains solutions provider Voxware. A successful DTC model also eliminates the need for minimum order quantities — the least amount of product units a manufacturer is able to sell to a retailer at once — which are a big hurdle for retailers.

DTC retailing will continue to transform supply chain operations across the furniture and big and bulky sectors. Although it comes with its own set of challenges, sometimes leading to differing product costs and specifications, as well as new considerations when scaling operations, this method of retailing will generate higher profit in the long run. With this, furniture retailers and e-commerce businesses across all sectors should prioritize implementing DTC retailing (as at least part of their business) in 2024 to fuel growth.

Scott Chorna is vice-president of sales operations for GigaCloud Technology. He leads the implementation and growth of the Giga B2B Marketplace in the U.S., which is a technology-driven business-to-business platform coupled with a complete storage and fulfillment solution for the furniture industry and other big and bulky items. As chief revenue officer at Wondersign, Kaspar Fopp helps thousands of independent furniture retailers with cutting-edge catalog technology for in-store kiosks, tablet apps and e-commerce stores.

homegoodsonline.ca | 41 retail matters

WHITE-GLOVE SERVICE FOR RETAILERS

Amax Leather Canada’s DDC program handles logistics, costs related to inventory management, labour and delivery so stores can focus on sales

WHEN LOOKING BACK AT THE FIRST THREE decades of this century, historians are likely to conclude the Covid-19 pandemic was the single most important event to impact the development of human society since the Second World War. There hasn’t been a single aspect of life — cultural, political, scientific or economic — it didn’t touch in some way. For those working in the furniture industry, whether in manufacturing and distribution or retail, those changes have all been too real.

The pandemic compelled the consumer to alter how they bought furniture, whether a new mattress for the master bedroom, table and chairs for the dining room or a new upholstery group for the living room. It also forced retailers and their vendor partners to create a new buying experience, as well as devise new ways to support the sale and delivery of product to reflect the current reality.

Vancouver-based upholstery resource Amax Leather Canada believes it has developed a novel approach that achieves both.

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retail matters

“During Covid-19, the customer’s shopping behaviour switched from offline to online. While online retailers enjoyed a boost in sales during that time, brick-and-mortar stores were losing customers,” says Amax Canada president Kevin

“Amax spends quite a large budget on online marketing for the Hydeline brand to drive people to visit nearby brick-and-mortar stores to try the product before purchasing,” says Lee.

about inventory turnover or other overhead expenses as Amax ships directly to the customer from our warehouse.”

Retailers participating in the program need to have between six and eight floor samples under a point-of-purchase display designed to capture the customer’s attention when they walk into the store. The stand supports the program’s marketing materials, including signage, graphics, tear sheets and leather swatches, too. Also available is an interactive touchscreen kiosk that provides information about the 21 upholstery collections being offered as part of the program.

In additiontoa‘white-gloveservice’levelofdelivery, which includes placing the goods in the desired room, assembly and debris removal, the company also handles all post-sale issues, such as warranty repairs, replacements and returns, directly with the customer.

Lee says lead times for stock leather is between two and four weeks from order placement to delivery to the customer’s home. Amax also offers a tag order option that gives the customer 17 different leather choices. If one of the options is chosen, the lead time is from 12 to 14 weeks.

Once the customer purchases a suite featured in the DDC program, the retailer sends the order to Amax’s head office, which takes on responsibility for delivery to the customer’s home.

“The brick-and-mortar store is released from the inventory nightmare and since the retailer doesn’t have to purchase the set before the sale, gets better cash flow,” says Lee. “And they don’t have to worry

There are currently 60 or so retailers taking part in the Hydeline DDC program. Amax supports them by stocking as many as 500 units in its Vancouver warehouse at one time, while receiving a minimum of 60 units each week.

At the end of the day, Lee says the real advantage of the program to the retailer is simple: “You sell, we

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retail matters
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A PROFITABLE TRIFECTA

The simple truth about value and how to deliver more of it

WHATEVER YOU SELL, YOUR MARKET IS over-served and under-differentiated. There are too many other businesses selling the same products and most look alike, sound similar and charge about the same price.

Ultimately, customer ‘ownership’ and business profitability are about creating, delivering and communicating compelling value that grabs your target customers, clearly differentiates you from competitors, makes you a household name and grows your bottom line. Customers demand value and every business promises it, but there’s a huge lack of clarity about what ‘value’ really is. Let’s keep it simple. There are only three kinds of value: functional, emotional and financial.

Functional value refers to the usefulness and practical benefits that customers derive from a product or service. A business delivers functional value when it sells extraordinary products and services that actually work for their target customers;

is open or available when needed; provides information, coaching and encouragement so customers can wisely choose and effectively use what is being sold; and creates policies, systems and processes that make it easy for customers to do business with them and that ensure efficiency and consistency.

Most businesses struggle with emotional value. It goes beyond the functional benefits and is the perceived worth that customers attach to a product or service based on the impression it has left on them. This type of value is delivered when customers feel better about themselves every time they do business with you and use what they’ve purchased. If not delivering this type of value, a business is not

‘connecting’ with customers on an emotional level, which is where most buying decisions are actually made or strongly influenced. Many businesses emphasize functional value but financial value is most important. This is because it’s a product of the first two values; financial value is the amount a buyer would pay for a product or service based on its functional and emotional value. A business delivers financial value when its customers believe they paid a fair and competitive price for the functional and emotional value they got from the business. If you don’t deliver extraordinary functional and emotional value, no price, regardless of how low, will be good enough.

Donald Cooper 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. Donald can be reached at donald@donaldcooper.com.

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retail matters
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LOOKING BACK AND FORWARD

Four Canadian retailers reflect on their business performance in 2023, share plans and predictions for this year

Retail business can change from one year to the next and even within the same year. Success and failure hinges on a variety of internal and external factors, the latter of which have been increasingly evident of late. The pandemic supercharged consumers who flocked to online shopping during government-imposed stay-at-home orders and then returned to stores in droves as restrictions eased, eager to spend what they had saved during Covid’s first year when many exercised fiscal restraint. Later, as Canada’s inflation rate soared and interest rates steadily climbed, shoppers began to slow down and even pull back on purchases in home goods categories, as seen from statistics. Here, four retailers share their experience over the past year, including how their stores performed, and expectations for 2024.

ANDREW TEPPERMAN, TEPPERMAN’S

2022 was a record year driven by a healthy consumer and healthy inventory positions. The continuous interest rate increases in 2023 quickly impacted demand, the housing market (a barometer for the furniture industry) and capital expenditures. In the same way that we saw a consumer surge in the prior year, we experienced a pull back and quickly adjusted by re-balancing the expense side. We are forecasting a tight consumer market for the first half of 2024, which means finding more internal efficiencies, leveraging technology and being very focused on how we target the consumer. We have a long history of navigating these recurring cycles, both positive and negative. 2024 marks a momentous year. We celebrated our 99th anniversary in March, and opened our seventh location in May, in St. Catharines, Ont., that has a new focus on the in-store customer experience.

ERIC BUCHFINK, MATTRESS MATTRESS

2023 was an exceptional year. Same store sales were up. This was apparently an accomplishment in our industry. There was no one singular factor that impacted results. We analyzed every part of our business with one purpose in mind and that was to improve things. Leasing, hiring, training, marketing, accounting, buying, corporate functions, travel, group benefits, store insurance, meetings, housekeeping and more all overhauled and made better. We’re working smarter these days and our sales numbers, margins and profits show it. We’re going all out in 2024, as it’s our 30th birthday, celebrated March 31. We’re going to do it all over again, with major emphasis on marketing and overhauling our database.

SCOTT REID, REID’S FURNITURE

After two years of ‘drinking from a fire hose,’ our sales slowed in 2023, to a more comfortable pace. The obvious culprit is rising interest rates cutting into the consumer’s expendable income. We also had a few competitors expand into the market and a couple more expand into bigger stores, which I assume was a result of everyone feeling confident thanks to the Covid cash injection. As Warren Buffet said, “As the tide goes out, we will soon find out who is swimming naked.” I suspect we will start to see many businesses close in 2024, and I foresee us finding many good people that will be looking for work, which will not only help us to increase our market share but also climb back to record sales.

DARRYL SHERMAN, WILSON’S FURNITURE

2023 saw a modest increase in sales. As a mid- to high-end retailer that focuses on customization, we found a return to normal order times with increased custom orders as availability improved. Average sales increased, partly due to increased prices over the past few years. Shortage of truck drivers during the pandemic forced us to explore third-party delivery options, which have worked out well and continue this year. Finding competent sales staff remains an ongoing challenge that continues in 2024. To assist new staff, we are updating our training program on an ongoing basis. Higher mortgage rates have reduced discretionary spending. We expect this to continue through 2024. As traditional advertising falls away, we are spending a great deal of effort on our website and social media program, ensuring both are robust. As this is our 90th year in business, we will be actively promoting special events throughout 2024.

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