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Explaining the omnichannel and celebrating being green

23 August 2016
Events, Furniture, People, Retail

BRIGHTON, Ontario – In the Fall 2016 edition of the HGO Merchandiser, our team of writers and thinkers explain the omnichannel, celebrate Tepperman’s win of an environmental leadership award, review this year’s Canadian Furniture Show and discuss the latest trends in upholstery. Beyond that, our retail guru Donald Cooper shares his action plan for hiring a great team. That’s a lot of ground to cover.

‘Omnichannel’ is a term that’s been bandied about in retail circles for the past several years, but no one has really defined what it means or how it can be used to build a retail business of any kind, let alone one selling furniture, mattresses and major appliances. Well, Gary James has done precisely that. In a nutshell, being an omnichannel retailer means providing the customer with every possible path to purchase. It has to be provided seamlessly and while giving a superior shopping experience. Looking at the success many home goods retailers have had adapting to its demands, it may not be as dauntless a task as it appears.

Earlier this year, the third generation leadership of the Windsor, Ontario-based Tepperman’s Furniture was recognised by the London Chamber of Commerce for its environment sustainability efforts, which Andrew Tepperman, president, says have become part of the company’s culture. In fact, he’s discovered it’s more than possible to measure a return on investment (ROI) on the efforts to be green, producing not only a few unexpected dollars but an enhanced reputation among his customers.

In this issue, Ashley Newport reports on the recently concluded 2016 edition of the Canadian Furniture Show. It has undergone a makeover over the last few years, shortening its once cumbersome moniker, cutting a day from its run time and welcoming attendees during the summer rather than the winter. While it made in-roads in terms of style, welcomed more beautifully curated displays and some style-savvy celebrity speakers this year, attending retailers say they want more Canadian product and even more striking exhibits.

Ashley also authored our product strategies report this issue. While walking the floor at CFS recently, it became apparent to her that bright, bold upholstery pieces – especially those with sleek, soft frames – were no longer novel or rare. As the world has got smaller and the consumer more fashion-savvy, manufacturers began designing fun pieces that are versatile, mobile, practical and most importantly stylish.

Our resident retail guru, Donald Cooper, shares his eight essential steps to attract, lead and engage a top performing team because the real battle in business today is the battle for talent. If it is won, the battle for loyal customers and healthy profitability is a lot easier. Whether your business is large or small, not having the right people in every position carries a huge bottom-line cost in lost business, inefficiency, missed opportunity and frustration.

We hope you enjoy the read.

Click here to download your copy of the Fall 2016 edition of the HGO Merchandiser.

The Village Merchant and his decorative taste of Indonesia

16 August 2016
Furniture, Retail

GRENFELL, Saskatchewan – The world has gotten smaller (figuratively, at least) making its simpler for decorative accessories from far off place to find their way to the Canadian market. But few retailers and consumers are aware they can procure some truly unique statement pieces, such as a wildly appearling prehistoric looking sink, from a little company based here called The Village Merchant.

The firm was discovered at the recently concluded 2016 edition of the Canadian Furniture Show (CFS), offering an impressive array of bathroom sinks that somehow managed to evoke images of the Flintstones and luscious, luxurious outdoor washrooms (the kind you’d find at a high-end resort in some sunny locale). With just one glance at the well-curated booth, it was clear The Village Merchant had something special to offer.

“We’ve been at this for slightly over two years,” says Jamie Gorchynski, the co-owner of the recently established resource. “We had a relative who owned a small shop in B.C. who brought in products from Bali, Indonesia and we always liked her stuff. We went over with her on a holiday and what ended up being her last buying trip became our first.”

This unique glass top accent table, supported by pillars of teak wood is part of the Village Merchant assortment.Unlike many companies in the home furnishings trade, this one came to life on what was almost a whim. Gorchynski and his wife, Lisa, simply decided the Canadian market might respond well to rustic furniture, one-of-a-kind stone sinks, hand blow glass décor, teak products and other Indonesian-made home products.

The Gorchynski’s instincts weren’t wrong and the move to establish the company came at a time when people were opening their hearts and minds to unique, quality wood products produced by skilled artisans. Although some design gurus are noting a shift towards more glossy and glamorous finishes, large swaths of the Canadian market are still very interested in buying and selling rustic pieces. If those pieces happen to be exotic and tell a story, that would be all the better.

“[When we got back with some products] we did some local retail tradeshows and got a really good response,” he says. “We just tested the market with the retail tradeshows and quickly sold the stock that we had bought. They were just small pieces, such as carvings, because we hadn’t really seen the full picture of what was available.”

Once the Gorchynski’s took their show on the road, so to speak, they found out that there was, indeed, a huge market for their imports.

“We did Agribition [a livestock and goods tradeshow] in Saskatchewan and it’s such a varied market and there’s no specific target. We’re more rural out here, but we found that there was interest from all corners. We also did the Manitoba Winter Fair and the Winnipeg Cottage Country Show and the Ultimate Women’s Show in Winnipeg. We just got swamped and mauled there. We realized we’d have to bring over a container [of product],” he recalls.

While the couple could have opened their own shop and marketed directly to end consumers, they saw more opportunity in providing goods to a wide variety of retailers.

“After the retail shows, we were asked where people could buy our stuff,” he says. “People import and retail out of their own shops, but that doesn’t give the wider marketplace access. We saw that there was a market here and we developed a business plan. Our market is small and our foot traffic is light, so we knew wholesale was the way to go.”

After testing the market with the smaller shows, the Gorchynski’s decided to up the ante by setting up at the grander Alberta Gift Show. That show – one dominated by significantly larger exhibitors – prompted the couple to kick off their wholesale operation.

“We started out with small booth because we were going out on a limb,” he says. “We had a 200 square foot booth there and we loaded our own truck and trailer. Lisa said we were way out of our league. We were a little mom and pop shop rolling through the doors. I’m also a carpenter, so I built our wood booth. We were next to a large Toronto-based company and we just felt like a little dimple, but before we even finished setting up, we had people coming over to us and giving us positive feedback. People said our stuff was cool and we were going to do well. It was a crapshoot for us, but we ended up with product in 50 or 60 stores across western Canada and the Northwest Territories. We had to deliver most of our own product because it’s so delicate.”

The couple’s success at the gift show was monumental. After over-selling their inventory and ordering yet another container of product, the pair decided they needed a larger space to store their goods. They are now in the midst of renovating a 4,600 square foot space in Grenfell which was expected to be completed last month.

The Village Merchant sourced with teak accent chair from artisans in Indonesia and is part of their furniture collection. Although the unique start-up has gotten off to a good start, there are challenges involved in importing good quality products from so far away. To mitigate the difficulties, Gorchynski relies on good relationships with his suppliers.

“We make sure we get enough good quality products to fill orders,” he says. “It’s a challenge, but we have really good suppliers. We don’t want to lose our grip on quality.”

As for other challenges, the couple is also learning to navigate an industry that’s been, up until this point, relatively known to them.

“It’s a leap and a steep learning curve,” says Gorchynski, who has worked as a carpenter and teacher throughout his woodworking career. “But I’m such a wood guy. On our first trip, I was looking at the teak and just fell in love with the material and I had all kinds of ideas. [This business] is somewhat an extension of my passion.”

One of the most interesting aspects of Gorchynski’s business is its reliance on Indonesian suppliers (the Indonesian government actually sponsored the Merchant’s booth at CFS). Importing products from international suppliers isn’t just cost-effective (although currency conversions can induce headaches), it’s exciting. It gives the importer a chance to get to know another culture and share its craftsmanship with another country.

“You have to develop a trust-based relationship,” he explains. “We need to be back over there in November and we’ll be there for about two months. You want to see the orders filled and make sure everyone is paid. You want to make sure all the paperwork is looked after and you want to see the container off. Mistakes can be expensive and out of your control.”

He also says you have to adjust to different cultural expectations and roll with the punches.

“Indonesia is a unique place and business practices can depend on the supplier’s religious background,” Gorchynski points out. “Business with some suppliers is based on trust and feeling each other out. It’s an interesting place and it’s so safe. I feel safe walking down the darkest alley. It’s a relaxed and calm and happy setting. I’ve never felt insecure or like anyone was out to get me, but you have to be careful and be very specific about what you order. Bartering is typical and you have to learn how to walk away, but they’re honest and nice people to do business with.”

The Village Mercant is currently selling to independent retailers in western Canada and wants to expand into the rest of the country as well as into some of the larger regional and national retailers.

“We expected a bigger number of buyers at CFS, but it was worth it for us,” he says. “We generated orders and contacts. We have one or two [retailers] in Toronto now, but most of our orders were for out west. Eastern Canada will develop over time, but we don’t want to rush and not be able to supply orders. We’ve grown beyond our expectations.”

Durham implements ERP and cuts product delivery time

16 August 2016
Furniture, Manufacturing

DURHAM, Ontario – Solid wood bedroom specialist Durham Furniture has successfully implemented a new Enterprise Resource Planning (ERP) System, which has resulted in cutting customer delivery time by as much as 25%. This achievement coincides with the evolution of the company’s manufacturing process to mostly on-demand production over the past several years.

“In the five months since the new system has been in place, we’ve already reduced our delivery time by more than two weeks in many markets,” Luke Simpson, president and chief executive officer of Durham Furniture, said in a statement. “We’ve implemented the system without any significant negative impact on our production or customer service operations, and with our aggressive initiatives for continuous improvement, we’ve set goals to reduce our delivery times even further.”

Seen here with its wood plank bed and night stands in the company’s Autumn Wind finish, Defined Distinction is one of the first collections being manufactured by Durham Furniture using its new Enterprise Resource Planning system.The ERP system comes from Syspro Business Solutions Inc. – a global manufacturing software systems provider based in Mississauga, Ontario – and includes financial, inventory, production, requirements planning and reporting service modules. The company had also supplied systems to other furniture makers such as Prepac Manufacturing, the British Columbia-based ready-to-assemble specialist and Boss Designs, a United Kingdom headquartered producer of contract chairs, among others.

“The most fundamental benefits of our new system are the product planning and tracking components that ensure that the right product reaches retail locations at the right time and at the right cost,” Simpson said. “In addition, superior analytics of sales trends will enable us to more effectively position and market our products, resulting in further reductions in overall inventory costs and product obsolescence.”

Along with the new ERP system, Durham’s significant increase in custom orders over the past several years led the company to transition to an on-demand production process, warehousing parts to assemble case goods as they are ordered rather than stocking cases in whitewood.

“Our product line has evolved, and today nearly 90% of our business is custom orders,” he said, citing that as a key factor in making operational changes. “As we continue to serve our retailers and a growing customer base of interior designers, the new processes allow us to be much more flexible in the variety of styles and finishes we add to our product line.”

In addition to other improvements, Josh Alexander, Durham vice president of sales, brought deep experience in global logistics to the company, which has impacted operations as well.

“Josh’s input into the way we produce, consolidate loads for our carriers and manage orders in our warehouse has been invaluable,” said Simpson. “Under his leadership and as a direct result of the long-range plans implemented by our new management team, we made significant improvements in inventory, warehousing and logistics operations. We’ve also been able to introduce a new direct-ship option where it makes sense for the dealer.”

Related Story: Durham unveils updated site

Leon’s sees uptick in Q2

16 August 2016
By the Numbers, Retail

TORONTO – Leon’s Furniture has reported sales grew in the second quarter and first half of the year, although profitability wavered a little thanks to what Canada’s largest full-line furniture retailer described as soft economic conditions.

For the three months ending June 30, 2016, total system-wide revenue was $606.4 million, up 4.4% over the $580.8 million generated during the same period of 2015.

Corporate store sales were $516.2 million, a gain of 4.7% over the comparable period’s $492.9 million as same store sales were up 4.1%. Meanwhile, sales by its 103-unit franchise store network totalled $90.3 million for the quarter, a 2.8% uptick over last year’s $87.8 million.

While it breaks down sales between its corporate store and franchise segments, the company doesn’t give standalone results for its banners, which include Leon’s and The Brick.

The Leon's superstore in Sarnia, Ontario.“Effective marketing and strong merchandising programs continued to drive incremental same store sales growth in Q2,” Edward Leon, president and chief operating officer of Leon’s Furniture, said in a statement.

Adjusted net income for the quarter was $15.5 million or 22 cents per share, essentially flat on a year-over-year when compared to the $15.6 million or 22 cents per share in the same period in 2015.

For the six months also ending June 30, 2016, Leon’s total system-wide revenue was $1.15 billion, up 5.7% over the $1.09 billion in revenue generated for the first half of 2015.

Corporate store sales were $979.6 million, a gain of 6.2% over last year’s $922.6 million. Corporate same store sales were up 5.8% for the period. Franchise network sales were $173.3 million, up 3.3% from $167.8 million.

Net income for the first half was $20.7 million or 29 cents per share compared to $18.4 million or 26 cents per share for the opening six months last year – a gain of 11.5% on a per share basis.

“The strategic initiatives we have put in place are driving greater traffic and increasing average ticket price at the store level across all our banners contributing to growth in our top line while maintaining our profitability,” Edward Leon said, noting management is eagerly awaiting the opening of eight new locations acquired earlier this year from Sears Canada, including four in the Greater Vancouver Area which will give Leon’s its long sought after beachhead in British Columbia.

“Throughout the quarter we continued to make progress on our eight new retail locations across Canada,” he said. “We look forward to all these stores being opened by the end of September 2016, which will give both banners a meaningful presence in all key areas of the country. We remain confident that through judicious growth, sustained cost control and incremental synergies related to our acquisition of The Brick, we will continue to drive value for our shareholders in the coming years.”

Those eight stores are expected to come online before the end of September. However, the company shed five stores during the first half of the year including one Leon’s corporate store, one Brick franchise store, two Brick Mattress stores and one United Furniture Warehouse outlet. It also opened one new Brick corporate store and ended the half with a store count of 297, down from 301 a year ago.

“Even though the economy remains soft, we expect to see consistent profits in 2016, by improving same store sales, growing e-commerce sales, and continuing to drive efficiencies that will result from the ongoing integration of The Brick,” Leon added.

The publicly-held and family managed Leon’s Furniture operates a total of seven banners, including: Leon’s, The Brick, Appliance Canada, Midnorthern Appliance, The Brick Mattress Store, The Brick Clearance Centre and United Furniture Warehouse. It acquired The Brick in March 2013.

Related Story: The Brick, Leon’s named Canada’s most trusted brands
Related Story: Leon’s to take over eight Sears Home leases across Canada
Related Story: Leon’s Q1 sales up 7.1%

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Home Goods and its accompanying newsletter - HGO This Week - covers the furniture, bedding, appliances, consumer electronics, accessories, lamps and lighting and floor coverings product sectors of the big ticket home goods market in Canada. HGO is also a forum for the dissemination of market research and hard-hitting articles on best practices for Canadian retailers.

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