TORONTO (29 August 2011) - KubasPrimedia, a prominent retail consultant based here, has scaled back its 2011 sales forecast for Canadian furniture stores for the second time this year. After upping the forecast for home furnishings stores in the second quarter, expectations for these merchants have also been scaled back. Meanwhile, the forecast for electronics and appliance stores has flattened out - all thanks to sagging consumer confidence coupled with record high household debt.

In the third quarter edition of its Retail Sales Outlook, KubasPrimedia is forecasting furniture store sales will top out at $9.7 billion in 2011, essentially unchanged from 2010.  The original forecast called for furniture stores to have 2011 sales of $10.0 billion, up 3.4% year-over-year.

However, KubasPrimedia is now suggesting furniture stores won't reach the $10.0 billion mark until 2012. That will still be slightly less than the $10.2 billion sold in 2008.

Home furnishings stores - which sell everything from floor covering to wall and window treatments, lamps, lighting and decorative accessories - are now expected to have sales totaling $5.5 billion in 2011, a 3.0% gain over the $5.3 billion rung-up last year. The last edition of the Retail Sales Outlook pegged these merchants at $5.7 billion for the year.

Despite the downgrade, home furnishings stores are still tagged as the growth leaders in the big ticket home category, outperforming both furniture and electronics and appliance stores not only in 2011 but in 2012 as well.

Sales are now forecast to climb 4.4% to $5.8 billion in 2012, returning these stores to where they were in 2007.

Electronics and appliance store sales should see sales of $14.4 billion in 2011, up 2.5% over the $14.0 billion sold last year. While this forecast unchanged from the previous Retail Sales Outlook, it is higher than KubasPrimedia's original 2011 forecast of $14.1 billion.

It should be noted this is still lower than the $14.6 billion sold in 2008, before the onset of the recession. White and brown goods stores should reach a new high-water mark of $14.9 billion in 2012, a growth rate of 3.8%.

In his commentary, KubasPrimedia vice president Ed Strapagiel cautioned readers that his 2012 forecast was very preliminary and a "don't-hold-us-to-it extrapolation."

The claw-back in the original 2011 forecast was driven by a number of factors. There was not rebound from the first quarter's poor performance during the April to June period, which is traditionally a bright spot for many big ticket home stores. Furthermore, whatever gains were made in retail-as-a-whole were driven almost entirely by the automotive sector. In addition to buying new cars, Canadian consumers were contending with rapidly increase gas prices - this is where their money went.

However, Strapagiel noted "gasoline prices are stabilizing and this could free up some consumer dollars." Furthermore, while the automotive sector "will still tend to boost the numbers, it should be less of a factor going forward."

He also pointed out "the underlying economy is still in relatively good shape despite some recent setbacks."

When it comes to furniture, Strapagiel cautions that even though the housing market is "still okay," current conditions don't suggest there's a lot of pent-up demand as consumers will continue to be focused on other priorities. "I don't think it (pent-up demand) is a big factor right now," he told Home Goods Online. "It's not a question of putting it off; it's a question of not buying."

This, in part, explains the more cheerful forecast for home furnishings stores. It might prove easier - and less expensive - for a consumer to freshen her home with the acquisition of new accessories rather than laying out hundreds of dollars for a new sofa set or dining room suite.

Electronics and appliances have the replacement factor in their favour. When the refrigerator or the television in the family room gives up the ghost, it's replaced almost immediately. Meanwhile, other electronics categories - cell phones, video games and the like - have mass appeal despite their falling unit costs which bolsters top line sales.