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Purchase Report


2012 outlook modest, Kubas says PDF Print E-mail
Written by HGO Staff   

TORONTO (05 December 2011) - This has turned out to be a disappointing year for the overwhelming majority of furniture stores in this country, according to the latest edition of the Retail Sales Outlook published by KubasPrimedia, a retail consultant based here. However, home furnishings stores have turned in an above average performance and should continue to do so into 2012.

For the third time this year, Kubas executive vice president Ed Strapagiel has ratcheted down his sales expectations for Canadian furniture stores. They should total $9.5 billion when the year comes to a close at the end of the month, down 1.6% from the $9.7 billion rung-up in 2010. This is also substantially below his original 2011 forecast of $10.0 billion.

Furniture store sales are now forecast to gain 2.4% and reach $9.7 billion in 2012 - which is still well below these merchant's high water mark of $10.2 billion in 2008. Accounting for inflation, it now could be 2016 or later before these stores get back to where they were before the recession.

Home furnishings stores - which sell everything from floor covering to wall and window treatments, lamps, lighting and decorative accessories - should see sales of $5.6 billion in 2011, which is up 4.7% over the $5.4 billion sold last year.

Next year, their sales should grow another 5.5% to $5.9 billion, which will put them back to where they were before the recession.

Home furnishings stores are not just the stars within the big ticket home category; they're one of the few stars in store retail as a whole, which is only expected to achieve a modest sales gain of 1.1% this year.

Many observers note home furnishings stores carry a broad variety of product that can help the homeowner freshen the look of her home without buying an upholstery group or a dining suite. Sometimes, new lamps and pillows augmented with one or two accessories can really change the look of a room without a furniture-sized invoice.

Electronics and appliance stores will also achieve modest growth in 2011, the report suggests, forecasting these retailers will have sales of $14.2 billion in 2011 - a year-over-year uptick of 1.1%. This is slightly higher than Strapagiel's original forecast of $14.1 billion.

However, most experts with the consumer electronics industry assert new gadgets - such as the iPad 2 and other tablets - new games and gaming systems as well as devises such as smart phones are the primary growth drivers for these merchants, not major appliances and traditional CE products such as televisions. Primary data from Statistics Canada appears to show volume growth for both majaps and TVs has been stagnating over the past few months.

Having said that, the Retail Sales Outlook, is suggesting electronics and appliance stores should see a sales uptick of 3.4% to $14.7 billion in 2012 - putting them ahead of their pre-recession peak.

The auto sector, including gas stations, will be the real growth leader among retail stores in 2011 with a jump of 9.2% to $157.3 billion this year. These merchants will tack on another 7.9% next year as gas prices are expected to moderate somewhat over the next few months.

"Overall retail sales remain highly influenced by gasoline states, which now account for 12.7% of total retail," Strapagiel noted in this report. "Gasoline price increases are expected to be more modest in 2012, but this factor is notoriously difficult to predict."

Meanwhile, store retail (excluding auto) is expected to advance 3.2% next year.

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