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Tepperman’s – finding a green ROI

23 September 2016
Community, People, Retail

Kermit the Frog once sang: It’s not easy being green. When he wrote that line for the work’s most famous Muppet, Jim Hensen probably didn’t realise there would be an enterprising young furniture retailer from Windsor, Ontario who figured out that being green would not only enhance his family company’s reputation but would make money doing so. Not only that, his efforts would award winning as well.

Earlier this year, the London Chamber of Commerce presented its Environmental Leadership Award to Tepperman’s Furniture, the now five-unit regional chain lead by third generation president Andrew Tepperman. The accolade is part of the chamber’s London Business Achievements Awards program, which is one of the largest and most prestigious in the country.

Andrew Tepperman (at left) and the team from the Tepperman’s store in London celebrate being presented with the award for award for environmental leadership by the London Chamber of Commerce and its London Business Achievements Awards program earlier this year.In his address to the 1,200 or so members of the business elite from across southwestern Ontario who attend the awards gala, Tepperman noted environmental sustainability is a key element of the company’s ten-year vision and central to its continuing success.

“Reducing our energy consumption, minimizing our use of landfills and producing less garbage on the whole will help us achieve our environmental sustainability goals,” he said. “Our teams have worked hard to create company recycling programs, retrofit LED lighting into our showrooms and warehouses and installing foam emulsifiers. We know that stewardship of environmental sustainability has no end.”

In an interview with Home Goods Online, Tepperman noted being stewards of the environment is something of a family tradition. “I think this all started with Grandpa Nate who founded our business in 1925 going door-to-door on foot. He had a zero carbon footprint!” he chortled. “Actually, he couldn’t afford a car, so I’ll use that story for now.”

While the award was given to the London store – which opened in late 2008 and received the first Don Smith Commercial Building Award for environmental sensitivity, design and construction two years later – the environmental practises used there are also found in the company’s other units in Windsor, Chatham, Sarnia and now, Kitchener.

Tepperman revealed that within the company’s ten-year 2025 Vision are six Guiding Principles with one being environmental leadership. “Each department, whether you’re in I.T., warehousing, or sales will incorporate these six principles into their annual strategic plans,” he explained. “So, these environmental initiatives are company-wide. We do have specific tests in various locations like electric car charging stations in Kitchener and solar we’re planning to test in London.

“Each quarter when I do my town halls in each store, we talk about what we done with environmental sustainability during the last period and new initiatives going forward,” he continued. “For Tepperman’s, it’s not just about helping the environment, it’s about being a leader in environmental sustainability.”

Each of the five stores also has their own robust internal recycling program. “It’s everyone’s responsibility to find ways of reducing waste and new ideas to recycle,” Tepperman said. “For example, one store asked why we were printing three copies of every order. It turned out we didn’t need to file one copy simply by storing the digital version. That alone saved hundreds of thousands of pieces of paper. Sustainability is a feel-good thing but it also can save money.”

It’s also about measuring the results, which is why the London store was honoured by the Chamber of Commerce this year.

Last year, Tepperman’s diverted 30 tons of plastic, 520 tons of cardboard and 312,000 cubic feet of Styrofoam from local landfills in London. It’s also about being open about its efforts. In a partnership with Waste Solutions Canada, Tepperman’s has launched a web site available where the public can review accurate tracking of the waste disposed of by the facility, which houses both an 85,000 square foot store and a 100,000 square foot distribution centre. (teppermans.wastetracking.com).

Click here to read Michael’s complete report in Fall edition of the HGO Merchandiser

Editor’s Note: Since the Merchandiser went to press; Andrew Tepperman has told HGO the company has been approved to the Ontario government’s solar FIT program and will install a system in the London store in the spring of 2017.

Tepperman’s is also teaming up with a researcher at Western University who is finding ways of cracking molecules in waste and turning them into usable materials and is involved with a grant program experimenting with mattress recycling. “If it works, the City of London wants to do something with us as well,” he said. “Bedding waste has been a challenge for all municipalities in North America.”

Resale market climbs 10%

23 September 2016
By the Numbers

OTTAWA – According to the Canadian Real Estate Association (CREA), homes sales via their Multiple Listing System (MLS) fell 3.1% from July to August but, continuing on what’s becoming a familiar theme, were also up on an actual 10.2% above those recorded in August 2015. The national average price also climbed 5.4% over a year ago.

August’s was the largest monthly decline since December 2014 and, together with the declines in each of the three previous months, places national home sales activity 6.9% below the record set in April 2016.

Once again, the realtors’ group reported the overall housing market remains very much a regional story, with sales declines reported on almost 60% of all local markets, led by a steep decline in the Greater Vancouver Area, which was attributed to the new property transfer tax imposed by the Government of British Columbia on foreign buyers.

Sales fell for the sixth consecutive month on the Lower Mainland. “Much of the monthly declines in national sales in recent months reflect slowing activity in the Lower Mainland,” CREA said.

Chart courtesy of the Canadian Real Estate Association.“Single family homes sales were already cooling before the new land transfer tax on foreign home buyers in Metro Vancouver came into effect,” CREA chief economist Gregory Klump added. “The surprise announcement of the new tax caused sales to brake hard.”

Actual sales activity was up 10.2% year-over-year in August 2016. Sales were up from year-ago levels in about three-quarters of all Canadian markets, led by Greater Toronto. By contrast, Greater Vancouver posted the largest year-over-year sales decline.

The number of newly listed homes fell by 2.7% in August 2016 compared to July. While new supply was down in just over half of all local markets, declines in the Lower Mainland, Greater Toronto and Montreal far outweighed the monthly rise in new listings in less active markets.

The actual national average price for homes sold in August 2016 was $456,722 – up 5.4% on a year-over-year basis, the smallest increase since January 2015.

The national average price continues to be pulled upward by sales activity in Greater Vancouver and Greater Toronto, which remain Canada’s tightest, most active and expensive housing markets. If they are excluded from calculations, the average price is reduced by about $100,000 to $357,033.

Chart courtesy of the Canadian Real Estate Association.In her note to clients, Diana Petramala of TD Economics, seemed to almost welcome the end of double-digit price growth in the Toronto and Vancouver markets and pointed out that for the latter has already exceeded the 10% peak-to-trough correction she’s been expecting. She also expects Vancouver prices to remain weak through to early 2017.

“In contrast, the home price appreciation in Toronto has recently overtaken Vancouver and is rising faster than any other Canadian major market exacerbating the already present overvaluation – estimated to be around 17%,” she said, adding Toronto prices are expected to grow at a double-digit pace through the rest of 2016 supported by foreigners who appear to be shifting their attention from Vancouver.

“However, housing affordability in Toronto is eroding quickly for domestic buyers, something that should take some steam out of housing activity next year,” Petramala remarked.

“Low interest rates coupled with modest economic gains are expected to keep housing activity fairly stable elsewhere in Canada,” she concluded. “Still, following a 10% gain this year, weakness in Toronto and Vancouver are expected to pull the average Canadian home price down 1% next year.”

The brick and mortar advantage

23 September 2016
Opinion

Earlier this summer, I published a news story about the rapid increase in online sales made by furniture and home furnishings stores in Canada (click here to review). Basically, e-sales tripled in the years between 2012 and 2014, according to figures published by Statistics Canada – numbers we rarely achieve in our industry. Shortly after the story was published, I read an interesting tidbit about Wayfair, the internet furniture merchant that landed in Canada to a great deal of fanfare this past spring.

Perusing through some of Wayfair’s public documents they told shareholders their average ticket was $300. This suggests they’re not moving trailer loads of upholstery, dining rooms and bedroom suites off the web page and into the consumer’s home.

Then, a few weeks ago I was interviewed by the Toronto Star for a piece they were writing on Wayfair and how it will change the Canadian furniture buying marketplace. It was during that discussion with reporter Francine Kopun that I realised brick and mortar stores have one advantage over e-commerce that no matter how hard they try, I’m not convinced the geeks cannot replicated.

Furniture buying – whether it’s a new high-end mattress for the master bedroom or a new upholstery group for the living room – is relationship driven. Think about it. Most top-tier and long-lived independent retailers I know strive to build long-term relationships with his customers. The members of his sales team don’t just want to sell Mrs. Smith the mattress she needs right now, but the upholstery group she’s going to want in time for when the family comes home for Christmas.

Building a relationship requires conversation. It requires dialogue. It needs a certain level of give-and-take. It needs the kind of interaction you can’t have in a chat room. It’s probably a little like ‘sexting’ – it can’t be all that satisfying.

I’m not saying the independent retailer should ignore Wayfair and their compatriots. It’s critically important every store owner and buyer follow what they’re featuring on their page very closely because one thing is obvious. Wayfair and company are going to influence the consumer’s choices and dictate furniture fashions trends.

But it’s going to be very difficult for them to build strong relationships with the customer. It’s easy to sell a $300 pair of lamps over the internet, but the technology isn’t equipped to meaningfully participate in a conversation about a $3,000 sofa and its companion $2,500 loveseat.

Will they be able to overcome this handicap? That’s an interesting question. I don’t see how, but then again I’m not all that smart.

Adapting to the challenges of technology and then using it to further your business has been a common theme among the buying groups for some time now. Indeed, they are well equipped to deal with the challenges and a, if you’re a member, you should be exploiting every advantage their programs provide you. Every independent retailer needs a strong online presence – beginning with a web site. You need to use this technology to regularly communicate with your customers.

But this technology alone won’t build the relationship with the customer. That comes from having the best trained and most passionate sales force possible on the floor – people who know the customer, who learn what she wants and needs and are able to build the bridge leading to that second sale.

Yes, e-commerce sales are going to skyrocket over the coming years. Yes, Canadians are going to buy more furniture this way. Yes, independent retailers have to know, understand and use technology to the best of their ability. But in the end, it’s their ability to connect with the customer – to build a relationship with her – that will be the key to his or her ongoing success.

Related Story: E-sales triple for furniture and home furnishings stores
Related Story: Wayfair.ca goes on line
Related Story: The fledgling giant awakens

July furniture, mattress and furnishings sales climb for GLR

21 September 2016
By the Numbers, Furniture, Mattresses, Retail

OTTAWA – The Group of Large Retailers (GLR) saw its sales of furniture, mattresses and home furnishings climb in July on a year-over-year basis, according to the latest figures from Statistics Canada. However, sales of televisions and audio-video equipment continued to shrink, while those for major appliances were essentially flat.

Canada’s national bean counter set GLR furniture sales at a preliminary $241.1 million for July, 12.9% higher than the revised $213.4 million for June, but off 3.8% from the $250.5 million sold in July 2015. It was also the GLR’s best month for furniture sales so far this year.

For the year-to-date, furniture sales totalled $1.51 billion, up 3.4% from the $1.47 billion for the January to July period of 2015.

Mattress sales meanwhile were pegged at a preliminary $71.9 million in July, up 5.1% from the prior month’s $68.4 million and a 4.4% gain over the $68.8 million sold in the same month last year.

For the opening seven months, mattress sales were $462.6 million – a 5.3% uptick over the $439.2 million sold for the comparable 2015 period.

While sales of major appliances gained 5.9% on a month-over-month basis at $186.9 million, from $176.5 million in June, they were down 2.1% from July 2015 when the register rang-up $191.0 million.

Year-to-date sales for white goods were estimated at $1.05 billion, essentially unchanged from 2015.

Sales of televisions and audio-video equipment continued to lose ground, coming in a preliminary $157.4 million for July, down 8.2% from the $171.5 million sold in June. It was also down 5.7% from the $166.9 million from July 2015.

Sales for this sub-set of the consumer electronics category for $1.14 billion for the January to July period, off 3.5% from the $1.18 billion sold last year.

Home furnishings sales – which cover everything from floor covering to lamps and lighting, decorative accessories and wall art – totaled a preliminary $229.5 million in July, down 1.7% from the prior month’s revised $225.5 million and off 4.9% from the $241.9 million recorded for July 2015.

For year-to-date period ending July 31, 2016 sales of home furnishings totalled $1.53 billion, a 2.4% advance from the $1.49 billion recorded for the same period last year.

While the dollar volumes for the Group of Large Retailers – which includes 80 companies identified by Statistics Canada as retailers who either have stores across the country or are the dominant players in their home province – are preliminary estimates, they are unadjusted for seasonality or other factors.

For the big ticket home category – including furniture, mattresses, home furnishings, appliances and consumer electronics – the group includes: the Brick; Leon’s Furniture; The Source; IKEA Canada; BMTC Group; and, Best Buy Canada as well as the Calgary-based, 27-unit CE specialist Visions Electronics, among others.

Several of this country’s largest general merchandise store operators are also included. Among these are: Hudson’s Bay Company (HBC); Sears Canada; Wal-Mart Canada; and, Canadian Tire Corp.

Related Story: First half big ticket sales climb 2.9% for Group of Large Retailers

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Home Goods Online.ca 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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