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HGO Merchandiser: A new post-pandemic era begins

4 August 2020
Misc, Opinion

BRIGHTON, Ontario – The world changed on the 11th of March. No one in his or her right mind would have imagined just 24 hours earlier we would shut down our entire economy and society save for a select number of essential services. It had never happened before, not even during either of the World Wars or the Great Depression of the 1930s. Even now, as we slowly struggle back to what will be undoubtedly a vastly different normal, many still can’t quite believe the impact the pandemic has had on our lives and businesses.

That’s what this issue of the Merchandiser – as well as the next – will begin to examine. We’ll try to figure out where this industry is going, and to the degree possible, how we’re going to get there. We’ll start at retail, before moving on to manufacturing and the apparent market.

In the attempt to plot the way forward, the best place to start is where we’ve been. First, we’ll look at the numbers and view where furniture, mattress and major appliance retailing finished as 2019 drew to a close. We also have a snapshot of the first quarter of 2020, based on what is admittedly preliminary data.

The focus will be on brick-and-mortar or, as Statistics Canada prefers, location-based retail. The reason is simple. Traditional merchants still dominate furniture, mattress and major appliance retailing in this country. What little data there is indicates that despite all the press they receive, the direct-to-consumer or e-commerce players – such as Amazon, Wayfair, Endy – are still minor players when it comes to big ticket home goods.

We also chat with a few seasoned independent furniture retailers as well as with a recognized expert, speaker and author on all things retail. The goal is to give some insight into where we’re been and where we’re going as an industry. We don’t know what tomorrow will bring, but let’s prepare as best we can.

Gracing the cover of this issue, we celebrate the opening of Bennett’s Furniture & Mattresses’ third store in Kingston, Ontario. It is fitting as this family-owned retailer – under the current leadership of Eric and Marlaine Bennett – is enthusiastic about its future as it readies itself for two significant milestones: the transition to its fourth generation and to mark its centennial.

Click here to download the Summer 2020 edition of the HGO Merchandiser.

The Forecast: store sales

4 August 2020
By the Numbers, Retail

Even before the onset of the pandemic, the number of furniture stores operating in Canada has been shrinking steadily for most of the past decade. According to data published by both Industry Canada and Statistics Canada, there were an estimated 3,268 furniture stores across the country at the end of 2019. Seven years earlier there were 3,437. For the most part, the evidence suggests most of those lost were single unit operators.

Despite this shrinkage in numbers, furniture store sales improved modestly but steadily from $9.53 billion in 2012 to a record $12.0 billion last year. This has also driven sales for the average furniture store – which Statistics Canada defines as a retailer generating 51% or more of annual revenue from the sale of furniture and mattresses – from $2.77 million in 2012 to $3.67 million in 2019.

Leon’s Furniture Limited, the publicly held operator of Leon’s, The Brick and Appliance Canada had sales for $2.73 billion in 2019, giving them a national market share of 22.7%. Seen here is its Leon’s store in Sarnia, Ontario.In 2019, the furniture store segment of Canadian retail was dominated by four players whose combined total sales of $6.7 billion accounted to a market share of roughly 56%. In all, they operated a combined 626 outlets from coast-to-coast, just over 19% of all brick-and-mortar Canadian furniture stores. Three of these companies are publicly held, while the fourth is the Canadian subsidiary of what is believed to be the world’s largest furniture and home furnishings retailer. They are: 

Leon’s Furniture Limited (LFL): this Toronto-based publicly held operator of Leon’s, The Brick and Appliance Canada had sales for $2.73 billion and a 22.7% national market share in 2019, generated by some 304 corporate and franchise stores.

IKEA Canada: headquartered in Burlington, Ontario and owned by the global home furnishings giant based in The Netherlands, its 14 full-size stores had revenues of $2.53 billion during the fiscal year ending August 31, 2019 for a 22.0% market share.

BMTC Group: this Montreal-based and publicly held retailer operates solely in Quebec with 32 stores under the Brault & Martineau, EconoMax and Ameublements Tanguay banners, ringing up sales of $720.2 million and a 6.0% national market share for its last fiscal year; and,

Sleep Country Canada Holdings (SCC): also based in Toronto, the publicly held owner of mattress specialists Sleep Country, Dormez-Vous and Endy ended 2019 with revenue of $712.4 million out 275 stores plus its endy.ca virtual platform for a 5.9% market share.

Of the four, only SCC is aggressively adding to its store count at present, opening 12 new locations last year. For the three others, store counts have been remarkably stable over the past few years, although IKEA added new full-size stores in Halifax and Quebec City in 2017 and 2018, respectively. It also shelved plans to build another full-size store in London, Ontario earlier this year. It should be noted, LFL and BMTC have been continuously investing in their real estate, both have been relocating and renovating a number of their stores in recent years.

By contrast, the four largest furniture stores in the United States had collective sales of US$14.7 billion last year but with only a 26% share of that country’s market, according to Furniture Today. They also operated 3,845 brick-and-mortar stores between them, making them substantially larger than the entire Canadian furniture store sector in terms of both sales volume and unit count.

Statistics Canada includes furniture stores as one of 11 segments its uses to track the performance of location-based – brick-and-mortar – retail in Canada. There are two other types of retailers in the big-ticket home group, home furnishings stores and electronics/appliance stores. Home furnishings stores sell everything from floor covering to lamps and lighting, linens, decorative accessories and wall art as well as furniture, particularly accent and occasional furniture. 

Click here to read the rest of this report in the Summer 2020 edition of the HGO Merchandiser.

LBB opens Ottawa store

4 August 2020
Retail

OTTAWA – High-impact promoter Lastman’s Bad Boy has opened its first brick-and-mortar store here, adding it won’t be the company’s only outlet in the nation’s capital.

In a telephone interview last week with Home Goods Online, Samantha Lastman, the retailer’s director of business development (and daughter of chief executive officer Blayne Lastman), was more-than enthusiastic about the store’s potential, which at 30,000 square feet is one of the largest in its now 12-unit chain.

An exterior view of the new Lastman’s Bay Boy store on Merivale Road in Nepean, an Ottawa suburb.The opening was only slightly delayed by the Ontario government’s order that saw retail across the province shut down as part of fight against the COVID-19 pandemic. The store, located at 1695 Merivale Road in this city’s suburb called Nepean, softly opened in early June when the government began a slow re-opening of the economy.

“Ottawa is a good fit for us,” Lastman said, adding “It has a lot of big box stores and all of our competitors are here. They’re doing, so we know we’ll do well here too.”

In addition to Lastman’s Bay Boy, also every Canadian furniture, mattress and appliance retailer has a presence somewhere in the National Capital Region including Leon’s, The Brick, Brault & Martineau, Leon’s, Sleep Country Canada, Best Buy and Canadian Appliance Source.

She noted Ottawa is one of the most affluent markets in the country. In addition to the public service, local residents are employed in a variety of higher-paying jobs ranging from academia to technology. “There are over a million hard working people here,” she pointed out.

A look inside the new Ottawa Bad Boy store. At 30,000 square feet and with a staff of 50, it’s one of the largest locations in the high-impact promoter’s 12-unit chain.Slightly larger than most other Bad Boy locations, the new Ottawa location has a staff of 50 people – bringing the company’s employment rolls to about 350 – and carries its complete product assortment. Its opening follows on the heels of the store opened in Kingston, Ontario last fall.

Although the date has yet to be determined, Samantha Lastman said Ottawa will probably get a second Bad Boy location at some point in the future. The privately held retailer, which was re-founded by her father in 1991, is currently planning on opening a new store every two years or so. They currently have their sights set on the Toronto suburb of Newmarket.

In addition to its virtual e-commerce store, the chain currently operates a total of 12 stores throughout Ontario ranging from Ottawa in the east to London in the west. It also has a distribution centre in the Toronto suburb of North York. 

Related Story: Bad Boy opens Kingston

Related Story: Nooobody does it like a Lastman  

Store sales fall in May

4 August 2020
By the Numbers, Retail

OTTAWA – There was good news for furniture store, home furnishings store and electronic/appliance store operators from Statistics Canada last week. Sales for the month of May were up significantly after falling to mind-numbingly low levels in April. But it was obvious the fallout from the COVID-19 pandemic is still negatively impacting brick-and-mortar retail even though the economy began to re-open throughout the month.

The national bean counter said it pegged furniture store sales for May at an actual and preliminary $657.8 million. While this was double the record low of $327.0 million set in April 2020, it was still 38.5% below the $1.07 billion rung-up in May 2019.

For the first five months of the year, furniture store sales totaled $3.42 billion – a drop of 24.4% from the $4.52 billion for the same period last year.

Home furnishings stores – which sell everything from floor coverings to lighting, linens, decorative accessories, wall art as well as accent furniture – had preliminary sales of $322.4 million for May 2020, up 49.8% from $218.7 million for April. However, it was still down 46.9% from the $606.2 million for May last year.

For the year-to-date, home furnishing store sales were set at $1.91 billion – down 29.6% from the $2.71 billion for the January to May period of 2019.

Comparatively speaking, electronics/appliances stores fared somewhat better than furniture and home furnishings stores as their declines were not as steep, perhaps because many of this category’s leading lights – such as Best Buy Canada and Visions Electronics – have a stronger virtual presence. Statistics Canada said brown goods merchants had actual and preliminary sales of $974.3 million for the month of May 2020. This was a 25% improvement over the $781.1 million sold in April while only registering a 7.4% decline from the $1.05 billion in May 2019.

For the year-to-date, electronics/appliance stores have accumulated sales of $4.59 billion, down 2.8% from the $4.73 billion for the corresponding period.

For the month of May, all location-based retail – that is, brick-and-mortar stores – has sales of $46.2 billion, a 20% drop from the $57.7 billion recorded in May 2019. Almost every one of the 11 retail segments covered by Statistics Canada continued to see lower sales expect for food and beverage stores and general merchandise stores. The latter includes Walmart Canada, which announced it was investing some $3.5 billion to expand its operations over the next couple of years.

For the year-to-date, location-based retail suffered an 11.8% decline to $211.3 billion. Once again, all sectors posted declines except for general merchandise and food and beverage stores.

The HGO Merchandiser
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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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