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Will Sears Canada survive?

16 June 2017

TORONTO – Sears Canada, which remains one of the largest retailers of furniture, mattresses and major appliances in this country, has signalled it may not be able to stay in business much longer after reporting a 15.2% decline in revenue and a deeper net loss for the first quarter of its current fiscal year.

For the 13 weeks ending April 29, 2017, Sears Canada reported revenue of $505.5 million, a decline of 15.2% compared to same quarter last year, even though same store sales were up 2.9%.

The company attributed the decline in revenues to a significant reduction in catalogues published over last year in response to lower customer demand; to some products being unavailable on the new web site during the period while back-end logistics technology was under development; and, a planned decline in the number of merchandise pick-up locations to reduce costs.

Sears Canada remains a major player in the furniture, mattress and major appliance business but sales sagged in the first quarter of its current fiscal year. The net loss for the first quarter was $144.4 million or $1.42 per share compared to a net loss of $63.6 million or 62 cents per share in the same quarter last year. The first quarter last year included a gain on sale and leaseback transactions of $40.6 million.

Although it remains Sears Canada’s largest business group, sales by its ‘home and hardlines’ segment – which including furniture, mattresses, major appliances, consumer electronics as well as seasonal durables such as bar-be-ques, lawnmowers and snow blowers – fell 24% to $212.3 million, compared to $279.5 million last year.

The ‘home and hardlines’ segment traditionally accounts for about 40% of the company’s overall business.

For its last fiscal year, the segment generated revenues of about $1.14 billion. That places Sears Canada behind Leon’s Furniture Limited and IKEA Canada when it comes to sales of furniture, mattresses and major appliances but ahead of third ranked BMTC Group.

It is estimated, for example, that Sears Canada holds a market share of about 14% for mattresses – which would place those sales in the $240 million range – and about 20% for appliances.

Senior management said the financial situation raises “significant doubt as to the company’s ability to continue as a going concern.” Some in the business press have been quoting industry insiders saying the Toronto-based Sears Canada could be in court soon to file for a restructuring under insolvency laws.

Financial experts were quoted widely as noting that Sears Canada’s admission comes during a time of mounting difficulties for traditional retailers. Both operating and profit margins are being squeezed in a race to sell goods online. Many of these e-commerce titans are literally stealing their business, forcing these large chains to close stores and reboot their strategies and merchandising directions.

These tides are particularly hard on department stores such as Sears, which are being pushed to downsize their operations, cut stuff and re-invent themselves.

It would also seem the Sears Canada’s furniture, mattress and major appliance rivals could be well positioned to take up the slack if it exits the market. Leon’s recently picked up eight former Sears Home locations and has been reporting solid in recent quarters. Sleep Country Canada is on an aggressive expansion kick and IKEA Canada plans to double in size over the next decade. Not to be outdone, regional players such as Tepperman’s have been upping their game of late.

But the issue remains, will Sears Canada survive? Most are betting it won’t.

IKEA Quebec breaks ground

16 June 2017

QUEBEC CITY – IKEA Canada has broken ground on its store here which is one track to open in the late summer of 2018. It will be the chain’s 14th full-size store and is part of an aggressive expansion plan aiming to double both its store and annual revenue by 2025.

Store 13 is expected to open in Halifax later this year.

The company, part of the global home furnishings giant based in The Netherlands, also named Annika Lenoir as the store’s manager.

IKEA Canada team members and local officials – including company president Marsha Smith (centre) – turn the earth as part of the ground breaking to begin the construction of its new full-size store in Quebec City.Located south west of the Charest (40) and Duplessis (540) Highways interchange at the intersection of Rue Mendel and Avenue Blaise Pascal, the store will take roughly 16 months to complete. When finished, it will cover approximately 340,000 square feet, which is roughly the size of five football fields.

In a statement, IKEA said the Quebec City store will be a destination for the whole family and will offer its full range of 9,500 products as well as inspirational room sets in the Showroom. It will also have IKEA’s iconic Market Hall, restaurant and a SMÅLAND supervised play facility for kids. Customers will be able to take advantage of a suite of services such as home delivery, assembly, planning and returns.

“We are so excited to bring to Quebec City more of what people know and love about IKEA,” Lenoir said. “Quebec City residents have shown great support for the brand since the pick-up and order point opened. Now we want to amplify the customer experience at IKEA Quebec City and ensure it’s a fun day out for the whole family.”

Lenoir brings to her new role more than 20 years of experience at IKEA, both in Sweden and Canada. She currently works as the Quebec City pick-up and order point manager.

An artist’s rendering of the full-size IKEA Canada store set to open in Quebec City sometime in late 2018. The company broke ground to begin construction recently.“IKEA is keen to improve life at home and understand the needs and dreams of Canadians in Quebec City,” IKEA Canada president Marsha Smith said. “Annika’s broad experience in opening new locations and her deep understanding of the Quebec City marketplace will help ensure we are providing relevant solutions to the unique home furnishings challenges in Quebec.”

Lenoir will soon begin the task of recruiting approximately 200 to 250 co-workers to join the team currently working at the pick-up and order point. Jobs will be available in sales, restaurant, interior design, human resources, logistics, operations and more.

“The construction of a full-size IKEA store is not a dream, it’s becoming reality for thousands of families that have been waiting a long time for it,” said Quebec City Mayor Regis Labeaume. “The ground breaking is a strong signal that confirms the strength of Quebec City’s retail market and vigorous economy.”

IKEA’s Quebec City store will be LEED certified when it opens. With a particular focus on energy and waste avoidance, there will be waste management equipment installed to maximize material recycling and diversion from landfill. Additionally, every single light source throughout the store will use LED lighting. While the store will operate in a sustainable manner, it will also provide inspiration and solutions that will enable customers to live a more sustainable life at home. For example, visitors will find solutions that will help them reduce and sort waste, save water and energy and encourage healthier living.

Embracing change

16 June 2017
People, Retail

Kimmberly Capone, the president and head buyer of Treasures/Kimmberly Capone Interiors, is an endearingly confident and engaging speaker. She’s someone who is more than happy to share the ‘secrets’ to her success and unafraid to pair her overall sage advice with a helping of candid anecdotes.

She’s also been getting a lot of well-deserved attention lately for successfully re-inventing a veteran brand and quadrupling sales.

At a time when furniture and home décor retailers – anyone in the furniture industry, really – is grappling with tighter margins and a more challenging economy that’s remained ever-so-slightly unsteady since the economic downturn of 2008 (which was almost a decade ago now, believe it or not), it’s encouraging to see someone happily roll with the punches and do things a little differently – especially when it comes to rejuvenating an established brand.

The Kimmerbly Capone process begins with a home visit. A week later, the customer is invited to the store to view a set of 3D renderings on a work station such as this to get an idea of what the renovated space will look and feel like.Kimmberly Capone Interiors is new nameplate given to Treasures, a company founded by Capone’s father almost 40 years ago. It started off as The Brass Touch, a single unit operation in the Bramalea City Centre, located in the Toronto suburb of Brampton. Over time, the brand grew and Capone’s family opened more locations throughout the Greater Toronto Area.

“The brass market was huge and we opened up one store and it ended up being five or six stores,” Capone says. “When brass started to go out of style, we got a store in Sherway Gardens [in the Toronto suburb of Etobicoke] and decided to change our name to Treasures. They kept continuing with building those stores and we had ten.”

Over time, the brand grew even more successful.

“We got a warehouse and we did our own manufacturing,” Capone says. “Treasures lasted until this year and we opened Kimmberly Capone Interiors because Yorkdale gave me the opportunity to have another store right beside Treasures and they thought we could test the market.”

Capone has amassed experience not just from spending years operating a family business, but also from studying interior design and business at the post-secondary level (she attended both Ryerson and Sheridan), obtaining a real estate licence and spending time in the home staging industry. But experience aside, economic downturns and changing consumer attitudes can be difficult to navigate – especially when you’re trying to persuade shoppers to invest in pricier goods.

While Treasures was – and is – a tried and true operation, it’s undergone absolutely massive rejuvenation and is a very different business from what it was in its heyday.

As everyone in the industry most certainly knows, higher-end pieces (whether upholstery, case goods or accessories) can struggle to find buyers at a time where retailers are racing to the bottom price-wise.

Kimmberly Capone, the president and head buyer of Treasures/Kimmberly Capone Interiors used technology and a flare for design to turn-around her family’s ailing furniture retail business.“I was in Florida in 2015 at the Tony Robbins’ Master Business Class, and he said you can’t beat anyone on price,” she says. “Our store looked beautiful, but people would shop somewhere else. You have to beat [your competitors] on value-added service. I thought, ‘huh, it’s interior design for people who can’t afford hourly designers.’ What I knew as a retailer was that you don’t have to charge by the hour.”

After the Tony Robbins talk inspired Capone to reinvent the wheel, she immediately worked to implement the new business model and eventually made it work – even though people were skeptical that the plan would generate sales.

While it’s no secret it can sometimes be harder to sell higher-end pieces to more budget conscious consumers, it’s also well known that shoppers have become more design savvy with the growth of media outlets such as HGTV and social media platforms such as Pinterest, Instagram and Houzz.

For that reason, Capone decided to play to people’s design interests by offering them beautiful room makeovers with some complimentary perks that traditional interior designers might not offer – and they did it even though Treasures did not have a stellar first year at Yorkdale.

“We tested a new concept,” begins Capone. “Our first year at Yorkdale was a disaster. The sales weren’t terrible, but the rent was so high it was hard to make ends meet. I decided to revamp the business. We offered free design consultations with 3D renderings.”

The model, which might seem a little counterintuitive, actually prompted customers to follow through on their makeover ambitions because they weren’t paying designers by the hour and therefore weren’t becoming quite so fatigued by the process.

“A lot of projects don’t get completed,” says Capone. “Wealthy people even run out of tolerance to spend hourly, people don’t see the value in that. Vendors don’t see value in discounting products to designers. I used a faster paced model where we focused on one room at a time with 3D renderings. If people like the one room, it’s easy to go forward after that. Today is our second year anniversary with that business model. We’re going to do $5 million in one year in sales.”

But while the model has been successful, it didn’t take off overnight. “It hasn’t been an easy climb, there were a lot of readjustments and tweaking,” she says.

Click here to read Ashley’s complete profile of Kimmberly Capone in the HGO Merchandiser.

CNW wins Alpha Award

16 June 2017
Community, Retail

MONTREAL – Cantrex Nationwide Group (CNW) was recently named the 2017 Alpha Award winner for in the business service sector by the Chamber of Commerce and Industry of Saint-Laurent and Mount Royal.

The privately-held buying and marketing group, a wholly-owned subsidiary of the Winston-Salem, North Carolina-based Nationwide Marketing was cited in the category’s ‘more than 50 employees’ section. The Alpha program is designed to recognise excellence among the chamber’s members.

Jean Favreau (left), senior vice president and Jeannine Ghaleb, president and chief operating officer of Cantrex Nationwide are seen here accepting the 2017 Alpha Award from the Chamber of Commerce. Looking on (right) is Jean-Marc Fournier, Quebec’s minister responsible for Canadian relations and the Canadian Francophonie.In a statement, CNW said the achievement helps recognise that the organisation works “relentlessly to provide independent retailers with best-in-class services to help them continue to grow and prosper in their marketplace. Understanding that training is key for excellence and remaining competitive in the workplace, the company is committed to providing the most current educational programs for both its employees and retailer members.”

Jeannine Ghaleb, president and chief operating officer, accepted the award on behalf of the company’s employees, members and vendor-partners. “I would like to thank our employees for their continuous hard work and contributions to the success of Cantrex Nationwide,” she said.

“Independent retailers have an important role in our economy. As entrepreneurs and innovators, they build our vendors’ brands, employ our population and are often the foundation of our communities. I invite everyone to continue supporting your independent retailers and thank you for your trust in our organization,” Ghaleb added, speaking to an audience of dignitaries, provincial government officials and business people from the Saint-Laurent and Mount Royal communities.

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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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