Furniture store sales cool
OTTAWA – Furniture store sales continued to cool in September, as did those of home furnishings stores, a review of the latest data from Statistics Canada reveals. Several observers note their slide mirrors the easing seen in recent months in both housing starts and resales. However, electronics and appliance stores remain one of the hottest performers in brick and mortar retail.
Furniture store sales in September dipped under the $1 billion mark for the first time since June and at $980.0 million were at their lowest point since April. On a year-over-year basis they were down 5.2% from the $1.03 billion recorded in September 2017.
Thanks to gains made earlier in the year, furniture store sales for the first nine months of 2018 managed to eke up 0.8% to $8.48 billion.
It should be noted this data gives Leon’s Furniture Limited – the publicly-held parent of Leon’s and The Brick – with an overall market share of 23.1% which up from 22.8% for the comparable period last year.
Ed Strapagiel, the Toronto-based retail consultant, noted furniture store sales for the third quarter itself were down 0.7% and for the trailing 12 months ending 30 September 2018 were up a marginal 1.0% at $11.5 billion. For the years 2014 through 2017, furniture store sales had an average growth rate of 4.4%.
Meanwhile, home furnishings stores – which sell everything from floor covering to lamps and lighting, decorative accessories and wall art as well as accent and occasional furniture – saw their sales for the month of September sag a minor 0.4% to $601.0 million.
For the first nine months of the year, sales were $5.05 billion – an uptick of 1.1% over the comparable period’s $5.0 billion.
For the third quarter – typically the entry to the busiest time of the year for many merchants in this sector – home furnishing store sales were down 0.8%, down from the 2.0% growth rate seen for the first half of the year. For the trailing 12 months, their growth rate dipped to 0.4% at $7.0 billion.
Electronics and appliance stores have become the rock stars of the retail scene over the past 30 months or so, turning in strong performances.
Sales in September were $1.38 billion – a climb of 3.5% year-over-year, making it one of the best performers among all location-based retail tracked by Statistics Canada. They were up 7.9% for the third quarter and up 3.5% for the trailing 12 months at $16.6 billion.
For the first nine months of the year, electronics and appliance store sales were up 9.4% year-over-year at $11.4 billion.
Driven by the growth in both housing starts and resales, the two largest product groups within the brown good category have been outpacing both furniture and home furnishings over the past couple of years. For example, Statistics Canada recently reported sales of major appliances were up 8.1% in the first half of 2018. Not to be outdone, sales of televisions and audio-visual equipment gained 10.6% during the same period.
There has a cooling across most categories of location-based retail in recent months. For example, automotive dealers have seen their growth rate trimmed to 1.8% for the 2018 year-to-date.
While the numbers don’t look particularly favourable, Brian DePratto of TD Economics pointed out in his research note that the overall picture is one of a still-resilient consumer.
“Canadians showed a bit of confidence heading into the fall, still willing to commit to auto purchases even as borrowing costs have marched upward,” he said. “If there is a fly in the ointment, it is in the housing related sectors, such as furniture/home furnishings, and building material stores, which have displayed persistent weakness since mid-year.”
He also believes the Canadian economy as a whole is likely to achieve a “not-too-hot, not-too-cold” growth rate of 1.8% for the year but with the current challenges facing the oil patch, doesn’t believe the Bank of Canada will be moved to increase interest rates again this month – which should have some positive influence on the consumer as she heads into the most important month on retail’s annual calendar.