Canada retailers wary
Inconsistent business may carry over from 2003
By Michael J. Knell -- Furniture Today, January 4, 2004
TORONTO — A choppy and inconsistent 2003 has retailers cautious about buying deep at this weekend's Canadian Home Furnishings Market.
Retailers from across the country say Canadian consumers had numerous reasons to sit on their wallets last year — a SARS scare, a West Nile virus scare, a confirmed case of mad cow disease and devastating forest fires in British Columbia.
The recent strengthening of the Canadian dollar also has turned away some consumers from buying furniture, since it raises the price of imports.
"All of these things caused consumers to reel," said Cliff Eisenberg, vice president of Alberta Furniture, a four-store retailer in Calgary, Alberta. "2003 wasn't the most robust year in our history. It was a really tough summer. Mad cow disease was particularly devastating to Alberta's economy. While we saw some rebound from September on, it was not enough to make up what we lost earlier in the year."
Michel Ethier, president of Maison Ethier, with stores in metro Montreal, said most of the business he has done with consumers in Vermont, New York and other neighboring states dried up in 2003.
"And Canadian consumers are doing a lot of looking before buying," he said. "Sometimes it was two months before they came back to buy."
While their outlook for the opening months of 2004 is at least mildly positive, few retailers believe this will be a banner year.
"2003 was a challenging year for us," said Joe Ramia, president of Gallery One in Halifax, Nova Scotia. "Business was choppy. It wasn't consistent. There was no rhyme or reason to it. The media is so out there and people are reacting to things so much faster than they used to. If they feel good this week, they get out and buy. If not, they don't."
Eric Bennett, president of Bennett's Home Furnishings, a two-unit independent with stores in Campbellford and Peterborough, Ontario, said 2003 sales were up, but that was the result of working harder and smarter.
"We had a good year and our sales will be up, but we have to communicate with our customers all the time," he said. "We're building a brand, so we constantly have to tell people who we are and what to expect, so they come in ready to buy."
Retailers also admit to trepidation about the looming conflict between furniture importers and domestic manufacturers. They believe that any U.S. antidumping ruling that imposes countervailing duties will have a detrimental affect on supply chains in this country. Although independent retailers say they buy mostly from Canadian and U.S. factories, they are becoming more reliant on goods from China and the Pacific Rim in promotional and mass-market case goods.
Most independents in Canada sell appliances and often electronics along with furniture and bedding. In many cases, they say 2003 growth largely was driven by white goods, while furniture sales suffered. "Appliances were up over 25% last year; furniture is in tough shape," Ethier said.
Also breeding buyer caution are inventories, which several big independents said range from "about right" to "higher than they ought to be." This means they'll have less open-to-buy and that they'll focus on select categories — motion upholstery, fabric upholstery and alternate sources of case goods are mentioned most often.
Meanwhile, 2003's inconsistencies makes planning difficult. "When you have choppy business conditions, you can't really plan what you need for each month," said Gallery One's Ramia.
Still, he expects business in 2004 to at least equal that of 2003, as does Ontario retailer Bennett.
Stefan Wille, president of research company Aktrin Furniture Information Center, believes the residential housing market, which saw vigorous growth in 2002 and 2003, may now be oversupplied, and that mortgage rates may climb this year.
He also noted that Canadians' personal income and spending continued to grow in 2003, and that pent-up demand largely may be satisfied, so that spending on durable goods could grow more slowly in 2004.
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