Canadians stressing value over fashion
By Michael J. Knell -- Furniture Today, March 31, 2003
High Point — Canadian retailers attending the market here this week will be shopping hard for fresh products capable of bringing consumers back to their stores after a lackluster first quarter.
For the first time in several years, Canadian buyers appear to be more interested in value than fashion, a reflection of the difficulties posed by a souring North American economy, the war in Iraq and one of the coldest winters in many years.
"I don't think we're off by more than a couple of points, but there's no momentum in our business," said Dennis Novosel, president of Stoney Creek Furniture, Stoney Creek, Ontario. "We're all in a funk here, and we've also had one of the longest, coldest winters ever."
"It's not the easy market that it was last fall," said Alixe MacRae, marketing manager/furniture and appliances for The Bay, the Toronto-based national department store chain. "And it's not going to get easier until we see more consumer confidence."
Bill Tepperman, president of the five-unit Tepperman's chain in Windsor, Ontario, said he feels like "a salmon swimming upstream because our business has been showing some nice increases."
However, Tepperman shares the concerns of his colleagues and notes that his results are probably the result of planning and a good reputation. "We planned for this to be a tough quarter and maybe that's why things have worked out so well for us. When things get tense, people tend to buy from stores they can trust."
Most observers believe Canadian retail attendance at this edition of the High Point market will be down considerably. Many buyers will choose to forego this market, citing not only business conditions but also an uneasiness about travel, particularly air travel.
"A lot of people won't be attending High Point this spring," said Pierre Royal, general manager of Les Marchands, the Montreal-based buying group. "Sales have been really slow so far this year and right now inventories are such that a lot of our members are saying they don't need to go to High Point."
Even some major Canadian players may stay home this market, although they attended pre-market four weeks ago. Hudson's Bay Co. — parent to The Bay — has issued a travel advisory to its senior management cautioning against unnecessary travel.
Statistics Canada reported last week that after five months of modest growth, Canadian furniture store sales declined 1.7% in January. This marks the end of a run that has seen the furniture sector outperform every other retail category for the past several years. Furniture store sales in January were C$1.34 billion, down from C$1.49 billion in the same month of last year and C$1.57 billion in December 2001. These figures include sales of furniture, bedding and accessories as well as household appliances and electronics.
Retail executives note that the fundamentals for growth remain in place. Interest rates continue at a 40-year low, particularly for mortgages, while housing starts remain high. But consumer confidence appears to be off.
"Housing has been so strong for so long, but we haven't seen that reflected in our business," Novosel said.
With some exceptions, Canadian retailers say their inventories are in good shape. As a result, they'll have at least some "open to buy" here, but they'll be making sure they get the most they can for those dollars.
"Our inventories are in an excellent position," Tepperman said. "We'll be going to market to look for some extra-special weapons to get the consumers to come back into the store."
"We've paid attention to what's been happening in the marketplace so we have good control over our inventories," Stoney Creek's Novosel noted. "We'll be looking for deals because the only we way we can drive the consumer into the store is by offering great values."
And in that search for great value, many retail execs said their buyers are going to spend more time than usual shopping for new suppliers.
"We're definitely going to be looking at new vendors," Novosel said.
"We need to realign the assortment," said MacRae of The Bay. "And we want to run some extra events in the coming months to excite the customer."
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