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Retailers, producers anticipate brisk activity at Toronto market

By Michael J. Knell -- Furniture Today, January 5, 2003

Toronto — Market fever has broken out in Canada's largest city as retailers and manufacturers eagerly anticipate a lively 2003 campaign. The 31st edition of the Canadian Home Furnishings Market will begin its annual four-day run at the Toronto International Centre of Commerce here Saturday morning, Jan. 11.

Retail and factory executives say business at retail has been soft for the most part since late September after a reasonably vigorous first half. However, buyers are expected to have at least some open-to-buy, as inventories at retail seem to be only slightly high.

"Last year was pretty good for out members but it started to slow in September," said Pierre Royal, general manager of the retail buying group Les Marchands P.A.S. of Montreal. "Inventory is a little high so we have to sell what's on hand before we start buying."

"Because of the discipline our programs bring to our members, their inventories are always low," said Steve Braniff, business development manager for another buying group, Cantrex. "We work with suppliers who can give us just-in-time production and delivery."

"Business has been reasonably good," reported Eric Roberts, vice president of sales and marketing for bedding producer Sealy Canada. "The sell-through the retailers have been reporting has been quite good, so inventories are fairly low meaning they'll be coming to market with an open-to-buy."

Some factors beyond the industry's control could derail growth prospects, the executives cautioned. Consumer confidence could erode because of a possible U.S.-led war in the Middle East, or if unemployment or interest rates increase. Meanwhile, investor confidence is still shaky. Another Enron-type scandal could send the markets into a downward spiral, even though corporate profits, in Canada anyway, seem to be trending slightly upwards.

For these reasons, most execs believe the rate of growth will slow in 2003.

"There is too much uncertainty out there," said Jeff Casselman, president and chief executive officer of full-line producer Shermag. "The Canadian economy has been notably better than the U.S. economy for the past 18 months. I think it will soften a little next year but we'll continue to see growth in our Canadian business because of the products and programs we've been introducing lately."

In the latest edition of its Furniture Economics newsletter, the Aktrin Furniture Information Centre is predicting that Canadian consumer spending on household furniture will advance by approximately 5% in 2003 — after growing by 9.1% in 2002 and 7% in 2001. Including a national sales tax of 15%, the Canadian consumer in 2002 spent about C$8.3 billion on household furniture, a figure that Aktrin expects will reach a new high of C$8.7 billion in 2003.

Aktrin said that consumer confidence of late has been boosted by low mortgage rates that have driven housing starts to an all-time high. On the minus side of the ledger, after inflation and taxation, real growth in disposable personal income has slowed drastically in the past three years — from 4.7% in 2000 to 2.7% in 2002.

But the CHFM remains the Canadian furniture industry's most important — and only national — event. It's the major platform for the introduction of new products and programs, so both retail and factory execs believe attendance will be high.

"The January market remains the most important market for both our dealers and ourselves," said Laine Reynolds, vice president of sales for manufacturer Superstyle Furniture. "Attendance is expected to be good and the dealer mood is still quite positive. Furthermore, inventories are low and there is a desire for fresh product."

"We are expecting a very well-attended market, possibly the strongest in recent years," said Rick Verjee, executive vice president of case goods importer Hamilton & Spill.

"We're anticipating a good turnout because the business retailers have been doing lately has been fairly good," Roberts said.

While Canadian retailers have a strong and growing presence at the semiannual High Point markets, not all attend on a regular basis, which adds to the January Toronto event's importance. "While we see many of our Canadian customers in High Point we see many more in Toronto," said Shermag's Casselman. "This is a once-a-year opportunity to show them what we can do."

However, while retailers are demanding new product, no one sees a breakout category dominating the scene this market.

Leather continues to be the hot-button upholstery category, with home theater seating the sensation of the moment. On the case goods side, every major producer is bringing out new suites and collections. And this is definitely the bedding event of the year with every major supplier introducing new programs.

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