Toronto buyers cautious?
Want room to maneuver in 2008
By Michael J. Knell -- Furniture Today, January 6, 2008
Toronto — Statistics indicate that Canadian furniture stores are coming off a fairly strong 2007, and buyers might be expected to shop the market here this weekend with generous open-to-buys.
But with cautionary messages coming from within and outside the industry, smart retailers are more likely to be careful, leaving themselves plenty of room to maneuver as the 2008 campaign gets under way.
The latest figures from Statistics Canada show furniture store sales are on track to exceed C$10 billion in 2007, a solid gain over the C$9.6 billion they rang up in 2006. But the federal agency also noted that sales peaked in April and have been trending down since then to October, the latest month for which figures are available.
This downward trend mirrors the slowing pace of growth in such key areas as housing starts and resales, personal income and consumer spending.
On the plus side, Canadian furniture stores have been outperforming retail as a whole, as have consumer electronics and appliance stores. (Many furniture retailers also sell the latter categories.)
In the key housing sector, the Canadian Real Estate Assn. is forecasting a slight downturn in units sold in 2008 after achieving record highs in both the past two years, including an 8.1% rise in 2007 to 523,000 units sold.
Meanwhile, Canada Mortgage & Housing Corp., the federal government's housing agency, is predicting housing starts will fall for the second consecutive year in 2008, although they will remain above 200,000 units for the seventh straight year.
Kubas Consultants, a Toronto-based marketing and research firm specializing in retail, said that while it expects furniture stores to see sales growth in 2008, the pace will slow, although the falloff won't be as significant as that anticipated in the United States.
Canada's record-low unemployment rate means people are still working, "and people with jobs will keep buying regardless of most other factors," Kubas said.
Kubas believes furniture store sales will reach C$10.2 billion in 2007, and rise 6% to C$10.8 billion in 2008.
Research company Aktrin Furniture Information Center also sees furniture and bedding sales continuing to rise, but at a slower pace, citing declining consumer confidence and a cooling housing market.
Aktrin President Stefan Wille predicts consumer spending on furniture and bedding, which grew 9.4% in 2006, will ease to 5.3% growth in 2007 and inch up to about 5.6% in 2008.
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