Canadian report: Furniture stores lag behind other retailers

Michael J. Knell -- Furniture Today, October 13, 2012

TORONTO - Furniture and home furnishings stores will continue to lag behind other location-based retailers the rest of this year and in 2013, according to the latest Canadian edition of the Retail Sales Outlook published by the retail consulting firm KubasPrimedia.
     In the report, KubasPrimedia Executive Vice President Ed Strapagiel said sales got off to a good start in the first quarter but dramatically slowed in the second - a trend that continues well into the second half of the year.
     Canadian furniture store sales fell 2.3% in 2011 to C$9.5 billion and are expected to make marginal gains of 1.2% to C$9.6 billion this year and 1.3% to C$9.7 billion next year. That's still well below the pre-recession peak of C$10.2 billion for 2008.
     Home furnishings stores - which sell everything from floor covering to lamps and lighting, decorative accessories and wall art - will continue to outperform furniture stores as well as electronics and appliance stores as they have for the past several years, but will also lag behind retail as a whole. After a 3.8% gain in 2011, home furnishings merchants are expected to advance sales at a gentler pace of 1.7% to C$5.7 billion this year, then add 2.4% in 2013 to reach C$5.8 billion.
     For much of the past decade, electronics and appliance stores have outperformed their furniture and home furnishings selling cousins. While in dollars, they will still dominate big ticket homes goods, sales in 2012 will come in at C$15 billion, unchanged from 2011. Sales should grow 2.4% next year, reaching C$15.3 billion, Kubas projects.
The outlook forecasts that total location-based retail in Canada will have 2012 sales $473.8 billion, up 3.4% over last year's $456.4 billion. Sales in 2013 should grow 4% to $492.6 billion.
      Once again, new car dealers will lead the pack as their sales are expected to climb 6.1%.
     In his commentary, Strapagiel said real GDP (gross domestic product) softened in both Canada and the United States in the second quarter and that "nothing in the forward outlook suggests an imminent improvement in retail sales."
     With only modest sales growth in the forecast, Strapagiel said marketing issues will come to the forefront for most retailers over the coming few months, especially with the anticipated arrival of cheapchic Target in the Canadian market next spring. He said retailers are also going to have to devise strategies to cope with emerging trends such as "showrooming," defined as shopping in stores and then buying online, and omni-channel marketing.