Retailers and forecasters speak about demographics, consumer attitudes, the economy and the new Canadian Home Furnishings Awards.
This time it’s not a case of “plus ça change, le plus c’est pareil”. A brisk northern breeze is blowing away all yesteryear’s cobwebs and brand new and exciting horizons are in sight!
It’s happening in the product mix you’ll feature in your stores in the coming seasons. Stefan Wille, President of Aktrin Research Institute, told us that the trend from formal to casual continues. “Opulent and formal living room furniture is increasingly replaced by casual and relaxed furniture for family rooms and entertainment spaces. Upholstery fabrics are very bright and colourful. Fabrics include much quilt-patchwork and tropical themes.” And in spite of what some people say has been a sluggish economy, “leather upholstery is selling much better than fabrics.
“The casual dining room is characterized by a wide product variety and many new material combinations have been introduced, wood, glass, metal, wicker, leather and other mixed media. Even though casual dominates, one sees a hint of revival of the formal/traditional dining room or a mix of formal/casual styles. European and contemporary casual styles seem to have fallen out of favour.
“Occasional furniture is more luxurious. Cocktail tables are often finished with wood veneer. Mixed media is also popular with occasional furniture. This includes wood, glass, metal and faux fibres. Furniture with organic ingredients, wicker, raffia, bamboo, banana leaves, are sought after. Furniture imported from China and other low-cost countries, often features hand rubbed finishes, hand carved edges and pediments and hand painted images.
“Consumers are also looking for more sophisticated home office furniture, both fashionable and functional. They seek innovative solutions to reduce clutter and improve organization, to get rid of excess cords, to create more room for storage. Styles must complement rather than contrast with existing furniture.
“Beds and mattresses are larger and more luxurious. Queen-sized mattresses are most popular, demanding a market share well in excess of two-thirds. Product variety, styling and material choices are extensive. Similar to Europe, foam is gaining ground. Toppers and cores of latex, visco-elastic foam and other specialty foams are making great inroads.”
That same busy breeze ruffling trends has been shaking up thought processes of both retailers and manufacturers about the three decade old, respected Trillium Awards. Readers will remember the programme celebrated the Canadian industry’s achievements in marketing, design, quality and value. Our breeze, transformed to hurricane force, has virtually turned the concept upside down and back again! Now officially renamed Canadian Home Furnishings Awards, the competition retains its basic vision and mission, but presents a vibrant, improved, invigorated face.
Laine Reynolds, Chairman of the Canadian Home Furnishings Steering Committee and Vice President of Sales for Superstyle Furniture Limited, led the team that included Jean Francois Michaud, QFMA and Terry Clarke, Furniture West and CCFM, through extensive and enlightening market research back in the autumn of 2001. Findings have produced really worthwhile savings in time and money for participants coast to coast and, in fact, will open up the opportunity of competition to many manufacturers who previously felt the mechanism too costly and troublesome. As well, entry fees were reduced significantly and the entry deadline extended.
Judging will now take place not inconveniently in November, but during The Canadian Home Furnishings Market in January. The jurors, always drawn from retailers across Canada, will no longer need to make an early trip to Toronto to evaluate entries. Their job will be simplified, too, by a state-of-the-art electronic system to tabulate results.
Actual product categories have been changed and each category has been subdivided by price point rather than product style. This allows for a fairer level of judging and the once voluminous entry forms have gone the way of the dodos.
Leslie Bruce, Director of Sales for the International Centre, said, “We’re all thrilled to host the Awards Banquet. Our newly appointed Aviation Ballroom offers 15,500 square feet of column free space, welcoming up to 800 for banquets and it’s positioned adjacent to our state-of-the-art kitchen.” Rumour has it that the Centre’s cuisine is out of this world, something else to look forward to.
And, please note, for the first time, the competition, organized by the Ontario Furniture Manufacturer’s Association, is held in collaboration with The Canadian Home Furnishings Market, produced by the Quebec Furniture Manufacturers’ Association and Furniture West.
After many productive years as a stalwart of the Association’s Board, Derek Ashton just recently took the reins of the OFMA as Executive Vice President and hit the ground running. He said a contract of Collaboration and Cooperation between the OFMA and the QFMA was conceived earlier this year and has officially come into being. “It’s a tremendous step forward for both organizations. There are some special revenue sharing clauses, but most are designed as encouragement for us to work together for the benefit of the Canadian industry.”
Veronique Mear, QFMA’s Director of Exhibitions, is enthused about the Quebec manufacturers participating in competition. “It’s so much more efficient for everyone and both the interest and the exposure will be increased.” She predicts an “excellent January Market”.
Terry Clark, President of Furniture West, Accro Furniture, and the umbrella Canadian Furniture Manufacturers’ Association, said, “The new format is an excellent improvement. It levels the playing field for those manufacturers outside Ontario not only for time and expense factors, but because the judges will view product lines in appropriate settings rather than on cold concrete floors surrounded by packing materials. It will be easier for the judges and better for manufacturers. Interest will be heightened and the Awards will attract more entrants on a national basis.
“It’s also excellent that Derek Ashton (OFMA), Jean Francois Michaud (QFMA) and their colleagues on both sides have found common ground; this has added excitement to the equation. Through the CCFM we are all working together.”
There are now 15 retailers judging the revamped contest. They were all pretty happy about the fresh, more convenient-for-everyone system. As is tradition at this time of year, they were also ready to share insights into prospects for the year to come.
Jamie Thompson, Thompson’s Fine Furniture, Aurora, Ontario, was ebullient. “I like the timing. Judging immediately prior to the Market is great, especially with technology to make the task easier. It’s a good move; it makes better sense, to include manufacturers from right across Canada.
“Business was very strong for us this fall after a quiet summer. The weather was so good people were away at their cottages and elsewhere. But since mid-August, sales have been good. People are house-proud and in an upbeat state of mind. Although the U.S. is still lagging a bit, 2003 looks like a very strong good year. The stock market seems to have turned, very important to some people. We are located in a fast growing area; there are a lot of new things happening in the GTA. (Greater Toronto Area)”
In Ottawa, the nation’s capitol, Doug MacDonell, Ormes Furniture, said, “I love the format! The amount of paperwork is reduced. It’s so much more compact, more efficient to judge on the Thursday and Friday before Market, then have Awards on the Sunday. Categories of the competition have been narrowed down. Overall, the new approach will really encourage participation from across Canada.
“It will probably be a few more years until we have another year 2000. In Ottawa we’ve experienced an economic downturn, 3.3 million square feet of vacant office space. But, on the other hand, we’ve just seen the opening of another freestanding Sears’ store. The people that were employed in the high tech sector are now employed again. Salaries have adjusted somewhat. Last quarter business was a little soft, a smaller traffic count, but larger ticket sales.
“We’re very optimistic for 2003, probably a six to seven percent increase. Eleven thousand new homes have been built in Ottawa and it usually takes people about 18 months before they furnish them. It’s beginning to happen now.”
Liz Wilson, Wilson’s Furniture, Winnipeg, Manitoba, sees things from a western perspective. “The new name, Canadian Home Furnishings Awards, is great and it’s a step in the right direction, building a competition more representative of Canada. It opens up the Awards to all parts of Canada, a much easier way for manufacturers. There are fewer categories and more entries in each category to make it more exciting and three panels of five judges, each panel judging different products. It’s a more intelligent way to do it.”
Awards night at the International Centre met with Liz’s approval. “Everyone will be there already, much easier for all of us.”
Her crystal ball predicts “steady business through the winter and into next spring. The economy is improving, picking up here and there.”
We kept travelling west to Calgary, Alberta, the foothills of the Rocky Mountains. Todd Markin of The Living Room and The Bedroom Shoppes, is pleased with “the diversity in jurors as well as categories, everything is better defined. It will save a lot of time and the technology aspect is good; the new structure is more efficient and certainly cost effective.”
He feels Alberta has “lagged behind most provinces. We’ve had competition come and go. It’ s always been a booming market, but becoming saturated here. I predict stabilization in competition. Overall, this year should be quite comparable to last year. We’ve added stores in what we call here ‘furniture row’, and I anticipate significant increases in 2003. Hard to know when it’s going to come, but it’s just there.” (There are now three “Living Rooms” and three “Bedroom Shoppes” in Calgary.)
“Historically, our Prairie Province population is not as aware of current affairs. Over the last five years, a lot of head offices have moved to Calgary, so world happenings do affect business more than in the past. I agree with Faith Popcorn that people are engaged in armoured cocooning, travelling less, concentrating on their homes and entertaining there.”
Carol Weir, Tugg’s Furniture, Cobourg, Ontario, said “Judging will be a lot easier for all of us, a lot less paperwork. And it’s fairer for Quebec or West Coast manufacturers. I really like it.
“Business this year is up so far. I don’t perceive that 2003 will be much over 2002. People do have concerns. If we can do next year what we have done this year, that will be good.” She cautioned, “With the increase in imports from the east, people should look very closely at quality. Good Canadian goods are superior; the consumer will pay more, but they’re getting more.”
Another happy voice from Joel Barnaby, Barnaby and Company Furniture Limited, Moncton, New Brunswick. “All in all, the new approach to the Awards will work out much better. It was difficult to make bona fide decisions when we were running all over the place. People now will be judging in categories they understand and there will be more time to go over things. The Palm Pilot approach to compilation, instead of trying to add things up in your head while judging, is far preferable.
“Here in Atlantic Canada, the last couple of years business has been solid. In Moncton a lot of building is going on. I think 2003 will carry on the same way. We’ll continue to do what we’re doing.”
Windsor, Ontario is a border city with Detroit right across the river. Andrew Tepperman, Director of Operations, Tepperman’s Furniture, is a pragmatist with a vision. “The auto industry, manufacturers and parts suppliers, is a critical part of our business and many businesses in our communities. The Big Three auto manufacturers all settled (contracts) quickly this year, ensuring Windsor and the feeder communities a positive period for three years. Chrysler has just celebrated the grand opening of their new Canadian headquarters and announced impressive projections for a new line of minivans. Ford as well is expanding production. Whether it’s low interest rates or a new psychological confidence in the economy, housing starts have been on fire. I have never seen or heard anything like this.
“As retailers, we can’t affect interest rates or the weather, so we have to focus our energy on affecting our own market share. With new homes being built at record paces, each month there is an immediate demand for home furnishings. In 2002, most consumer’s net worth decreased as their investment portfolios plummeted. This is when we kick up our advertising and look for new ways to attract customers.”
His reaction to the changes in the Awards programme, “I think it’s a more accurate and fair way of judging and awarding the Canadian manufacturers. Laine Reynolds has added much needed energy and, I’m sure he’ll be happy to hear, some YOUTH, into this competition. The first two judging categories, design and construction, are basic important elements to measure, but it all leads to the third criteria, marketability. This is what the retailers really care about and ultimately what the manufacturers strive for. I think this will attract the attention of more North American retailers and increase the competitive degree of this event in the future.”
Our friend Stefan Wille provided facts and figures as well as his trend forecast.
“Personal income growth is picking up a bit. After advancing at an annual rate of 2.3 per cent during the first half of 2002, growth may approach 4.4 per cent in the second half of this year. Further improvements are expected for 2003 with an anticipated rate of 5.5 per cent . . .
“Spending on household furniture follows a very similar path to spending on overall durable consumer goods. The growth rate of 7.0 per cent in 2001 will likely be surpassed this year with an anticipated clip of 9.1 per cent, but it will slow down a bit to a rate of approximately 5.0 per cent next year. If our growth predictions are correct, the value of the Canadian household furniture market will advance from C$ 7.6 billion last year to C$ 8.3 billion this year and to an new all-time high of C$ 8.7 billion in 2003.”
Jerry Epperson, Mann, Armistead & Epperson, Richmond, Virginia, always has pertinent comments. He suggests that we should “Expect rebound in furniture sales as consumer confidence returns because housing strength of 2000-2002 combined with disappointing sales in 2001 and 2002 means huge deferred demand. The Federal Reserve lowered interest rates and increased money supply and government is spending on new projects.” Jerry has always been critical of what seem to be perpetual “sales”. He said, “Mortgage rates are important. Seasonal peak for home sales is May-September. Mortgage rates recently reached their lowest point since 1964 when the oldest Baby Boomer was 18. Consumers have an urgency to lock in these attractive rates so they buy all the home or vacation home they can afford. In a similar fashion, consumers have an urgency to lock in extremely attractive vehicle offers which, like today’s mortgage rates, may not be available in a few months. Furniture has its ‘best ever’ sale every weekend so the consumer senses no urgency in making the furniture purchase.” (Well worth thinking about!)
“Housing sales have exceeded experts’ predictions. New Harvard study is very positive for this decade. There will be a big demand for housing from maturing Baby-Boomers buying large homes, second homes and vacation homes. The children of Baby Boomers are beginning to leave the nest and are buying first homes (with parents’ help) and there are high levels of immigration.”
The new demographics are meaningful on both sides of the border. Jerry says that in the U.S. “Seventy-seven million Baby-Boomers (born 1946-1964) are hitting their peak earnings power at age 38 to 56. They are paying off their mortgages which is highly influential. Kids are beginning to leave home and their education is being completed. There is a wave of inheritances coming to them in their fifties, not the forties as in the past, in the amount of $10 to $16 trillion, the biggest payday ever. The largest impact peaks about 2005-2006.”
We’ll let Andrew Tepperman have the last word with his fresh and breezy perspective! “In the same way I look at the people within our own organization who exemplify love and passion for new challenges, a mind-set of continuous improvement, professionalism and the ability to have fun, I see similar traits in our industry leaders who are driving us into the future. Our industry is strong. We’re innovative. Fashion conscious. We have the ability to create demand which means we will control where we want to go. Asia and South America for the manufactures are forcing change. The end result is that the consumer is getting incredible values today. Global safety concerns many people who find comfort in making their home as warm and inviting as possible. The stock market is a risky investment compared to a new dining room. Aggressive financing promotions continue to keep the doors wide open for immediate purchases. And new technology in audio/video has become our friend as consumers need new home furnishings to complement electronic innovations.”
Invigorating? Real change? You bet!