Sales drop along with economy
By Mario Toneguzzi, Calgary Herald
CALGARY – The furniture retail sector is taking a hit these days because of the slumping economy.
According to Statistics Canada, sales in February in the furniture category were down by 13.5 per cent in Alberta compared with a year ago, while the home furnishings sector was off by 24.1 per cent.
<!–more–>
<!–adsense–>
That compares with national yearly declines of 10.3 per cent for furniture stores and 15 per cent for home furnishings.
“The category-wide sales declines currently underway in the home fashion/home furnishing retail sector across the country are not unexpected,” said Michael Kehoe, an Alberta-based retail specialist with Fairfield Commercial Real Estate Inc. “These are the first dominos to fall in the retail sector as expenditures in this category represent significant purchases for most households and are dependent on discretionary spending and new household formation, which have stalled across the continent.
“A leaner home fashion/home furnishing retail sector will emerge from the current economic circumstances over the next 24 to 36 months.”
The economic climate is challenging, said Carey Bracko of Bracko Brothers Quality Furniture and Mattresses and the Oak Shoppe, which has been in business in Calgary for 29 years. “The competitive nature of furniture has changed drastically in the last 10 years.”
He said, 10 years ago, 83 per cent of the furniture sellers were independents, while today it’s less than 20 per cent. Big box stores, discount stores and online buying have also changed the retail sector.
“The independent little guy is battling. He’s battling a competitive marketplace that, sometimes unless you have big dollars for advertising, you can’t get the proper message out,” said Bracko.
“This environment has been very difficult for anybody in the furniture business . . . At the end of the day, there’s a cleansing going on and whoever withstands it is still going to have challenges going forward. Any independent small business in Canada today is being tattooed with over-taxation.”
Lane Home Furnishings last weekend in the newspaper advertised its closing sale with floor models 50 to 70 per cent off. There was also an ad for the sale of all remaining inventory due to a receivership liquidation of Nefco Furniture Ltd., operating as Penthouse Fine Furniture, Leather Express and Thomasville Home Furnishings. And many retail outlets are advertising clearance, liquidation and blowout sales.
It’s been a tough haul for all furniture retailers.
Last month, The Brick Group Income Fund said the economic downturn helped push it to a fourth-quarter loss of $222.3 million and an annual loss of $200.7 million.
“The recessionary economic climate in the second half of 2008 impacted our financial results,’’ said Kim Yost, CEO of the Edmonton-based company.
There are some similarities in what’s happening with the retail furniture business to the home improvement sector, said Kyle Murray, director and associate professor of the school of retailing at the University of Alberta.
“People aren’t buying and renovating and moving into new houses as frequently,” he said.
“When the housing market slows down, then we already have furniture for the rooms in our houses. There just isn’t the same sort of need.
“When it comes to furniture, you can put off buying that new furniture for another six months or a year fairly easily,” he said.