FURNITURE LANDSCAPE IN

CANADA APPROACHING THE

CANADIAN FURNITURE

MARKET

0

WHO AM I?

Total of 10 years buying

experience for the Hudson

Bay Company, Great

Universal Stores (G.U.S.)

Canada

Total of 20 years National

responsibility for major

Canadian upholstery and

casegood suppliers

MANUFACTURING

EXPERIENCE

RETAIL

EXPERIENCE

John Power

WHO IS MEGA GROUP

Focused around Brandsource

Offering solutions in Merchandising,

Marketing and Advertising

Processing of all Accounts Payable

and Receivables for members. We

operate as their ‘Bank’ giving retailers

credit lines and financial advice

Specific programs for Training,

Business Intelligence and Best

practices

RETAIL SOLUTIONS CENTRAL BILLING STORE OPERATIONS

Making Independent Retailers Stronger

OVER 600 INDEPENDENT RETAIL ENTITIES ACROSS CANADA REPRESENTING OVER 1 BILLION IN WHOLESALE PURCHASES

A TASTE OF MEGA

8 LOCATIONS WITH 2 BRANDS 3 LOCATIONS 200,000 TOTAL SQ. FEET

We Go From this Type of RETAILER

https://www.youtube.com/watch?v=eJ

7qO10vr-A

A TASTE OF MEGA To This TYPE of RETAILER…..

UNDERSTANDING CANADA

Physical Limitations of Canada:

• 10 Provinces spanning over 9 million square KM’s. Portugal is 92,000 Square KM’s

• 35 million people - 4 persons per square KM Portugal has 11million people 115 per sq. KM’s

• The top 5 Metropolitan cities in Canada contain 16.5 Million or almost 50% of the population

Portugal’s top 2 cities has 3.5million people 1/3rd of population

• Top two provinces contain 21.5 Million over 60% of population

• $18CDN Billion in Furniture related Retail Sales in 2016 Portuguese market is about $4.5CDN

Billion (3 EU Billion)

• Approximately 3800 manufacturers in Canada in 2016

Complexities of Canada

FROM PORTO PORTUGAL

5127 KM’S TO MONTREAL 8093 KM’S TO VANCOUVER

One way

FROM PORTO PORTUGAL

4,467 Kilometres

Good News:

3 of these

markets

represent

approx. 1/3 of

total Market

They are in

‘closest’ half

of the country

And they are

all within

600km’s of

each other

Top 6

Markets in

Canada

WHERE TO LOOK FIRST!

Provincial Locations with Employees

SECTOR CA NF PE NS NB QU ON MB SK AB BC YK NT NU

Home

Furn.

4386 35 22 118 82 962 1699 110 113 490 727 5 5 0

Furn.

Store

3438 74 12 99 67 702 1361 116 111 362 528 4 2 0

Total

stores

7824 109 34 217 149 1664 3060 226 224 852 1255 9 7 0

Half of all Furniture related retailers are situated in Ontario and Quebec. As this is by location many of the other provinces have satellite stores with their

head offices being most likely in Ontario.

Not included in these numbers are Department stores accounting for roughly another

200 locations across Canada.

REGIONAL DISPARITIES

ONTARIO MARKETS

Market Style

Tendencies

First

Language

Eastern Ont. Mixed

contemporary

with Traditional

bit

80% Eng.

20% Fr.

GTA (Toronto) Mixed

contemporary

moving towards

Modern

100% Eng.

Western

Ontario

Mixed

traditional to

slightly

contemporary

100% Eng.

QUEBEC MARKETS

Market Style

Tendencies

First

Language

Northern Quebec Mixed

Contemporary

with Traditional

bit

100% Fr.

Quebec City Mostly Modern

with some

contemporary

80% Fr.

20% Eng.

GMA (Montreal) Mixed

Contemporary

to Modern

60% Fr.

40% Eng

Our size and diverse culture allows for a variety of product selection

WHAT STYLES LOOK LIKE TRADITIONAL MODERN CONTEMPORARY

WHAT STYLES LOOK LIKE CONTEMPORARY TRADITIONAL MODERN

HOW STYLE SALES BREAKOUT IN ONT. QUE.

Traditional 15%

Contemporary 73%

Modern 12%

Traditional Contemporary Modern

HOW CATEGORY SALES BREAK OUT

BALANCE OF SALES

[CATEGORY

NAME][VALUE]

[CATEGORY NAME]

[PERCENT

AGE]

Motion Upholstery[CATEGORY NAME]

[PERCENT

AGE]

[CATEGORY

NAME], [VALUE]

[CATEGORY NAME] [PERCENT

AGE]

[CATEGORY NAME] [VALUE]

[CATEGORY NAME] [PERCENT

AGE]

[CATEGORY NAME] [VALUE],

BALANCE OF SPACE

Accent Chairs 10%

Stationary Upholstery

29%

Motion Upholstery

14%

Bedroom 15%

Dining Room 11%

Accent Livingroom

9%

Bedding 10%

Other 2%

0

CATEGORY HIGHLIGHTS

1) Heavily influenced by US

factories; ASHLEY, LazBoy

2) Very strong local factories

offering fast delivery and

mass customization

No dominant resource – open

market very good opportunity

Bar Stools, Storage Pieces,

Uph. Headboards, Desks

All domestic international

brands – no opportunity

UPHOLSTERY

MATTRESSES CASE GOODS

ACCENT

FURNITURE

1) Mainly imports from

South East Asia

2) Domestic again is very

custom and fast

delivery

THINGS TO THINK ABOUT What issue are you trying to solve for the retailer? Only you know this, but be prepared to show your differentiation and value proposition, it may be:

Distribution/Exclusivity rights by vendor or product

Marketing and Merchandising Unique display features or presentation

Customization/configurations

Pricing

How do I get your products? Don’t underestimate Logistics within Canada:

Timelines how long from order to delivery –what delivery system? Local warehousing or container direct

Serviceability – Quality, parts, credits etc.

5 ½ time zones across Canada 9 a.m. in Vancouver is 11 a.m. in Toronto and 4 p.m. in Porto

Training and knowledge for sell through – in store help and “on the ground support”

Terms and conditions of sale – rebates, discounts, etc. Letter of Credit or trade terms

0

MARKET SEGMENTS

Leon’s, the Brick, Ikea, Home

Sense, JYSK, Urban Barn and

others PLUS; Teppermans,

SofaLand, JC Perrault, Germain

LaRiviere, Setlakwe,

Chesterfield Shop, and others

Sears, The Bay,

Walmart, Costco

Buying Groups

represent approx. 1200

stores. And then general

independents. Another

2-3,000 stores mostly

smaller

NATIONAL ACCOUNTS AND

MAJOR INDEPENDENTS

INDEPENDENT

CHANNEL

DEPARTMENT

STORES

Our Market Place has Three main Retail Segments in addition to On-Line

RANKING THE SEGMENTS 1. National and Major Independents –

• Forget the majors

• Priority for me would be multiple store regional chains used to doing containers and willing to work with new vendors and test products if they ‘fit’ people like –

• Teppermans 5 stores ON, Chesterfield Shop 5 Stores ON, J.C. Perrault 4 Stores QE, Germain LaRiviere 4 Stores QE, Upper Rooms 3 Stores ON, West Elm 5 stores, Structube 55 stores QE, Setlakwe 5 Stores QE, etc.

2. Independent stores –

• Approach buying groups first they can handle containers and distribution for you

• Most true independents cannot ‘handle’ the logistics and financing easily

3. Department Stores –

• NO – don’t go there right now

KEY INSIGHTS • Stay within Ontario and Quebec - Travel

between Montreal, Ottawa and Toronto

• Develop relationships with the family owned

multi-store operations (Sales volume

between $8-50 Million at retail)

• Find your point of differentiation

• Solve the logistics issues:

• Freight costs

• Servicing of repair and replacement

• Ongoing order fulfillment

• Local representation

• Stay away from British Columbia and western

provinces for now

• Don’t ignore American and Chinese

competitors and influence

• Don’t under-estimate time zones and

distances

• Understand shipping times and costs related

to container business

• Look at Accent type furniture such as

Headboards, storage and wall units, bar

stools and chairs.

THANK YOU &

QUESTIONS?? John Power General Manager Sales and Strategic Development

T: 905-286-4993, ext. 212 / 1 888 739-1431

C: 905 301-4347

2000 Argentia Road Plaza 3, Suite 301, Mississauga L5N 1V9

jpower@megagroup.ca | www.megagroup.ca | www.brandsource.ca

Service Excellence - our commitment to you!

Service Excellence - notre engagement envers vous!