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Each day TFO Canada publishes a sample of trade news on the Canadian import market along with any new, updated or changed regulations and legislations regarding international trade; countries in which TFO Canada offers services and on the export sectors which it promotes.

 

Canada: Changing bedroom styles will drive growth

Wednesday, May 11, 2016 > 09:45:51
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(Home Goods Online)

Canadian bedroom producers anticipate that 2016 will be another solid year for the category, with consumers continuing to respond to strong values, fresh designs and added construction and storage features.

While still likely to be outpaced by more fashion-forward segments such as upholstery and occasional, bedroom remains a core industry segment with steady growth and continuing opportunities. To grow their business, Canadian manufacturers are looking for creative new style niches to fill, as well as expanding their distribution by signing on additional brick-and-mortar accounts as well as new online merchants.

In their home market, Canadian furniture producers continue to face strong headwinds. The nation’s economic output was either flat or in recession for large portions of 2015 — and that weakness is likely to linger into at least the first half of 2016.

A major contributor to Canada’s slowdown has been lower capital spending in the oil sector, which impacts both resource-related investments as well as disposable income. The weakness of the Canadian dollar – commonly known as the loonie – versus other major currencies also has been a drag on growth. In 2015, the loonie had its second worst year on record, dropping 17% compared to 2014.

The plunge has had one silver lining for Canadian furniture producers. It has leveled the playing field on pricing with foreign competitors.

According to the Organization for Economic Development, Canada’s economic growth is expected to slowly recover in 2016 and rise to 2.3% in 2017. The drag from falling energy investment should fade away by early 2016, says OECD, while non-energy exports lead the subsequent pickup in growth.

In the U.S. market, economic activity is expected to continue expanding in the 2% to 3% range. But uncertainties remain, with major events such as the November presidential election and the Federal Reserve’s recent decision to bump up interest rates for the first time in nearly a decade still unfolding.

New value equations

Powered by brisk sales of transitional designs such as its popular GrandVille collection, and strong retail placements of two new offerings – Romanesque, inspired by classical Roman architecture; and Atelier, a mid-century modern design with Scandinavian influences — BG Furniture enters 2016 with good momentum in bedroom. The solid wood specialist’s sales grew at a healthy clip from last fall to the end of 2015, with bedroom up “a significant amount,” company president Adam Hofmann reported.

He expects 2016 also to be a good year for domestically produced solid wood bedroom, as Canadian retailers increasingly gravitate to locally-made products rather than the imports they might have bought in the past.

“A few years ago, our price points weren’t as competitive with products from Asia and the United States,” said Hofmann. “Now, with what’s happened with currency rates, we are very close to import pricing and the playing field is much more level. This development has enabled us to take away floor spots from the imports, and led some import competitors to exit the Canadian market.”

Bedroom now accounts for 47% of BG Furniture’s total business, up from 40% in 2014. In addition to the category’s stronger value proposition, BG also has been gaining new customers through its new delivery promise. The program vows retailers will receive orders within 20 working days or the freight charge is free. In addition, BG also offers a 12-day, quick-ship service on two bedrooms and best-selling occasional and entertainment products – backed by the same pledge.

The Walkerton, Ontario-based company rolled out the program in the summer of 2015 and, to date, has delivered 95% of shipments on time.


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