Canadian furniture retailers evolving for tech-savvy shoppers

MONTREAL – Canadian home furnishing and decor retailers facing tough economic challenges are beefing up their e-commerce offerings to appeal to tech-savvy shoppers like millennial Tania Caldareri.

In her early 30s, Caldareri is like many her age — she shops online, or browses sites before choosing which stores to visit and where to spend her money. And in a cautionary note to retailers, she won’t waste her time with retailers that don’t have a robust Internet offering.

“For sure online is definitely important … it’s a key focus,” she said while browsing Bouclair Home, the Montreal-based chain that’s one of her go-to sites.

Like the women’s fashion sector, Canadian home furnishing companies are facing intensified competition from large foreign brands, including Pottery Barn, Pier 1 Imports, Bed, Bath and Beyond, TJ Maxx-owned HomeSense, Costco and Walmart.

Each is trying with varying success to adapt by having a strong network of stores while building web sales. Few are willing to discuss their strategies publicly, including Bouclair.

While TJ Maxx said it sees e-commerce working for all its brands over the long-term, said a spokeswoman for the company that’s been in Canada for 25 years, the U.S. chain currently doesn’t offer online shopping in Canada.

Retail analyst Jean Rickli of the J.C. Williams Group said many Canadian companies are struggling to adapt to shoppers who demand an online presence.

“It’s a little bit of a disarray at this point because everybody is adjusting,” he said.

In the U.S., kitchen retailer Williams-Sonoma, which started as a catalogue company and now owns Pottery Barn, has been the most successful, drawing more than half of its overall sales online.

North of the border, retailers have taken notice, and are trying to boost online sales by offering free shipping to either the nearest store or directly to a shopper’s home. Canadian Tire is working on getting a revamped e-commerce platform back online after scrapping its old one in 2009.

Swedish giant IKEA is testing a new pick-up concept where online purchases can be picked up from small showrooms or collection locations in cities far from the nearest store. Canada is one of five test countries. Pick-up centres that will also sell less than 100 products will open by year-end in Quebec City and London, Ont.

The company also offers home delivery of some items in major markets, including Toronto, and will line up someone to assemble their products for various fees.

President Stefan Sjostrand said the company wants to make IKEA more accessible to Canadians without building more stores. He adds the goal is to have 10% of sales coming from online, up from six% currently.

“We believe that the store will always be our main sales channel … but it is to give the customer the alternative, to let the customer make the choice,” he said in a recent interview at a Montreal store that is the company’s largest in North America.

Sjostrand added IKEA’s core customer demographic is the same, whether it’s the 25 million people who visit stores annually or the 75 million who are expected to look or shop online this year. They are female “CEOs of the home,” aged 25 to 40, he said.

Although many retailers compete in specific categories, Sjostrand said IKEA Canada, which generated $1.6 billion in sales last year, has no real overall competitor.

While the Canadian retail sector is “suffering a really tough situation,” he said IKEA’s sales are on track to grow 8.5% this year after expanding by 5.3% in 2014.

Moody’s, meantime, expects overall Canadian retail sales will grow between 3.0% and 3.5% this year, down from 3.6% in 2014. But it also estimates that e-commerce sales will account for 5.9% of overall retail sales, up 16.8% from 2014.

Retail analyst Brynn Winegard said large, one-stop shopping retailers like IKEA are doing well with millennials born between 1980 and 1999 who are beginning to be a driving force for sales as they set down roots and buy homes.

Unlike older generations, these shoppers tend to be more urban, are less likely to drive and don’t like to hop among suburban big box stores, she said.

Montreal-based Dorel Industries (TSX:DII.B), the manufacturer of ready-to-assemble furniture and other goods, says it has those online shoppers top of mind when it creates home furnishing designs that can be shipped via courier.

“If it can’t be shipped by UPS, then we can’t sell it online,” said CEO Martin Schwartz, noting that Amazon and Walmart won’t buy such goods either.

Dorel’s latest creation is a sofa selling for up to US$500 that is delivered in a box and assembled at home.