How does a traditional furniture business deal with change? The Canadian retail furniture sector has been buffeted by challenges over the last several decades including big-box competition, new marketing channels, fewer local suppliers, increased global supply chain and rising operational costs.
For Wilson Furniture, a third generation family-owned store selling high-end products, the demands to adapt are even greater.
Wilson Furniture has faced steady deflation in its product line. After free trade emerged, rising imports were accompanied by lower quality at lower prices. Furniture manufacturing in Canada dropped off precipitously, with prices dropping to near 1980s and 1990s levels.
As a high-end quality furniture store, how could Wilson Furniture reposition itself to survive in the market?
Ed Wilson founded Wilson Furniture in 1934. His daughter Helen and her husband, Bob Sherman, carried on the business. In 1984, after a fire destroyed the store next door, the family decided to rebuild and expand the showroom. After opening the new store in 1987, sales tripled. Since that time the business has seen only modest growth.
Helen and Bob's sons, Darryl and Jory Sherman, took over the reins in the 1990s and eventually bought the business in 2000 without a heavy financial burden. Today, the brothers operate two retail showrooms in downtown Oshawa, totaling 25,000-square-feet along with an 18,000-square-foot warehouse and distribution centre. The business, which is open seven days a week, currently has 15 employees.
Oshawa economy has always relied on General Motors Canada. Over the past 30 years, however, GM has reduced its work force from over 20,000 to fewer than 5,000. Income levels have also declined. The good news is that a decade ago, Oshawa became home to the new University of Ontario Institute of Technology which continues to grow with staff and students.
Consolidation of the furniture industry, as displayed by the recent merger of Leon's Furniture and The Brick, and big-box stores make it difficult for independent furniture stores to compete. Imports from China, Vietnam and other low-wage overseas economies have lowered retail prices along with customer expectations. High-end imports still undercut prices on Canadian made products. Wilson Furniture still carries Canadian and American-made furniture, which is generally higher quality, but even those prices are lower than in the past.
During the 1960s and 70s there were six to eight quality furniture stores in downtown Oshawa. Today, Wilson Furniture is the last independent major furniture store.
Darryl and Jory knew they would have to sell more units in order to maintain the same revenue.
To do this, the brothers decided to maintain their high quality furniture offerings while building on their meaningful partnerships with Canadian and American manufacturers in order to offer competitive pricing. They focused on customized ordering at sale prices and providing customers the opportunity to create their own unique piece of furniture. The freedom to create something unique is appealing to customers.
They also remind customers of the environmental benefits of their purchases. Selecting better quality pieces means they last longer, occupy less space in landfills and ultimately are more cost effective.
Products are rotated frequently in the showroom, which is regularly decorated to feature current trends. Room displays are fully accessorized to help customers visualize their purchase. The sales team provides personalized service and free decorating advice.
Darryl and Jory rebranded, including adding the motto "we just LOOK expensive" which they found resonated with customers looking for both quality and value.
Everything is sold also comes assembled. "We want our customers to receive a finished piece of furniture, not a box with an instruction kit," explains Darryl. "Having a finished piece of furniture delivered and set up in a customer's home is part of the high-end furniture experience." Wilson Furniture also has a dedicated after-sales service manager who seeks to solve delivery, quality and other problems quickly.
The brothers are hands-on owners. They attend trade shows, scout out new offerings in the world of home furnishings and accessories, assist customers, monitor operations closely and control costs. Inventory is paid for outright. They have no debt and reinvest most of the profit back into the business.
Marketing now comprises of a combination of print, radio, social media, website content and direct mail throughout their region and the greater Toronto area. They supported the University of Ontario Institute of Technology with an endowment for business students. "We have always believed that our success should be shared with the community," says Darryl.
In order to compete, Wilson Furniture had to adjust not only to what was happening in Oshawa but to what was happening around the world. The last two decades of forces beyond their control presented the greatest challenge to the first 80 years of existence for Wilson Furniture.
Resolving to double-down on service around quality products with flexible options, the brothers built sales and profitability. Sales for 2014 are already up over 10 per cent on last year.
The brothers are not resting. "We must continue to challenge ourselves and look for ways to be different," says Darryl. "We love this business and our customers feel this when they visit our store. We plan to be around for another 80 years."
Peter Bowal is a professor of law at the Haskayne School of Business.
This is the latest in a regular series of case studies by a rotating group of business professors from across the country. They appear every Friday on the Report on Small Business website.