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Williams-Sonoma Inc., the chic U.S.-based home-decor chain, is set to open eight stores in Toronto starting in October and could have as many as 40 over the next five years, a senior company official says.

The San Francisco-based retailer, which also operates under the Pottery Barn and Pottery Barn Kids banners, will begin slowly and "deliberately" in its first international foray, partly because of the economic slowdown, said Shelley Nandkeolyar, a vice-president at Williams-Sonoma.

Eventually he envisions stores in all 10 major cities across Canada, if the outlets in Toronto prove successful, he said.

"There is a lot of appeal for our brand," Mr. Nandkeolyar said in an interview before addressing the annual conference of the Retail Conference of Canada. "That will help to get us started . . . Our best campaign is word-of-mouth."

He said that despite the drop in consumer spending, the firm is "cautiously optimistic" about meeting financial expectations.

Williams-Sonoma, a name that is familiar among home decorating and cooking lovers, is entering the market just as other rivals are stepping up their efforts to take a bite of the once under-served sector.

It's also a time of economic uncertainty as consumers become stingier in their spending and job prospects become dimmer.

"It's such a fragile period," said retail consultant Len Kubas, who yesterday released a report predicting a 4.5-per-cent gain in retail sales this year -- a drop from the 6.4-per-cent growth of 2000.

He said the novelty of Williams-Sonoma's opening in Canada will undoubtedly bring shoppers to its stores. But he wasn't sure that the flood of browsers will translate into enough sales, he added.

Meanwhile, competition in the home decor sector is getting more heated. Hudson's Bay Co. is expanding its big-box retail chain called Home Outfitters, while U.S.-owned Winners recently launched its HomeSense division.

Bed Bath & More, another U.S. chain, is expected to begin operations here next year, and fashion retailers such as Holt Renfrew and Roots Canada have expanded their homeware departments.

Restoration Hardware Inc. of California, another upscale home-furnishings chain, came to Canada a few years ago and is finding the going tough, Mr. Kubas said.

"They may have second thoughts about coming to Canada," he said. "They're probably experiencing a little more of a slowdown than what they anticipated."

Mr. Nandkeolyar said the company is well aware of the stiff competition. When Williams-Sonoma first planned to start business in Canada, the economy was roaring, while things have changed drastically since. "We will just be cautious and careful in how we unfold the story," he said.

The first two stores, Williams-Sonoma and Pottery Barn, will open in the Torono Eaton Centre on Oct. 20, while a Williams-Sonoma, Pottery Barn and Pottery Barn Kids will open in the Yorkdale Shopping Centre on Nov. 3. The flagship stores for all three banners will open on Bloor Street West, at the site of the former University Theatre, next spring.

Mr. Kubas said he was in a Williams-Sonoma store in San Francisco a couple of weeks ago but didn't buy anything, finding the prices "quite expensive." The price tags, which are expected to be comparable in Canada (after taking into account the different exchange rate), may make the launch in Canada even more challenging. "People have a sense of frugality," he said.

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