This story appeared in Strategy C-Suite, a weekly email briefing on how Canada’s brand leaders are responding to market challenges and acting on new opportunities. Sign-up for the newsletter here to receive the latest stories directly to your inbox every Tuesday.
Established in 1909, Leon’s Furniture Limited is the largest furniture and appliances retailer in the country, counting a little over 300 locations between Leon’s and The Brick, which it acquired in 2012. It also claims to have brought the big box concept to Canada, introducing the first large-scale Leon’s outlet in 1973.
But, today, legacy retailers face increased competition, from contemporary retailers like West Elm and Urban Barn, to online-born brands like Casper and Article. Even as market leaders, Leon’s and The Brick collectively hold less than 20% share of total sales (nearly $2 billion in system-wide, year-to-date sales, as of Sept 2019). The sector remains highly fragmented between new and established large-scale chains and mom-and-pop shops, creating the likelihood of further consolidation in the years ahead, as noted in Leon’s most recent annual report.
To remain competitive, Leon’s has needed to broaden the appeal of its namesake banner among younger, trendier shoppers, says CEO Edward Leon. That has led to the launch of a more millennial-friendly campaign with new AOR Bimm in May, expanding its e-commerce strategy with Shopify over the last few years, and unveiling a new concept store this year that has a smaller footprint and more tech features than its larger locations.
While same-store sales are holding steady, having only increased 0.6% so far this year (compared to last), Leon tells strategy the approach and investments are beginning to pay off.
How have your investments paid off so far?
We’re getting a lot of positive feedback [on our new campaign], more than I remember in the last 20 years. We’ve been historically known as a bit of a discount house, so our branding is attempting to raise the bar a bit and reach customers who are a little more stylish, and we’ve been tailoring our merchandising and marketing to meet that need, because frankly, we just want to expand our consumer base. We’ve never really had too much of a problem reaching the working individual, the middle-income type person. We have struggled with the younger folks, the professional urban types who like to shop boutique, so we’re presenting ourselves as having options available in that vein, and we’re definitely seeing positive results, not just from sales, but traffic and attention and everything else.
Have you learned anything through testing your new store concept? Are there elements that you plan to roll out to additional stores?
When [Leon’s brought the] big box concept [to Canada], it was very useful and served a great purpose in building our business… [But] this store has confirmed we can do alterations to our physical size, to our showroom design, we can add tools to make the shopping experience fun and have access to a wide variety of services and products without compromising the brand that we’ve built in the past, the large discount retailer. The footprint and cost of running the [Coquitlam, B.C. store] is very effective and it allows us to take our brand into smaller markets, whereas typically corporate would ignore those, because of our fear of diluting the image that we previously had set as the standard. And since we opened in Coquitlam, we’ve already opened a second [concept] store in Coldbrook, N.S. We’re going to continue to roll out [elements of those locations], not just in new store openings in smaller towns, but we’re going to incorporate some of them into our existing buildings as well.
You recently struck a partnership with the Toronto Raptors. What does that partnership entail and how does it fit with your brand positioning or marketing goals?
The Raptors have very wide appeal, certainly more so now with their championship last year. Because we find ourselves addressing the needs of the average consumer, which covers a lot of ground in terms of age, income and everything else, we thought [the team] was a natural fit. We do some marketing with [MLSE], we have [in-stadium] signage during the games and do a “couchside session.” Once a month, we do a draw and fans get the opportunity to sit in a Leon’s couch at the side of the court and experience warm-up first-hand, and then we move them into [regular] seats when the game starts… There will be more of that [kind of activation] to come down the road, as we get into this campaign, which is, at this point, a multi-year campaign.
How do the Leon’s and The Brick brands differentiate, and have you also made investments in The Brick business?
We operate the two brands as very friendly, competitive enterprises. And the Brick has been very progressive in its marketing. It has a number of celebrity relationships, including the Scott Brothers [from the Property Brothers], [actress] Cindy Crawford and more recently [Olympic figure skater] Tessa Virtue. When we bought The Brick, one of the things that was most surprising to us, being a family-run business and very proud of our heritage, [was how loyal] The Brick customer was. They have a very strong following, as Leon’s does. We believed that we could build both brands, without hurting each other. And that’s what we’ve been doing, and will continue to do.
The true differentiator, if there is one, is that The Brick caters more to the lower-middle and middle [segment], versus Leon’s, which caters to the mid to mid-high [customer]. So the lower-middle is very much a price proposition, [while at] Leon’s we promote a lifestyle [and customers are more] fashion-forward. It’s working for both of us, and we’re going to continue to build on the loyal customers we both have and hopefully continue to take market share away from the independents that are out there, and there’s still a great number of those.
When it comes to developing a loyal following in furniture retail, what role do you see for brand building? Will the brand play an increasingly important part, or is it more about the shopping experience, things that are a bit less brand-focused?
I wouldn’t say it’s one or the other exclusively. Look, if I didn’t have a brand, and I came up with a better mousetrap, I would expect that I would have some success with it. But on the other hand, having a strong brand gives you the greatest opportunity to have the most interested consumer transacting with you, whether it be physically or otherwise. So they’re not mutually exclusive. They complement one another. If you manage them both together, which is probably the most practical way (because I’m not sure I’m going to be able to invent a new mousetrap that differentiates us so much more from everybody else), then you have to have both.
This interview is part of a series for Strategy C-Suite, a weekly email briefing on how Canada’s brand leaders are responding to market challenges and acting on new opportunities. Sign-up for the newsletter here to receive the latest stories directly to your inbox every Tuesday.
The interview has been edited for length and clarity.
