There was a time when Canadians were characterized as "hewers of wood and drawers of water." Today, however, it appears we’re becoming a nation of decorators.
Certainly that’s the conclusion one would tend to draw from the recent flurry of activity in the home décor category. With Hudson’s Bay Co. planning to build 50 new Home Outfitters stores, and some major U.S. players poised to invade Canada, this segment could soon become one of the most competitive in this country’s retail marketplace.
Industry watchers describe home décor as an underserved category with plenty of room for new players. Growing interest on the part of baby boomers is believed to be the major factor driving its expansion.
"People are spending less and less on fashion apparel, so there’s more and more disposable income for personal expression in our homes," says John Williams, president of Toronto-based retail consultancy J.C. Williams Group. "It’s a big, wide-open market."
It’s also a market that Williams says is unlikely to be dominated by any one retailer, since decorating tastes and preferences vary so widely among consumers. He envisions several major players ultimately leading the category – each commanding a healthy but by no means overwhelming share.
Hudson’s Bay would very much like to be one of those players. To this end, the venerable Canadian retailer plans to build Home Outfitters into a national chain over the next three years.
The Home Outfitters stores build on the Bay’s reputation for soft goods. There are three of the big-box outlets currently in operation.
Hudson’s Bay president Marc Chouinard says the new stores will be clustered in four major markets: Montreal, Toronto, Vancouver and either Calgary or Ottawa. This will allow the company to spread advertising expenses over a group of stores, thereby creating efficiencies as it goes about the process of building the Home Outfitters brand.
By staking a claim early, Hudson’s Bay stands a good chance of emerging as a leader in the category, Williams says. But the Home Outfitters chain will face some formidable competition.
Bed, Bath & Beyond, a home décor chain based in Union, N.J., has confirmed that it plans to open at least one Canadian location next year, in Vaughn, Ont. And analysts are predicting that it will go head-to-head with Home Outfitters in many product areas.
Williams-Sonoma of San Francisco, Calif. will also be launching its three banners – Pottery Barn, Pottery Barn Kids and Williams-Sonoma – in Canada next year, according to spokesperson Tracy Brown. While the company won’t comment further, industry sources say the first location will be in the vicinity of Toronto’s upscale Bloor and Yonge intersection, near the Holt Renfrew flagship store.
The Williams-Sonoma brands skew somewhat more upscale than the Home Outfitters chain, and therefore won’t compete with it directly. Nevertheless, Williams says, there will be some overlap.
Another player to watch is Pier 1 Imports of Fort Worth, Tex., which has been repositioning itself over the last year to put more of a focus on home décor. The company, which currently operates 33 stores in Canada, has recently undergone an expansion in the Western provinces, and has plans for more store openings – as well as a national television campaign – in the fall.
"It’s definitely a competitor," says retail analyst Wendy Evans of Toronto-based Evans & Company.
Sears Canada, meanwhile, has been moving its home furnishings into freestanding outlets so that it can beef up the décor offerings within its department stores. (South of the border, Sears is unleashing a décor category-killer called The Great Indoors that could prove a heavyweight contender if launched into this market.)
All in all, the home décor category has the makings of a complex and somewhat confusing market. Sears and the Bay will compete with one another, while Home Outfitters takes on Bed, Bath & Beyond, and Williams-Sonoma and Pottery Barn grapple with trendy upscale boutiques. And everyone will be keeping an eye on big-box home improvement stores such as Home Depot, which are inching into the category as well.
Survival will depend on segmentation, says Williams, who predicts that consumers will see a serious catfight next year, as the major players attempt to stake out their turf.
