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Friday, Mar 29, 2024

Home Furnishings Retailer Targeting Urban Dwellers

The first area location of a new home furnishings concept store opened in Burbank last week. EQ3 Furniture and Accents, a franchise retail division created by Palliser Furniture, Canada’s largest manufacturer of assembled household furniture, is designed for urban dwellers seeking affordable, fashionable furnishings. Doug Smith, an EQ3 franchise partner, said he chose the Burbank location for his first L.A.-area store because it offers the kind of market that he believes is well-suited to the retail concept. “What it comes down to is you need to be somewhere where there is an urban pulse,” said Smith. “It could be a furniture row, another lifestyle center where you are with other high-end lifestyle retailers or a heavily traveled urban street with a bit of draw from other areas.” The store is located on North San Fernando Boulevard, next to Burbank’s media center and very close to Ikea, a pioneer in the idea of affordable, Scandinavian-inspired home furnishings design in the U.S. Like Ikea, the EQ3 furnishings are scaled to apartment dwellers. There are ottomans that double as storage units and dining tables that can fold to take up less space when not in use, for instance. “It plays most naturally in a very urban atmosphere,” Smith said. “We do find our way into suburbia as well, but not on scale. You sell a piece for a room or a child’s room or a home office, but when we talk about the opportunities in condos and apartments now we’re seen as an easier fit for the entire apartment. So I think we play very well into vertical growth.” Smith, an 18-year veteran of Ikea, said he was attracted to EQ3 because of the styling and merchandising it offered. “I was very familiar with the industry,” Smith said. “What it comes down to is what products do they offer, what merchandising concept and price levels do they offer? EQ3 passed all my thresholds as an exciting concept.” Palliser Furniture, founded in 1944, is carried at retailers throughout the U.S. and globally as well. Prices at EQ3 range from about $500 to $1,000 for a sofa to about $400 to $600 for a chest of drawers. The stores carry furnishings for living, dining and bedrooms, home offices and table ware and accent pieces. The company launched the EQ3 concept in 2001, and since then has opened franchise stores in San Francisco and New York, among other locations. The company also operates gallery stores within independent retail furniture stores. Retail Outlook The coming year will bring a slowdown in consumer spending with some sectors of the population growing more tight-fisted than others. A just-released Ernst & Young survey projects retail sales will grow by 6 percent in 2006, compared to a growth rate of 6.7 percent in 2005. The Ernst & Young Consumer Trends Center report cites higher energy prices, and a softening housing market among the reason for the slowdown. Upper income consumers will continue to be the most enthusiastic shoppers, however, even these consumers may shift their buying to discount stores as rising costs increasingly take a pinch out of disposable income. The Ernst & Young report noted that what it called the “ongoing polarization of consumer spending between high-income and low income consumers” will continue to adversely affect department stores and other mid-range retailers. The group predicts that there will be further consolidations, acquisitions and bankruptcies in this retail segment in 2006. The Ernst & Young report was echoed by Retail Forward Inc., a global management consulting and research firm that publishes ShopperScape, a monthly survey of about 4,000 U.S. households. Retail Forward’s research projects that consumer spending in February will match the robust rate generated in January but below spending in February last year. “Shoppers remain undaunted largely because of better cash flow this month across each of the key income segments,” said Steve Spiwak, a Retail Forward economist. “This is being offset somewhat by the downtrend in home buying since autumn, which will discourage spending primarily on homegoods.” The survey found households with incomes greater than $75,000 will be more inclined to increase spending in February, while shoppers in middle income and lower income households are likely to spend less than they did in the past few months. One element likely to contribute to retail sales in February is the large number of gift cards households received over the holidays. Most of those gift cards have yet to be spent, the survey found. January retail sales turned out to be surprisingly strong with sales at stores open at least a year rising 5.1 percent according to data released by the International Council of Shopping Centers. The group attributed the month’s performance to the growing popularity of gift cards during the holiday season. According to the ICSC, 40 percent of gift cards purchased during the holidays are spent in the month of January. The warm January weather also affected the month’s sales, the ICSC said. Retail Beat is an occasional column written by senior reporter Shelly Garcia. She can be reached at (818) 316-3123 or by e-mail at [email protected].

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