Leon’s Furniture Limited

Amid a cross-provincial recession, Leon’s Furniture Limited an­nounced bold plans to continue growth in its established markets and expand into new provinces. The company plans to open four to five new corporate stores and one to three franchise stores each year for the next five years. This could result in a 50 percent increase in its retail network. During a contractual period when many are tightening their belts, some may find the move a bit odd. But as Leon’s President and CEO Terrence T. Leon explains, it is all strategy.

“[Some] might wonder why we are doing this now, in the midst of an uncertain economy that has made consumers so cautious,” he states. “The most fundamental reason is our faith in the Canadian economy, which despite present difficulties will invariably return to higher levels of growth. In the meantime, Leon’s has been presented with an ideal opportunity to lease or acquire new store locations at favorable costs.”

With 69 stores, 30 of which are franchised and the rest corporate owned, Leon’s has a presence in all but one province, which should change in the near future. It has an impressive stronghold in Ontario, which hosts 40 corporate and franchise Leon’s. Cities such as Montreal, Ottawa and Toronto hold multiple stores.

Real Estate Manager Rod Fortune says the company plans to open four new stores this fall  – one each in Saskatchewan and Quebec and two others in Ontario. As it strengthens its central and eastern markets, Leon’s has teamed with Strategic Real Estate (SRE) to grow its Alberta presence and enter British Columbia – the one province in which Leon’s has yet to break ground.

Strategic Real Estate holds more than 30 years of real estate development experience and has spent the latter half concentrating on development for retail clients. It offers services ranging from market orientation and population and demographics analysis to zoning and permit consultation and acquisition services. SRE’s forte is developing market penetration strategies no matter the economic climate.

“Timing is everything,” says Joe Rogers, principal at SRE. “What our company specializes in is we create opportunities. If we wait for opportunities to just come along, then you are in competition with everyone else. Is it an easy time? No, but developing a strategy just requires a little more work.”

Paul Lachambre, also a principal at SRE, says they have developed a relationship with Leon’s over the past five years and have spent the last year-and-a-half aggressively developing a strategy for Leon’s. “They operate in other provinces in Canada with the exception of British Columbia,” he says. “They decided to establish a distribution center in the Vancouver market with five retail stores all in the British Columbia market.”

Fortune says the Alberta plans are progressing well and Leon’s has secured a new 85,000-square-foot site to add to the six stores already in the province. The Leon’s model is to build corporate-owned stores ranging form 75,000 to 150,000 square feet. Fifty-thousand square feet will serve as a showroom and the remaining space is used as a warehouse and distribution center that will serve up to three satellite stores, which average 40,000 square feet and are within 30 minutes of the distribution centers. Some of the satellite stores house an up to 10,000-square-foot warehouse for local deliveries and others have no warehouse at all.

All of the corporate-managed stores with warehouse and distribution centers are owned by Leon’s. The satellite stores can be owned or leased. “We like to have distribution centers attached to our stores and for that reason we want to own the site and not lease it,” Fortune says. “ We will lease satellite stores that are primarily showroom. With a 40,000-square-foot satellite store, it’s easier because we don’t have a big warehouse and can carry the cost of renting easier. Given the economic realities currently in the market, [for our distribution centers] we don’t want someone to come back 10 years from now and jack up the rents.”

The formula of having corporate-owned stores plus distribution centers centrally located to satellite stores has worked well for Leon’s, but implementing the model in British Columbia has proved a bit more challenging.

“Land in British Columbia is expensive,” Fortune says. “To expand into the province, we need to expand our distribution center up to 150,000 square feet initially and 200,000 square feet ultimately. We’re looking for a showroom and distribution center. Depending on where it is located, that will determine where we locate other satellite showrooms.”

Proven Partners

When Leon’s does set out to make its physical mark on British Columbia, it is likely that the company will bring along key partners for the project. “We have in the last couple of years developed trust and created relationships with a couple of different contractors that have helped us to expand, most definitely,” Fortune says. “It’s taken a while to develop that trust with somebody. It takes a while to prove yourself to Leon’s but these contractors have done it.”

Leon’s consistently works with three general contractors – one each for Quebec, Ontario and Western Canada. For the past two years Turner Fleischer Architects has designed all of its stores and its electrical and mechanical consultants have worked with the company for several years. Leon’s key partners include Century Group Inc.

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