Palliser poised to push growth of EQ3 network
By Michael J. Knell -- Furniture Today, October 13, 2003
Winnipeg, Manitoba — The first of 15 new freestanding, independently owned EQ3 stores in Southern California will open in the seaside city of Torrance in mid-November.
It's the opening salvo of an aggressive expansion drive for the Palliser Furniture retail division, which could see as many as 45 of the modern home furnishings stores in operation by the end of 2004.
Later this week, New York's first EQ3 store will have a soft opening on Manhattan's Upper East Side.
Currently, there are four freestanding EQ3 stores — in Winnipeg; London, Ontario; Toronto and Grand Rapids, Mich. — and 150 in-store galleries across North America.
"EQ3 fills a fashion gap in furniture retail," said Chris Maynard, franchisee and president of EQ3 Southern California. "People are becoming much more connected to furniture as a form of self-expression. They are seeking innovative, fun furniture from a manufacturer who offers quality and a retailer that understands service. EQ3 offers both at an affordable price."
To manage the expansion drive, Palliser has created a new division called EQ3 Franchise Holding and named Peter Tielmann as president. He continues to serve as Palliser's senior vice president of imports and EQ3.
"We did this because EQ3 is a different business from Palliser," Tielmann said. "We will have a separate management team and the supply chain will continue to be part of Palliser."
EQ3 Franchise Holdings will undertake front-end work, including real estate management, interior design of the stores and product development.
"It's more of a new legal structure than something that will affect the dealers," Tielmann said, adding the existing 150 in-store galleries will continue to operate as before.
However, each EQ3 store will be a franchise. "We are creating a turn-key operation for the dealer," Tielmann said.
He added that rather than building the cost of developing the support services into the price of the goods, Palliser felt it would be better to use a franchise fee/royalty structure. This is designed to keep retail prices affordable.
"We have to provide a lot of services, and the retailer doesn't have to bear any of these development costs, but at the same time we need to be able to sell the product at the retail price points we're targeting," he said.
Maynard is a Nova Scotia native who, before taking on the Southern California franchises for EQ3, held senior sales, marketing and management positions at Ikea. Most recently, he was general manager of the Ikea store in Santa Barbara, Calif.
Over the next three years, he plans to build 15 stores in an area bounded by Santa Barbara, Palm Springs and San Diego, a region with a population of close to 15 million.
The Torrance location will have 10,000 square feet of retail space, and the others will have between 8,500 and 12,000 depending on real estate and development costs.
"There's a real market gap out there," Maynard said. "There are a lot of people who like modern design but there was nowhere for them to go."
"We are looking to partner with retailers with his experience and background," Tielmann said. "We are developing a network of strong franchisees who can open and operate more than one store in their trading areas."
In Canada, he added, Toronto EQ3 owner Richard Paik is set to open a second location within the next few weeks at Yonge and Eglinton, in the city's uptown shopping district, and plans to open as many as two more EQ3 stores.
The chain's first store in Edmonton, Alberta, also is expected to open this month, in the West Edmonton Mall, Canada's largest indoor shopping center.
Palliser also plans to open its second corporate EQ3 store in the fashionable Yaletown district of Vancouver, British Columbia, later this year.
The other corporate store is in Winnipeg.
"We experiment in these stores and we want more than one store to learn from," Tielmann said. "But beyond these, we don't envision any more corporate stores."
By the end of 2003, Tielmann anticipates there will be a total of 15 freestanding EQ3 stores in operation in Canada and the United States.
The company's ambitious plans for next year are dependent on its ability to acquire locations, Tielmann said.
"If we get all the real estate we want, we could open as many as 30 stores next year," he said.
