A Brick furnature store sign in Toronto.
Credits: Steve White/QMI Agency
KINGSTON, ON -- The plan by Leon's Furniture to buy The Brick is a good move for the company but consumers may have to wait to see the benefits, a Queen's University business professor says.
The two companies announced the $700 million purchase Sunday.
Business strategy Prof. Ken Wong said the merger will make the companies stronger and better able to compete with a growing number of competitors.
“It's probably a wise move on their part,” Wong said Monday.
In addition to the impending arrival of Target, the second-largest retailer in the United States after Wal-Mart, Leon's and The Brick face increasing competition from non-traditional furniture sellers, like Home Depot and Lowes.
As well, online retailer giants such as Amazon and Overstock are looking to expand their furniture sales.
Ikea also remains a major competitor.
The merger of Leon's and The Brick will allow the companies to centralize logistics, finance and accounting, and increase their combine buying power, Wong said.
“Don't hold your breath,” Wong said. “It will take a while for these efficiencies to come into play.”
Wong said the two brands are distinct enough that they will likely continue to operate as separate stores.
Leon's has 76 stores in Newfoundland and Labrador, Quebec, Ontario, Manitoba, Saskatchewan, Alberta, Nova Scotia, New Brunswick and Prince Edward Island.
The Brick opened its first store in Edmonton in 1971 and has 230 stores operating under The Brick, United Furniture Warehouse, The Brick Mattress Store and Urban Brick names.
Wong said the merger of Leon's and The Brick is a good match because they sell similarly priced products.
By contrast, The Bay's purchase of Zellers in 1978 never really worked because the two companies were not well matched, Wong said.
And Canadian Tire's purchase of the sports company Forzani Group resulted in an expanded sports section in Canadian Tire stores.
The Leon's-The Brick deal is expected to close in early 2013.