If Michael Medline’s plan comes to pass over the next three years – and there’s little reason to think it won’t – “the Tire”, as he calls it, won’t be your dad’s Canadian Tire.
Canadian Tire Corp. Ltd.’s chief said Thursday one of Canada’s most iconic retailers plans to pump hundreds of millions of dollars annually through 2017 revamping its network of stores, and pushing aggressively into e-commerce to adapt to a growing “generational shift.”
“The retail business is a great business for those who are willing to act quickly and embrace the future,” Medline said while speaking in Toronto.
Young families, millennials
Canadian Tire’s future is zeroed in on targeting young families and millennials – and leveraging the emerging field of data analytics to drive each group to shop more at the “Tire” and its other chains, like Mark’s Work Wearhouse and Sport Chek, either in store or online.
Medline’s first order of business is fulfilling an “aggressive commitment to digital,” an area that some experts suggest Canadian Tire has ignored at its own peril.
“Canadian Tire lags in omni-channel retailing,” investment analysts at Desjardins Securities said. “Many of its direct competitors and peer group are much more developed in online retailing.”
Medline disagreed with that, saying no Canadian retailer has been particularly impressive in e-commerce to date. Medline said Canadian Tire’s own efforts have been “disappointing.”
He went on to say though, new “enterprise-wide” digital initiatives are at the core of a new three-year plan. They are now “making strides” and will “take us from the old world to the new,” he said.
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Sport Chek, the sporting goods department store bought in 2011, represents the “tip of the spear” Medline said, adding that it will test e-commerce as well as in-store promotional tactics to prime sales.
Sport Chek ‘tip of spear’
Soon, Sport Chek customers will be able to make a purchase online and expect delivery of the product within an hour to their home. Mark’s stores might do the same, Medline said.
At the larger Canadian Tire chain, so-called “click-and-collect” service, where shoppers select a basket of goods online for pick up at the store, appears to be being tested now – a method others such as Loblaw, are trialing as well.
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The emphasis on Sport Chek is based on Canadian Tire’s efforts to better target younger shoppers, specifically technology-oriented millennials, or those born after 1981.
Medline said Canadian Tire plans to shift a fifth of Sport Chek’s print advertising budget over to digital marketing this year, noting four separate recent trials where it halted a printed flyer in favour of beefing up digital marketing. The trials led to a detectable boost in sales at the sports chain, he said.
Led by younger shoppers, discretionary spending online and on mobile devices rose 12 per cent and 23 per cent in the United States in first part of 2014, respectively, according to comScore. Those are far faster rates of growth compared to total discretionary spending.
Keith Howlett at Desjardins said technology adoption and shopping habits among U.S. millennials and Canadian millennials “are very similar,” though e-commerce sales still trail here.
Sport Chek’s principal demographic is 18 to 34-year-olds. Canadian Tire announced Thursday a new six-year partnership with the SCENE loyalty program, run by Cineplex and Scotiabank that rewards shoppers with free movies and other merchandise.
Nearly all of SCENE’s more than six million cardholders are under 40, or the “exact demographic of a core Sport Chek customer,” Medline said.
“We’re going to run things at Sport Chek that we can take to other banners,” Medline said. “Even Mark’s is going digital.”
Young families
At Canadian Tire, the core of the business remains automotive services sales, home maintenance and care as well as sports equipment, like hockey gear. But like across the rest of Canadian Tire’s corporate umbrella, the target customer is getting younger.
In the case of the main Canadian Tire stores, the new primary target is shifting to families led by parents age 30 to 49, Medline said. And the head of Mark’s Work Wearhouse said the male-oriented clothing store is moving away from a customer with an average age of over 50 to one that’s 34 years old.
Medline added, “Are you seeing a theme here?”
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