Come for the tire, stay for the shopping.
Canadian Tire Corp., which is renewing its focus on core automotive products, is counting on tire sales to lead the way in its return to e-commerce. The retailer, which abandoned selling online in 2009, is set to offer more than 4,500 tires when it officially relaunches its website on Friday.
The company is betting that once customers come to its stores to have their tires installed, they’ll also pick up more products or get other repairs done.
In a tire industry estimated at between $2.5- and $3-billion of annual sales, the company is racing to hang on to its leading position as rivals rush in to nab business.
But the new online strategy is also fraught with logistical challenges: Tires are bulky, requiring customers to head to its stores to pick up their purchase and get it installed. Consumers have little familiarity with buying tires online. Those who shop for tires online are mainly do-it-yourselfers, while the mainstream business is mostly done in stores.
The shift online is part of its bigger bet on tires as the retailer returns to its automotive roots as an engine of growth. This fall, it will launch a new auto store of the future with drive-through, valet-type service and, at its core, the tire offerings and a wide array of auto parts and accessories.
“While we may not be the first to sell tires online, we certainly won’t be the last,” said Carol Deacon, associate vice-president of the automotive division at Canadian Tire. “We're assuming the industry is heading in that direction. We feel we have an advantage. We have 485 stores across Canada and 5,500 service bays. We have many advantages over our competitors.”
Canadian Tire sees promise in the online segment: While today it makes up less than 5 per cent of the Canadian tire market, in Europe, those sales are between 10 and 15 per cent of the overall business, according to industry players.
“People in Canada are not very used to buying tires online,” said Alexis Nerguisian, president of the Geneva-based company that launched the online discounter Tires and Co. in Canada a year ago. “Of course, there is a two-step process. First you have to order at home or at work, then you have to go to a garage. We think it’s practical.”
His Tires and Co. Canadian business turned a profit in its first four months, generating $165,000 of sales until the end of December, he said. Since January, it rang up $240,000 in sales, meeting its targets although grappling with a sluggish summer in an uncertain economy and poor weather. “It’s not an incredible takeoff but it’s not that slow,” he said in a telephone interview.
Tire shops like his bring in between 50 and 60 per cent of their sales in winter, buoyed significantly by selling winter tires, he said. Sales are particularly strong In Quebec, where winter tires have been mandatory since 2008.
He’s feeling the competitive pressures in such players as European-based Delticom (tireeasy.com) and U.S.-based Tire Rack – and now Canadian Tire. But he added the increased activity in the segment will also help consumers become more familiar with online tire selling.
Jim Okamura of Okamura Consulting in Chicago said that while buying tires online may seem awkward, it can be more convenient for consumers to figure out their purchase online so that it’s ready to be installed when they bring their car to a store. Canadian Tire can raise its profile in tires by selling them both digitally and in stores, beating some other domestic sellers that still don’t sell tires online.
“It’s better for Canadian Tire to try to grab their share and defend it, rather than the opposite way around and having to steal it back,” Mr. Okamura said.
Ms. Deacon said the move online makes sense for the tire business because it has become extremely complex with a proliferation of different tire sizes – about 650 under multiple brands. She said it’s less confusing for consumers to be able to research and order tires online, reserving the product for when they come into the store.
“You can make one trip to the store instead of a couple.”