Canadian Tire Corp. is giving its home repair aisles a tune up after having worked to improve its ailing automobile parts and service department.
It’s also looking to beef up its sporting goods section, following healthy gains from its 2011 acquisition of Forzani Group Ltd., which owns Sport Chek and other specialty chains, Canadian Tire president Michael Medline said on Wednesday.
Canadian Tire is applying a specialty-retail business model to its generalist merchant format, aiming to refresh its departments one by one to gain an edge in an increasingly crowded retail landscape.
“The day you start thinking like a general merchant, you’re in trouble,” Mr. Medline said at an annual CIBC retail and consumer conference. “… We have to think more like a specialty retailer under this big roof of a general merchant.”
The company started with its biggest and highest margin department – auto-related businesses – and last year enjoyed its strongest results in the segment in five to seven years, Mr. Medline said.
It meant a big investment in new systems and computers as well as a 40-per-cent turnover of its auto service staff and, more recently, a new head of the division who came from the U.S. specialty auto sector.
And despite its huge strides, “I still don’t think we are getting the market share we can get in auto,” Mr. Medline said.
Mark Petrie, a retail analyst at CIBC World Markets, said the retailer has also strengthened its kitchen wares aisles, partly by concentrating on major brands such as KitchenAid appliances.
It has poured more money into better store fixtures and the over all look of the department and its merchandise, he said. Now the president, who took the position in November, is sending a message that he wants to bolster other store sections such as paints. “It’s clear that he’s not satisfied,” Mr. Petrie said.
Mr. Medline said the “fixing” department isn’t broken but “it’s not growing as fast as the rest of Canadian Tire.” That and sporting goods “will be two businesses where I think you’re going to see a lot of movement in the next 12 to 24 months – positive movement.”
Canadian Tire is taking lessons from Sport Chek and applying them to its business, he said. It recently launched its prototype “digital” Sport Chek store in West Edmonton Mall. The latest store features multiple digital screens and product information, aimed at drawing younger customers.
Forzani enjoyed 10 straight quarters of positive same-store sales at outlets open a year or more, an important retail measure. “It’s our fastest growing business,” Mr. Medline said.
Sport Chek is working on reducing print flyers and shifting to more digital promotions. It recently tested ditching its Sport Chek print flyer for two weeks and using the funds in its digital marketing instead, Mr. Medline said. “I’m extremely happy with that test.”
And he acknowledged that Canadian Tire’s online experience “is not where it needs to be,” predicting that it will be much better in one to two years.
The company’s namesake chain sells tires online but only started to test a wider e-commerce offering last fall. Its business model is to allow customers to purchase online and come to one of its stores to pick up the items.
For future growth, Canadian Tire will consider an acquisition although “we are extremely choosy,” he said. An acquisition needs to be in one of Canadian Tire’s heritage businesses, such as autos parts or sporting goods. In the past, it has acquired Forzani and Mark’s Work Wearhouse (now called Marks) in 2002. Mr. Medline says he looks for strong companies: “We don’t bet the farm.”