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A new Canadian Tire Express store is opening on Danforth Avenue near Pape Avenue in Toronto. Like many domestic retailers, Canadian Tire is pursuing urban shoppers.Gloria Nieto/The Globe and Mail

Canadian Tire Corp., known for endless aisles of products ranging from its namesake item to outdoor furniture sets, will unveil a scaled-down version of itself as the retailer enters the competition for urban shoppers looking for convenience.

The iconic chain is launching on Thursday its first Express urban store in a bustling Toronto neighbourhood. At 6,100 square feet, the new store is about one-sixth the size of its standard big-box suburban store.

Toronto-based Canadian Tire is betting that even without space for its signature tires and other bulky merchandise, it will draw urban customers who increasingly are turning their backs on superstores.

Retailers' burgeoning bid to serve urban shoppers is a key reason that domestic giant Loblaw Cos. Ltd. sealed a mammoth $12.4-billion deal two weeks ago to acquire Shoppers Drug Mart Corp., which has plenty of urban stores.

The latest initiatives of Loblaw and Canadian Tire underline incumbents' push to raise their game and take on the growing array of deep-pocketed foreign players, led by U.S. discounter Target Corp.

The efforts reflect the pressure on retailers to adapt to consumers' shifting needs in the fast-changing retail landscape, forcing them to find niches of potential strength.

At stake is holding on to customers who may be lured to shiny new stores of newcomers such as Target, which opened its first stores in Canada in March and will have 124 by the end of 2013. Now Canadian Tire has to develop new ways of stocking and serving smaller stores to ensure they generate enough business.

"We want to expand our footprint and get into markets that are under-served," David Hicks, senior vice-president of store operations at Canadian Tire, said during a tour of the Express store on Wednesday.

"We feel there's a good opportunity for us to be more convenient for customers. We think there's an opportunity for us to become extremely locally relevant."

Mr. Hicks acknowledged that Express customers will probably purchase fewer items than those at Canadian Tire's big-box stores. The Express store on Danforth Avenue near Pape Avenue, which the company previously ran as a Mark's Work Wearhouse clothing outlet, has no parking lot, in stark contrast to the retailer's namesake stores.

The Express store provides shoppers with wheeled shopping baskets that are roughly one third the size of conventional shopping buggies. But to make up for customers' anticipated reduced spending, Canadian Tire expects more traffic in the store and more transactions overall, he said.

Its stores overall generated $376 of sales per square foot last year but its Express store is expected to perform even better, he said, without providing details.

Next year, Canadian Tire will test four to six more Express stores and, if successful, envisions 40 to 60 in all eventually, he said. It aims to serve a growing number of consumers moving to city centres.

The smaller store doesn't stock tires, many auto parts and other large items, but shoppers will be able to order them from a large, nearby Canadian Tire or else, by the fall, purchase them online, he said. Within the next few months, the retailer is expected to expand its online shopping offerings beyond tires to other goods.

The Express store is run by the same "dealer" (or franchiser) who runs the nearby bigger store, which will be able to ship goods in 15 minutes to its smaller, sister outlet, he said. And instead of Canadian Tire's large trailer trucks making regular deliveries to the Express store, the company now has a smaller truck to take goods from the larger store to the Express.

The new store carries about 25 per cent of the offerings of its largest stores, with close to 80 per cent of the offerings in some categories such as light bulbs, nuts and bolts, plumbing items, bicycle helmets and other accessories. "We don't need 15 bags of charcoal, we need five bags of charcoal," he said. "If we need 15, we'll get it in 15 minutes" from the larger sister store.

The Express store will receive eight to 10 shipments a week, compared with just one delivery a week at conventional stores, he said.

The store stocks items that local residents are more apt to purchase, such as kitchen and ball hockey supplies, he said. It even has a prominent display of sunscreen in preparation for the upcoming Taste of the Danforth festival and a sunny weather forecast. "If it's raining out, we'll have umbrellas and ponchos up here."