Skip to main content
The Globe and Mail
Get full access to globeandmail.com
Support quality journalism
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
The Globe and Mail
Support quality journalism
Get full access to globeandmail.com
Globe and Mail website displayed on various devices
Just$1.99
per week
for the first 24 weeks

var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){console.log("scroll");var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))}pencilInit(".js-sub-pencil",!1);

Canadian Tire Corp. Ltd. has a supersized challenge: As the recession bites into consumer spending, its huge showcase outlets are underperforming the old-style, jammed-to-the-rafters stores.

What's to blame? Wide spaces for attractive aisle displays, more room for customers and lower-margin merchandise such as housewares - it's all not helping the iconic retailer's bottom line, and so chief executive officer Stephen Wetmore is taking Canadian Tire back to the future by launching "smart stores."

He hopes to narrow the gap between the less-productive, newer and better-looking stores and the retailer's crowded, smaller money makers.

Story continues below advertisement

"We have invested a lot of money over the years," he said in an interview. "You have to continually look at how you get the most amount of money from the assets you're currently invested in, as opposed to just network expansion."

Mr. Wetmore, 57, has been CEO for only four months, but he is no stranger to the challenge of getting maximum business out of each shopper. After more than a decade in the telecom business, where the goal is to get every possible dollar, he's an old hand at boosting productivity.

And Canadian Tire needs the help. The newer stores are generating 20-per-cent fewer sales per square foot than their older, smaller counterparts. While fourth-quarter profit beat expectations, it still fell almost 23 per cent to $101.2-million, pinched partly by investments in new systems to improve efficiency. Mr. Wetmore is clear about his mandate: He must operate smarter and squeeze more out of the existing business, rather than just adding more stores.

Canadian Tire has been one of the country's stronger retailers, but competition is incredibly fierce. Loblaw, Wal-Mart Canada, the Bay and every other player in the sector is aggressively looking at ways to sustain customer traffic, and get consumers to spend as much as possible.

"With an environment of declining sales and rising costs, if you're not managing your cash on your balance sheet extremely carefully - that means your inventory - you could get really badly hurt if this recession lasts a long time," said Mark Cohen, a professor at Columbia Business School in New York and a former CEO of Sears Canada Inc.

Canadian Tire's "smart stores" are Mr. Wetmore's big bet. So far, five have opened since the end of last year; 35 are planned this year. Their same-store sales have grown between 6 and 8 per cent after the conversion, compared with virtually no same-store sales gains overall in 2008. Mr. Wetmore said the outlets have exceeded internal targets, but can still be improved.

CIBC World Markets analyst Perry Caicco agrees. "Economically, the success of these stores will hinge on improved sales per square foot, and we believe they will deliver," Mr. Caicco said in a recent report.

Story continues below advertisement

Each converted store costs up to $500,000 to refurbish, a fraction of the up to $10-million tab to build a new store from scratch, company officials said. Merchandise that doesn't earn its keep gets abandoned. Burgeoning categories - such as sports, recreation, home storage and pet and auto care products - get more attention. Each section is treated like a fashion boutique, with displays featuring the latest trends. And the chain known best for auto parts has added something more essential: food.

Walk into a smart store, and the main "power aisle" takes shoppers to sporting goods, the single most-improved department, Mr. Caicco said. The tents and camping gear are set out in a campsite-like setting, designed to help encourage multiple purchases. The "destination" tools section is moved to the back with an eye-catching wall of products on display, and home goods has been shifted to the front to give prominence to an often impulse-driven department.

The new approach to merchandising is already paying off. The smart stores expanded the size of their hockey sections by 30 per cent, carrying more products and, for the first time, mannequins.

Hockey sales jumped as much as 140 per cent from a year ago, Mr. Wetmore said. The space for camping gear was also increased, and the revenue results were similar.

Auto accessories - long considered mainstay products, but recently relegated to the back of the store - have been moved to the front where more shoppers see them. As a result, sales in that category have more than doubled.

Other changes include putting hardware and tools back together to capture more sales. And customer feedback suggested that they would buy more bulky items if the products were taken out of their boxes and displayed.

Story continues below advertisement

The stores are also trying to improve service with more price-check stations and service desks, while offering skate sharpening, fishing and hunting licences and bike repairs.

Still, unless store owner-operators "step up their game, these tools could lead to poorer perceptions of service levels," Mr. Caicco warned.

Through this process, a key division purchased in 2002 is being squeezed out of smaller locations - Mark's Work Wearhouse. The apparel boutiques are simply too small, with no space to try on clothes, said Mike Arnett, who heads Canadian Tire's retail division. In future, they'll only be in stores with space for a full offering.

And to entice more-frequent customer visits, the smart stores have moved into new territory, introducing milk, bread and other must-have food items. "In bad times, you still have to eat," said Stephen Jarislowsky of Jarislowsky Fraser Ltd. in Montreal, a long-time company share holder.

Report an error
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies