TORONTO • Canadian Tire Corp. is taking its erstwhile “neighbourhood store” tag line to a new level.
The largest purveyor of auto parts and sporting goods in the country, which already has stores within a 10-minute drive of 90% of the country’s households, is the latest retailer to cash in on the small-store trend with its new pilot format, Canadian Tire Express.
We are underserved in certain markets where consumers are looking for a convenience offering
The first 6,100-square foot outlet opens this week on a busy midtown Toronto street corner, offering about a quarter of the goods available at the chain’s biggest stores, but at less than a tenth of the size.
“We are underserved in certain markets where consumers are looking for a convenience offering — we didn’t have [a store format for it] before,” said David Hicks, the retailer’s senior vice-president of dealer relations and store support.
The new Express store, one of four to six opening across the country by the end of 2014 in a pilot project, debuts as a glut of retailers seeks to penetrate urban spaces in Canada with small-footprint locations, including Sobeys, Loblaw and Best Buy. If the Express stores resonate with consumers over the next 12 to 18 months, Canadian Tire will roll the format out across the country.
The strategy also targets rural communities currently deemed too small for the retailer’s existing 15,000 square-foot stores, Mr. Hicks said. “We have scoped somewhere between 50 to 80” of the small rural markets where Express stores could potentially fit.
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Canadian Tire’s credit card and demographic research allows it to fine-tune its store assortment. The first Express store in Toronto’s diverse Riverdale neighbourhood targets the range of locals, from upwardly-mobile eco-conscious parents to older fixed-income immigrants. A display of bottle-saving Soda Stream kitchen carbonation systems sits prominently at the front of the store’s kitchen goods aisle, there is a wide array of kids’ bicycle helmets and hockey sticks, while dishwashing liquid on offer ranges from basic $1.99 Ivory to earth-friendly but pricey Mrs. Meyer’s Clean Day, $6.59.
The outlet caters primarily to walk-in traffic and there is limited street parking, but it can be nimble with its assortment because it is located three kilometres away from its “parent” store, Mr. Hicks said, which at more than 10 times its size functions as a feeder warehouse and is linked to the same Canadian Tire dealer.
Each morning before 6 a.m., the Express store’s vacant shelf spots will be filled with an order placed to the parent the night before, in what will also function as a test pickup location when the retailer relaunches online sales in the third or fourth quarter of the year.
“This gives us more distribution points,” Mr. Hicks said. “The e-commerce strategy for other retailers is difficult if you do not have multiple distribution points.”
There used to be corner hardware stores everywhere and the format is still quite viable
The store will also test a valet service for consumers who want their cars serviced at the parent store’s auto bay, he said, allowing them to drop their vehicles in the morning and pick them up after work.
Mr. Hicks said cannibalization from the two closest Canadian Tire stores is not a concern.
“If the consumer [chooses the small format over the large], that’s fine. There are a lot of retailers in this area capturing the convenience customer.”
Much like an historic small-town general hardware and convenience store, more than half of the Express store assortment is devoted to the ‘fixing’ category for smaller household projects: nuts and bolts, small tools, lightbulbs and paint. About 30% of the merchandise is kitchen and household goods.
Alex Urosevic for National PostDavid Hicks, senior vice-president of Dealer Relations and Store Support for Canadian Tire talks to Keia Johansson, a Canadian Tire employee during tour of Canadian Tire's first small urban store in Toronto, on 607 Danforth Ave near Pape, July 31, 2013.
The move comes as the mature retailer has fewer opportunities for organic growth with new large stores in its network.
“In big-box hardware there are many slow-moving items that are a draw for people to look at, but they are in low demand and can be culled down quite significantly,” said Ed Strapagiel, a Toronto-based retail consultant.
“There used to be corner hardware stores everywhere and the format is still quite viable. If the assortment is sharp and well-tuned to the available market, they could do very well.”
Canadian Tires will match its flyer sale prices at the Express stores, but Emily Salsbury, a retail strategist the University of Alberta’s School of Retailing in Edmonton, said the market could get competitive quickly as rivals move into high-rent urban areas and could result in fierce price competition.
“As more stores explore this strategy, it will come down to price,” for consumers, she said.