Canadian Tire spending $3.4-billion over four years to expand products, bolster operations
Canadian Tire Corp. Ltd. CTC-T unchno change will spend $3.4-billion over the next four years to improve its e-commerce operations, launch thousands of products, expand its loyalty program and improve its supply-chain efficiency.
The Toronto-based retailer unveiled its growth strategy on Thursday, setting a goal to expand comparable sales by 4 per cent on average annually, not including fuel sales at its gas stations.
A major part of Canadian Tire’s planned investment is a $2.2-billion plan to build its digital operations. Of that, more than half will go toward stepping up digital services connected to its physical stores, including speeding up curbside pickup operations, rolling out lockers for automated pickup, and creating “connected stores” with digital appointments and more mobile-app features to help customers find what they are looking for.
“We made the strategic decision to have the core of our e-commerce strategy flow through the store,” chief executive officer Greg Hicks said in an interview Thursday, adding that the pandemic helped to demonstrate the appeal of click-and-collect pickups for online orders.
Relative to big pure-play e-commerce companies, “that’s where we were squarely advantaged,” he said.
The retailer also offers home delivery, the volume of which is now five times larger than it was in 2019.
“This is a big portion of the way we go to market in e-commerce, but it’s not really the way we’re going to differentiate. … Where we’re really advantaged is those touch-and-feel and need-it-now categories,” Mr. Hicks said, referring to the kinds of products that customers come to stores for, either because they want to see them before buying or do not want to wait for delivery.
Another $675-million of the investment will go toward improving the company’s supply chain. Canadian Tire will be adding 1.6 million square feet of warehouse space, will open a 1.3-million-square-foot facility dedicated to e-commerce fulfilment in the Greater Toronto Area and will introduce robotics into distribution centres to improve efficiency.
A big part of the investment in digital operations includes expanding the retailer’s Triangle Rewards loyalty program to encourage more repeat visits by shoppers. Canadian Tire wants to boost purchases by loyalty members – who tend to spend more – to 63 per cent of sales, from 58 per cent now.
The company has been testing an annual-fee-based program called Triangle Select that it will launch nationally this year. In exchange for the $89 fee, the program provides perks such as more Canadian Tire Money on purchases, and is designed to encourage shoppers to buy its more profitable private-label brands by attaching more attractive points offers to them.
The program will also help the company to send more personalized advertising to members, and to market its financial services business by encouraging customers to “stack” their membership with rewards from its credit cards.
Canadian Tire also plans to expand its private-label product lineup, which already draws $5.7-billion in annual retail sales with brands including Mastercraft, Paderno, Noma and Denver Hayes. The company plans to launch more than 12,000 products by 2025 across all its store chains, including Canadian Tire, Mark’s and Sport Chek.
The company’s goal is to expand its private-label brands to 43 per cent from 38 per cent of sales currently. The company’s outerwear brand, Helly Hansen, aims to triple its business in Canada and expand market share in international markets.
The significant investment in private-label brands gives Canadian Tire more visibility into supply-chain issues than some other retailers, because it works so closely with manufacturers.
Mr. Hicks added that some categories – such as those with raw materials containing oil-based products or steel – are affected more than others.
“Categories where there’s no inflation, maybe that’s where we can lean into a little bit more value for the customer,” he said. “… But inflation is real. And we for sure are going to have to pass some of it on to the customer.”