Canadian Tire – dull, dependable, nice

Image from Canadian Tire FB page

When visiting a number of Canadian Tire stores in British Columbia and the Yukon in September last year I wasn’t exactly blown away by their very basic presentation. But they’re a growing $12.6 billion (2016) top-10 Canadian retail behemoth, with a Toronto Stock Exchange share price of $152 and a shareholder return of 286 per cent in the past five years, so they must be doing something right.

I was curious to know what it was.

Turns out it’s a couple of key things, not least of which is they are not a traditional department store. They are closer to being a Supercheap Auto, Bunnings, BCF, Rebel Sport and Harvey Norman rolled into one.

Canadian Tire’s closest competitors are probably Walmart and department store Hudson’s Bay. Formerly they would have contended with Target, but it’s been defunct in Canada since 2015, and Canadian Tire took over 12 of its locations.

Neither Target nor Kmart could cut it in Canada (although in fairness Canadian Tire had two unsuccessful forays into the US in the 1980s and 1990s). But once you understand the history of Canadian Tire and its ranging policies the picture becomes clearer.

A nearly 100-year old company – and thus a Canadian fixture for some four generations – Canadian Tire started in 1922 as a tire and garage company, and within a few years expanded into other related categories. It executed its first mail order catalogue just four years later in 1926. In 1958 it launched Canada’s first loyalty program, originally known as Gas Bonus Coupons, and then more famously as Canadian Tire Money.

The 1990s onwards saw a series of acquisitions and now the conglomerate boasts 1800 stores, 500 which are branded Canadian Tire and the others a series of brands covering apparel and sportswear (Marks, Helly Hansen), sporting goods (FGL group), auto parts (Partsource), and petrol stations.

Canadian Tire also offer branded financial services, including credit cards, and roadside assistance services.

The great (freezing) outdoors

Canada bills itself as one of the world’s largest outdoor playgrounds, but it has some very extreme weather. So what you find in-store is an exhaustive range of outdoor-living equipment, including hunting and camping equipment, hiking gear, bikes, fishing stuff, winter sports gear, wagons and ride-ons, skateboards and scooters, paintball, toys and games and an entire section of equipment for Canada’s national religion, ice hockey.

Given their auto heritage the auto category is likewise extensive with 16 categories, including

snowmobiles, power sports, and trailers/towing. Certain brands are manufactured specifically for Canadian Tire, including Mastercraft Tools, SuperCycle bikes, BluePlanet, Motomaster, NOMA.

Although there is a catalogue of deals available at the front of store, Canadian Tire focuses on their range and an everyday pricing strategy rather than being a low-cost discounter.

A national crypto-currency

Around 1960, CTM was extended to the retail operations and was an immediate success. The coupons resemble real banknotes and are used as scrip in Canadian Tire stores. Culturally they’re a sort of Monopoly Money – everyone has had some at one time or another – and denominations include 5¢, 10¢, 25¢, 50¢, $1 and $2 – plus a $1 coin manufactured by the Royal Canadian Mint.

Originally worth 5 per cent of the purchase price, now 0.4 per cent, CTM “gives back” more than C$100 million to customers annually.

CTM can be used in-store for purchases and/or to cover sales tax. It is accepted by multiple retailers, even some outside of the Canadian Tire Group because small business owners shop at Canadian Tire anyway (although there are ongoing sales tax issues with retailers outside of CT accepting CTM).

In April 2018, Canadian Tire announced a shift to a card-based program, Triangle Rewards. The new plastic loyalty card earns points at twice the rate of paper money to encourage switch. Given the Canadians’ preference for cash over cards, it will be interesting to see how this goes.

No frills, no fuss

Canadian Tire started its online operation in 2000 but interestingly discontinued it in 2009. They reinstated click and collect in late 2013.

The average store is very basic in terms of layout and display, although in 2015 it opened across two floors at South Edmonton Common, incorporating interactive experiences including a driving simulator and VR, and a rotating exhibit of Hockey Canada memorabilia. But this remains an exception.

Canadian Tire is part of the fabric of Canadian life, the way Walmart is in the US, and a success story based on range, dependability and loyalty programs.

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