Canadian Tire’s baffling strategy to sell you everything

It breaks every marketing rule, but it’s paying off

by Chris Sorensen

So wrong that it's right

Colin O'Connor/Maclean's

The Canadian Tire store on Yonge Street at Davenport Road in downtown Toronto—a few blocks from where brothers John and Alfred Billes opened their first store in 1922, and the location that became the main Canadian Tire store in 1937 (complete with roller-skating stock boys)—is not a very welcoming place these days. Prospective shoppers are greeted by a queue of frazzled-looking customers clutching humidifiers and extension cords at the service counter. They must then negotiate a pair of waist-high turnstiles before browsing aisle after cluttered aisle of merchandise as varied as Canada’s seasons: kitchen utensils, vacuum cleaners, caulking guns, drill bits and sprinkler attachments. Upstairs there’s hockey gear, camp stoves, some toys and cans of tennis balls. Downstairs, auto parts, oil-slicked service bays and, finally, a wall of all-season tires.

Newer stores, located in towns and cities across the country, are brighter and more airy, but largely house the same eclectic inventory—none of it particularly cheap and none of it terribly aspirational either. Customer service, meanwhile, varies wildly from store to store, the result of the company’s independent—and bureaucratic—dealer ownership model.

It all seems like a recipe for retail disaster, particularly as an army of well-oiled U.S. big box chains—Wal-Mart, Home Depot and soon Target—continue their relentless march north of the border. Yet somehow, Canadian Tire remains standing, earning profits of $453 million on $10.3 billion in retail sales last year, which was up three per cent from a year earlier (Canadian Tire Corporation Ltd. also makes money through a banking operation, Canadian Tire Financial Services). “People have been calling for Canadian Tire to fold under the pressure of new competitors for 20 years, and it hasn’t happened yet,” says Jim Danahy, the chief executive of CustomerLAB, a retail consulting firm. “They seem to have a unique relationship with their customers.”

What’s the secret? Retail experts say it’s a mixture of familiarity and convenience coupled with a methodical approach. “It’s bad in theory and great in practice,” Danahy says half-jokingly. “I don’t think any business school could design the Canadian Tire model.” Of course, that doesn’t mean the road ahead is bare and dry. After years of grappling with flat sales and a questionable effort to try to attract more women to its stores, CEO Stephen Wetmore, a former Bell executive, is taking steps to refocus the 89-year-old chain on auto parts, tools, home supplies and sporting goods as competition mounts. “We’ve done our research and we know where we would like to be,” he said during a recent investor conference in Toronto. Just don’t confuse that with the promise of a sexy shopping experience.

Under Wetmore’s guidance, change has been coming fast and furious at Canadian Tire’s 487 stores (at least by the company’s notoriously glacial standards). Earlier this month, the company relaunched its online store after executives pulled the plug on a previous attempt in 2009—an experiment that Wetmore recently described as ill-conceived. “We had set it up to be home delivery, but we didn’t isolate it to the products that made sense,” he said. “You’re not going to deliver a canoe online to someone’s home without incurring a lot of cost.” So what will Canadian Tire be selling on its website this time around? “A selection of over 7,000 tires and wheels,” according to Wetmore. But they will have to be picked up at Canadian Tire stores, where many will presumably also be installed. It turns out that Canadians are increasingly buying their tires online through U.S.-based websites that have them shipped to local mechanics. Wetmore said the company was “frightened” to discover that “tens of millions of dollars” were flowing to these online outfits. Other products will be added to the website later.

It’s all part of a renewed emphasis on Canadian Tire’s automotive roots, as surveys show its reputation among consumers in the category slipping well behind competitors. Beginning this month, Canadian Tire is also planning to open a handful of automotive concept stores that will feature drive-in reception areas, express oil and lube services and auto detailing. Canadian Tire also owns 87 specialty automotive PartSource stores.

Tweaks are coming to other departments, too. Just last week, Canadian Tire said it would start offering its customers home installation services for garage door openers, which is to be followed by central vacuum installations and heating and cooling systems. And, earlier this year, Canadian Tire said it would begin selling major appliances like refrigerators, washers and dryers alongside its usual selection of toasters and coffee makers. It’s a $3-billion-a-year market in Canada that’s currently dominated by the big home improvement chains like Lowe’s and Home Depot. It’s not yet clear, however, whether Canadian Tire, with a rather limited inventory and a staff that aren’t generally known for their customer service, will be able to convince its customers to cart away such big-ticket items.

But that may be beside the point. “They’re not making a lot of money on these appliances,” Danahy says. “They’re simply hoping to give you one more reason to come in.”

By far, the biggest move this year was Canadian Tire’s $771-million purchase of sports retailer Forzani Group Ltd., which solidified the company’s position in the sporting goods market while giving it a pipeline to a younger demographic of Canadians who are more likely to shop at malls. The company continues to function as a stand-alone operation, running Sport Chek, Sport Mart and Athletes World stores.

Yet even with all of the bold moves, some say Canadian Tire is bound to be hurt when “cheap chic” retailer Target arrives next year. The chain bought 220 Zellers stores, many of which it plans to convert into Target locations. “Where Canadian Tire is at risk is that they are often very close to a Zellers,” says Mark Satov, the founder of Toronto’s Satov Consultants. “And they still have quite a selection of small appliances, housewares and cleaning products”—categories where Target excels. Wetmore, however, has said that Canadian Tire, which posted a five per cent increase in sales in the second quarter of this year, is confident in its lineup of household products. “What Canadian Tire has to do [better] is awareness,” he said. “We lead the market in many categories, and yet the average Canadian is not as well aware of our leading position in the market as we would like.”

But making Canadian Tire “top of mind” for consumers for things other than automotive, tools or sporting goods has never been a straightforward proposition, as evidenced by those old 1980s commercials that reminded Canadians, “There is a lot more to Canadian Tire than just tires.” “It’s always part of the challenge when you’ve got the word ‘tire’ built into your name,” acknowledges Duncan Reith, the senior vice-president of merchandising for Canadian Tire retail. “But we’ve made progress over the years. If you look at the balance between men and women, it’s now pretty much even.”

At the same time, Canadian Tire needs to be careful it doesn’t stray too far from its bread and butter. Danahy says that means being a store where Canadians can buy the items on their household to-do lists. “Their customers did not accept them as a major home decor player,” Danahy says. “They accept them as good for paint, good for small appliances, the most basic of lamps and cheap furniture.” He likens Canadian Tire’s business model to a drugstore’s, with its racks of impulse purchase items, but for dads. They go in to buy a doorknob and walk out with a new winter driving mat and a pair of shears. He also argues that Canadian Tire has managed to find a sweet spot in the do-it-yourself market that exists just below Home Depot (where you might go if you’re refinishing the bathroom) and the local hardware store. “They are a DIY retailer, but for very small day projects,” Danahy says. “Instead of building the deck, Canadian Tire is going to sell you the high-pressure washer to clean the deck.”

If it sounds like a chain that’s trying to appeal to everybody simultaneously—usually a bad business strategy—that’s because it is. “We’ve built a unique proposition at Canadian Tire that is not only unique in Canada, but is unique in the world,” Reith says. “All Canadians visit our store at least once a year.”

Canadian Tire will need to stay on its toes as its territory is further invaded by big U.S. retailers. But despite its sometimes ungainly appearance, there’s no reason to think the inverted orange triangle and green maple leaf will disappear from the Canadian landscape anytime soon. It may never be a chic proposition. But neither is weatherproofing windows or fixing a clogged toilet.




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Canadian Tire’s baffling strategy to sell you everything

  1. I prefer Canadian Tire and Home Depot because of their websites, you can find out the price and which local stores have it in stock. Then go get it from whoever has it cheaper.

    Home Hardware and Walmart take forever to find anything on their sites.

    But the worst are Zellers and Lowes, their products and store stock are a total mystery because all they show online is this weeks flyer.

    • I prefer anything but Canadian Tire – their prices are the high, much of their inventory is bizarre off-brands, and their selection in any given department (aside from automotive) is abysmal.

  2. The answer to their long survival rate: They “feel” Canadian…….they “feel” local…….they “feel” safe…..and more than anything: hubby will come shop with you…….:)…….A trip to Canadian Tire is a whole family day out shopping……..a tradition that goes back a long ways in most middle aged Canadian memories: its part of our heritage!……..that is much more than price and convenience.

  3. As consumers, we are, unfortunately, a captive market. From low end Walmart to middle of the road Canadian Tire to Sears and The Bay, everyday appliances from Toasters, Irons and Coffee Makers are defective junk from China.  Personally, I’m sick of it.  In recent months, I have returned an Iron to Canadian Tire that emitted smoke and then shorted out on first use, a Ppresident’s Choice Toaster to Loblaw that burnt the toast on the bottom only and a second Toaster to Sears because only half the toasting filaments lit up. A couple of years ago, I bought 2 Martha Stewart brand table lamps, also manufactured in China, each of which lasted only one year, before the cup that you place the bulb in burnt out.  I’m tired of returning defective merchandise.  Even if you are prepared to pay more money and move to higher end brands, it’s all manufactured in China.  

    • “As consumers, we are, unfortunately, a captive market”

      Tautology, meet self-reference.

    • You’re free to buy $300 toasters made in Europe, but you won’t. They’re too expensive. Make up your damned mind.

      • If the Chinese manufacturers used the same quality materials the Europeans do then that toaster might cost an extra $10. I’d be more than willing to pay that much extra. The labour costs would remain the same. That’s the problem. If you want anything useful your choice is a piece of crap for $30 or something excellent for ten times the price. It’s just bullshyte either way.

        • That’s utter nonsense. Europeans are paid orders of magnitude more than the Chinese. And China is capable of producing high quality products, if consumers are willing to pay for it.

  4. CT’s success certainly is an enigma.Shoddy Chinese products,non existant sales items,surly service and now unbelieveably a new customer home installation service with tradesmen who will probably be failed deck builders /home renovators or commuting from mainland China.I refuse to shop there the day I witnessed a sale associate put a defective product I had returned back on the shelf.10.3 billion in sales is unbelieveable.

  5. This piece totally ignored Canadian Tire Money. Surely there’s something about it– above & beyond the success of other loyalty reward programmes– that keep people coming back. I’m a sucker for saving up my CT bucks– they “look and feel” like bills after all– and even when I’ve made a purchase using 2 years worth of what are essentially discount coupons, I “feel” like I’ve got something free. AND THEN, even on that kind of purchase, you get yet more CT Money back to start the bug of saving it again. In practice I’m being manipulated but whatevs, you’ve got to shop somewhere. Other retail loyalty rewards don’t hook me in at all in this way. I know I’m not alone.

    • I think the great thing about CT “money” is how you KNOW how much you have to spend/redeem. There is no point conversion rate or scale to muddy the waters.
      I would like other reward systems to follow their lead.

      • Excellent point, never thought about that comparison before. Other reward programmes instantly make me skeptical that I’ll actually get anything out of it. 

    • Canadian Tire money actually turned out to be the “last straw” for me a few years ago. After selling me a string of defective products, including bad paint that was nearly impossible to cover and, finally, a ceiling fan that took two hours to install and worked for less than half an hour, I brought back said ceiling fan to the store and ended up dealing with the same manager I’d dealt with for several prior returns.

      It took some doing to even get her to agree to a return; when she did, she gave me back my money – less the value of the CT money they’d given me when I made the purchase (and which I’d dropped in their donation bin by the door).

      This was the fourth time I’d returned defective merchandise in a month - often material that I’d had to expend a deal of energy to try to use and which required extra expenditure and energy to undo the damage caused by the defective merch; this manager was well aware of all these issues; and her idea of customer service was to nickel and dime me over the CT money! At that point, frankly, I lost it. I’ve never yelled at anyone like that before or since.

      She banned me from the store – but that was rather a moot point, as I swore I’d never return. That was quite a few years ago, and I can count on one hand the number of times I’ve made a purchase from CT since (and those only when I could not find the item elsewhere).

      I used to be a big fan of the Tire, and even worked there summers when in university – but poor quality merchandise and extremely poor customer service has forever cost them the thousands per year I used to spend there.

      • Likewise. I used to spend thousands there every year but gave up after terrible customer service. Home Depot just lets you return everything no questions asked. At CT you have to fight for every penny. It’s not worth it. I rarely go there no and only out of desperation when I do. Their stuff is crap but sometimes crap is good enough.

  6. They Own the camping market.

    • Their success is based equally upon who they “are’ and who they are “not”……..a) they arent outsiders trying to sell Non Canadian values……… b) they ARE  part of the Canadian lifetsyle shopping heritage………..Every kid in every town grew up with one of those stores around the corner ………..you might well have known  the managers family………..your first bike likely came from there….your parents got their outside Christmas decorations there……….If CTC remembers that focus:..Stay Canadian…..Provide a Canadian shopping experience: sell solid products at fair prices Canadians are willing to part money for..they wont be losing share anytime soon to the faceless newcomers…….

  7. What about Canadian Tire’s rural presence?

    I always figured they had such an eclectic array of products to service the rural customers. I mean away from the larger cites there was always either a Home Hardware or Canadian Tire.
    I don’t think I’d go to Canadian Tire to buy a TV or DVD player, but if they were the only store selling them around where I lived, well, I’d be happy the carried them!

  8. As a consumer, we all regard ourselves as retail experts, wise to the ways of The Tire and Lowes and WalMart and Home Depot.  Well let me share this wee little tidbit of wisdom.  Canadian Tire knows what it is like to be Canadian.  They always have and always will. 

    Transplanted US retailers know how to export a sexy, new American experience, whose fancy only lasts so long.  So far, none  of them have come to understand Canadians as well as The Tire. I doubt they ever will.   

    • Value, convenience and customer service have no nationality. Failing on all three and hiding behind blustery patriotism won’t work forever.

      Also, knock it off, obvious paid CT shill.

      • You may benefit from doing a little research into attitudinal loyalty.  You might learn something about the power of emotional attachment over the simple retailing basics you mentioned.  Is everyone who has a different opinion than yours a CT shill?

        • No, but you clearly are. How much does it pay to sockpuppet for them?

    • Here’s a secret: the import chains’ Canadian operations are mostly run by Canadians.

  9. Force of habit.

  10. Random thoughts about Canadian Tire:

    1. Canadian Tire Money used to mean something — a significant percentage of a cash purchase came right back at you at the register.  Now? Pfffft.  Less than one percent, why do I even bother.  And yet, bother I do.  I consistently pay by cash or debit at CT for the stupid little five-cents in funny money, even though I am now charging for groceries.

    2. Customer service?  Ha!  Here’s a test anyone can try out.  Make the mistake of walking into one of these joints with a short-sleeved red polo shirt, and count the number of desperate customers latching on to you, the endangered species employee decoy, for any bit of wisdom you can share on latex paint, windshield wiper blades and where the rainboot aisle is.

    3. It may no longer be true, but it is probably still pretty close: I can recall some factoid a decade or so ago that a huge percentage of the Canadian population lived within a short drive of a Canadian Tire store.  I have the sense that this remains a major contributor to their success.  You know the kind of stuff they stock, and you know where to find them.  Misplaced your screwdriver, need two more lawn chairs for the BBQ you’re hosting tomorrow, the boy needs hockey tape NOW… it’s almost like a dash to the corner store.

    4. When all the retail flyers get dumped on the stoop mid-week, I invariably reach for the “middle-aged suburban dad porn” CT flyer first.  I will never buy an acetylene torch.  The six different pre-charged car battery jumpers are fun to look at, but let’s face it, the CAA truck will be there in half an hour anyways.  But it’s fun to look at.  And I eagerly wait to see what insanely overpriced dumb item just became must-have because it’s 80% off this week.  A bag of bungee cords, regular thirty-five bucks, for 12.99?  Sold!

    5. “We lead the market in many categories, and yet the average Canadian is not as well aware of our leading position in the market as we would like.”  Does it take an MBA for that sentence to make any sense?  Everyone comes here, we eat the competition for lunch, but we need to find a way to let everyone know that everyone comes here.  Duh.  I KNOW everyone is there.  They’re all in front of me at Cash Number Four!  Open up some more registers, wouldja?

    • If you don’t have enough frustration in your life,  and have too much time on your hands, go there to get a can of paint mixed. 

  11. This piece also missed the most bizarre category they have tried: groceries and fresh food. They piloted it at a few stores, much to my scepticism. Who wants to buy bread or cheese at a store that smells of vulcanized rubber?

  12. I like that they’re the “one stop does it all” store.  Small home fix’er up projects, and some other items I don’t wan’t to fight traffic all day looking for.  Might not have the best prices or selection, but it’s worth it for me not to have to drive around and hunt.

  13. A few years ago, in Chilliwack B.C., I bought a can of chocolate nuts, when I got home I found the chocolate melted of the nuts. The next day with receipt in hand I asked for the $3 back, I was asked for a pictured ID like a DL., the cashier started to put my personal information in her cash-computer-register, I stopped her right away as with all the unattended cash-computers in this store alone my personal information would not be save.In B.C it is illegal to sell any thing defective yet she would not return my $3 with out this info. At the end I e-mailed planters and they send me a coupon.

    • Wow, you’re nuts about nuts!

  14. I used to buy a lot of tools at CTC, as the sale prices made it worthwhile, but not anymore.  Every tool I have bought there in the last 5 years has been absolute garbage.  I will never buy another Mastercrap tool again.  People always say “but they have such a good warranty”.  No, a good warranty does not force you to accept a defective piece of Chinese garbage as replacement for your first piece of Chinese garbage.

    Here’s my experience:

    Sliding compound mitre saw:
    - Laser stopped working after second use
    - dust collection port broke within a month
    - preset angle detents out by at least 1/2 degree (that’s a lot when you’re doing trim work)
    - blade guard mechanism broke and had to be removed after about a year

    Air nailers (bought four at once):
    - these are just general pieces of crap that won’t work unless you oil them 6 times day

    Drill press:
    - strike point of drill when plunged into workpiece varies by about 2 mm from stroke to stroke

    Snap ring pliers – garbage, wait until UAP opens on Monday morning!

    As for the service, I think one of their interview questions when hiring new staff must be “Do you like helping people?”, and then if the applicant says “yes”, they are screened out.  It cannot be by sheer coincidence that an entire workforce over several stores turns the other way when they see a customer who is obviously looking for something.

  15. You would like to look at something behind locked display case? Be prepared to wait and don’t ask too many questions. 

    Don’t get too frustrated if you can’t find your item. It is there, they just keep changing displays all the time. $CT? Measly 1.7%. I used to buy gasoline there and save CT money. When I saved a bundle,  I would buy some tool that was too expensive otherwise. At 1.7% it is hardly worth saving. I will now go and check WalMart [far better service] or Home Depo. 
    Canadian Tire lost a loyal and faithful cutomer.

  16. If you want to draw more women to Canadian Tire, then market Reasonable women’s clothing.  I mean reasonable styling, good fit, pockets, quality material and hopefully made in Canada or Fair Trade abroad:  sweatshirts, warm sports clothing, warm underwear that fits, non-microfiber materials but wool, cotton and reasonable blends thereof.  I can find none of the above listed in any store I am able to get to (sans car, sans bus, too far to walk).   FYI, so-called “high fashion” is uncomfortable, unhealthy and ugly.

  17. I find it odd that my local CT now stocks milk and eggs and bread and butter and frozen foods, etc.

  18. As a former employee who worked in the automotive parts department I have a strong opinion on why CTC has gone off the rails.  I was one of a small minority of parts counter people who had a clue about the parts we were selling.  The department employed far too many inexperienced, underpaid, unmotivated, young people who had few skills in customer service.  Their strength?  They worked cheap.  All departments were understaffed and the warehouse was a complete shambles where no one could find any of the four hundred widgets the computer showed in stock.  I pointed out to the dept. manager and later his manager that we were receiving a particular car battery that was being warrantied at an alarming rate.  I checked new stock arriving and found almost the whole shipment to be defective (not reaching spec).  I was told to sell them and they would be covered by warranty.  Now, after you have been left stranded and paying for a service call two weeks after buying your new battery, getting another piece of crap, that would shortly fail, is little consolation.  After selling a set of four tires it was far too common to discover, after searching in vain for half an hour, that only two or three were in stock.  Anyone pointing out problems was a trouble maker.  Only people who did not make waves were promoted.  When straying from the auto dept. I would be immediately surrounded by customers who could not get help and were pissed (rightly so) that I couldn’t tell them anything about a vacuum cleaner or blender on sale or where the economy size Tide was located.  Sadly, I find customer service at CT on about par with WalMart, so I don’t shop at either of them.
    Edit: @ Kathtyn Lew. Don’t shop for womens fashion at Canadian TIRE.

    • True enogugh. I am boycotting CY after they sold me a defective car battery. I returned it, a process that took about 3 hours (really). That battery failed after a couple of months. THen they wouldn’t replace that one for free because the first year free replacement portion of the warrantee had passed. I told them it it should be backdated to when they gave me the first replacement but that fell on deaf ears. I spent another 3 hours in there and finally walked out without my battery, vowing never to return. I got a great battery at a real Tire store. Buy your stuff someplace that doesn’t give you endless hassle when you return them. Costco is really good for returns. Also Home Depot.

  19. Yes, agreed – and watch Canadian Tire charging HST on food products (not allowed) in Ontario, but they do it!

  20. There’s one major reason Can-Tire stays profitable even when competing against the big box stores, and it’s this: A Canadian Tire can still be found in the city centre. There’s a store located in the heart of many Ontario (at least) cities that can be accessed by a quick walk or one bus, or a bike ride, where its competing chains you need a car to browse at. In my current city of Toronto (as well as my hometown of Hamilton) I can think of two to three Candian Tires I can bike to in 10 minutes or so, but I have no idea where a Home Depot or Lowe’s would be from downtown.

  21. canadian tier all the way, never will go to target, it like the next walmart or someting.

  22. Canadian Tire in my view is on a slipery slope I recently made the mistake of bying tires there it took over a month for them to arive at the store .we are talking regular tires here for my 4 runner nothing fancy and when I phoned for an appointment to get them installed I was told next Wednesday
    seven days if I had not paid for them already I would have cancelled and gone to Costco

                   Really Pissed John

  23. “there’s no reason to think the inverted orange triangle and green maple leaf will disappear from the Canadian landscape anytime soon”

    check the logo it’s a RED triangle not orange just like the Canadian flag

  24. Car parts Rock Auto USA .Car tires USA. Tools Princess Auto. Canadian Tire is overpriced and selection is not that great. ie. Only when they have tools at 50% to 70% is it worthwhile. Fed up with Canadian pricing ! IE Needed upstream O2 sensor for Subaru ,dealer $321.00 ,Canadian Tire $165.00 but not original equip,Rock Auto $106.00 (same as dealer) cdn plus $20 shipping . Guess where I purchased.

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