Canadian Tire going small in fight against Target

You have to wonder what a good retail consultant earns these days, as someone is surely making some nice dollars advising Canadian Tire.

The iconic national chain is returning to a strategy it decidedly dumped five years ago, when it decided that smaller-sized stores left it vulnerable to the likes of Wal-Mart and Home Depot, American behemoths that could offer everything under the sun, at scale, with parking.

Yesterday, Canadian Tire told the Globe and Mail it was going to trial a new concept - a focus on smaller stores in city centres, acknowledging it needed a new strategy to rival old foes and new entrants like Target.

As a new concept always sounds better than an old idea, no reference was made to neighbourhood outlets like the one in Ottawa that was shuttered in 2008 after 56 years in business. It was seen as such a significant event in the community that the Ottawa Citizen interviewed area residents who had grown up browsing its aisles.

Ironically, only a year earlier, much fanfare was made by the company when it opened smaller stores in smaller markets, saying that it wanted to test the potential of one-stop shopping experiences in rural locations. Mike Arnett, president of Canadian Tire Retail at the time, said in a press release “We have identified approximately 100 communities across Canada that we believe to be potential sites for this concept.”

The release went on to state that the new stores would replace the more traditional outlets, presumably like the Ottawa shop.

So what happened? In short, Wal-Mart began opening Supercentres across Canada, each one averaging 90,000 square feet, or roughly seven times the size of the new Canadian Tire format. And while it’s one thing getting clobbered by the discount giant, God knows it’s happened to most, it’s another thing to be zigging when the most successful retailer ever is zagging.

It’s far safer, from a career survival if not a profit perspective, to stay big box in the burbs, roll out the petunias, charcoal, and goalie gear (don’t worry too much about staffing the place), set up a four-bay service centre and pray the logo out front pulls in the minivans.

That’s worked well enough for the past few years, keeping Canadian Tire in the top 20 of best Canadian brands.

But as Target rolls into town, and Wal-Mart kicking the tires on its own small-store strategy, relying on the sprawling suburban shops to drive sales is no longer sufficient. Or at least, it’s not much of an answer for the execs when the board asks them for their five-year-plan.

So forget for a moment mega-stores, and never mind the rural markets, the future now is downtown, and at the mall. The new ‘express’ stores will be approximately 10,000 feet, a format that has performed well for Canadian Tire in recent years, the Globe reported.

Of course, with downtown space and mall locations comes much higher rents, up to 60 per cent higher, according to the newspaper. That means if condo dwellers and teenage mall rats don’t start snapping up garden hoses and briquette sets, it will be back to the burbs for this beloved brand.