Canadian Tire, IKEA rate highest up north - Brief Article

DSN Retailing Today, August 7, 2000 by Jim Fox

TORONTO -- Canadian Tire Corp. is the "most shopped" retailer in Canada, while IKEA is the chain that people will drive the greatest distance to visit, a national marketing study shows.

Due in part to its sheer number of outlets, Canadian Tire, Canada's largest hard goods retailer with 430 stores, is at the top of the Major Market Retail Report 2000.

The study, by Kubas Consultants, a Toronto-based market research and consulting company, showed Canadian Tire attracted "nearly 90% of consumers" in the past 12 months.

If location was factored out, London Drugs, based in British Columbia, is the "most effective retailer at bringing consumers in from the trade areas their stores actually serve," said study director Ed Strapagiel, senior vp of Kubas.

Again this year, IKEA furniture stores remain the top destination retailer, with shoppers willing to travel an average of 21 minutes to get to the outlets, the longest amount of time of any other retailer, the study found.

The Quebec-based Jean Coutu drug store chain was the top retailer on the "frequency ratio a new success measure in the study.

"This is the proportion of a retailer's total customer traffic who shop the store often or on a regular basis," Strapagiel said. "Higher frequency means higher sales, all other things [being] equal," he added.

Overall, Chapters bookstore chain received the highest average score among the 130 retailers rated by consumers in the study.

Consumers said Chapters is best for store layout and decor, variety and selection and merchandise quality; while Rona home improvement stores were rated best for customer service; and Costco/Price Club for value for money.

The top ten overall performers in order were: Chapters, Reno Depot, Rona, Home Depot, the Body Shop, Indigo Books, HMV, Jean Coutu, Pharmaprix and London Drugs.

The study is based on a major consumer survey conducted on retail shopping habits and store preferences in Canada's six largest markets -- Vancouver, Edmonton, Calgary, Toronto, Ottawa and Montreal -- that account for 48 percent of all retail sales in the country.

Kubas predicted retail sales in Canada will increase by 4.6 percent this year over 1999, to a total of C$272.5 billion (US$185.3 billion) That's down from 5.8 percent higher in last year's study.

"With inflation running at around two percent, retail sales growth in real terms will be about 2.5 percent for the year, a respectable gain by any standard," Strapagiel said.

About half the real growth will be due simply to population increase, he said, noting "the other half represents real increases in retail spending by consumers, a reflection of a better economy and lower unemployment."

The study also found that consumer confidence is up, with 58 percent of those surveyed now saying the overall economy is getting better, up from 46 percent last year.

"In fact, the number saying things are getting better is at the highest level since the MMRR study was started in 1994," Strapagiel said.

The demise through bankruptcy last year of the legendary T. Eaton Co. Ltd. department store chain benefited in sending former Eaton's shoppers to other stores, particularly The Bay, a division of Hudson's Bay Co.

Other retailers were also helped, depending on the product category, Strapagiel said, noting that shopping at almost all women's wear stores is up compared to last year.

Sears Canada Inc. bought the Eaton's banner and will reopen seven of the reformatted stores in the fall.

The study turned thumbs down on e-tailing, even though the number of people who have bought something on line increased by nearly 50 percent, "but this is a much lower gain compared to the year before," he said.

"There's the impression that shopping on line is burning the house down, but it isn't," Strapagiel said, noting that "even those who shop on line may not rate the experience highly."

As compared with most "bricks-and-mortar stores," shopping on line usually had significantly lower results on the loyalty ratio of the study, which is the proportion of shoppers who said it was how they shop or what they prefer most for the study's 31 product categories.

The top five categories for e-tailing are computers and home office products; music and video; electronics; personal care products; and books and magazines.

About 15 percent of the adults surveyed had made an on-line purchase, with most having done so in the last 12 months. A further 10 percent had shopped on line but didn't make an actual purchase.

The report, as well, named poor performers including Bi-Way discount stores, owned by Dylex Ltd., which rated poorly in almost all categories except value for money. Others were Best Value, a variety store chain owned by Zellers Inc., a Hudson's Bay discounter; Stitches, which sells low-end jeans; and Work World, a clothing chain.

Receiving honorable mentions for "doing a good job" in specific categories were: A&B Sound, Birks, the Body Shop, Brault & Martineau, Business Depot, Costco/Price Club, Disney Store, Eddie Bauer, Gap, HMV, Home Depot, IKEA, Indigo, Jean Coutu, La Senza, Laura/Laura II/Laura Petites, London Drugs, Marks Work Wearhouse, Michaels, Moores, Pharmaprix, Reno Depot, Rona, Sears, Shoppers Drug Mart, Sport Chek, Toys 'R' Us, and Wal-Mart.