Canadian Tire focuses on 20/20 format - marketing concept - Company Profile

DSN Retailing Today, Jan 26, 2004 by Mike Duff

TORONTO -- Four new concept stores developed by Canadian Tire will showcase not only fresh merchandise and merchandising but the venerable retailer's focus on key products that differentiate it from rival retailers. Also key to the test format, dubbed Concept 20/20, is the expansion of merchandising approaches and goods that will enhance the chain's appeal to women.

Canadian Tire is building its store initiative on recent success. The company boosted its fiscal 2003 earnings forecast (in Canadian dollars) in mid-December, restating it as $2.95 to $3, as opposed to the earlier prediction of $2.80 to $2.85, and versus $2.56 per diluted share in fiscal 2002 on $5.94 billion in sales. Although it has several businesses, including gas stations and the Mark's Work Warehouse chain, Canadian Tire retail, the division that services that chain's mostly franchised broadline stores, contributed to the decision to raise the earnings estimate. It generated higher product shipments to stores, which enjoyed strong overall retail sales and positive consumer response to holiday merchandising and promotional programs through the first half of the holiday season.

Three initiatives have been important as Canadian Tire has advanced its retail business, said David Roussy, senior vp of marketing for Canadian Tire retail. The first is the addition of new and exciting products that help maintain the chain's unique position in relation to broadliners and specialty stores. With a focus on four core departments--automotive, hardware, sporting goods and home decor--Canadian Tire has won acceptance as a store that can satisfy multiple needs but remain as deep in its areas of concentration as big-box specialists. Second is the development of "inspiring events and promotions," said Roussy, most of which are seasonally oriented. Finally, Canadian Tire has been developing "impactful" merchandise to generate more excitement among consumers. "When you add those three things together, it's a great way to differentiate ourselves," he said.

Canadian Tire initiatives, which might be summed up an effort to reemphasize the relationship between the retailer and its customers, are evident in Canadian Tire's new Concept 20/20 format. The 20/20 units, located in Markham, Kitchener and Pembroke, Ontario, and Prince George, British Columbia, sport a change in storefront signage to signal that the retailer is concentrating not on how customers use their products, Roussy said. Rather than signs identifying departments--automotive, sports, hardware and home decor--the main banner is flanked by signage identifying usage: Driving, Playing and Living.

The new concept stores are essentially test vehicles that will give Canadian Tire a chance to look at new ideas in a store setting before potential roll out across the chain, Roussy said.

The new concept stores are designed to be more customer-friendly and easier to shop, in part due to the addition of an improved store layout with 3,000 square feet of wider aisles and checkout lanes. They also boast a conveniently located exchange/returns desk separate from the Customer Care desk, easy-to-follow store pylon signage and even redesigned shopping carts. Design changes include warmer colors on the building exterior; lifestyle vignettes on high walls; skylights and window wells along the roof line to let in natural light; wood finishes on interior fixtures events; and plasma display screens. In addition, outdoor lawn and garden has been enclosed to permit year-round use and to showcase expanded seasonal assortments, including winter-related products, toys and landscaping.

Key among the newly forged and retooled departments are Marketplace, Outdoor Living/Seasonal, Home Decor, Dining and Cooking, Household Cleaning, Automotive, Power Sports and Sports and Leisure.

* Marketplace, as a new section placed at the entrance to the Concept 20/20 stores, Marketplace been designed as a showcase where customers can experience entertaining product displays and promotions that change out every seven to 14 days. Marketplace will focus on seasonal and event-related products, as well as innovative new items exclusive to Canadian Tire. The Customer Care desk, which offers a variety of services, is located in association with Marketplace. The Concept 20/20 stores provide a number new services and products as well, including cut flowers, live goods year-round, greeting cards and a dedicated kiosk for Canadian Tire Financial Services products and services.

* Outdoor Living/Seasonal is essentially an extension to Marketplace and will extend out into the front of the store during three seasons of the year.

* Home Decor, a department that Canadian Tire has been expanding as it seeks to better satisfy existing female shoppers and entice new ones, enjoys a 95% increase in display space, with lighting--a particular strength with the retailer-doubling in geography. With its auto/hardware/sporting goods pedigree, Canadian Tire has long been associated with male shoppers. But when the company looked at gender-based shopping data, "traffic was a pretty even split," said Roussy.