Canadian Tire is spending $3.4 billion to finally fix its online ordering system. Will it work?
“,”heading”:””,”fullWindow”:false,”fullBleed”:false,”showFullBleedOnMobile”:false,”headColor”:””,”type”:”html5mobile”,”textColor”:””,”mobileImageUrl”:””,”bgColor”:””,”imageUrl”:””,”registeredOnly”:false,”linkUrl”:””,”aodaTitle”:”Canadian Tire stock price over the past five years”,”internalScroll”:false,”displayStyle”:”small-up”},”text”:”Canadian Tire has long wrestled with the rise of e-commerce. The place the iconic company occupies in Canada’s national psyche is closely intertwined with its brick-and-mortar locations — a profusion of aisles where customers bushwhack for baseball gloves and AAA batteries and curse “Crappy Tire” if the shelves are found empty — and moving that experience online has not been seamless. “,”type”:”text”,”isParagraph”:true,”isHeading”:false,”text”:”But mounting competition from tech-savvy rivals and the implosion of Zellers and Target in the 2010s spurred a hardline push within the C-suite to modernize the franchise.”,”type”:”text”,”isParagraph”:true,”isHeading”:false,”type”:”ad”,”heading”:”ARTICLE CONTINUES BELOW”,”name”:”ArticleSecondBigBox”,”display”:”medium-down”,”pos”:”2″,”interstitial”:true,”sizes”:[[300,250]],”text”:”Former CEO Michael Medline was abruptly replaced in 2016 after only two years on the job by former CEO Stephen Wetmore, which one analyst said at the time was likely related to larger strategic issues, including e-commerce and digital loyalty.”,”type”:”text”,”isParagraph”:true,”isHeading”:false,”type”:”textBreakPoint”,”insertAt”:”contentMiddleBreakPoint”,”type”:”articleRelatedInlinePrimary”,”text”:”In the years that followed, the company launched the digital-forward Triangle Rewards program while slowly reducing circulation of its Canadian Tire money.”,”type”:”text”,”isParagraph”:true,”isHeading”:false,”text”:”After toiling with pandemic-era consumer habits and supply chain pitfalls, the company announced a far-reaching plan earlier this month to spend $3.4 billion over the next four years on e-commerce operations, along with thousands of new products and large-scale infrastructure projects.”,”type”:”text”,”isParagraph”:true,”isHeading”:false,”type”:”stn-smart-player”,”captionPosition”:”overlay”,”origImageSize”:”1200×800″,”fullWindowGenericImage”:false,”lastmodified”:1648836996147,”forceoriginal”:false,”caption”:”Canadian Tire plans to spend $3.4 billion over the next four years on e-commerce operations, along with thousands of new products and large-scale infrastructure projects. The bulk of its investment will go toward digital services for physical stores.”,”type”:”genericimage”,”credit”:”R.J. Johnston”,”url”:”/content/dam/thestar/business/2022/04/02/canadian-tire-is-spending-34-billion-to-finally-fix-its-online-ordering-system-will-it-work/rpj_canadiantire04.jpg”,”renditions”:[“url”:”https://images.thestar.com/xVCNVJDppyfSdP7RH6_oNGVUZDg=/1200×800/smart/filters:cb(1648836996147)/https://www.thestar.com/content/dam/thestar/business/2022/04/02/canadian-tire-is-spending-34-billion-to-finally-fix-its-online-ordering-system-will-it-work/rpj_canadiantire04.jpg”,”width”:1200,”height”:800,”scalefactor”:100,”url”:”https://images.thestar.com/xusXoxyxofQunBDZxuwcds3OEeo=/1086×724/smart/filters:cb(1648836996147)/https://www.thestar.com/content/dam/thestar/business/2022/04/02/canadian-tire-is-spending-34-billion-to-finally-fix-its-online-ordering-system-will-it-work/rpj_canadiantire04.jpg”,”width”:1086,”height”:724,”scalefactor”:91,”url”:”https://images.thestar.com/FrOE_ObfVZKHMsujE6KrOZA-q7g=/968×645/smart/filters:cb(1648836996147)/https://www.thestar.com/content/dam/thestar/business/2022/04/02/canadian-tire-is-spending-34-billion-to-finally-fix-its-online-ordering-system-will-it-work/rpj_canadiantire04.jpg”,”width”:968,”height”:645,”scalefactor”:81,”url”:”https://images.thestar.com/6-6n80nslz_HNk72RGEN2drx-tM=/850×567/smart/filters:cb(1648836996147)/https://www.thestar.com/content/dam/thestar/business/2022/04/02/canadian-tire-is-spending-34-billion-to-finally-fix-its-online-ordering-system-will-it-work/rpj_canadiantire04.jpg”,”width”:850,”height”:567,”scalefactor”:71,”url”:”https://images.thestar.com/V_5won7Q47GN4zuJyb7CxUtTp-M=/650×433/smart/filters:cb(1648836996147)/https://www.thestar.com/content/dam/thestar/business/2022/04/02/canadian-tire-is-spending-34-billion-to-finally-fix-its-online-ordering-system-will-it-work/rpj_canadiantire04.jpg”,”width”:650,”height”:433,”scalefactor”:54,”url”:”https://images.thestar.com/kRtqAegYv2NJgk4a2IwEKtxPybQ=/605×403/smart/filters:cb(1648836996147)/https://www.thestar.com/content/dam/thestar/business/2022/04/02/canadian-tire-is-spending-34-billion-to-finally-fix-its-online-ordering-system-will-it-work/rpj_canadiantire04.jpg”,”width”:605,”height”:403,”scalefactor”:50,”url”:”https://images.thestar.com/nduQloHX4kDSU_RM9M54JUIkECo=/480×320/smart/filters:cb(1648836996147)/https://www.thestar.com/content/dam/thestar/business/2022/04/02/canadian-tire-is-spending-34-billion-to-finally-fix-its-online-ordering-system-will-it-work/rpj_canadiantire04.jpg”,”width”:480,”height”:320,”scalefactor”:40,”url”:”https://images.thestar.com/N9Fb8asIEf0od05l13tLddMrf-0=/400×267/smart/filters:cb(1648836996147)/https://www.thestar.com/content/dam/thestar/business/2022/04/02/canadian-tire-is-spending-34-billion-to-finally-fix-its-online-ordering-system-will-it-work/rpj_canadiantire04.jpg”,”width”:400,”height”:267,”scalefactor”:33,”url”:”https://images.thestar.com/oW3SR7kKeQXvxk5Xdlyb7QbF_dk=/320×213/smart/filters:cb(1648836996147)/https://www.thestar.com/content/dam/thestar/business/2022/04/02/canadian-tire-is-spending-34-billion-to-finally-fix-its-online-ordering-system-will-it-work/rpj_canadiantire04.jpg”,”width”:320,”height”:213,”scalefactor”:27,”url”:”https://images.thestar.com/nP5lmtDLgqDbRE1l4rbYpt8Qdmw=/93×62/smart/filters:cb(1648836996147)/https://www.thestar.com/content/dam/thestar/business/2022/04/02/canadian-tire-is-spending-34-billion-to-finally-fix-its-online-ordering-system-will-it-work/rpj_canadiantire04.jpg”,”width”:93,”height”:62,”scalefactor”:8],”text”:”It’s an “incredibly important vision” for the company, said Sandra Duff, president of Jackman Reinvents, a business management consultancy in Toronto.”,”type”:”text”,”isParagraph”:true,”isHeading”:false,”text”:”“We’ve seen a lot of doom and gloom in retail over the past two years … long-term strategies like these are really the only way forward for companies that have weathered the pandemic’s storm.” “,”type”:”text”,”isParagraph”:true,”isHeading”:false,”type”:”slimcut”,”text”:”The bulk of Canadian Tire’s investment will go toward digital services for its physical stores, the company told investors this month. Some $2.2 billion will be allocated for features like text-enabled curbside pickup, click-and-collect lockers similar to those used at Ikea, and the creation of “connected stores” that allow customers to set up digital appointments at nearby locations and find items through an improved website and digital app. “,”type”:”text”,”isParagraph”:true,”isHeading”:false,”text”:”In Brampton, a 1.3-million-square-foot distribution centre for Canadian Tire’s online-ordered deliveries is under construction and scheduled for completion by 2023. The company also plans to expand a distribution centre in Montreal, and will pack its warehouses with new automation equipment.”,”type”:”text”,”isParagraph”:true,”isHeading”:false,”type”:”ad”,”heading”:”ARTICLE CONTINUES BELOW”,”name”:”ArticleThirdBigBox”,”display”:”medium-down”,”pos”:”3″,”interstitial”:true,”sizes”:[[300,250]],”text”:”A big part of the digital-first push is the company’s Triangle Rewards program, which it plans to grow through a fee-based program called Triangle Select. Introduced last year, the program offers customers extra loyalty rewards for in-store purchases, free home delivery of all online orders and access to Bell Media’s Crave streaming service, for an $89 annual fee.”,”type”:”text”,”isParagraph”:true,”isHeading”:false,”text”:”Experts say the move mirrors similar ventures by companies like Loblaw Companies Ltd., which has grown its PC Optimum membership into Canada’s largest loyalty program and helped sway customers toward its myriad of brands beyond its grocery stores. “,”type”:”text”,”isParagraph”:true,”isHeading”:false,”text”:”Similarly, companies like Hudson’s Bay split management of its physical stores from online operations in 2021 to focus its efforts on e-commerce.”,”type”:”text”,”isParagraph”:true,”isHeading”:false,”text”:”Like Amazon and Home Depot, Canadian Tire has gone to significant lengths to take control of its supply chain cogs, purchasing a 25 per cent stake in British Columbia’s largest inland port, the Ashcroft Terminal, last summer. “,”type”:”text”,”isParagraph”:true,”isHeading”:false,”text”:”“One of the things that makes the Canadian Tire challenge so complicated is that there’s no clearly defined competitor for them,” said David Soberman, a professor of marketing at the University of Toronto’s Rotman School of Management. “,”type”:”text”,”isParagraph”:true,”isHeading”:false,”text”:”“If we’re talking about tires, maybe their major competitor is Costco. If we’re talking about sporting goods, maybe their major competitor is Amazon. For household items, maybe it’s Walmart.””,”type”:”text”,”isParagraph”:true,”isHeading”:false,”snippet”:”“,”heading”:””,”fullWindow”:false,”fullBleed”:false,”showFullBleedOnMobile”:false,”headColor”:””,”type”:”html5mobile”,”textColor”:””,”mobileImageUrl”:””,”bgColor”:””,”imageUrl”:””,”registeredOnly”:false,”linkUrl”:””,”aodaTitle”:”Canadian Tire revenue growth over the past five years”,”internalScroll”:false,”displayStyle”:”small-up”,”type”:”cta”,”buttonText”:”Sign Up Now”,”buttonLink”:”/emails.html?nsrc=article-inline-business”,”description”:”Read the business news and analysis that matters most every morning, including the latest on what the coronavirus means for you, in our Star Business email newsletter.”,”title”:”Get more business in your inbox”,”type”:”textBreakPoint”,”insertAt”:”contentLongBreakPoint”,”text”:”Over the years, Canadian Tire has grown from a focused storefront retailer to something much bigger.”,”type”:”text”,”isParagraph”:true,”isHeading”:false,”text”:”When Alfred and William Billes founded the store in 1922, during the auto industry’s ascendancy, the sibling duo carved out a niche by purchasing discounted car tires from manufacturers in the winter when demand was low and reselling them at a premium in the summer road-trip season. “,”type”:”text”,”isParagraph”:true,”isHeading”:false,”text”:”The company went public in 1944 and followed a lateral path in the ensuing decades. Auto parts led to household equipment, which led to lifestyle goods, which led to family-focused kiddie items, sports gear and outerwear and, eventually, financial services. “,”type”:”text”,”isParagraph”:true,”isHeading”:false,”text”:”In the past two decades, Canadian Tire launched the Canadian Tire Bank and bought a flurry of popular brands including Mark’s Work Wearhouse, Forzani Group (now FGL Sports Ltd.) — which operates Sport Chek and several other sports brands — American retailer Party City and Norwegian sports apparel maker Helly Hansen.”,”type”:”text”,”isParagraph”:true,”isHeading”:false,”text”:”According to PSA International, a cargo transportation group, the company now uses more container ships to import goods than any other in Canada, with tens of thousands of products entering the country every year.”,”type”:”text”,”isParagraph”:true,”isHeading”:false,”text”:”In its announcement this month, the company detailed plans to introduce another 12,000 products by 2025. “,”type”:”text”,”isParagraph”:true,”isHeading”:false,”snippet”:”“,”heading”:””,”fullWindow”:false,”fullBleed”:false,”showFullBleedOnMobile”:false,”headColor”:””,”type”:”html5mobile”,”textColor”:””,”mobileImageUrl”:””,”bgColor”:””,”imageUrl”:””,”registeredOnly”:false,”linkUrl”:””,”aodaTitle”:”Timeline of Canadian Tire”,”internalScroll”:false,”displayStyle”:”small-up”,”text”:”The challenge now, said Soberman, is turning its franchise model into one cohesive e-commerce machine. “,”type”:”text”,”isParagraph”:true,”isHeading”:false,”text”:”Unlike Amazon or Walmart, Canadian Tire oversees hundreds of individually owned franchised locations across the country, making it difficult to keep track of inventory and shipping orders. “,”type”:”text”,”isParagraph”:true,”isHeading”:false,”type”:”relatedStories”,”relatedStories”:[],”text”:”“Integrating Canadian Tire’s many brands and locations in a website or mobile app is not so straightforward,” said Soberman.”,”type”:”text”,”isParagraph”:true,”isHeading”:false,”text”:”“When you’re integrating a website with one central warehouse, it’s easy to take stock of your inventory and manage deliveries. But when the website has to reflect the stock of each of its associated stores, you’ve got a much bigger challenge.””,”type”:”text”,”isParagraph”:true,”isHeading”:false,”text”:”Duff, too, has experienced that problem firsthand. “,”type”:”text”,”isParagraph”:true,”isHeading”:false,”text”:”“I was looking for a sectional sofa from Canadian Tire recently and the store closest to me didn’t have one. I had to look around for inventory at different stores,” the business consultant said. “That would never happen at a Walmart or a Wayfair, where it’s all coming from one central warehouse when you order online.””,”type”:”text”,”isParagraph”:true,”isHeading”:false,”text”:”But Canadian Tire’s omnipresence comes with potential advantages, noted Soberman. More than 90 per cent of Canadians live within a 15-minute drive of a Canadian Tire store, giving the company a leg up on online-only retailers that rely solely on shipping and out-of-town fulfilment centres to get products to customers. “,”type”:”text”,”isParagraph”:true,”isHeading”:false,”text”:”And Hicks knows this. “,”type”:”text”,”isParagraph”:true,”isHeading”:false,”text”:”“Although customers love shopping online, I think COVID has demonstrated that what they really want is control: control over how and where they receive their orders,” the CEO said in an earnings call last year. “,”type”:”text”,”isParagraph”:true,”isHeading”:false,”text”:”Keeping that kind of control in the hands of customers as the company pivots online is essential to its success, said Soberman. “,”type”:”text”,”isParagraph”:true,”isHeading”:false,”type”:”textBreakPoint”,”insertAt”:”contentEndBreakPoint”,”text”:”“If you can find the product easily on the website, order it easily and also get it easily — because you can drive 15 minutes or less to your nearest store — you now have an advantage over pure online players like Amazon. If Canadian Tire can figure that out, it could be the golden egg. But they still have to figure it out.””,”type”:”text”,”isParagraph”:true,”isHeading”:false,{“text”:”Jacob Lorinc is a Toronto-based reporter covering business for the Star. Reach him via email: [email protected]“,”author”:”author”:”Jacob Lorinc”,”photo”:”origImageSize”:”5134×3447″,”lastmodified”:2700061000,”url”:”/content/dam/thestar/columnist_logos/Lorinc_Jacob_logo2019new.JPG”,”sizes”:”1:1″:”small”:”https://images.thestar.com/psaKwU-e7CBPI4unRjiBEj4OL1I=/100×100/smart/https://www.thestar.com/content/dam/thestar/columnist_logos/Lorinc_Jacob_logo2019new.JPG”,”3:2″:”small”:”https://images.thestar.com/EaPIWOnFw1xnsYeY1ShS7Gx2U5o=/114×76/smart/https://www.thestar.com/content/dam/thestar/columnist_logos/Lorinc_Jacob_logo2019new.JPG”,”medium”:”https://images.thestar.com/pS_4EXDCT6L1G5-QJuAmDZdfRKg=/330×220/smart/https://www.thestar.com/content/dam/thestar/columnist_logos/Lorinc_Jacob_logo2019new.JPG”,”large”:”https://images.thestar.com/VHCm7mzRvpFijrL0vBF2CEcFiyE=/690×460/smart/https://www.thestar.com/content/dam/thestar/columnist_logos/Lorinc_Jacob_logo2019new.JPG”,”21:9″:”large”:”https://images.thestar.com/uZhN4PB_QviRVi_Hd4-7BpvyO_E=/1080×460/smart/https://www.thestar.com/content/dam/thestar/columnist_logos/Lorinc_Jacob_logo2019new.JPG”,”location”:”Toronto”,”tag”:”lorinc_jacob”,”credit”:”Business Reporter”,”twitterId”:”jacoblorinc”,”email”:”[email protected]”,”authorPageUrl”:”https://www.thestar.com/authors.lorinc_jacob.html”,”type”:”endnote”,”isLast”:true},”type”:”articleRelatedFooter”,”type”:”related_topics”,”tags”:[“costco”,”amazon”,”canadian_tire”,”walmart”],”type”:”shareBar”,”position”:”bottom”,”type”:”trustbar”,”type”:”conversations”],”assetTags”:[“costco”,”canadian_tire_corporation_ltd_”,”smg_business”,”triangle_rewards”,”InHouseArticle_thestar”,”bentonville_arkansas”,”helly_hansen”,”amazon”,”rebrand”,”service_companies”,”canada”,”arc_cov_recovery”,”canadian_tire”,”retailers”,”lorinc_jacob”,”zellers”,”walmart”,”kmi1″,”greg_hicks”,”toronto”,”nicrt1″,”s_p_tsx_60″,”online_shopping”,”canadian_tire_near_me”,”ceo”,”retailing”,”canadian_tire_online_orders”,”walmart_canada”,”arc_cov_economy”,”sport_chek”,”algolock”,”canadian_tire”],”seoKeywords”:”arc cov recovery,Arc cov economy,Canadian Tire,Amazon,sport chek,Helly Hansen,Walmart Canada,Triangle Rewards,rebrand,Canadian Tire online orders,Canadian Tire near me,KMI1,NICRT1,smg_business,InHouseArticle_thestar,algolock”,”excludeInRecommendations”:false,”promo”:[],”tier”:”tier1″,”related”:”pubdays”:0,”strategy”:0,”personalizationMetadata”:”inHouseArticle”:”true”,”image”:”https://images.thestar.com/ynlKeGDCRILBVESsgwyX7y5g_hQ=/1280×1024/smart/filters:cb(1648976554386)/https://www.thestar.com/content/dam/thestar/business/2022/04/02/canadian-tire-is-spending-34-billion-to-finally-fix-its-online-ordering-system-will-it-work/final_canadian_tire_web.jpg”,”enableLivechat”:”false”,”images”:”https://www.thestar.com/assets/img/thestar-ribbon.png”,”noShow”:”false”,”enableConversations”:”true”,”description”:”Turning the iconic retailer’s nearly 100-year-old brick-and-mortar model into one cohesive e-commerce machine will be a massive challenge. But they have a hidden advantage, retail experts say”,”hasImage”:true,”section”:”Business”,”abstract”:”Turning the iconic retailer’s nearly 100-year-old brick-and-mortar model into one cohesive e-commerce machine will be a massive challenge. But they have a hidden advantage, retail experts say”,”asset_id”:”bae0eb93-a5b2-4fa4-97e7-d74eb5c1d9b1″,”title”:”Canadian Tire is spending $3.4 billion to finally fix its online ordering system. Will it work?”,”type”:”article”,”smg_tag”:”business”,”url”:”https://www.thestar.com/business/2022/04/02/canadian-tire-is-spending-34-billion-to-finally-fix-its-online-ordering-system-will-it-work.html”,”site_name”:”thestar.com”,”enableLivechatadmin”:”false”,”thumbor_image”:”\”imageid\”:\”GRD1G3LG6.3\”,\”origImageSize\”:\”956×637\”,\”lastmodified\”:1648838136510,\”fullWindowMainart\”:false,\”forceoriginal\”:false,\”caption\”:\”The bulk of Canadian Tire\\u2019s $3.4-billion investment will go toward digital services for its physical stores, with some $2.2 billion allocated for features such as text-enabled curbside pickup and click-and-collect lockers, among others.\”,\”source\”:\”Susan Kao photo illustration\”,\”type\”:\”image\”,\”credit\”:\”\”,\”mainartSize\”:\”medium\”,\”url\”:\”/content/dam/thestar/business/2022/04/02/canadian-tire-is-spending-34-billion-to-finally-fix-its-online-ordering-system-will-it-work/final_canadian_tire_web.jpg\””,”published_time”:”2022-04-02T11:00:00Z”,”publisher”:”https://www.facebook.com/torontostar”,”last_modified”:”2022-04-01T18:35:36.384Z”,”author_names”:[“Jacob Lorinc”],”authors”:”[\”author\”:\”Jacob Lorinc\”,\”photo\”:\”origImageSize\”:\”5134×3447\”,\”lastmodified\”:2700061000,\”url\”:\”/content/dam/thestar/columnist_logos/Lorinc_Jacob_logo2019new.JPG\”]”,”seoHead”:”Canadian Tire is spending $3.4 billion to finally fix its online ordering system. Will it work?”,”chevronTextBGColor”:”009988″,”headline”:”Canadian Tire is spending $3.4 billion to finally fix its online ordering system. Will it work?”,”subheadline”:”Turning the iconic retailer’s nearly 100-year-old brick-and-mortar model into one cohesive e-commerce machine will be a massive challenge. But they have a hidden advantage, retail experts say”,”shortSeoGoogleHead”:”Canadian Tire is spending $3.4 billion to finally fix its online ordering system. Will it work?”,”canonicalUrl”:”https://www.thestar.com/business/2022/04/02/canadian-tire-is-spending-34-billion-to-finally-fix-its-online-ordering-system-will-it-work.html”,”seoDescription”:”Turning the iconic retailer’s nearly 100-year-old brick-and-mortar model into one cohesive e-commerce machine will be a massive challenge. But they have a hidden advantage, retail experts say”,”enableConversations”:true,”publishedepoch”:1648897200000,”lastmodifiedepoch”:1648838136384,”abstractVisible”:true,”abstract”:”Turning the iconic retailer’s nearly 100-year-old brick-and-mortar model into one cohesive e-commerce machine will be a massive challenge. But they have a hidden advantage, retail experts say”,”relatedLinks”:[],”paywallMode”:”locked”,”storyuuid”:”bae0eb93-a5b2-4fa4-97e7-d74eb5c1d9b1″,”republish”:true,”slideshowid”:”B881705799Z.1″,”lastmodified”:”04 01 2022″,”stnPlayer”:”type”:”stnPlayer”,”playerPosition”:”secondaryMainart”,”lastreplicated”:”Sat., April 2, 2022″,”readtime”:6,”breadcrumbs”:[“label”:”Business”,”relurl”:”/business”,”url”:”https://www.thestar.com/content/thestar/business.html”],”authors”:[“author”:”Jacob Lorinc”,”photo”:”origImageSize”:”5134×3447″,”lastmodified”:2700061000,”url”:”/content/dam/thestar/columnist_logos/Lorinc_Jacob_logo2019new.JPG”,”sizes”:”1:1″:”small”:”https://images.thestar.com/psaKwU-e7CBPI4unRjiBEj4OL1I=/100×100/smart/https://www.thestar.com/content/dam/thestar/columnist_logos/Lorinc_Jacob_logo2019new.JPG”,”3:2″:”small”:”https://images.thestar.com/EaPIWOnFw1xnsYeY1ShS7Gx2U5o=/114×76/smart/https://www.thestar.com/content/dam/thestar/columnist_logos/Lorinc_Jacob_logo2019new.JPG”,”medium”:”https://images.thestar.com/pS_4EXDCT6L1G5-QJuAmDZdfRKg=/330×220/smart/https://www.thestar.com/content/dam/thestar/columnist_logos/Lorinc_Jacob_logo2019new.JPG”,”large”:”https://images.thestar.com/VHCm7mzRvpFijrL0vBF2CEcFiyE=/690×460/smart/https://www.thestar.com/content/dam/thestar/columnist_logos/Lorinc_Jacob_logo2019new.JPG”,”21:9″:”large”:”https://images.thestar.com/uZhN4PB_QviRVi_Hd4-7BpvyO_E=/1080×460/smart/https://www.thestar.com/content/dam/thestar/columnist_logos/Lorinc_Jacob_logo2019new.JPG”,”location”:”Toronto”,”tag”:”lorinc_jacob”,”credit”:”Business Reporter”,”twitterId”:”jacoblorinc”,”email”:”[email protected]”],”urlMetatag”:”https://www.thestar.com/business/2022/04/02/canadian-tire-is-spending-34-billion-to-finally-fix-its-online-ordering-system-will-it-work.html”,”numOfParagraphs”:37,”liftigImage”:”captionPosition”:”overlay”,”fullWindowMainart”:false,”type”:”image”,”imageid”:”GRD1G3LG6.3″,”origImageSize”:”956×637″,”lastmodified”:1648838136510,”forceoriginal”:false,”caption”:”The bulk of Canadian Tire’s $3.4-billion investment will go toward digital services for its physical stores, with some $2.2 billion allocated for features such as text-enabled curbside pickup and click-and-collect lockers, among others.”,”source”:”Susan Kao photo illustration”,”credit”:””,”url”:”/content/dam/thestar/business/2022/04/02/canadian-tire-is-spending-34-billion-to-finally-fix-its-online-ordering-system-will-it-work/final_canadian_tire_web.jpg”,”mainartSize”:”medium”,”renditions”:[“url”:”https://images.thestar.com/tQtMg2qXNsSg4xI9sl3NzpXIXP8=/93×52/smart/filters:cb(1648838136510)/https://www.thestar.com/content/dam/thestar/business/2022/04/02/canadian-tire-is-spending-34-billion-to-finally-fix-its-online-ordering-system-will-it-work/final_canadian_tire_web.jpg”,”width”:93,”height”:52,”scalefactor”:10,”aspect”:”wide”],”seopublisheddate”:”2022-04-02″,”seomodifieddate”:”2022-04-02T11:00:03.756Z”,”primarylabel”:”label”:”Business”,”relurl”:”/business”,”url”:”https://www.thestar.com/content/thestar/business.html”,”totalParas”:0,”additionalEvents”:”,event29″,”sectionLevel1″:”Business || /business”}
//–>
ADVERTISEMENT
/https://www.thestar.com/content/dam/thestar/business/2022/04/02/canadian-tire-is-spending-34-billion-to-finally-fix-its-online-ordering-system-will-it-work/final_canadian_tire_web.jpg)
Turning the iconic retailer’s nearly 100-year-old brick-and-mortar model into one cohesive e-commerce machine will be a massive challenge. But they have a hidden advantage, retail experts say
The ink had barely dried on Greg Hicks’ multimillion dollar contract when the COVID-19 pandemic hit.
It was March 2020, and in the days after he became CEO of Canadian Tire Corporation Ltd., governments across Canada announced sweeping business restrictions that would upend the centenarian retailer’s conventional business model.
Company metrics faltered before Hicks could get settled in his new office. The stock price nosedived. The company reported a startling $13.3 million net loss in the first quarter.
To make matters worse, the company’s website couldn’t handle the surge in demand from consumers looking to place online orders. Would they soon turn to Amazon or Walmart for gardening tools?
“I realized my dream job was not going to be anything like what I’d imagined or planned for,” Hicks recently told investors.
Canadian Tire has long wrestled with the rise of e-commerce. The place the iconic company occupies in Canada’s national psyche is closely intertwined with its brick-and-mortar locations — a profusion of aisles where customers bushwhack for baseball gloves and AAA batteries and curse “Crappy Tire” if the shelves are found empty — and moving that experience online has not been seamless.
But mounting competition from tech-savvy rivals and the implosion of Zellers and Target in the 2010s spurred a hardline push within the C-suite to modernize the franchise.
Former CEO Michael Medline was abruptly replaced in 2016 after only two years on the job by former CEO Stephen Wetmore, which one analyst said at the time was likely related to larger strategic issues, including e-commerce and digital loyalty.
In the years that followed, the company launched the digital-forward Triangle Rewards program while slowly reducing circulation of its Canadian Tire money.
After toiling with pandemic-era consumer habits and supply chain pitfalls, the company announced a far-reaching plan earlier this month to spend $3.4 billion over the next four years on e-commerce operations, along with thousands of new products and large-scale infrastructure projects.
/https://www.thestar.com/content/dam/thestar/business/2022/04/02/canadian-tire-is-spending-34-billion-to-finally-fix-its-online-ordering-system-will-it-work/rpj_canadiantire04.jpg)
It’s an “incredibly important vision” for the company, said Sandra Duff, president of Jackman Reinvents, a business management consultancy in Toronto.
“We’ve seen a lot of doom and gloom in retail over the past two years … long-term strategies like these are really the only way forward for companies that have weathered the pandemic’s storm.”
The bulk of Canadian Tire’s investment will go toward digital services for its physical stores, the company told investors this month. Some $2.2 billion will be allocated for features like text-enabled curbside pickup, click-and-collect lockers similar to those used at Ikea, and the creation of “connected stores” that allow customers to set up digital appointments at nearby locations and find items through an improved website and digital app.
In Brampton, a 1.3-million-square-foot distribution centre for Canadian Tire’s online-ordered deliveries is under construction and scheduled for completion by 2023. The company also plans to expand a distribution centre in Montreal, and will pack its warehouses with new automation equipment.
A big part of the digital-first push is the company’s Triangle Rewards program, which it plans to grow through a fee-based program called Triangle Select. Introduced last year, the program offers customers extra loyalty rewards for in-store purchases, free home delivery of all online orders and access to Bell Media’s Crave streaming service, for an $89 annual fee.
Experts say the move mirrors similar ventures by companies like Loblaw Companies Ltd., which has grown its PC Optimum membership into Canada’s largest loyalty program and helped sway customers toward its myriad of brands beyond its grocery stores.
Similarly, companies like Hudson’s Bay split management of its physical stores from online operations in 2021 to focus its efforts on e-commerce.
Like Amazon and Home Depot, Canadian Tire has gone to significant lengths to take control of its supply chain cogs, purchasing a 25 per cent stake in British Columbia’s largest inland port, the Ashcroft Terminal, last summer.
“One of the things that makes the Canadian Tire challenge so complicated is that there’s no clearly defined competitor for them,” said David Soberman, a professor of marketing at the University of Toronto’s Rotman School of Management.
“If we’re talking about tires, maybe their major competitor is Costco. If we’re talking about sporting goods, maybe their major competitor is Amazon. For household items, maybe it’s Walmart.”
Over the years, Canadian Tire has grown from a focused storefront retailer to something much bigger.
When Alfred and William Billes founded the store in 1922, during the auto industry’s ascendancy, the sibling duo carved out a niche by purchasing discounted car tires from manufacturers in the winter when demand was low and reselling them at a premium in the summer road-trip season.
The company went public in 1944 and followed a lateral path in the ensuing decades. Auto parts led to household equipment, which led to lifestyle goods, which led to family-focused kiddie items, sports gear and outerwear and, eventually, financial services.
In the past two decades, Canadian Tire launched the Canadian Tire Bank and bought a flurry of popular brands including Mark’s Work Wearhouse, Forzani Group (now FGL Sports Ltd.) — which operates Sport Chek and several other sports brands — American retailer Party City and Norwegian sports apparel maker Helly Hansen.
According to PSA International, a cargo transportation group, the company now uses more container ships to import goods than any other in Canada, with tens of thousands of products entering the country every year.
In its announcement this month, the company detailed plans to introduce another 12,000 products by 2025.
The challenge now, said Soberman, is turning its franchise model into one cohesive e-commerce machine.
Unlike Amazon or Walmart, Canadian Tire oversees hundreds of individually owned franchised locations across the country, making it difficult to keep track of inventory and shipping orders.
“Integrating Canadian Tire’s many brands and locations in a website or mobile app is not so straightforward,” said Soberman.
“When you’re integrating a website with one central warehouse, it’s easy to take stock of your inventory and manage deliveries. But when the website has to reflect the stock of each of its associated stores, you’ve got a much bigger challenge.”
Duff, too, has experienced that problem firsthand.
“I was looking for a sectional sofa from Canadian Tire recently and the store closest to me didn’t have one. I had to look around for inventory at different stores,” the business consultant said. “That would never happen at a Walmart or a Wayfair, where it’s all coming from one central warehouse when you order online.”
But Canadian Tire’s omnipresence comes with potential advantages, noted Soberman. More than 90 per cent of Canadians live within a 15-minute drive of a Canadian Tire store, giving the company a leg up on online-only retailers that rely solely on shipping and out-of-town fulfilment centres to get products to customers.
And Hicks knows this.
“Although customers love shopping online, I think COVID has demonstrated that what they really want is control: control over how and where they receive their orders,” the CEO said in an earnings call last year.
Keeping that kind of control in the hands of customers as the company pivots online is essential to its success, said Soberman.
“If you can find the product easily on the website, order it easily and also get it easily — because you can drive 15 minutes or less to your nearest store — you now have an advantage over pure online players like Amazon. If Canadian Tire can figure that out, it could be the golden egg. But they still have to figure it out.”
JOIN THE CONVERSATION
Anyone can read Conversations, but to contribute, you should be registered Torstar account holder. If you do not yet have a Torstar account, you can create one now (it is free)
More from The Star & Partners