TORONTO — Canadian Tire Corp. is retooling to concentrate on its core automotive and hardware businesses, but its chief executive says he doesn’t want to shopping there to feel like a “male experience.”
The iconic retailer says it plans to focus on the auto parts business that made Canadian Tire a household brand after a recent expansion into the home decor market to attract more female shoppers. It plans to grow the automotive division by four to six per cent per year over the next five years.
But chief executive Stephen Wetmore said at an investor conference Wednesday that the company’s renewed focus on automotive supplies and repair is meant to broaden its customer base, not limit it.
“The thing we do not want to do is just make it a male experience, it has to be consumer friendly, whoever brings (a car problem) in, and whatever your knowledge level,” he said.
Auto supplies are among the first items customers will see when they walk into a revamped Canadian Tire, where a racetrack floor plan provides more space for high growth categories and directs consumers to products more easily, said Mike Arnett, Canadian Tire’s retail president.
“There was a very specific focus in the (previous store) format to raise the profile of what are sometimes called female friendly, or the categories that women are more interested in....but I think we made too many compromises in order to achieve that,” he said.
One of the problems with the store layout he identified was that it separated tools from the rest of the hardware section, which was pushed to the back of the store to give “table top items” and kitchen appliances more space closer to the entrance.
The company will concentrate store renewal on expanding its “smart stores”, which have been a boon to automotive and hardware sales because the products have been given better space. Canadian Tire has 60 retrofits and eight new store projects planned for 2010.
With nearly 480 stores across the country, Canadian Tire expects to put increased resources on fast-growing merchandise categories, including backyard, fitness equipment, kitchen, storage, mechanics and tools, and paint and accessories.
The company’s main focus over the next three to five years will be its core retail operations and driving overall business growth of up to 25 per cent while keeping capital expenditures similar to the $280 million to 300 million spent in 2009.
Over the past decade, under different senior management teams, Canadian Tire has spent billions of dollars expanding its store network across the country and diversifying — including into clothing through Mark’s Work Wearhouse and financial services.
Wetmore said the company had become distracted by the new businesses, which “have been generating the majority of growth for Canadian Tire through this past decade.”
In 2008, the Mark’s Work Wearhouse and financial services represented almost half of the company’s consolidated earnings, he said.
“We’ve become reliant on the solid performance from Mark’s and financial services and too accepting of the modest performance of our core retail assets,” Wetmore added.
Canadian Tire has also hired Dunnhumby Ltd., a British customer research company, to help it tailor its marketing and develop a new customer loyalty program, which it plans to pilot in 2011.
The company offered few details about the program, aside from its plan to offer a broader range of benefits that better target consumers and evolve its beloved Canadian Tire money.
Nic Read, a marketing strategy expert, said Canadian Tire is smart to target specific demographics as more retailers compete in crowded markets for frugal buyers.
“There has to be a proactive approach to customer retention and loyalty, special programs, different tiers of membership for instance,” he said.
Wayne Hood, a retail analyst at BMO Capital Markets said in a recent report, that while Canadian Tire has made significant investments in its store base and supply chain infrastructure “the changes outlined may not be radical and fast enough.”
On Tuesday, Canadian Tire announced it will build and operate gas stations at 23 service centres along Ontario’s two busiest highways. The provincial government and a private company will spend $300 million on renovations to 20 of the centres over three years under a new 50-year agreement.
Canadian Tire employs more than 58,000 people at 273 gas stations and 479 retail stores across the country.
Shares of the company (TSX:CTC.A) lost five cents to close at $55.94 Wednesday on the Toronto Stock Exchange.