Canadian Tire plans fall deliver-to-home trial
• Canadian Tire Corp. is getting back into home delivery of online goods as it looks to the future during a historic period of change in the retail industry.
The country’s biggest seller of sporting goods and housewares famously scrapped its sales website in 2009 after nine years, and relaunched it in 2013 as a click- and- collect model, allowing customers to pick up goods bought online at their local Canadian Tire stores.
But at a time when Amazon.com Inc. and other online operators are eating away at the business of bricks- andmortar retail chains, executives have realized that a ship-to-home online business is something the company simply needs to do.
Canadian Tire announced Thursday that it will begin a trial of online home delivery orders this fall, but offered no further details about its location or scope.
“We obviously have to have a deliver- to- home capability,” chief executive Stephen Wetmore said after the retailer’s annual general meeting of shareholders. Wetmore, 64, who was CEO of the company from 2009 to the end of 2014, resumed the top job again last July after Michael Medline’s ouster from the role after he reportedly clashed with the board over digital strategy.
Medline, who was named CEO of Sobeys’ owner Empire Co. in January, received a separation package of $ 2.21 million f rom Canadian Tire, according to the company’s proxy circular released Thursday. His total compensation in 2016 was $4.76 million.
The so- called ‘ last- mile’ element of customer home delivery comes after the company spent years and hundreds of millions of dollars on digital improvements and enhanced customer data capabilities.
As the detailed back- end process for online shopping was refined, retail division president Allan MacDonald says executives noted the company has the same number of ‘ engagements’ online as it does overall retail transactions, suggesting people are looking up items in advance online for “trip assurance” to ensure a product is at a store before they come in to stores to buy them.
At the same time, Canadian Tire has become more focused on improving its merchandise assortments in key categories such as sporting goods, automotive, camping and lighting, through private label goods, which carry a higher margin and are exclusive to the retailer. Private- label goods now account for a third of the company’s revenue, up from 20 per cent in 2012.
In some categories home delivery might be critical for competitive reasons. In a category such as kitchenware, for example, Canadian Tire has the top retail market share in Canada but only eight per cent of the goods it sells are in-house brands.
“Everybody is carrying the other brands and so are all the big online players,” said Wetmore. “That means whatever you have to do to keep your business, whatever the customer wants, you are going to have to deliver it in your kitchen business. If they want a red toaster delivered to their home, you are just going to have to do it.”
Roughly a hundred of Canadian Tire’s 487 dealer-owned stores already offer home delivery for some items, he said, as do its Sport Chek and Marks’ stores.
Bruce Winder, partner in Retail Advisors Network, said rolling out home delivery will be complex because of Canadian Tire’s dealer model, with a need to consider whether dealers might lose sales that are shipped straight to customers from the company’s warehouse.
“This is a good decision, a bit of an awakening,” Winder said. “They were behind with e- commerce and omnichannel, and I think with Wetmore back in, they are trying to catch up quickly.”
The news came as Canadian Tire reported a 26 per cent jump in first- quarter profit Thursday of $ 107.9 million, or $ 1.24 per share, up from $ 85.6 million ( 90 cents) in the same period of 2016.