1. What are the key facts as presented in the article?
A few key facts presented in the article are as follows:
a. Canadian Tire’s plans to move to smaller sized stores in urban locations in an effort to attract a market they believe is underserviced – sports and outdoor recreational activities b. These decisions were influenced by Target’s arrival in the Canadian market. c. Leasing in urban areas such as malls means greater lease rates. On the contrary, urban areas means greater traffic and can very easily lead to many impulse buyers. d. The smaller stores are set to pilot their sports and outdoor recreation stores to compete against larger similar stores such as Bass Pro shops and Cabela e. Other retailers are also making moves to capture impulse buyers as a result of Target’s expansion and the saturating suburban markets. Canadian Tire’s decision to penetrate this particular market places even more weight on the executives who pushed and agreed for this to happen.
2. If you were acting as an outside consultant for Canadian Tire, what key stratgic problem or problems can you identify?
One problem I find is their lack of experience operating under smaller stores. This is a whole new different ballpark the management team would have to adjust to. Since they are dealing with smaller area space, deciding which inventory to shelf becomes an even more critical task. Which products can entice customers to buy? Do the products that yield the greatest margins get priority? What would attract customers to the store? And so on. A smaller space also means greater storage and related inventory costs. Do they have an accurate and timely inventory information system to track which inventories need to be restocked? Also, most of the outdoor and sports products that Canadian Tire sells are seasonal; again, inventory management is vital. Furthermore, the lease rates at the locations they wish to expand to are much more expensive. This means they need to consistently sell their most profitable products to cover the greater lease costs. The numbers are going to be more crunched so efficient management practices is a must. It is therefore imperative for Canadian Tire to eliminate any non-value added activities to try to keep their costs as low as possible. Also, the consumers they are trying to reach – sports and outdoor recreational activities – are typically men. Placing these in urban areas would be great for traffic and to grab those impulse buyers. However, the shopping experience tips more towards women especially in malls and would be rather difficult to get women to buy a lawnmower or a bbq set out of impulse. Another problem with Canadian Tire’s decision to restructure their brand image, is that they are moving too far away from what they were known for: auto parts and hardware. They are slowly moving into a retailer that sells all things. Branching off to new territories means management must now monitor a new area. This will add to their increasing list of competitors. And to make matters more difficult, they would need to manage it in a different store format. Furthermore, how should Canadian Tire absorb their FGL acquisition? FGL has many banners. If they choose allow FGL to operate under their own name, just like Mark’s Warehouse, should they consolidate the many banners into a smaller number? Or keep what they currently have? 3. Are their proposed strategic changes consist with the company's vision, mission and values?
I believe it is. There statement of purpose, which was originally created in 1993, has changed over the years. As of now it is “to create customers for life and shareholder value”. From this statement, their vision is to “create sustainable growth by being a national champion and Canada’s most trusted company. We will grow from our strengths – leveraging our brands, core capabilities, assets and extraordinary people.” By...
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