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Shawn Stewart is the Senior Vice President of Customer and Triangle at Canadian Tire.
Traditional retailers learned a harsh lesson over this past year – not to ignore the growing shopper demand for convenience, value, and immediacy. They had been slow to make the transition to omnichannel commerce, misreading the slow gradual rise in online spending as a sign of shopper indifference. Why should they fool with a proven brick-and-mortar sales model, even if Amazon was looming ever larger in their rear-view mirror? Time was on their side, they figured.
The pandemic proved them horribly wrong. The sudden surge in online shopping left most retailers operationally stranded. As foot traffic dwindled due to restrictions on in-person shopping, they were forced to close stores. Many retailers, particularly in the department and clothing sectors, were pushed to the brink of insolvency. In fact, the U.S. experienced the most retail bankruptcies in a decade. Once prominent retailers like Neiman Marcus, J.C. Penney, Lord & Taylor and Brooks Brothers filed for bankruptcy. In Canada, the picture was just as bleak, with many retailers crippled by the lockdowns.
This financial carnage may have been the tipping point for the reinvention of retail. The industry has finally woken up to the fact that shopping habits have radically changed. And as product manufacturers open up their own digital storefronts, the era of retail hegemony may finally be over. Retailers will need to evolve beyond their historical role as the primary distribution channel for products. Stores may simply become showrooms. Or retailers may decide to open up new revenue streams by making their own branded products. And those retailers with large addressable databases might create online marketplaces for third-party sellers (just as Hudson’s Bay has announced). Or they can offer their customers add-on services as Walmart has already done in the U.S., taking advantage of the loyalty data they collect.
In Canada, one retailer has stood out above all others in transforming its business model – Canadian Tire. Founded almost a century ago, Canadian Tire has confronted numerous threats to its merchandising might by U.S. giants like Walmart and Target intent on muscling in on its turf. The company’s resiliency is partly explained by its geographical footprint – most Canadians live within a 15-minute drive of a store – but also by its independent dealer network which gives the company an intimate connection to each local community. In 2019 Canadian Tire was recognized as Canada’s most admired brand in Leger’s annual consumer survey. It rightfully owns the honorific “Canada’s Store”, a far cry from the days when it was mocked as “Crappy Tire”.
This past year, despite all of the havoc caused by the pandemic, Canadian Tire increased comparable year-over-year store sales by 11% across its banners. Ecommerce sales more than doubled, an impressive feat when you consider that at one point the company actually backed away from online selling, until it came to its senses seven years ago and began to invest heavily in its digital and e-commerce capabilities.
A big part of its recent success is attributable to its embrace of data-driven marketing, thanks to its 10-million-member Triangle Rewards program, which grew by another 2 million customers last year. Launched in 2018, Triangle Rewards is the digital version of the famously popular Canadian Tire Money, once looked upon affectionately as Canada’s second currency. The CTC Executive in charge of loyalty and insights is Shawn Stewart who took over the role six years ago. Amongst his many accomplishments has been the development of the Triangle program and the creation of an AI-driven recommendation engine which powers seven million weekly personalized offers.
I began the interview by asking him to explain why Canadian Tire was able to prosper this past year despite the entire retail sector being caught in the eye of a hurricane.
Shawn Stewart: It’s a few factors. I mean, we saw in our loyalty data that consumers did consolidate their visits and baskets were appreciably… You know, the thing with the core Canadian Tire brand, and it’s always had that kind of secret sauce of being able to walk in there and find things you never knew you needed, but over the years we’ve really overdeveloped our presence in the essentials as well. So, early on, I think we were being discovered, frankly, by customers, “Hey, I didn’t know Canadian Tire sold toilet paper, and they’re in stock,” right? So, we got this mix of our best customers coming to us as a one-stop-shop because they didn’t want to go out to visit stores. The strength of our dealers really helped in this case because they were very easily able to launch curbside pickup and new capabilities that we didn’t have coming into COVID. And so, just meeting customer needs quickly. And, you know, we talk to customers a lot throughout the pandemic, and loud and clear was the strength of our brand, the love for our brand, the appreciation for all the safety measures we were taking. I would say a lot of patience, right, for some of the friction we had in our process early on. Our e-com site was just overloaded with volume, but we quickly pivoted and got that right. And we’ve acquired actually new customers, believe it or not, within this. And I think that’s part of that discovery piece where they said, especially young adults, you know, who were maybe shopping on behalf of their older family or friends but came into Canadian Tire for the first time, joined Triangle program for the first time during this period and really focused on essentials, what we call internally “boredom busters.” So, this is people with kids spending a lot of time in their backyards, you know, barbecues, patios, toys. All those core categories were right in our sweet spot in terms of behavior shifts.
Stephen Shaw: Wow. It’s hard to believe, with Canadian Tire, I think 80% of Canadians or some figure like that shop at Canadian Tire, hard to believe that you could actually find new customers, but this is a generational thing as you’re pointing out. What about shifts in… obviously, people loading up on essentials and, obviously, that’s been going on. Non-essentials, the kinds that you’re describing anyway for home entertainment or boredom busters, I think you said?