News
Canadian retailers aim to drive customer traffic with more stores under one roof

July 31, 2008, Toronto – Traditional shopping malls and department stores are taking a back seat to a spruced up version of the all-in-one customer experience as Canadian retailers pack multiple store fronts under one roof to drive more customer traffic.

Traditional shopping malls and
department stores are taking a back seat to a spruced up version of the
all-in-one customer experience as Canadian retailers pack multiple
store fronts under one roof to drive more customer traffic.

In the past few weeks, Canadian Tire threw open the doors of two “test locations'' in northern Ontario that plunk a Mark's Work Warehouse clothing store amidst home appliances and gardening tools.

And, the incoming CEO of Hudson's Bay Trading Co., waxed poetic about revamping the look of some larger multi-floor Bay department stores to include Zellers discount centres, Fortunoff jewellery stores or Home Outfitters locations.

The concept diverts from the power centre ideals that have driven retail growth over the past decade by encouraging shoppers to scoot from store to store in their cars.

But since the "big box'' idea was introduced some retailers have been looking for ways to keep shoppers inside their stores for longer, rather than encouraging them to take their business to another nearby competitor, or even out of the power centre altogether.

If it's all under one roof, it's closer, and that means more people are likely to buy it, some retail observers suggest.

Add to that soaring gas prices and the idea of parking the car and loading up sounds a lot more reasonable.

"It's cheaper to get to one supercentre where there's ample parking and the like,'' said Daniel Baer, leader of retail and wholesale practice at Ernst & Young.

"You're going to see more of these supercentres, fewer conventional malls and fewer conventional stores.''

Canadian Tire is one of the latest retailers to jump into the fray by installing its Mark's Work Warehouse brand at two rural locations in Hearst and Deep River, Ont.

When shoppers walk into the new locations they're greeted with a “power aisle” which runs down the middle of the store through all of the traditional products, leading to the entrance of Mark's.

The goal is to make Canadian Tire the go-to destination for local shoppers, explained Glenn Butt, senior vice-president of the company's store support and design.

"If we can keep those customers from having to make the long trip into the large cities, and can shop one-stop in Canadian Tire, we think that is the No. 1 opportunity for us,'' he said.

The repositioning of Canadian Tire as more than just tools comes after the company revamped the design of many stores to appeal to women a few years back.
"They saw the demographics of the shopper at Canadian Tire and it was heavily weighted towards men, with women sitting outside in the parking lot waiting for them to come out,'' said David Howell, president of Associate Marketing International, a global management consulting company.

The new approach bets that more women will come inside – possibly to buy clothes for themselves – and leave with a hammer, nails and a blouse.

While the idea of multiple stores under one roof isn't exactly new, it is timely because of a shift in demographics.

Baer says that with an aging population more people find that mobility is becoming an issue, so they want to do as little travelling as possible to buy the essentials.

Then there are families, whether they're single parents or not, who are already grappling with a work-life balance that usually isn't going in their favour. They'll cut corners running the weekly errands whenever given the chance.

But the icing on the cake are the competitive options already available to these two groups of consumers.

Costco has spent more than 20 years luring away supermarket shoppers with bulk supplies of food items and a variety of other discounted products including DVDs, furniture, computers and appliances.

More recently, Wal-Mart has led an impressive campaign to drive a stake into the Canadian supermarket chains by offering all of its trademark items as well as a wide array of food products, including fresh produce.

Wal-Mart Canada says it plans to open or expand 25 to 27 stores by the end of its current financial year in January 2009, with most of them being new supercentres.

Supermarket giant Loblaws (TSX:L) made an unconventional leap in the opposite direction, straying from food stuffs and into shirts and shorts two years ago with its Joe Fresh Style discount clothing line.

Loblaws “always had a fairly significant share of the infants market,'' said Howell, who once worked as a consultant to the company.

“Infants' ware is kind of impulse and I think that's what drove them to launch Joe Fresh.''

Food retailers, who are used to thin margins on their products, see huge profits in the marked up prices of clothing.

Howell was more skeptical about the success of Canadian Tire's stride into fashion.

“Quite frankly, I don't see a Mark's working all that well in the middle of a Canadian Tire,'' he said.

“I'm just not sure that the guy who runs out to get a spare part while he's working on something is going to want to try clothes on.''

So far, Canadian Tire says its impressed by the first two weeks at its test locations.

“It's pretty hard to give you any kind of specifics'' at this point, Butt said

“But we are pleased with both the consumer's reaction to the format and the overall results.''

The Canadian Press