Canadian Tire CEO Greg Hicks is pictured at the company’s museum in their Toronto head office on Nov. 21, 2023.Christopher Katsarov/The Globe and Mail
As Greg Hicks prepared for the biggest event on Canadian Tire’s corporate calendar – the annual dealers’ convention last fall, where he would address hundreds of store owners – the chief executive officer knew his speech had to acknowledge it had been a tough year.
There were the natural disasters – floods and wildfires. There were business disruptions, such as the Port of Vancouver strike and a devastating warehouse fire that destroyed millions of dollars of the company’s inventory.
“The list is long,” Mr. Hicks said during an interview just before the convention.
And that’s before he’s even mentioned the economy, and the pullback in consumer spending on discretionary purchases – or roughly two-thirds of what a typical Canadian Tire store sells. Think toys, bikes, cookware and camping gear.
Rewind a year, and Mr. Hicks thought the worst was behind them. At the 2022 dealers’ gathering, emerging from crisis mode was a theme of his speech. He was appointed CEO of Canadian Tire Corp. Ltd. just one day after the World Health Organization declared COVID-19 a global pandemic in 2020 – and after a tumultuous couple of years, Mr. Hicks had (finally!) been looking more toward the future.
In March, 2022, the company announced the launch of “Better Connected,” a $3.4-billion, four-year plan designed to increase sales across its banners, including Canadian Tire, Sport Chek and Mark’s.
Investments include thousands of new product launches under the stores’ owned brands, upgrades to physical stores and digital operations, construction of new warehouse space and expansion of the Triangle loyalty program, among other initiatives.
But now, nearly at the halfway mark of that plan, the company has pumped the brakes, signalling it will not meet the $3.4-billion target by the end of 2025, as it delays spending on low-priority investments and copes with severe economic headwinds.
In the first nine months of this fiscal year, total revenue fell by 2.1 per cent to $12.2-billion, and normalized EBITDA (earnings before interest, taxes, depreciation and amortization) declined to $1.5-billion, compared $1.6-billion in the same period the previous year. Mr. Hicks is still looking to the future, but it’s become murkier.
“What has changed is the assumptions that we had, with respect to the demand environment. So how does that adjust the strategy? It adjusts the pace,” Mr. Hicks said during an interview with The Globe and Mail at the company’s head offices in Toronto. “We still find ourselves in a position where forward-looking visibility is really tough.”
Canadian Tire says modernizing its stores is a major part of the Better Connected strategy.Sean Kilpatrick/The Canadian Press
In that tough environment, the parent company isn’t the only one making investments. Its store owners are being asked to kick in cash, too.
Modernizing Canadian Tire stores is a major part of the Better Connected strategy. This is now happening more slowly, but the company estimates more than 125 of the 500-plus stores will have been updated in some way by the end of this year.
At a minimum, this means spiffing up an existing Canadian Tire outlet, with features that include a new wood-panelled sign on the storefront, upgraded locker areas for pickupof onlineorders and technology to make it easier to find products. In some cases, it means building an entirely new store, with significantly more space, new floor plans, more efficient warehouse operations in the back and more tech.
“I’ve gotten calls from at least 50 to 60 dealers so far, and I get dealers coming in every single day to see how it looks,” says Ezhil Natarajan, standing in his new store in Etobicoke, Ont., which opened in late September. His old location, a five-minute drive away, was 25,000 square feet andabout 40 years old; this one is 78,000 square feet. “Everybody wants to find out … especially in today’s interest rates – is it worth investing?”
Mr. Natarajan says he put in even more money than the corporation suggested for this location, to add more technology. Walking around the bright, cavernous space, he points out touchscreen stations where customers can search for products.
The system can signal a corresponding electronic shelf label to light up, pointing the way; or it can alert the warehouse to fetch purchases directly, which is helpful for cumbersome items such as snow blowers. In the automotive shop, he shows off a camera system that photographs cars as they drive in, checking tire alignment and tread wear that staff can show to customers waiting at the counter.
Mr. Hicks at the Canadian Tire head office in Toronto on Nov. 21, 2023.Christopher Katsarov/The Globe and Mail
Development of this store was a two-year process. It still looks like a Canadian Tire – if supersized, and more brightly-lit – but there are subtle, strategic changes. Large signs display some national brands such as Cuisinart, but the overwhelming majority advertise the company’s owned brands, a vast portfolio that includes Motomaster, Paderno, Canvas, Noma and more. Another goal of the strategy is to expand private-label brands to account for 43 per cent of sales, up from 38 per cent in 2022.
“That insulates us from the Amazons of the world,” Mr. Natarajan says.
Even under the same owner, the new store is yielding some surprising results. Mr. Natarajan says his old location ranked almost dead last among Canadian Tire stores in the pet category; here, he has already jumped into the top 100.
Partly it is because products are easier to find: Sections are prominently labelledwith new illuminated “light box” signs. He also benefits simply from having more space. He can display items such as furniture, which some shoppers weren’t even aware he carried at the last place. Shelves are deep enough to stack bulky storage bins on their sides, so customers can pull out one or two rather than wrestling with a whole stack.
Such changes may seem small, but can make a difference.
“We’re extremely pleased with the sales to date,” Mr. Hicks said of the new stores, where customers buy more items during each visit, on average, than they do in other locations.
This is important because an overwhelming share of the company’s retail sales still happen in person – 90 per cent at Canadian Tire, 85 per cent at Mark’s and 75 per cent at Sport Chek. Some stores in the network are more in need of a refresh than others: There are still locations that can feel dark, cramped and out of date.
“This is going to be a good testing ground for us,” says Bruno Moscone, the company’s associate vice-president of store planning, gesturing around the Etobicoke location. “When we see people come in here and say, ‘This is Canadian Tire?’, that’s huge for the brand.”
Canadians who have grown up with the chain may not realize that Canadian Tire is a bit unusual. Bryan Pearson, an industry consultant and former CEO of Air Miles’ parent company, LoyaltyOne Inc., recalls that when international retailers visited his Toronto offices, they would always ask to visit Canadian Tire, baffled by its assortment of goods and the place it occupied in the market.
Turns out, not every country has a physical store where you can buy a spatula and motor oil and a Nespresso machine and hockey skates and sponges and a camping tent and a television and a chocolate bar and an air compressor and a parka and, yes, tires, all in one trip.
“It’s such an interesting anomaly. It’s Canada’s unofficial department store,” Mr. Pearson said.
Expanding the loyalty program is another goal of Better Connected, as is boosting members’ spending, though Mr. Hicks acknowledges winning new members is ‘more challenging in this environment.’Christopher Katsarov/The Globe and Mail
While the company has grown beyond Canadian Tire stores – with acquisitions of Mark’s, Party City, the Helly Hansen apparel brand and Sport Chek – the flagship chain still accounts for more than half its revenue and has maintained a significant foothold even after a century in business.
Ask Mr. Hicks about Canadian Tire’s e-commerce strategy, and he points to those brick-and-mortar stores, which he sees as integral to the logistics needed to make online retail work.
“If I told you that we had 40 million square feet of same-day microfulfilmentspace within a 10-minute drive of 90 per cent of the population – that just happened to have storefronts attached to them – probably your context changes pretty quickly, and you’d probably think differently about our ability to compete in e-commerce,” Mr. Hicks said. Likely because store pickup is free, click-and-collect is a sizable chunk of the online business. In addition to regular shipping to customers’ homes, the company has been testing express delivery through DoorDash.
Still, the digital operations have needed some work. Since the launch of its Better Connected strategy, the websites and mobile apps for Canadian Tire, Sport Chek and Mark’s have had an overhaul. Canadian Tire’sold website was so fusty that it couldn’t even handle booking automotive service appointments or create gift registries. There are still improvements needed in search functionality, Mr. Hicks said, as well as more accurately reflecting what’s in stock at each store.
As part of a new partnership with Microsoft Corp. announced last year, the company is using generative AI to build a “shopping co-pilot.” This technology would offer a digital assistant on the mobile app, answering questions about products via text or voice, in multiple languages.
“Amazon’s good for buying,” Mr. Hicks said. “We want to enable shopping.”
Consumer spending is under intense pressure, so Canadian Tire has been working with dealers on order forecasting.Christopher Katsarov/The Globe and Mail
The trouble is, shopping is exactly the kind of thing Canadians are trying to do less. Consumer spending is under intense pressure. Canadian Tire has been working with dealers on order forecasting, to strike the right balance between essential products, which are selling better, and discretionary items that boomed during COVID but are now lagging.
One tool the company uses to cope is the customer information it gathers. During the 2008-09 financial crisis, the retailer was still issuing paper Canadian Tire money, a loyalty program that – despite its nostalgic value – was next to useless in tracking shopping behaviour.
“We didn’t have the same level of analytics capabilities to really assess what was happening with the consumer back in the last recession,” Mr. Hicks said.
Now, the Triangle Rewards loyalty program has 11 million active members. That, combined with the much broader purchasing data captured through the 2.3 million Triangle credit cards issued by Canadian Tire’s banking arm, provides an important window on the economy, he said.
“Given this economic backdrop, it’s all about how we deliver value, knowing what we know about these customers,” Mr. Hicks said. “And Triangle is the biggest value play we have.”
Expanding the loyalty program is another goal of Better Connected, as is boosting members’ spending. Triangle Select, which charges an annual fee in exchange for more valuable points offers and other perks, launched last year. Roughly 30,000 customers have joined so far, but Mr. Hicks acknowledges winning new members is “more challenging in this environment.”
And the future of the entire loyalty program is currently in flux. In October, Canadian Tire announced an $895-million deal to buy back a minority stake in its financial services division from Bank of Nova Scotia. Since then, the company has been evaluating “strategic alternatives” for the business. That could mean finding a new partner.
“Groceries, gas, DIY, banking – those are the big four, where your dance card needs to get full if you’re going to take a step-change in presence in the marketplace. And a lot of those people have dance partners,” former LoyaltyOne CEO Mr. Pearson said. “Canadian Tire has cachet on the Triangle side. … There’s a deal to be done, it’s just, the devil’s in the details.”
An economic climate of such deep uncertainty is a challenge, especially for a CEO who clearly likes to have a plan for everything.Mr. Hicks arrived for an interview with a sheaf of typed notes – from which he occasionally read aloud. Even his daily schedule is a quantitative exercise: the company’s leadership team sat down last year to identify four main areas of focus, and each quarter they measure how evenly the CEO’s time is allocated among those.
Partly, this is an effort at balance, as one of Canada’s largest retailers tries to navigate the current economic turmoil without neglecting long-term strategic goals.
Controlling shareholder Martha Billes, the daughter of Canadian Tire co-founder A.J. Billes, believes that strategy is important to the company’s future. In a statement, Ms. Billes wrote that she and her son and fellow board member, Owen Billes, are confident in the plan.
“Greg was appointed to CEO at a pivotal time in history,” she wrote. “The pandemic accelerated the evolution of the business, and the Better Connected strategy was designed to maintain that momentum and ensure the continued success and longevity of the company.”
As the economy has stalled, though, the team has had to rethink the pace of their ambitions. But Mr. Hicks said he is confident in the plan.
“It doesn’t shift the fundamental drivers of the strategy,” he said. “As the market stabilizes, we believe, with potentially even more conviction now … that we can achieve the objectives that we put forward.”
Still, as the current landscape – and indeed, Mr. Hicks’ nearly four years on the job so far – have shown, even the most prepared CEO can’t prepare for everything.
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
