Key Takeaways

• CTC recently invested in an omnichannel marketing strategy to provide customers with a seamless shopping experience. The company plans to spend C$1.2 billion on making sure that its digital and physical channels are effectively and efficiently linked in a way that will enhance customer value. The brand will use some of the funds to develop a system that speeds up same-day customer pick-up options to increase customer value and convenience. The technologies that will be implemented include automated click-and-collect lockers as well as curbside-enabled pickups via text.
• CTC will also expand Canadian Tire Bank's offerings so that customers gain access to Buy Now Pay Later (BNPL) financing options. According to Canadian Tire Financial Services CEO and president, Aayaz Pira, BNPL is an upgrade that effectively integrates the Triangle Rewards Program with its retail brand in a way that supports the organization's digital transformation and growth agenda.
• CTC will spend C$500 million on modernizing its IT infrastructure. This will include a new Digital Core Banking platform that will be developed by Temenos to enhance delivery, consumer engagement and brand revenue, and also allow for richer digital experiences among consumers.

Introduction

Canadian Tire Corporation's Digital Transformation Strategy

1. Company Overview

• Canadian Tire Corporation (CTC) is a public company that was founded in 1922 by John W. and Alfred J. Billes. The two brothers invested $1,800 in the initial business that was called Hamilton Tire and Garage Ltd, but they officially changed the business name to Canadian Tire Corporation in 1927.
• The company sells products and services such as sportswear, automotive parts, housewares, leisure products, party supplies, and financial services.
• CTC has 1,700 locations across Canada and prides itself on having skilled employees that have enabled the brand to gain recognition as Canada's #1 retail brand.
• To secure its position in the competitive business environment, CTC has invested heavily in innovation, unique merchandising strategies, and high-quality products and services. This ensures high customer value and satisfaction in the long term.
• Since 2002, the brand has made 4 acquisitions including Mark's (2002), FGL Sports (2011), Padinox (2017), and Helly Hansen in 2018.
• CTC's revenue has improved in recent times, increasing from C$14,534.4 million in 2019 to C$16,292.1 million in 2021.  

2. Corporate Values and Mission

• The company states that its operations are carried out based on integrity, adherence to industry rules and regulations, and the policies and procedures established by the organization itself. Doing so ensures that the brand provides customer value, employee, and stakeholder satisfaction in the long term.
• CTC states that its mission is “to excite and serve Canadian customers from coast-to-coast.” The firm achieves this by providing customers with a wide range of high-quality and affordable products and services.

3. Recent and Announced Strategic Initiatives

• CTC recently announced that it plans to invest C$3.4 billion over the coming 4 years in a digital and physical transformation process that is designed to increase customer value and organizational growth in the long term. The move will also enable the brand to increase its customer share. Below are the programs that are part of the 4-year plan.

3.1 Enhanced Integration Between Digital and Physical Marketing Channels

• A report in Cision Canada stated that CTC recently invested in an omnichannel marketing strategy to provide customers with a seamless shopping experience. The company plans to spend C$1.2 billion on making sure that its digital and physical channels are effectively and efficiently linked in a way that will enhance customer value.
• The digital transformation strategy includes the launch in 2022 of the new store design, “Concept Connect,” in 225 of its stores.
• Furthermore, the brand will use some of the funds to develop a system that speeds up same-day customer pick-up options to increase customer value and convenience. The technologies that will be implemented include automated click-and-collect lockers as well as curbside-enabled pickups via text.
• “Remarkable Retail” stores were opened recently in Ottawa and Welland, and another will be opened in Calgary in 2025. These stores are more than 100,000 square feet wide, and their main purpose is to allow customers to speedily click and collect their online purchases and use the brand's auto services.
• The brand also plans to accelerate its digitization strategy to make sure that the customer journey is optimal and memorable. The technologies that it plans to deploy include “further use of electronic shelf labels, digital appointment scheduling, digital wayfinding, and an enhanced in-store mobile app experience through redemption of eCTM, including loyalty offer swapping.”
• Additionally, CTC will use some of the funds allocated to the omnichannel strategy to enhance its inventory processes in a way that ensures products are much easier to assort and locate. The brand will integrate AI into the inventory infrastructure to speed up processes in the supply chain.
• CTCs “One Digital Platform” is a digital tool that is also expected to improve online consumers' user experiences and help connect the brand to its customers across the country.

3.2 Improvement of the Triangle Rewards Program

• The brand will expand on the Triangle Rewards Program by enhancing its data collection and application capabilities through partnerships with notable and world-recognized networks.

 

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• It will also expand Canadian Tire Bank's offerings so that customers gain access to Buy Now Pay Later (BNPL) financing options. According to Canadian Tire Financial Services CEO and president, Aayaz Pira, BNPL is an upgrade that effectively integrates the Triangle Rewards Program with its retail brand in a way that supports the organization's digital transformation and growth agenda.
• A new product, Global Money Transfer on Triangle MasterCard, allows customers to send money to more than 100 countries across the globe.

3.3 Supply Chain Automation

• CTC will invest C$675 million to improve its automation and supply chain infrastructures.
• One of the programs in this plan is the launch of a 1.3 million square foot highly advanced eCommerce fulfillment center in the Greater Toronto Area. Last year, the company faced product shortages and shipping delays, so the fulfillment center and additional space will ensure that consumer demand is satisfied and products reach them in a timely manner.
• The brand also plans to launch an “innovative robotics automated system in Calgary, Brampton, and Montreal DCs.”
• It will also expand its capabilities in Western Canada and expand the Montreal distribution center (DC) by 322,000 square feet. While these two might be physical transformations, they nevertheless support the brand's plan for increased customer value, market share, and organizational growth.

3.4 Modernization of the IT Infrastructure

• CTC will spend C$500 million on modernizing its IT infrastructure. This will include a new Digital Core Banking platform that will be developed by Temenos to enhance delivery, consumer engagement and brand revenue, and also allow for richer digital experiences among consumers.
• Furthermore, the brand shall continue to invest in data and analytics in order to ensure that the Triangle Rewards Program continues to provide personalized consumer products and services.

3.5 Automated Trucking Technology

• In 2021, CTC partnered with the trucking startup NuPort Robotics and the Ontario government to develop and launch automated trucking technology that allows CTC to improve its supply chain and commercial deployment processes.
• The partners invested C$1 million each into the venture to test the AI technology and make sure that it would be effective in resolving the middle mile challenge related to driver safety and efficiency.

4. Quotes From the CEO

• In an interview with The Star in March 2021, Greg Hicks, the President and CEO of CTC, opined that “The next big adjustment will involve technology. No longer will technology be viewed as a separate function. Virtually every company is now a technology company.”
• During the same interview, he noted that CTC tapped into e-commerce during the COVID-19 pandemic, and at the time, “We were in the process of methodical investment in our websites. Having demand accelerate the way it did certainly caught us by surprise and we had our share of hiccups, but the foundation we were building enabled us to respond quickly.” He added that “we invested heavily in the Triangle [rewards program] and Canadian Tire app. Finally, and this one was key, we in-sourced in late 2019 our digital marketing capability, creating a centralized team of experts.”
• In his message to shareholders in the company's 2021 annual report, the CEO stated that "In addition to changing how we work, we’d spent the previous two years focused on building a better omnichannel business, including our platform upgrade, our site experience, our digital marketing, our mobile apps, our in-store technology, and our improvements in both the economics and the speed of experience across every customer fulfillment method."
• Gregory Craig, the Executive VP and CFO at CTC, noted in August 2022 that the brand was focused on supporting its strategic investments. He added that “And at the same time, we're committed to kind of deliver them because I don't think either of us want us to make a short term decision and stop investing in digital as an example.”

 

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5. CTC's Market Tech Stack

• According to Crunchbase, CTC uses company tech stack such as HTML5, Google Analytics, and Google Fonts.
• Its website tech stack includes Viewport Meta, IPhone/Mobile Compatible, and SSL by Default.
• Awesome TechStack reports on its website that CTC uses 17 technologies. These include RequireJS, Select2, Microsoft ASP.NET, New Relic, Cloudflare Bot Management, IIS, Windows Server, Cloufdlare, Google Tag Manager, and DigiCert, to name a few.
• According to Enlyft, CTC uses 939 technologies from 10 vendors such as IBM, Apple, Microsoft Corporation, Apache Software Foundation, and Adobe Inc. The technologies include VMware, vFabric, RabbitMQ, Vue.js, and Google Drive.

6. Corporate Challenges Faced by Canadian Tire Corporation

6.1 Impact of the Russo-Ukrainian War on Company Expenditure

• The Russo-Ukrainian War affected many companies, including CTC. The company was forced to halt its retail, eCommerce, and product shipment operations in Russia in order to protect its employees and support Ukraine.
• The brand's Helly Hansen Russian operation had more than 41 retail locations and 300 employees in Russia. Its closure, therefore, led to a reduction in the brand's revenues and an increase in overhead costs due to lost consumer revenue and higher employee management in the affected locations respectively.
• Although the brand experienced increased sales across the retail brand in Q2, CTC's withdrawal of the Helly Hansen brand from Russia has led to higher expenses that also include fluctuations in foreign exchange activities.
• Its revenue growth and income before taxes also declined in Q2 because the company spent $36.5 million during the company's exit strategy from Russia.

6.2 CTC's Limited eCommerce and Online Services

• Over the years, CTC has mainly focused on its physical stores, with 1,700 stores spread across the country and few eCommerce outlets.
• This was a major challenge during the pandemic as physical stores were shut down across the globe, but the company rallied and deployed a stronger online presence in order to ensure continued customer patronage.
• Consumers nevertheless continue to favor online shopping since the pandemic, so firms that want to thrive in the marketplace should be prepared to tap into this potential.
• CTC has been performing admirably, with eCommerce sales increasing 29.9% from 2020 to reach more than C$2 billion in 2021. However, the brand is still developing digital infrastructure, and this means that CTC is still lagging behind in providing comprehensive online services that can satisfy consumer needs today.
• That is why the recently-announced digital transformation initiatives will prove useful in making sure that the brand enhances the customers' digital experience, grows the brand's market share, and obtains higher revenue in the long term.

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