Case Study 1
Canadian Tire—A Company With Traction!
Communication in Process
Founded in 1922, Canadian Tire is seen by many as a Canadian institution—it even has its own money. And, at a time when so many Canadian companies are being sold to U.S. owners (even Tim Hortons), Canadian Tire is still wholly ours!
Canadian Tire is an example of an organization that faced a near-death experience but by good management has continued to be brand relevant. Competition from Home Depot and others continues to be tough, but Canadian Tire still delivers. One of the most common things it delivers is its catalogue. Nine million are currently distributed each year to Canadian homes in French and English.
In the 1990s business analysts wrote the company off, calling it the “retailer that was going to die.” However, in 1994 the company imported Stephen Bachand from the United States and aggressively remodelled its stores. In comparison to the fate of other domestic retailers, such as Woolco, Eaton’s, and, BiWay, Rob Gerlsbeck, editor of Hardware Merchandising Magazine, calls Canadian Tire “the last of the true great Canadian retailers.” After Bachand’s departure, Wayne Sales continued to oversee Canadian Tire’s growth with a plan to “grow from our strengths and develop new ones.”
The company is successfully competing with Wal-Mart, Home Depot, and other U.S. retailers, and has done “exceptionally well” according to Gerlsbeck. Canadian Tire’s survival and success is no accident. The company successfully undertook a series of corporatewide changes that positioned the Toronto-based retailer for profitability.
In 2005 Canadian Tire opened 17 new stores and expanded 11 so it could devote more room to seasonal goods such as snow blowers and Christmas decorations. Adding the space is part of the corporation’s strategy to boost profit 15 percent annually over the next four years. The company continues to add the larger stores, introducing up to 80 in 2006. The new outlets are brighter and have more spacious aisles and about 20 percent more room for merchandise than the traditional stores. Sales at the new outlets are more than one fifth higher than at the old ones, the company has reported.
In 2005 the company had growth at all of its divisions. Earnings before income taxes and minority interest at its flagship Canadian Tire stores rose 8.5 percent to $80 million. Additionally, pretax earnings at its Mark’s Work Wearhouse clothing stores rose 37 percent to $42.2 million. After seven consecutive quarters of 17 percent average sales growth, the clothing chain’s sales increase will moderate as the company continues to expand projects. Pretax earnings at the credit card division rose 32 percent to $42.8 million while profit at the company’s gas-station unit increased 24 percent to $3.2 million.
Canadian Tire continues to succeed and evolve with its unique mixture of products by sticking to its strategic plan of keeping the company intact and successfully promoting its banking and retailing business.5 This success has not gone unnoticed, as Charlie Finnbogason, managing partner of Franklin Retail Advisors of Winnipeg, notes: “Canadian Tire is reinventing itself before it has
to. . . . The customer is evolving and it appears [Canadian Tire] is trying to evolve in time with them.”
Critical Thinking
•How is Canadian Tire similar to many retailers today?
•What kinds of changes are other companies undergoing?
•Why is communication within an organization especially important in times of change?
•How can effective communication help Canadian Tire remain successful?
Process in Progress
Canadian Tire Revisited
By 2006 Canadian Tire Corporation had become Canada’s most-shopped general merchandise retailer, operating more than 1100 stores, gas bars, and car washes in a growing network of interrelated business.Canadian Tire Corporation Limited consists of four distinct operations: retail, financial services, petroleum, and PartSource. With the acquisition of Mark’s Work Wearhouse, the company added “apparel” to its list of offerings. More than 48,000 Canadians work for the Canadian Tire organization from coast to coast.
There are more than 462 Canadian Tire core retail stores, offering a selection of national and retail brands through three “stores” under one roof—automotive parts, accessories, and service; sports and leisure products; and home products. Customers also have the option of shopping online ( and obviously do, for Canadian Tire is among the country’s top three busiest e-commerce sites.
PartSource is an automotive parts specialty chain with 54 stores designed to meet the needs of major purchasers of automotive parts—professional automotive installers and serious do-it-yourselfers.
Canadian Tire Financial Services offers a variety of financial products, primarly branded credit cards. The division also markets a variety of insurance and warranty products, in addition to operating an emergency roadside service. Canadian Tire Financial Services manages over 4.0 million Canadian Tire MasterCard accounts and allows customers to access services online (
Canadian Tire Petroleum is the country’s largest independent retailer of gasoline with more than 259 gas bars, 247 convenience stores and kiosks, and 67 car washes. In Ontario, Canadian Tire Petroleum operates a network of 14 Pit Stop locations offering customers a variety of automotive services including oil changes, rust check, and other services.
Mark’s Work Wearhouse is Canada’s largest supplier of unisex apparel with 334 stores in Canada. Under the Clothes That WorkTM marketing strategy, Mark’s sells apparel and footwear in work, work-related, casual, and active-wear categories, as well as health care and business-to-business apparel. Canadians can shop online ( the variety of services the company is involved in, effective and clear communication between the head office and Canadian Tire’s dealers and its employees is what has ensured the company’s status as a success story. Shifts in strategy are based on honest and simple communication with the head office, as well as constant feedback from across the
organization. “From the creative stage to testing to implementation—associate dealers are involved every step of the way,” explains Scott Bonikowsky, senior director of Corporate Affairs. “It’s just how we do business.” The key to effective communication, both internal and external, according to Bonikowsky, is honesty: “You’ve got to be open about the bad news and the challenges as well as the good stuff.”
Critical Thinking
•Canadian Tire’s executives recognized that informal communication would not be appropriate during the company’s many new campaigns and initiatives designed to revitalize the retail chain across Canada. Why would informal channels of communication be dangerous at such a time of change?
•What obstacles might hinder the downward, upward, and horizontal flow of information across an organization with as many employees and stores as Canadian Tire? Why is it important that communication experts like Scott Bonikowsky consult with dealers, employees, and customers before dramatic changes are made in stores and product lines?
•Since Canadian Tire has a unique blend of products and services, how can the corporation communicate and promote its various components successfully? What strategies would work?
Process to Product
Applying Your Skills at Canadian Tire
Responding to the customer is key to Canadian Tire’s success. Addressing customers both inside and outside of the store is a strategy that the company uses in practical and successful ways.
Focus groups reported that although half of Canadian Tire customers were women, females were spending only 35 percent at the cash register. Lisa Gibson, manager of media and public relations for Canadian Tire Corporation, Limited, observed that Canadian Tire would benefit from marketing to women since research reveals that women either make or influence about 85 percent of purchasing decisions in Canadian households.73 Other initiatives include providing a wedding registry, to compete with major department stores and specialty shops, so that couples can choose products related to their lifestyles, and launching Canadian design icon’s Debbie Travis products of ready-to-assemble furniture, paints, and other products.
On the charitable side, every February Canadian Tire hosts a huge skating party! Families from across the country join Canadian Tire employees in The Great Skate and help raise money for JumpStart™ by skating anywhere they can find an ice surface—on ponds or backyard or community rinks. Created in 2005 by the Canadian Tire Foundation for Families, JumpStart is a charitable program that helps kids in financial need participate in organized sports and recreation. The program funded almost 25 000 kids in 2005, giving them the opportunity to participate in all the healthy benefits that result from physical activity. National in scope but local in focus, the program is delivered through over 225 community chapters and pays for registration fees, equipment, and transportation costs for children whose families are in financial need.
Canadian Tire believes that playing sports allows kids to learn about teamwork and enables them to build confidence in themselves. Martha Billes, chair of the Canadian Tire Foundation for Families, says: “By helping to give all kids a chance to play, we’re making an investment in our children that benefits everyone in the longer term. Healthy kids grow into healthy adults.” In support of this initiative, donations are encouraged, and Canadian Tire promises to match gifts up to $500 000.74
Canadian Tire’s strategy seems to be working, and the company has attracted American interest. U.S hedge fund manager William Ackman admires the Canadian retail icon for its “great company, great management, cheap stock.” Although there has been speculation of an American takeover, analysts predict that the company would not be interested in any major change.75
Your Task
Your boss asks you to determine the best way to communicate with associate dealers about the importance of supporting The Great Skate. Associate dealers meet every year, but the next meeting is not for nine months. In light of this, the suggestion has been made that
a formal teleconference would work best. You are exploring the idea of using the Internet to conduct an informal question and answer session followed by a virtual, real-time meeting. What would be the advantages and disadvantages of an online session? Would a teleconference session allow for a free flow of ideas, or simply complicate matters? How important would it be to include senior corporate managers in any communication exercise?
In a memo addressed to your boss, outline the advantages of an online meeting, and present a strong argument for holding a teleconference based on the need to avoid a breakdown in communication while overcoming any obstacles that might create misunderstandings.