When warehouse clubs were getting started in the U.S., people wondered if people would be willing to buy food in the same store where they bought tires. The answer was clearly yes. Now, a retail chain in Canada with the word tire in its name is looking to see if it can sell groceries along with all the hard goods that have made it successful over the years.
Canadian Tire, according to a report by The Globe and Mail, plans to test grocery sales at two of the company's stores in Ottawa.
Tom Stephens, president of Brand Strategy Consultants Inc. and a former executive at Loblaw Cos., told the paper, "Canadian Tire is up against some really good food retailers. Food is a different ball of wax from screwdrivers and electric fans."
Canadian Tire is not completely new to food. The chain stocks convenience foods at its big box stores and g-stores.
The chain's test of food sales is a worrisome sign for Canadian grocers, said Kevin Grier, senior market analyst at the George Morris Centre and editor of the Grocery Trade Review.
"It's more negative news for the grocery sector that already has been pummeled by Walmart and Costco," he told The Globe and Mail. "Everybody is encroaching on grocers, but grocers haven't done as good a job of encroaching into other areas."
Discussion Questions: What do you think Canadian Tire will learn about the food business from its two store test? What will it need to do if it is to succeed in the business going forward? What must Canadian supermarkets do to compete against Canadian Tire and other formats selling groceries?