Canadian Tire N.B. under consideration for new small market concept stores

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Canadian tire is the newest big chain going small in order to capture a larger market and the reason, according to a New Brunswick economist, is likely tied to increasing fuel prices.

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Cindy Wilson/telegraph-journal

New Brunswick locations are also under consideration for new, small market Canadian Tire concept stores. Two recently opened up in Ontario.

Following similar moves made by Home Depot in recent years, Canadian Tire this month unveiled two new small market concept stores in Hearst, Ontario and Deep River, Ontario - the first two of four test locations.

"We have identified approximately 100 communities across Canada that we believe to be potential sites for this concept," said Mike Arnett, president of Canadian Tire Retail.

Lisa Gibson, communications officer with Canadian Tire confirmed that New Brunswick locations are also under consideration.

"I can't confirm any specific place. But I can confirm that we are looking in the New Brunswick areas and areas across the country. These are areas that are currently under-served or areas which offer good real estate opportunities," said Gibson.

Jason Childs, an economist and professor with the University of New Brunswick in Saint John, said many big chains may be rethinking their strategy in light of an expected change in consumer buying patterns as fuel prices rise.

Typically big chain stores have built one big store in a central location to which customers would drive, sometimes for long distances. In a province like New Brunswick, rural customers sometimes drive quite a distance in order to shop at the store of their choice, sometimes getting better prices at the big chains than at local stores.

That, says Childs, will change. Higher fuel prices will make customers reluctant to spend money on gas to shop far away from their home.

"Customers will be less likely to want to travel long distances to get to the big store. The small store might not have as much stuff, but that's not such a big deal anymore," said Childs.

Childs said that rising costs were likely part of the decision by Canadian Tire to introduce its small store concept.

"They have had to hang their business strategy around the decreased willingness to travel. A store in Rothesay may be smaller than one in Saint John and it's only a 15 minute drive. But if gas is getting really expensive, consumers won't want to drive. Now, some of these big chains are recreating little stores. That makes sense to me," said Childs.

With another two stores set to open in Athabasca and Cochrane, Albta., Canadian Tire's small market concept is designed to provide customers in smaller towns with a slightly abbreviated selection of products.

Ranging from 14,000 to 18,000 square feet, the new small stores will either replace traditional Canadian Tire stores or be incremental new stores enabling the company to serve even more of the Canadian population.

Each of the cost-effective new stores is expected to generate $5-9-million annually.

Each store will feature automotive, hardware, home, sports and seasonal and feature full size Mark Work Wearhouse offerings. Where available the stores will offer an on-site gas bar.

"By leveraging the strengths of our inter-related businesses, we are able to bring this new concept to these markets," said Arnett.