TORONTO -- Canadian Tire (TSX:CTC.A) is planning to open two experimental stores in Ontario that will offer an expanded variety of food and other consumable items as part of a new product assortment.
The two stores, which will be in the Niagara region city of Welland, Ont., and the Ottawa suburb of Orleans, will test a new retail concept called the "smart store."
Canadian Tire spokeswoman Lisa Gibson said the stores will open in mid-November and will emphasize "productivity."
She said convenience food items, such as bread and milk, will be one small part of the new concept, which will offer one-stop shopping for customers.
"Our research tells us that (selling food items) will probably increase customer traffic to the store and certainly if someone's in buying other items, if they need milk or bread, it's a great opportunity to purchase it there," Gibson said.
Canadian Tire isn't the first large-format retail store to move into food sales.
Shoppers Drug Mart (TSX:SC) has described its Nativa Organics line of food as "the biggest success of any kind of product label we have" and Wal-Mart -- which has long sold some grocery items -- now includes fresh produce among its food offerings at some stores.
Retail analyst John Winter described Canadian Tire's move into food and other consumables as "very smart."
"When the customer is there, you try and sell them as much as possible of what they need," Winter said. "It will be a better service to time-pressed consumers."
Elizabeth Evans, director of the Ted Rogers School of Retail Management at Ryerson University, said diversifying product offerings is an increasingly necessary strategy for large-format retailers to expand their market share as Canadian population growth stagnates.
"We live in a country where there's not huge population growth right at the moment and where new expansion and growth opportunities are becoming increasingly limited, particularly for mature retailers like Canadian Tire," Evans said.
"It becomes much more about a market share game in terms of vying for consumer dollars."
"That's why I think you're seeing so many retailers take a look around and say, 'Where's the potential for some natural alignments for product line expansion or new categories that would make sense for our customer within the context of our retail format?"' she added.
It remains to be seen whether Canadian Tire and other large-format retailers' movement into food sales will hurt traditional grocery stores, Evans said.
Many, such as Loblaw Co. (TSX:L) and its Real Canadian Superstore outlets, have moved in the opposite direction and now sell clothes, cosmetics and other non-food items.
"When it becomes this competitive is the time when one will start to see which retailers are really most strategically strong and well-positioned to protect their market share," Evans said.
When pressed for details about what other products would be offered at the new stores, Gibson declined to be specific.
Most Canadian Tire stores already sell some consumables, such as cleaning products and laundry detergent, as well as snack food items like pop and chips.
However the iconic retailer is best known for selling a range of sporting and outdoors goods, household small appliances, gardening products, automotive parts and, increasingly, clothing and footwear.
Gibson said the new stores will expand upon the products already available.
"There's a lot of different areas of the store that are going to look different and the product assortment is going to be different too," she said.
"We've actually expanded the product offering, in some cases and in some areas."
