The Home Depot Leads Canadian Tire, for Now

Which Retailer Do Canadians Prefer for DIY? The Home Depot Leads Canadian Tire, For Now

Each year, The Home Depot Canada hosts a “Spring Black Figure 1: Stores Regularly Shopped for Friday” event to kick off the home improvement season. Home Improvement/DIY Items Canadians seem particularly keen this year, with 39% of homeowners planning to invest in a home renovation Which of the following stores do you regularly shop at project (according to a recent Harris/Decima poll for for home improvement/do-it-yourself projects? CIBC). Canadian Tire 61% The Home Depot Given the spring selling season and the heightened 51% interest in home improvement, Kantar Retail partnered Walmart 41% with TNS Canada to examine which retailers Canadians Rona 34% prefer for their do-it-yourself (DIY) projects. Speciﬁ cally, in Home Hardware 27% April 2013 we surveyed 500 Canadians across the country Costco 17% to learn their preferred store for home improvement/DIY Lowe’s 12% projects, identifying how the top competitors stack up in assortment, price, service, and community appeals. In this None Of The Above 10% article, we examine the survey results and discuss the top Source: TNS Canada, April 2013 two retailers’ strategies to drive their market position. Figure 2: Favourite Store When Shopping for Retailer Penetration, Preference: Presence Home Improvement Doesn’t Equate to Popularity Which one of these stores is your overall favorite Approximately 3 in 5 respondents (61%) named Canadian for home improvement and do-it-yourself items? Tire as their regular store shopped for home improvement The Home Depot 28% items, ranking it well ahead of other leading players in the market (Figure 1). Canadian Tire 20% Rona 14%

This reach is aided by the fact that Canadian Tire’s store Walmart 10% presence is unparalleled. With 490 Canadian Tire stores Home Hardware 9% nationwide, the retailer itself asserts that it has a store Lowe’s 3% within a 15-minute drive for 90% of Canadians. The Home Depot and Walmart are comparatively less accessible, Costco 3% with 180 and 379 stores, respectively. Notably, Lowe’s None of the above 15% reach is limited with only 34 stores across 4 provinces. Source: TNS Canada, April 2013

However, asking shoppers to name their favourite store for home improvement items changes the ranking. The The Home Depot’s Strength Home Depot steps ahead as the clear leader, with 28% Shoppers’ satisfaction with The Home Depot is reﬂ ected in of respondents identifying it as their preferred store for its recent sales performance: though the retailer has added home improvement, followed by Canadian Tire and Rona only one store in the past two years, it recorded positive (Figure 2). comparable store sales (comps) in each quarter in 2012, and increased market share. Viewed regionally, The Home Depot had broader liking in the Western provinces and Ontario, whereas Canadian Tire and Rona were more widely prefered in Quebec.

To drive its shopper proposition, The Home Depot’s leadership is focused on delivering enhanced product Figure 3: The Home Depot authority and customer service, as well as developing (% Very satisfied or satisfied) “interconnected retail.” Variety Of Items I Want 79% . When asking its shoppers about the in-store Clean Store 73% experience, most (79%) were satisfi ed with its product Fast Check-Out 71% variety (Figure 3 ). Relative to its competitors, the Products Always In-Stock 67% proportion of shoppers satisfi ed with its in-stocks Good customer service 67% (67%) was also strong. Accordingly, its broad, reliable Value For Money 63% selection is where the retailer particularly excels. Enticing Deals 56% Supports The Community 37% . Customer service is also fairly well regarded by The Is A True Canadian Store 30% Home Depot’s shoppers. Roughly two-thirds (67%) were Loyalty Rewards 21% satisfi ed that the retailer delivered “good customer service.” This result is likely aided by its ancillary Source: TNS Canada, April 2013 services, including tool rentals, van rentals, and installations to aid shoppers’ purchases. In addition, offers grants to support various affordable housing 71% felt that the retailer had fast checkouts, putting it initatives, and its annual “Meet the Buyer” program ahead of Canadian Tire. allows promising small Canadian manufacturers store placement. . “Interconnected retail” is still an emerging area for the retailer. In 2012, The Home Depot upgraded its website . Along with the notion of community, shoppers also offering with an enhanced aesthetic and functionality. It do not view it as “a true Canadian store,” though its is eCommerce capable, allowing shoppers to buy online position is consistent with the other international and pick up in-store two hours later. More recently players surveyed. though, the retailer has expanded its pickup service . Regarding its deals, the retailer does offer an array of to allow shoppers to ship their purchases to specifi c promotions, including limited-time sales, online-only stores for pick up. Today, the retailer’s online audience deals, and other special events. Though given shoppers’ is still fairly small, as the website is not in Canada’s relatively low satisfaction, there is opportunity to top 100 (according to the web analytics fi rm, Alexa). examine whether the retailer is emphasizing the right Nevertheless, management recognizes the need to items and framing the deals in a way that resonates evolve its selling strategies to meet changing demands. best with Canadians.

Where The Home Depot falls short is shoppers’ opinion of Recommendations for The Home Depot’s Suppliers its support for the community (only 37% felt reassured) Considering The Home Depot’s positioning, the following and excitement around its deals. table outlines the ﬁ ndings and implications for its suppliers . While it seems to lack recognition, the retailer has (Figure 4). made efforts to support the community. Its foundation

Figure 4: The Home Depot—Findings and Implications

The Home Depot's Position Supplier Implication Solid sales growth and strong liking in the • Align with this retailer's growth strategies, communicating internally the market, particularly in the West and Ontario market strength of this contender • Articulate how you plan to facilitate their key objectives around product authority, customer service, and interconnected commerce • Consider advising the retailer on ways to develop its appeal in Quebec Receiving mixed satisfaction, opportunity to • Leverage your category expertise to advise the retailer on building excitement elevate deals around its offers, tailoring messages for Canadian tastes Weak shopper impressions of community • Explore partnering with the Home Depot's charitable efforts to build recognition support, despite ongoing charitable efforts for its work

Canadian Tire’s Re-Positioning to Contend Figure 5: Canadian Tire Since Stephen Wetmore took over as Chief Executive in 2009, Canadian Tire has re-emphasized its heritage departments, (% Very satisfied or satisfied) including “Fixing” (management’s term for DIY). This has Is A True Canadian Store 82% involved re-assorting the tool offering to emphasize national Variety Of Items I Want 75% brands alongside Mastercraft® and expanding its paints Clean Store 74% assortment with the introduction of Origins by Benjamin Value For Money 68% Moore last year. The retailer has also been touting its Enticing Deals 65% Canadian heritage, launching its “Canada’s Store” multi- Fast Check-Out 64% media campaign in 2012 and announcing its sponsorship of Supports The Community 62% Canada’s Olympic Teams for the next eight years. Good customer service 62% Products Always In-Stock 51% On these two dimensions, the variety of items and being a Loyalty Rewards 48%

“true Canadian store,” a majority of its home improvement Source: TNS Canada, April 2013 shoppers are satisfi ed (Figure 5 ). Relative to The Home Depot, more of Canadian Tire’s shoppers said they were satisfi ed with the deals and value for money offered. Looking ahead, the retailer aims to develop its position by using new technology to enable “smart commerce.” However, leadership still has a ways to go to drive its . Marrone explained that Canadian Tire aims to make performance. Last year, Canadian Tire stores posted digital “a core strategic differentiator,” investing weak comps growth of 0.3%. In terms of its DIY shoppers’ millions in innovation labs in Waterloo and Winnipeg to satisfaction, management has an opportunity to improve its develop new apps and services. Its Sport Chek banner customer service, in-stocks, and loyalty rewards. also launched a digitally enabled store in Toronto . To aid its customer support, the retailer has been earlier this year, where we expect Canadian Tire to also adding DIY-related services. Its home services pilot to leverage learnings. “install what we sell” expanded to include 250 stores . Canadian Tire’s website is already ranked 85th in in 2012 and now includes services for home painting, Canada by Alexa, and its online selling is to expand windows, doors, furnaces, and air conditioners. Last across categories later this year through its recently year the retailer also added fi nancing options for big- launched “Canadian Way” catalogue. In addition to store ticket items through its fi nancial division. Both of these pickup options, management is also considering items programs are expected to accelerate. for home delivery. . Regarding in-stocks and loyalty rewards, management . Adding to its customer reach, Canadian Tire is piloting is relying on technology to enhance its offer. In March two small store “Express” concepts later this year. One 2013, then Chief Operator, Marco Marrone explained to will focus on a specifi c department, likely kitchenware, investors that when customers think an item is out-of- and the other will have a mix of items targeted to serve stock, a majority of the time the issue is their inability its community. These stores are designed to help the to fi nd it in-store. Accordingly, the retailer is adding retailer penetrate new locations, such as malls and 5,000 touchscreen tablets across its stores and giving urban neighborhoods. Both of these stores will offer staff another 2,000 tablets, to help shoppers select and website-to-store ordering options, furthering the reach locate their merchandise. of its offer. . As for enhancing rewards, management plans to expand Money Advantage, its digital loyalty pilot, beyond Recommendations for Canadian Tire’s Suppliers Nova Scotia in 2014. Among the program’s benefi ts, Given Canadian Tire’s efforts and direction, the following it lets the retailer personally target offers and refi ne table outlines the fi ndings and implications for suppliers promotions to enhance their appeal. As this expands, working with the retailer (Figure 6). it will only further differentiate the retailer from its DIY competitors.

Figure 6: Canadian Tire—Findings and Implications

Canadian Tire's Position Supplier Implication Using digital media to drive • Consider how your brands may augment the experience offered on the shelf and store employee customer service, in-stock tablets impressions • Monitor its "Living Lab" Sport Chek, considering which practices may translate over to your department in Canadian Tire • Connect with your brand/digital teams to identify ways to leverage shoppers' smartphones in-store

Developing "smart commerce" • Assess your category's presentation on its website, catalogue, and apps, considering how to and Express stores to further communicate your offer across channels access, convenience • Consider the opportunity to communicate with your shoppers about this new access point as the eCommerce platform expands • Explore linking your social media presence to the Canadian Way feeds

Enhancing loyalty rewards • Expect pressure to add insights, perspective as the resources available to Canadian Tire's buyers through Money Advantage in and dealers expand 2014+ • Anticipate how you will target Canadian Tire's base given this digital information, exploring opportunities to partner during the current pilot

To further discuss Kantar Retail’s analysis of these retailers, contact: Robin Sherk, Director, Retail Insights at Kantar Retail / [email protected] Laura Kennedy, Senior Analyst at Kantar Retail / [email protected]

To further discuss TNS Canada’s shopper panel, contact: John MacLeod, Research Director at TNS Canada / [email protected] Mike Moussallem, Senior Research Director at TNS / [email protected]