Retail
Is the one-stop-shop a one-hit-wonder?
Canada’s largest retailer, Canadian Tire, made headlines last week, as it announced it was going to go back-to-basics by focusing on its core business – tires. For CT traditionalists and handymen alike, this is a move that is long overdue. In recent years, it seemed as though the retailer had lost touch with its consumers, as scented candles, picture frames, and electronics became increasingly prominent within store walls. CT even expanded into banking, insurance, and stocking low-margin food such as bread. Surprising? Slightly. Over the past decade, stores boasting the “one-stop-shop” designation have transformed retail significantly, but is it just a multi-billion-dollar trend, or are they here to stay?
In 2006, much to the dismay of Loblaws, Wal-Mart announced it would enter the Canadian grocery market. At the time, I thought it was ludicrous, and I wasn’t alone. I mean who wants to buy a steak from a retailer in a massive warehouse? However, a few months earlier, in an attempt to get a step ahead of their counterparts, Loblaws launched the much-adored clothing line Joe Fresh. Then Shoppers Drug Mart hopped on board by introducing a grocery line in 2008. Not to be left out, Canadian Tire announced it would be transforming a number of its traditional outlets into “smart stores”, which offered grocery staples such as milk, eggs, and bread. In the world of retailing the theme was literally go big or go home.
Amid all of these changes, a few players backed out of the retail arms race and charted a different route. The first one to come to mind, and one of the more publicized shifts was made by Sobey’s. In 2007, Sobey’s announced it would be purchasing all public shares as they had decided to go private. This came as a surprise to most, but for supermarket executives the decision was clear. Already in an uphill battle against longtime rival Loblaws, Sobey’s hardly stood a chance against the global powerhouse Wal-Mart. Since the privatization, Sobey’s has maintained a consistent image as well as its placement as the second largest food retailer in Canada.
Another retail chain that stepped out of the way of the Wal-Mart steamroller was Zellers. Once a discount department store, Zellers altered their image by offering better quality products rather than compete directly with the Walton’s low-cost empire. Zellers has stayed true to the department-store model by avoiding groceries and focusing on their strong points, such as clothing. Just last month, Zellers launched a clothing line with help from the internationally renowned designer Alfred Sung. This is one of many strong steps that Zellers is taking to solidify their presence as a good quality, reasonably priced department store within the market.
Although it may seem as though Zellers and Sobey’s were merely avoiding direct competition with Wal-Mart, that’s only half of it. Rebranding a well-established franchise is no small task, and if executed poorly, there is the risk that you will do worse than if you had not have changed in the first place – Canadian Tire is a case-in-point. However, just because they are narrowing their focus rather than broadening it, does not mean this is a sign of things to come. In order to be the world’s top retailer (Wal-Mart), you need to go after the masses, not niches, and as long as there is active competition in the global marketplace, there will always be emerging companies that will do just that in order to dethrone the leader. That said, there will always be companies that sacrifice too much for a slice of the pie, and are forced back to the drawing board. After all, the pie is only so big, and if you can’t make one, you shouldn’t be selling them.