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Canadian Tire uses customer data from loyalty rewards program to boost sales

Revenue for the quarter ended April 2 totalled $3.84 billion, up from $3.32 billion in the same quarter last year.
5/17/2022
Canadian Tire Gas Bar in Toronto
Shutterstock

One of Canada's biggest retailers is using customer data mined through its loyalty program and credit cards to drive sales and counter the potential demand impact of rising prices.

Canadian Tire Corp. Ltd. said Thursday it is focused on attracting and engaging rewards members as a way to gain insight into shopping habits and shape sales through promotions.

The company's emphasis on its rewards program underscores the growing value of personal shopping data in the highly competitive retail environment.

"In addition to the rich first-party data we can mine through our Triangle Rewards loyalty program, our Triangle credit card provides critical insights into our customers and their preferences and shopping behaviours,'' Greg Hicks, Canadian Tire president and CEO, said during a call with analysts to discuss the company's quarterly results.

"Our ability to engineer demand with our high-low programming across all banners has us being much more relevant,'' he said. "We feel prepared to address any concerning shifts and spend behaviour at a customer level.''

Canadian Tire raised its dividend by 25% as it reported its first-quarter profit and revenue rose compared with a year ago.

Overall, the company reported net income attributable to shareholders of $182.1 million or $3.03 per diluted share, up from $151.8 million or $2.47 per diluted share a year earlier.

Revenue for the quarter ended April 2 totalled $3.84 billion, up from $3.32 billion in the same quarter last year.

Comparable sales at its Canadian Tire retail business grew 4.5%, with automotive, hockey and winter categories leading the way.

The company's Mark's banner saw comparable sales gain 17.1% amid stronger sales of industrial footwear and jeans while SportChek stores gained 10.2% on higher winter sports and apparel sales.

Meanwhile, Canadian Tire's use of loyalty member data highlights the increasing sophistication of in-store and online promotions that aim to boost customer spending.

Canadian Tire retail, for example, has created a new "offer widget'' function, that encourages customers to use rewards to earn bonus electronic Canadian Tire money if they purchase a particular product.

In testing, the offer widget drove a 17" increase in sales at Canadian Tire and a 34% increase at Mark's, Hicks said.

``If you went back two years ago, you would have seen a lot more of a store being 20 (per cent) off as an example,'' said Gregory Craig, Canadian Tire chief financial officer.

"The use of targeted promotional offers is much more significant than it's been in the past.''

Using customer data to target sales more effectively also benefits margins.

"With all of the data we have at our disposal, we've never been more able to really understand the value consumers crave,'' said TJ Flood, president of Canadian Tire retail.

"We're always trying to strike that balance between managing margins and inspiring demand and also not giving an inch on being priced competitively.''

Still, the company is managing through a tight labour market and ongoing supply issues.

"When you look at labour in the marketplace right now, it is challenging,'' Flood said. "But our dealer network is very entrepreneurial, and very, very aggressive at the local level with attracting and retaining talent.''

Although there are concerns about how shutdowns in China will ripple through the global supply chain, Hicks said the impact is minimal.

"It's important to know that the ports in Shanghai and Beijing are not shut down,'' he said. "The reality is the supply chains out of China are functioning better than they were a year ago.''

Hicks added that the company has adjusted lead times and is continuing to use charter vessels to ensure inventory arrives on time.

While shoppers may start to rein in spending amid high inflation, he said the company is ready to roll out its "demand elasticity drivers'' and rewards program to deliver choice and value to customers.

 

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