One of Canada’s largest retailers uses customer data extracted through its loyalty program and credit cards to increase sales and counter the potential demand impact of higher prices.
Canadian Tire Corp. said. Ltd. On Thursday, it’s focusing on attracting and engaging rewards members as a way to gain insight into shopping habits and shape sales through promotions.
The company’s focus on its rewards program underscores the increasing value of personal shopping data in the highly competitive retail environment.
“In addition to the rich first-party data that we can extract through the Triangle Rewards loyalty program, the Triangle credit card provides important insights to our customers, their shopping preferences and behaviors,” said Greg Hicks, President and CEO of Canadian Tire. Contact analysts to discuss the company’s quarterly results.
“Our ability to engineer demand with our high and low across all the signs makes us even more relevant,” he said. “We feel prepared to deal with any worrisome shifts and spending behavior at the customer level.”
Canadian Tire raised its dividend by 25 percent as it announced an increase in first-quarter earnings and revenue compared to 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, in the prior year.
Total revenue for the quarter ended April 2 was $3.84 billion, up from $3.32 billion in the same quarter last year.
Similar sales in the Canadian tire retail business grew 4.5 percent, with the automotive, hockey and winter categories leading the way.
The company’s Mark sign saw a similar sales gain of 17.1 percent amid stronger sales of synthetic shoes and jeans, while SportChek stores gained 10.2 percent with higher sales of winter sports apparel.
Meanwhile, Canadian Tire’s use of loyalty member data highlights the growing sophistication of in-store and online promotions aimed at increasing customer spending.
For example, Canadian Tire Retail has created a new “offer tool” functionality, which encourages customers to use rewards to earn additional Canadian Tire e-cash if they purchase a specific product.
In testing, Hicks said, the display tool led to a 17 percent increase in sales in Canadian Tire and 34 percent in Mark.
“If you went back two years ago, you would see a lot of stores that were reduced by 20 (percent) as an example,” said Gregory Craig, chief financial officer of Canada Pictures.
“Using targeted promotions is more important than in the past.”
Using customer data to target sales more effectively benefits profit margins, too.
“With all the data we have, we’ve never been able to understand what value consumers really crave,” said TJ Flood, President of Canadian Tire Retail.
“We always try to strike that balance between managing margins and inspiring demand and also not giving an inch to pricing competitively.”
However, the company is dealing with a tight job market and ongoing supply issues.
“When you look at the business in the market right now, it’s a challenge,” Flood said. “But our dealer network is very entrepreneurial, very, very aggressive on a local level while attracting and retaining talent.”
Although there are concerns about how China’s lockdowns will spread across the global supply chain, Hicks said the impact is small.
“It is important to know that the ports in Shanghai and Beijing are not closed,” he said. “The reality is that supply chains outside of China are doing much better than they did a year ago.”
Hicks added that the company has adjusted lead times and continues to use chartered vessels to ensure that inventory arrives on time.
While shoppers may begin to rein in spending amid rising inflation, he said the company is ready to roll out “demand elasticity drivers” and a rewards program to offer customers choice and value.
This report was first published by The Canadian Press on May 12, 2022.
The companies in this story: (TSX: CTC.A)
Brett Bundal, The Canadian Press