The Little Tire Store That Grew

September 1, 1998 by Angela L. Smith

The fragrant smell of Christmas tree-shaped car deodorizers always makes me think of two important events in my life: Taking a much-anticipated drive in my dad’s first completely new car–a Ford Thunderbird convertible–and shopping with him at our local Canadian Tire store.

Back then, men didn’t “shop”, they just “picked things up.” I remember we would end up in line at the checkout counter where we’d come face to face with the store’s last-ditch effort to show us the things we were forgetting to pick up. The counter-top display usually included masking tape, flashlights, batteries, twine and a pretty good selection of green car deodorizers. I, of course, would do my best to remind Dad of his need for these “essentials” and it wasn’t long before the T-bird smelled like a pine tree again.

Back in 1922, John William Billes and Alfred Jackson Billes had no idea how successful they were going to be when they bought a small garage in Toronto’s east end and called it the Hamilton Garage and Rubber Company. What the brothers saw was an opportunity to serve the growing number of people who were buying and using automobiles as their main means of transportation. At that time, the city had approximately 40,000 drivers and most of them stuck to city driving because there were just 1,000 miles of paved road in all of Canada. Those who did venture out to the countryside were lucky to return without a blown tire.

In 1923, the brothers closed the garage and opened a retail outlet in downtown Toronto that specialized in the sale of tires. But customers of the Billes’ store could also buy parts to repair two of the most popular makes of cars at the time, Chevrolet and Ford.

Within five years, brothers J.W. and A.J. had incorporated the company. They had also selected a name–Canadian Tire–that, according to A.J. “sounded big.”

And big is what Canadian Tire became. In fact, the company is so big that some people regard it as a Canadian institution. Others see it as a Canadian icon, one that clearly occupies a firm place in our national consciousness. But no matter how you look at it, Canadian Tire is a Canadian success story because each store provides acceptable products at good prices. The company has approximately 430 stores and 194 gas bars coast to coast. It employs more than 34,000 Canadians, and in 1997 had sales of $3.91 billion. The company’s newer stores are big, bright places where shoppers can find a wide variety of year-round or seasonal goods.

In the 1997 book Our Store: 75 Years Of Canadians And Canadian Tire, another icon of Canadian culture–Don Harron–uses his character of Charlie Farquharson to recall a trip to Toronto when he was a child. In the book’s forward, Charlie claims to have enjoyed his family’s side trip to Canadian Tire better than the intended trip to the Canadian National Exhibition. “After all,” he writes in his familiar style, “we had them animals of our own back home that wuz exhibit in yer Colossalinoleum. But in this big Tire store I had never seen such a corny-copious of tools and artyfacks.”

During the Great Depression, Canadians who were lucky enough to own an automobile looked to Canadian Tire to supply them with the parts that would help keep their old cars running. As a result, the company flourished even more during those dark days.

Myrel Pardoe is the company’s longest serving employee. She’s a reflection of the work ethic that was developed during the Depression. Pardoe started working for Canadian Tire in 1932 when she was 16. “There just weren’t jobs. People had no money. And so if you got a job you stayed with it.”

The people who worked for Canadian Tire during the Depression were with a company that had a firm sense of direction and appreciation for employees. Pardoe noticed this right away. Her first job was opening the mail for eight dollars a week. “Her work must have been good,” writes Hugh McBride in the book Our Store. “When they gave out the semi-annual bonuses that June, just two months after she started, she got a six dollar cheque–almost a week’s wages! And that December she received 35 dollars.”

The company also listened to its customers and developed new ideas on how to market automotive parts. In the 1930s, the brothers began publishing their now-famous catalogue. The early editions showed a road map of Ontario with the store’s line of tires displayed around the edge. At the time, road maps were a much coveted possession and many people kept the catalogues close at hand. In this way, people were constantly reminded of the store.

In 1934, the Billes brothers decided to expand their enterprise. They went looking for hands-on investors becauseJ.W. Billes didn’t like the idea of taking money from investors and hiring salaried managers to run the stores. He wanted to work with people who felt responsible for the company’s success, and he found no better way to do that than to allow investors to become owners and operators. These people would be associate dealers or franchise owners, and they would sell Canadian Tire products at a prescribed price. J.W. believed that the dealers would have as much at stake as he did, and that they would be committed to working hard and keeping on top of the business.

And so, with only a handshake, Walter Anderson opened the first Canadian Tire dealership in Hamilton. A short time later, other dealerships sprang up in Ontario and the Maritimes.

By 1936, the automobile was being used for recreational travel. Instead of just driving to and from work, people were using their cars to get to the country or a relative’s home. Cars made going on vacation easier and more spontaneous. J.W. recognized the change and used it as rationale behind a move to expand the company’s product line. After all, weekend car trips to go fishing meant people would need fishing rods, reels and tackle. A trip to relax under the stars would require tents, sleeping bags and camp-fire cooking utensils. A more exotic vacation might require golf clubs, bicycles or other sporting equipment.

The opportunities seemed limitless until 1939. World War II brought rationing of almost everything, and like a lot of companies, Canadian Tire was hit hard by the limited availability of rubber, steel and gas. Dealers had trouble stocking their shelves, but they survived by selling what they got their hands on. In 1944, in an effort to expand the company, the Billes brothers took the company public, offering 100,000 common shares at $10 each. The additional capital from this, coupled with the hard work of the dealers to supply their customers, put Canadian Tire in a great position; it was now able to supply the growing needs of the baby boom generation.

Sure enough, the ‘50s brought more babies and more wealth. People had cash to spend on cars, houses and countless leisure activities. Canadian Tire kept pace with the demand by adding more stores and by building a 225,000-square-foot warehouse north of Toronto. It was a very prosperous time, however, J.W. would not see the end of that great decade; he died in November 1956 as a result of complications from pernicious anemia. He was 59.

Well before his death, J.W. realized the importance of introducing new products. It was that kind of thinking that put Canadian Tire on the road to becoming one of Canada’s most renowned retailers. The company grew to boast the distinction of being the largest retail supplier of skates and every other kind of hockey equipment. Indeed, the company recognized that for many Canadians, Canada means hockey. Hockey means Canadian Tire. But the really good news was that the company was in the midst, perhaps unwittingly, of creating a kind of self-perpetuating cycle of shoppers because Canadian Tire was where many kids bought their first hockey equipment. As those same kids grew into adults and had families of their own, they’d take their kids to Canadian Tire for their first hockey equipment.

With the risk-taking A.J. Billes now president, the company ushered in two mainstays of the Canadian Tire makeup: Gas bars and Canadian Tire money. The latter helped the retailer compete with the big oil companies of the time. Customers paying cash for gas would get cash-valued coupons to spend in the store. The unofficial currency, which is printed on banknote paper, can be found in almost every household in the country. It feels like real money and features a very familiar penny-wise Scotsman named Sandy McTire.

Roger Fox, the president of the 280-member Canadian Tire Collectors Club, says a small percentage of the more than 400 versions of the coupons are “worth a lot of money, and about five per cent are worth a reasonable amount of money” to collectors. He often advises people who have older, more valuable coupons to hang on to them. “They may be worth a lot of money if you keep them for another 10 years or so.”

The gas bars and the money were huge successes. Stories abound about people who cash in coupons 40 years after they were introduced. The coupons have been accepted by restaurant owners and other retailers, and they have been collected by charitable organizations to buy much-needed products. It has even been claimed that Europeans and Caribbeans have mistaken the coupons for Canadian currency.

Citing health reasons, A.J. stepped down as president in 1965, but stayed on as a director until 1988. In 1966, the first store west of Ontario opened in Winnipeg, and by 1980, the company stretched from the Atlantic to the Pacific.

In the early 1980s, A.J.’s three children assumed a majority voting position in the company, and nearly sold their interest in 1987. Last year, A.J.’s daughter, Martha Billes bought out the shares of her brothers Fred and David. Currently, she holds more than 60 per cent of the organization’s voting shares.

By 1990, sales had hit a record level of $3 billion. However, the decade introduced free trade and its implications for retailers. Many industry analysts thought Canadian Tire would suffer from strong foreign competition, particularly from the United States. At one time, Canadian Tire had even tried to enter the U.S. market, but was unsuccessful. “It was a different market without the deep connection to the brand name,” notes Scott Bonikowsky, senior director of corporate affairs.

Stephen Bachand, a former executive with a large northeastern U.S. retail chain, became president in 1993. He used his experience to deal with the new competition. “The hard truth is that the ‘90s have ushered in no-frills warehouse clubs, mass discounters with very broad assortments and little depth, and category killers offering exceptional depth in specific product lines. These gloves-off retailers, typically high-profile U.S. firms, provide in various combinations what customers demand–price, service and selection.”

Although the company looked for ways to cut costs, the main initiative was put behind changing the format of the stores to deal with congestion and lineups at cashiers. In addition, the company wanted to ensure that it was providing its customers with what they wanted. As a result, the company launched a$1-billion capital expenditure program to renovate, relocate or redesign its stores. Since 1994, 103 stores have been opened under the new format.

The new stores are built in one of five sizes, designed to meet the varying sizes of communities across Canada as well as meet the needs of the communities in terms of what customers value. Bachand says each store is made up of three clearly defined, clearly focused and highly competitive specialty stores. “Part of our mission is to be the first choice for Canadians in automotive, sports and leisure products, and home products.”

Bonikowsky says the company has met that goal. “The expansion plan has proven highly successful. We’ve actually exceeded our expectations.”

Don Thompson, a marketing professor at York University in Toronto who specializes in analysing the retail industry, believes Canadian Tire has been successful in taking on the competition. He says by increasing its focus on traditional products as well as on low-dollar-value small appliances and select sporting goods, the company has been successful in evolving away from head-to-head competition with Home Depot. “The product assortment is what Canadians expect from Canadian Tire, and they deliver. Most of Canadian Tire’s offerings do not overlap Wal-Mart offerings either. However, those that do, become convenience purchases for Canadian Tire shoppers, so that the price difference is not critical.”

During the last 75 years, Canadian Tire has managed to weather everything from the Depression to the more recent effects of global competition. Bonikowsky attributes that survival and ultimate success to a few simple elements. The first is customer loyalty. “Because of customer loyalty, Canadian Tire has become an icon.”

Second is the use of associate dealers or franchise owners. “The substantial investment each of our associate dealers has on the line is a great incentive to excel at customer service, to manage costs, to embrace change and to respond actively to the needs of local customers,” explains Bachand.

In addition, the associate dealers are members of and active participants in their communities. And it doesn’t hurt that 90 per cent of Canadian households are within 15 minutes of a dealer’s store.

Thompson believes Canadian Tire is much more likely to survive the invasion of the Wal-Marts than less focused retailers.

Today’s Canadian Tire stores have grown to include mega-stores with on-site doughnut shops, banks of checkout desks and rows of carefully segmented products. But, my childhood memories were held fast on my first visit to our relocated Canadian Tire store. There at the checkout–prominently displayed next to the VHS tapes, adaptors and rechargeable batteries, was an assortment of car deodorizers.

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