Canadian Tire’s brand new push to capture a slice of the $2-billion home paint market

TORONTO — Canadian Tire has its sights set on Canada’s booming home renovation market, hoping a relaunch of its in-house paint line, Premier, will generate the kind of returns the retailer reaped after it made a similar move in camping goods.

The country’s biggest seller of sporting goods, automotive and kitchen items has spent the last five years conducting a category-by-category overhaul of its private-label merchandise, also known as owned brands or house brands.

When successful, private label programs typically yield large retailers a higher profit on goods sold, due to scale and omitting the costs of third-party vendors.

And in an era when the “Internet of things” leads many consumers to shop and browse online for commodity items based on price alone, having strong in-house retail brands, such as Loblaw’s President’s Choice or Joe Fresh, can help businesses safeguard customer loyalty.

“Wherever we can bring the best of our own business to the market — our own formulation, our own source — it gives us a unique ability to create our own identity,” Allan MacDonald, president of Canadian Tire’s retail division, said Thursday.

“There was a time in our history when Canadian Tire was quite a formidable force in the paint business, and over the course of time with other priorities and new competitors in the market, it has been a business that we have allowed to not keep pace with the rest of our assortment.”

After Target announced in 2011 that it would open in Canada in 2013, Canadian Tire set out to identify its strongest consumer categories, and has introduced or reformulated over 30 in-house brands in the past five years, including Mastercraft tools, Canvas home decor, and Noma lighting products.

In paint, Canadian Tire spent three years reconstituting its decades-old Premier brand in concert with ingredient supplier Dow Chemical and the manufacturer, UCP, to improve the quality, MacDonald said. It then tested the paint against other national brands and with its own consumer panel, considering measures such as durability, low odour, coverage, contemporary colour palette, and an easy-to-clean, stain-resistant finish. As part of the effort, Canadian Tire has also retrofitted its 500 stores with new paint mixing machines and redesigned its paint wall.

And over the last year, the retailer phased out national brands such as Benjamin Moore. Premier will now account for the vast bulk of its assortment of indoor and outdoor household paint.

“This is very much a statement to customers that Canadian Tire is getting back into the paint business in a serious way,” MacDonald said, who noted doing a similar retrofit of its camping goods section “was very big for us.”

After phasing out some underperforming house labels in favour of its new and overhauled brands Woods and Outbound, sales of the two brands rose to $120 million in 2016 from $10 million in 2014. And after a decade of one per cent per annum sales growth in camping, overall sales in the category grew in the double digits in 2016.

Canadians spend $2 billion a year on home paint and painting accessories, and it’s a healthy piece of the country’s $71-billion home renovation market. While the pace of redecorating homes has sped up over the last two decades, Canadians typically paint with every move as the housing market continues a multi-year streak.

Paint and home décor also appeal to people who opt to renovate their existing residences when they are priced out of the market in cities where home prices have soared, analysts say.

Ed Strapagiel, a Toronto-based retailing consultant, said Canadian Tire has not been a top-of-mind home improvement retailer in the past, but carries a number of items for small household products.

“They are not that much into do-it-yourself because they do not support all of the accoutrements — lumber, drywall, flooring. But they have drapery hardware and lighting fixtures, so they are in the category,” he said. “There are a number of paint plants in Canada and it’s not a category that is all that difficult to get into, and (selling primarily) an owned brand gives them much more incentive to promote the category.”

Financial Post

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