One of Canada’s largest retailers is using customer data extracted from its loyalty program and credit cards to drive sales and counter the potential impact of rising prices on demand.
Canadian Tire Corporation said Thursday it is focusing on attracting and engaging with members of its rewards program to better understand their buying habits and encourage sales through promotions.
The company’s focus on its rewards program underscores the growing value of personal shopping data in the highly competitive retail industry.
“In addition to the rich first-hand data we can leverage through our Triangle Rewards loyalty program, our Triangle credit card provides critical information about our customers, their preferences and buying behaviors,” explained the President and Canadian Tire CEO Greg Hicks on a conference call with analysts to discuss the company’s latest quarterly results.
“Our ability to manage demand with our programming across all banners makes us much more relevant,” he continued. We feel ready to tackle any concerning changes and spending behavior at the customer level. »
Canadian Tire announced a 25% increase in its dividend when it released its first quarter financial results, which improved from a year ago.
Canadian Tire posted net income attributable to shareholders of $182.1 million, or $3.03 per share, which compared to a profit of $151.8 million, or $2.47 per share, in the same period last year.
Revenue for the quarter ended April 2 totaled $3.84 billion, down from $3.32 billion a year earlier.
Sales at Canadian Tire stores open for at least a year climbed 4.5%, led by automotive, hockey and winter product categories.
The company’s L’Équipeur brand saw comparable sales increase 17.1% on higher casualwear and workwear sales, while SportChek stores gained 10.2% on increased sales of winter sports and clothing.
Meanwhile, Canadian Tire’s use of member loyalty data highlights the growing sophistication of in-store and online promotions, which aim to drive customer spending.
Retailer Canadian Tire, for example, has created a new “offer widget” feature, which encourages customers to use rewards to earn bonus electronic Canadian Tire Money if they purchase a particular product.
In testing, the widget led to a 17% increase in sales at Canadian Tire and a 34% increase at Mark’s, Hicks noted.
“The use of targeted promotional offers is much more important than it has been in the past,” observed Canadian Tire Chief Financial Officer Gregory Craig.
Using customer data to more effectively target sales also benefits margins.
“With all the data we have, we’ve never been better able to truly understand the value consumers are looking for,” said Canadian Tire Retail Group President TJ Flood.
“We always try to strike that balance between managing margins and driving demand, without giving up competitive pricing. »
Still, the company is holding its own despite a tight labor market and ongoing supply issues.
“When you look at the workforce in the market right now, it’s a challenge,” Mr. Flood admitted. But our network of merchants is very entrepreneurial and very, very dynamic at the local level to attract and retain talent. »
Although he worries about how the lockdowns in China will affect the global supply chain, Hicks says the impact is minimal.
“It is important to know that the ports of Shanghai and Beijing are not closed,” he said. The reality is that supply chains outside of China are working better than they were a year ago. »
Mr. Hicks added that the company has adjusted lead times and continues to use chartered vessels to ensure its inventory arrives on time.
While shoppers may begin to rein in spending amid high inflation, he said the company is ready to roll out its “demand elasticity factors” and rewards program to deliver choice and value to customers.