in the q

Anchored by Starbucks and other powerful food brands, Canadian Tire’s ’Q’ concept could have a dramatic effect on the retailing landscape north of the border.

Canadian Tire Petroleum has sold gasoline since 1958, but even the company’s president will admit that its traditional convenience store offer has been less than imaginative—until recently. Canadian Tire Petroleum’s retail ops absorbed a jolt of super-sized imagination in February, however, when the division of Toronto-based Canadian Tire Corp. Ltd. opened two hybrid stores dubbed, simply, “Q” in the Ontario cities of Windsor and Milton.

The chain of nearly 500 specialty stores has staked its tent through sales of automotive, sports & leisure and home products, not to mention petroleum and related services through a network of 260 “gas bars” and 60 Simoniz car washes. The Q concept, however, helps Canadian Tire enter virgin territor y by thrusting fresh-prepared foods and strong brands like Starbucks, Richtree Market Restaurants and Sobeys into the spotlight. As a result, the chain finds itself in the enviable position of capitalizing on a unique opportunity in Canada, according to Canadian Tire Petroleum President Peter Kilty.

“People are so time-starved, and if you look at the research you see that the time of day people decide what to have for dinner is 4 p.m.,” he says. “Furthermore, if you look at the statistics in the U.S., you see that 15% to 18% of all meals are consumed behind the wheel [of a car]. This poses a huge opportunity, and it was the basis for Q, knowing that we needed quality products in a quality shopping experience that was a viable alternative to a traditional QSR or restaurant.”

You want alternative, you got it. The Q stores measure roughly 8,500 sq. ft., with space split among several unique sales drivers. A drive-thru Starbucks with an interior caf provides customized hot and cold beverages. A 4,000 sq. ft. Sobeys Express market sells fresh produce, deli meats and packaged sandwiches. A European-style Richtree restaurant measuring 1,000 sq. ft. offers everything from made-from-scratch soups and salads to rotisserie chicken and grilled vegetables.

A 2,500 sq. ft. “convenience market” rounds out the interior. Candy, packaged beverages, magazines and other standards have a presence, as do an assortment of DVDs, giftwrap & greeting cards and premium items like gourmet chocolates.

Gasoline also has a strong presence at Q, with 10 pumps under the signature Canadian Tire canopy (right). Canadian Tire gas bars out-pump the average Canadian competitor by nearly 2 liters to 1, and Kilty expects that ratio to remain intact at Q stores.

‘Holy cow!’
A braintrust of more than 30 Canadian Tire executives helped develop Q. (The name, if you’re wondering, evolved from “life’s quintessentials,” a name the company toyed with for a brief time.) As customers enter the store, a large, authentic-looking tree greets them, along with signage for the major partners represented. High ceilings, skylights and soft colors give the store an inviting feel the company says makes customers feel welcome and relaxed.

Right now, however, Canadian Tire doesn’t want customers to feel too relaxed, since the first two Qs did not allow for quite enough space to accommodate ample indoor seating. Many customers fall into the “in and out” category and take advantage of grab-and-go sandwich and salad offers. But some do linger. With the weather breaking, patio space outside the store has helped alleviate some congestion during busy times.

“We wanted people to walk in the door and say, ‘Holy cow!'” says Kilty. “In designing it we wanted to create a new brand, not just another Canadian Tire. We wanted customers to make the association of Starbucks at the Q, Richtree at the Q, and Canadian Tire gas at the Q.”

Canadian Tire’s prior convenience retailing/fuel marketing strategy typically involved opening gas bars with convenience stores positioned at “the front door” of its much larger specialty stores. But Q has helped the company push in a bold, new direction. Kilty characterizes Q as “more of a Main and Main strategy,” with a modular capability for the store’s interior. Each Q market will stand apart from other Canadian Tire stores.

For the first two Qs out of the gate, Canadian Tire built the stores on surplus lots that once housed Canadian Tire facilities. Kilty says the chain requires about three acres of land to successfully build and operate a Q.

“We called the project ‘Leapfrog’ because we felt we needed to move past the competition,” says Kilty. “We looked at a lot of research in Europe and North America, and Q’s roots are more based in the European model. It’s just now coming to the States and Canada.”

Going forward
Canadian Tire recently unveiled its strategic plan for 2005 to 2009. In it the chain expressed its desire to grow non-fuel operations to approximately 30% of Canadian Tire Petroleum’s sales as a way to reduce the impact of margin fluctuations in the gas business. In addition to renovating its network of existing convenience stores and opening more car wash facilities to drive site volume, the company intends to take Q forward.

Kilty couldn’t specify a definitive number as to how many Qs might pop up across Canada. But he didn’t have to.

“We’ll open another couple [of Q stores] this year and a few more the next,” he says. “But we didn’t spend the better part of two years developing this brand just to open a couple of sites.”


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