‘Going to the Q’

How many times has this happened: You're on your way back to Suburbiaville after a long day at the office and, unfortunately, the gas tank's empty. You also need milk for your kid's breakfast tomorrow. Not to mention, a birthday card for your mother-in-law. And have you even thought about what's for dinner yet? Luckily, there's now a way to address all of these needs, and more, in a single stop.

How many times has this happened: You’re on your way back to Suburbiaville after a long day at the office and, unfortunately, the gas tank’s empty. You also need milk for your kid’s breakfast tomorrow. Not to mention, a birthday card for your mother-in-law. And have you even thought about what’s for dinner yet? Luckily, there’s now a way to address all of these needs, and more, in a single stop.

It’s called the Q store and it’s a new retail offering from Canadian Tire’s Petroleum division aimed squarely at hectic, time-pressed consumers. Right now, there’s a pair of them in the GTA, but the goal is to have between five and eight locations up and running by 2007, according to Peter Kilty, Toronto-based president of Canadian Tire Petroleum, who adds that an aggressive rollout, including expansion into other parts of the country, will follow once all the kinks are worked out.

What’s interesting about the new 8,500-sq.-ft. format is that it houses several well-established quality brands – a 4,000-sq.-ft. Sobey’s Express with fresh produce, flowers and a deli, a 1,000-sq.-ft. Richtree Market Restaurant (which owns the Marche Mövenpick chains) stocked with takeout options, and a Starbucks drive-through and interior café. Also for sale are cards and gift wrap, as well as branded toys and DVDs to keep the kids occupied on the road.

‘We talk about it as the ultimate convenience centre – it saves you time and makes your life easier,’ says Kilty. ‘It’s been designed with the customer in mind – they’re time starved, they want quality products, they want them quickly and they want a great experience. If you put that all together – that’s where it started.’

The bull’s-eye target is working parents, he adds. ‘We’re trying to bring in more shoppers, more vehicles, with more reasons for people to come – it’s a growth opportunity for us.’

For his part, Ed Strapagiel, EVP of Toronto-based retail consultancy Kubas Consultants, calls it a ‘bold move,’ although he adds it feeds into a wider retail trend. ‘What they’ve done is looked at gas stations out there, which tend to be a combination of gas station/convenience stores, with designer coffee, Krispy Kremes, burgers, you name it. If you think about the old-style Canadian Tire gas bar, it was really falling behind. I guess Canadian Tire has to catch up, but they have a ‘leapfrog’ strategy. So they take it to the next step.’ And it’s a smart strategy, he says, because not only will the Q attract shoppers more frequently, thanks to a broader product mix and welcoming environment, it will also increase basket size and, for the most part, the new goods in the basket are much more profitable than gasoline. ‘In many cases it’s much higher margins…. Gas is a couple percent, whereas for convenience store items, it’s 20% to 30%….. There’s a general trend in retail to go beyond the usual product offering and try to increase the shopping basket – to try to sell more to customers you have on hand.’ (See sidebar below.)

Kilty says Canadian Tire first began working on Q a few years ago, when he and his team were charged with coming up with a new concept, ‘something that would really change the face of retailing.’ Recognizing, as Strapagiel suggests, that a gas station hooking up with coffee/food partners was not new, Kilty et al pushed further.

‘We spent some time in Europe and the U.S. and saw what we could develop from there,’ says Kilty. ‘Selling CDs, DVDs, mobile accessories – we saw that in the States. What we saw in Europe was that the consumer was open to getting quality food at a gas station, so we looked at potential partners and came up with Richtree.’

There’s another benefit to canoodling with such well-respected brands as Richtree, Starbucks and Sobeys – it can introduce the chain to new customers, points out Vancouver-based retail analyst Ian Thomas. ‘Consumers tend to be loyal, so if you’re a Starbucks customer, then you’ll probably buy Canadian Tire gas.’

Fair enough. But why the new brand, Q? Why not Canadian Tire? The goal, says Kilty, is to develop a wider-reaching brand and get folks to think of it as ‘the Canadian Tire gas bar at the Q,’ not the other way around, which analysts believe is somewhat of a tall order.

‘To denote the change in the things we’re doing, we thought it was important to come out with a new brand,’ Kilty says. ‘The way I describe it is it’s an edgy, contemporary umbrella brand. ‘I’m going to the Q’ – it rolls off the tongue.’ The tagline is ‘Q: quality food, quick service, no question.’

So far, the new stores, which are advertised mainly through DM, newspaper and billboards in local markets, have made Kilty, who leads a ‘lean’ marketing crew of eight, a happy guy, although he won’t share specific results.

‘The Q stands alone, but borrows authority from more established brands. With all new brands, you spend a lot of time, effort and money [to] create a brand that resonates. When you borrow authority, you can speed that up.’

UNITED WE STAND

When developing its new Q store format, Canadian Tire surveyed the retail landscape in both the States and Europe to get a sense of what would fly with customers. With that in mind, we asked retail pundits to describe innovative concepts that have recently caught their eye while outside our borders.

‘In Phoenix, there’s a chain of car washes called Danny’s [Family] Car Wash and they’ve determined that the average dwell time is about 35 minutes. So you have a customer captive, and why shouldn’t the cash registers ring the whole time? As you walk through the car wash facility, it’s broken into a strip of retailers including a c-store, ice cream shop, a drycleaners, a coffee shop, as well as two or three other retailers. It’s very cleverly done.’

Ian Thomas, president, Thomas Consultants, Vancouver

‘What comes to mind is the Stop & Shop grocery chain in the U.S. northeast. It’s a co-branded retail environment, with Boston Market, Staples Business Depot, and Dunkin’ Donuts. Particularly interesting is the fact that Staples [is included] which creates a more dynamic retail environment, and provides added value and convenience. [It also offers] interesting alternative channels of distribution for [the partnering retailers.]

‘Then there’s a concept that Best Buy launched called eq-Life, which is focused on health and well being. It includes a bunch of retail players and is positioned as a health and wellness and technology [offering].

‘They identified partners, such as Caribou Coffee, PrairieStone Pharmacy and Park Nicollet Health Services. The idea is that you would go there to fill a prescription, take a yoga class and maybe you need a heart monitor or an mp3 player too.’

Joanne Balles, president, Perennial, Toronto