Canadian Tire Gives Up On Core E-Commerce. Will Others Follow?

When Canadian Tire, with more than $8 billion in annual revenue and some 1,100 stores throughout Canada, makes a major strategic change to its Web site, it gets noticed. So the chain's move this week to abandon traditional E-Commerce, other than giftcards and its buy-online-pick-up-in-store program, shook up the E-Commerce community. But within days of the Canadian Tire (CT) statement, Circuit City shut down its Web site entirely (months before closing its physical stores) and Sears added a drive-through for its buy-online-pick-up-in-store program. Is this the next growth phase for E-Commerce, or is it more of a "We can't afford anymore to subsidize this bits-and-byte annoying albatross"? Canadian Tire officials portray their move as very logical and unique to the company's situation. With much of populated Canada saturated with some of CT's 1,100 general merchandise and apparel stores, gas stations and banks, in addition to a major financial services provider and a federally chartered bank, consumers prefer to go to their local store. This preference is helped by the fact that much of CT's merchandise—such as patio furniture and tires—doesn't lend itself to easy and cost-effective shipping. "We're located so close to customers that people mostly use our Web site for researching" CT's products, said Lisa Gibson, a CT associate VP. Using the Web site as a research tool designed to push more traffic into the stores was the site's original purpose, she said, and the chain is merely returning to that. "It was launched as a site for people to do research," Gibson said. "Online delivery never was going to be the main crux of the business." One retail IT exec—who does not work for Canadian Tire—said this kind of change has been discussed privately at many chains, but there has been hesitation to make a move until others do. The action of $8 billion CT could very easily make it easier for other chains to make similar moves. Back To Its Original Concept? "The old school exec has always believed that the Internet is for information gathering" and only information gathering, said the IT exec, adding that "nobody in our area is successful" with their Web shipping efforts. The original concept of E-Commerce was to allow purchases 24x7, supported by an independent shipment and inventory mechanism. Theoretically, this option could allow sales to be processed at a much higher margin. But some companies have found the separate inventory efforts to be more hassle than they're worth. But a potentially stronger undercurrent here—illustrated by both Canadian Tire and Circuit City—is the lack of comfort that many veteran retail execs have with the Web. This problem is a huge factor with merged channel efforts, as brick-and-mortar managers cling to the hope that the Web will either go away or be sidelined as a niche channel. And the Web side senses that distrust and lack of comfort and, as a result, hordes information and sales in an attempt to show that online is indeed worthy and powerful. This situation makes both sides scared to help the other. By the way, a colleague here offered an alternative theory for the new moves from Sears and Canadian Tire. "They've both created drive-throughs. This is really about trying to wear out tires to make more sales." Sometimes, it's nice to know that there exist mammals in the world even more cynical than I.