American discount retailers may be moving into its turf, but this Canadian value retailer has the product mix and the scale needed to thrive. 

Profile

• Number of locations as of January 2011: 238
• Headquarters: Mississauga, Ontario

A trait shared by consumers everywhere is the desire for value, quality, and convenience. In Canada, The Bargain Shop (officially known as “tb!s the bargain shop”) has a legacy that embodies all of those concepts. Now, a changing competitive landscape for the Canadian retail space is challenging everyone in the organization to take the company to the next level.

“We’re known and loved in the rural areas, and there we are working on providing a better shopping experience,” said Beryl “Jack” Buley, president and CEO. “In the urban areas, we are working on providing a better shopping experience and increasing our density.”

With 238 stores located across Canada, from Vancouver to Newfoundland, the company began its existence as the Canadian arm of the Woolworth Company back in the 1920s. With headquarters in Mississauga, Ontario, the Canadian-owned and -operated company now features an extreme value format, finding much of its historical success in rural and smaller communities. Products include everything from home electronics, housewares, toys, and apparel to shoes, food, cleaning products, and seasonal and health and beauty products.

“This company has great roots, history, and staying power. Over time, the store has developed a niche in the market because there is really no one else in Canada that does what we do,” said Buley. “There are three segments of our business: hardlines, apparel, and consumables. Each segment represents about one-third of our business. With that as our foundation, I think we can not only compete well in the space, but also grow our company.”

Change is good

Several major changes have taken place in the last few years. In 2010, the company launched the “tb!s the bargain shop” rebranding campaign in recognition of its 10 years as an independent Canadian-owned company. The logo was designed to be sharp and modern, focusing on the “tb!s” in hopes that the logo would evolve into an easy identifier for the brand. By emphasizing that the company specializes in high value, low price products, the company felt it could expand the number of people coming through its doors.

Another big change came recently at the top. Buley was appointed president and CEO in March, having joined the company in late 2010 as EVP and chief merchandising officer. Buley’s experience, earned in a long career with company’s like Dollar General and Kohl’s, was a major factor in bringing him in as successor to Michael Roellinghoff, who became vice chairman of the board. There is an American discount retailer invasion coming into Canada, and Buley’s experience puts the company in better position to expand its footprint, gain marketshare, and draw top international brands into the product portfolio.

The reason American retailers, like Marshall’s and Target, are planning to invest in the Canadian market is simple. The retail market in Canada is fairly strong and offers a lot of potential for those kinds of companies. Buley believes the Canadian consumer will benefit from the American invasion, but he also thinks his company has the leverage to not only survive the invasion, but also grow in spite of it.

“Coming from the US retail space, my first goal has been to get the company on track for this US retail invasion, which has already started,” said Buley. “Part of the beauty of the company is that the model we are rolling out works in rural and urban areas.”

In fact, one of the most important aspects of the company’s repositioning is a pilot program that involved redesigning the retail model in some of its stores. The model has an enhanced focus on an improved assortment of convenience products. The idea is to appeal to shoppers in terms of value and convenience. The pilot stores feature expanded grocery sections with freezers and coolers and new apparel, softlines, pet, gifts, and home care product offerings.

“This new format makes the store a much more convenient place to shop. We were somewhat cluttered, and this is more of a racetrack format. We launched the model in 10 of our stores, and the consumer response indicates that our customers love it,” said Buley. “We added the convenience section in the front with coolers and freezers, not to be a grocery store, but to provide busy consumers with better access to products they need.”

Firm roots

Another part of the company’s longevity stems from its ability to become engrained into the fabric of the communities it serves. Supporting many charities and community initiatives, it has run the “tb!s Cares” committee since 2005 to raise money to support people in need. Ongoing charitable efforts include the Paper Egg Campaign with Easter Seals Canada, as the company has raised more than $700,000 since 2007 to help people with disabilities live better lives.

In addition, the company has put a special emphasis on environmental concerns over the last few years. It formed its Enviroaction Committee in 2007, which has helped the company build on initiatives such as developing internal recycling, encouraging employees to carpool or use public transportation, lowering use of paper through expanded web-based ordering tools, and reducing company usage of fossil fuels. Like many retailers, it also encourages customers to the reduce use of plastic bags through the purchase of reusable shopping bags.

As the company continues to prepare for heavy competition and build on a legacy that goes back for decades, Buley sees positive prospects ahead. The returns of the pilot program are promising, and the company plans to roll that out across the chain over the next 18 months. Opportunities exist to expand through acquisition as well as through organic growth. Toronto is one specific area where Buley would like to expand the company’s footprint. Overall, he thinks the company is well suited to take on all comers.

“I believe we could have more than 30 stores in the Greater Toronto area. Our model works well in urban areas, and we are a destination store in rural areas,” he said. “Our greatest competitive advantage is the mix of goods we offer to customers. There will be a lot of pressure put on retail by the new players coming into the market, but we know how to compete, and our format can be inserted into a lot of growth areas and provide a great alternative for the consumer.”