Canadian Tire has laid off some of its top management in a move to shift from its longtime structure of five "separate but interrelated businesses" toward a "one company" approach. The retail conglomerate said the former "silo perspective" caused unnecessary duplication and bloated costs while also hampering efforts to push sales across the organization.
"Essentially, we have put experienced and talented individuals in key roles across the organization, we have reorganized to much more effectively live up to our commitment to allow every customer to feel they are dealing with one company rather than a series of loosely integrated business units," chief executive officer Stephen Wetmore said on a conference call. "Looking forward, we need a structure focused on motivating customers to spend more across our unified business, to do so more often and to build a support infrastructure that delivers a superior customer experience."
The company, with about 1,300 stores and gas stations across Canada, operates five units: Canadian Tire retail, Mark's Work Wearhouse, financial services, petroleum and PartSource specialty automotive stores. But it sees its six principal business categories as: living, fixing, playing, automotive, apparel, and financial services.
Mike Arnett, president of Canadian Tire, will be put in charge of the first three groups. Automotive will be led by Glenn Butt, who was named executive vice president customer experience and automotive. Paul Wilson remains president of Mark's and Dean McCann remains president of financial services. Three other top execs will leave the company.
Separate information technology, finance and other organization structures were also in place for each division under the silo structure.
"While this structure led to a focus on individual business performance, it significantly increased our operating costs and led to an unfocused approach on our customer," said Mr. Wetmore.
A pretax charge of about $15 million Canadian will be taken in the third quarter to cut less than one percent of Canadian Tire's workforce of more than 58,000.
Discussion Questions: What are the pros and cons of retailers going to a more centralized organization? Does it make sense for Canadian Tire?
Overall, have centralization efforts been positive or negative for large retail organizations?