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Canadian Tire president says retailers need to create original ideas

TORONTO - The president of Canadian Tire says the death of traditional retail stores is greatly exaggerated.

In fact, Michael Medline is placing bets he will be able to convince customers that shopping in stores is better than going online for the cheapest deals.

"We're putting our money where our mouth is," Medline said in a retail conference speech on Tuesday. "But, we need to be good at both. We have to put huge resources, time and money behind e-commerce and the new world."

After years of a minimal digital presence, Canadian Tire (TSX:CTC.A) began to wade into the world of online shopping in a bigger way earlier this year.

While it won't ship mufflers and light fixtures to your home, the company does let you shop for items online before swinging by the nearest store to pick them up.

It's a step in the right direction, Medline said, though he estimates Canadian Tire is still a year and a half away from the presence it needs to have in e-commerce, where companies like Amazon.com are capturing a growing share of the market.

"We're facing these Goliath-like retailers out there," he said in an interview at the annual Store 2014 retail conference, held by the Retail Council of Canada. "We have to be quick on our feet and we have to adapt and change."

The influence of e-commerce giant Amazon was apparent throughout the conference as retailers talked about how to respond to changing consumer expectations, and the expansion of selection from Amazon's Canadian operations.

During his speech, Medline sent a drone to make a specialty delivery of Tim Hortons' (TSX:THI) Timbits to him on stage, a nod to the headlines that Amazon captured last year when it showcased what it said would be the future of online delivery.

"I love that Amazon tried it," he said. "I love that we're all talking about it. And I love that it's an example of the new world. The faster we can get there, the better."

If the future of the retail industry looks anything like the image crafted by Medline, Canadians will soon be shopping at a high-tech variation of the traditional "Ma and Pa" store.

Two Sport Chek locations in Toronto and Edmonton serve as a model for what's to come. Large digital screens are scattered along the walls, replacing traditional in-store signs, while customers can personalize hockey jerseys by using an interactive touchscreen. Employees at the locations are equipped with tablets that can browse inventory and order merchandise.

Medline described his vision of retail as one where community becomes a priority and the local store carries items that better suit the demands of the neighbourhood.

"We have to be better in the community," he said. "We have dealers... who can stock their stores in a way that works for the community."

He said stores that respond to local demands, and also employ more knowledgeable staff, will help ensure that customers walk out with purchases in their hands.

Medline called on other Canadian retailers to become more nimble to survive the onslaught of competition.

That's where Canadian companies often fall short, characteristically averse to taking risks and rarely the first to shell out extra dough to invest in the future.

Medline said the industry needs to change that mindset, and fast, as U.S. retailers swoop in to take a larger chunk of the market.

"I see companies fighting where the world is going, and you're know they're not going to be successful by fighting it," he said.

"If you go where the customer wants to go, you'll probably be all right."

Increasingly, those customers are turning to e-commerce, which is why Hudson's Bay (TSX:HBC) president Liz Rodbell said the department store retailer is already making changes to enhance its online operations, with expectations that online sales will grow three times faster than in-store sales over the next five years.

While shopping for clothes online has never been the most practical approach, Hudson's Bay has unveiled features like True Fit, which allows shoppers to enter their size specifications to ensure that clothes fit, make the process a little easier.

Rodbell said there's still an untapped market in Canada where only 3.4 per cent of sales are made online, compared to five per cent in the United States.

"Lots of people are searching, but not transacting," Rodbell said. "This is an opportunity that we will seize."

Staples Canada president Steve Matyas told the audience in a separate discussion that he expects bricks and mortar stores to still exist, but the model will need to be rethought.

"(We need to ask) how do we rationalize that so that it makes sense, given how much business is being transferred online," he said.

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