Cantrex stores can offer Sears credit card
By Michael J. Knell -- Furniture Today, October 9, 2005
Toronto — Every Cantrex store that chooses will be an authorized Sears credit card merchant before the end of the year, members of the fee-for-service marketing and buying group were told at their annual convention here.
At the convention, the first since Cantrex Group was acquired earlier this year by Sears Canada, the 60 or so member stores attending also heard that:
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Sears wants to spur Cantrex's growth without losing the entrepreneurial spirit of its members.
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Members will be eligible to acquire Sears catalog agencies in their communities on a preferential basis should they become available.
The catalog outlets typically are secondary businesses for the small-town merchants operating them, and are seen as profit centers and traffic-builders for the main venture. -
The group is launching a direct import program put together specifically for members and featuring product not offered by other Canadian retailers, including Sears Canada.
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Cantrex is adding an Expert Retail Services division, which will offer a wide array of non-product related services such as succession planning, health care and other employee benefits, and inventory productivity.
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The group plans a Web initiative that will make communications with members more effective and give them real-time access to critical data. Other programs also will be rolled out in coming months.
As the convention got under way, Cantrex President and General Manager Claude Senechal told the gathering, "The challenge we have this weekend is to demystify the Sears acquisition.
"Since 1982, Cantrex has been devoted to the success of its merchant members, and we're not about to change that," he continued. "The acquisition by Sears is a win-win proposition which will bring Cantrex members to a new level of profitability and growth."
Rick Brown, senior vice president of strategic initiatives for Sears Canada, echoed that view: "We want to create significant value for both Cantrex members and Sears Canada by combining big corporate infrastructure with local entrepreneurship. That together will create a lot more value than either on its own."
Senechal said, "Cantrex is first and foremost a group of 1,000 retailers who are well established in their communities, mostly outside of the major cities. Sears puts great stock in such entrepreneurship. You have a unique perspective. It's your community; they are your customers and neighbors. You have your finger on the pulse of the people there and that is something that Sears cannot buy."
Senechal retired at the end of the convention, and Alain Masse was named to succeed him. (See story on page 86.)
Brown noted that Sears Canada's auto service business had struggled for years until Sears partnered with a few successful regional auto service experts. "Partnering with them allowed us to take them to a very profitable position for Sears," he said. "That's basically the approach we want to take with Cantrex."
The move to add Cantrex members and stores to the Sears credit card network was expected, and actually began in August at banner stores Furniture Plus, Accent and Mattress World. The Sears card is the largest credit card in circulation in Canada, with some 9 million issued and 4.5 million with an outstanding balance at any given time.
Every member who wants to accept the card should be plugged in before the end of the year. The card also is being accepted at Corbeil Electromenagers, Cantrex's 30-unit chain of appliance stores.
Sears Canada expects to gain more than just a new revenue stream from its acquisition of Cantrex. As a multi-channel retailer, it knows it can't be content with just one route to market. "Cantrex and Sears are combining their strengths," Senechal said. "We need this new spirit of 'co-opetition' to grow in an ever-changing competitive environment. Retail is no longer confined to the main street."
Cantrex members will gain considerable supply-chain leverage when coupled with the existing might of Sears, he said. "Most of the supply chain is beyond the control of the independent retail store. This leverage constitutes a significant competitive advantage. The ability to influence the supply chain is critical for the success of the independent retailer," Senechal said.
He said studies have shown that, in the early 1990s, 75% of all retail sales were made by independent retailers. "Today, it's less than 40%, and by 2010 it will be less than 30%," Senechal said. "The question is not whether you have to be part of a buying group — because the answer is you will have no choice — but what group the retailer will belong to. Our job is to provide services that allow the member to operate his business in a profitable manner."
Brown assured his audience that Sears Canada didn't buy Cantrex to squeeze the independent retailer out of the market. "Cantrex is a major growth platform for us going forward," he said.
Canadian industry insiders generally believe Cantrex mostly has marked time since it was acquired by TransAmerica Commercial Finance Canada seven years ago. A merchant banker, TransAmerica understood factoring but struggled with marketing and merchandising. That didn't improve much when GE Capital Finance took over the group a couple of years ago.
Meanwhile, Cantrex's principal competitor, the cooperatively owned Mega Group, based in Saskatoon, Saskatchewan, has been investing heavily in the development of new and more tightly disciplined retail systems such as Countrywide and Multi-Meubles. Over the past few months, Mega has been conducting an aggressive recruitment drive, targeting both non-aligned retailers and Cantrex members.
Now, with new management in place, Cantrex also will be on the hunt for new members and will use the power of the Sears name as a major selling tool. But some observers believe independent retailers will hesitate to enter into a relationship with the retailing giant, which many smaller stores see as one of their strongest competitors.
So far, there doesn't appear to be much membership switching between the two big buying groups.
Mega President Michael Graydon recently said that as many as nine Cantrex members had defected since Sears acquired Cantrex. Meanwhile, at least one Countrywide member in Alberta will convert to Cantrex's Furniture Plus banner in the next few weeks.
The membership battle surely will heat up in the months to come.
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Cantrex stores can offer Sears credit card
Oct 13, 2005
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