Giant Tiger
Encyclopedia
Discount store
A discount store is a type of department store, which sells products at prices lower than those asked by traditional retail outlets. Most discount department stores offer a wide assortment of goods; others specialize in such merchandise as jewelry, electronic equipment, or electrical appliances...
s (after Walmart and Zellers
Zellers
Zellers Inc. is Canada's second-largest chain of mass merchandise discount stores, with locations in communities across Canada. A subsidiary of the Hudson's Bay Company , it has 273 locations across the country....
). Following the 2006 acquisition of Zellers and its parent, the Hudson's Bay Company
Hudson's Bay Company
The Hudson's Bay Company , abbreviated HBC, or "The Bay" is the oldest commercial corporation in North America and one of the oldest in the world. A fur trading business for much of its existence, today Hudson's Bay Company owns and operates retail stores throughout Canada...
, by American entrepreneur Jerry Zucker
Jerry Zucker (businessman)
Jerry Zucker was an Israeli-born American businessman and philanthropist.-Biography:Jerry Zucker was the son of Holocaust survivors. He graduated from the University of Florida with a Bachelor of Science degree in mathematics, chemistry, and physics and went on to earn his M.S...
, Giant Tiger became the largest Canadian-owned discount retailer. Annual sales first surpassed $1 billion in 2005.
Giant Tiger operates 203 stores, including 106 in Ontario
Ontario
Ontario is a province of Canada, located in east-central Canada. It is Canada's most populous province and second largest in total area. It is home to the nation's most populous city, Toronto, and the nation's capital, Ottawa....
, 51 in Quebec
Quebec
Quebec or is a province in east-central Canada. It is the only Canadian province with a predominantly French-speaking population and the only one whose sole official language is French at the provincial level....
(as Tigre Géant and Chez Tante Marie), 13 in Manitoba
Manitoba
Manitoba is a Canadian prairie province with an area of . The province has over 110,000 lakes and has a largely continental climate because of its flat topography. Agriculture, mostly concentrated in the fertile southern and western parts of the province, is vital to the province's economy; other...
, 13 in Alberta
Alberta
Alberta is a province of Canada. It had an estimated population of 3.7 million in 2010 making it the most populous of Canada's three prairie provinces...
, 8 in Saskatchewan
Saskatchewan
Saskatchewan is a prairie province in Canada, which has an area of . Saskatchewan is bordered on the west by Alberta, on the north by the Northwest Territories, on the east by Manitoba, and on the south by the U.S. states of Montana and North Dakota....
, 6 in New Brunswick
New Brunswick
New Brunswick is one of Canada's three Maritime provinces and is the only province in the federation that is constitutionally bilingual . The provincial capital is Fredericton and Saint John is the most populous city. Greater Moncton is the largest Census Metropolitan Area...
, 4 in Nova Scotia
Nova Scotia
Nova Scotia is one of Canada's three Maritime provinces and is the most populous province in Atlantic Canada. The name of the province is Latin for "New Scotland," but "Nova Scotia" is the recognized, English-language name of the province. The provincial capital is Halifax. Nova Scotia is the...
and 1 in British Columbia
British Columbia
British Columbia is the westernmost of Canada's provinces and is known for its natural beauty, as reflected in its Latin motto, Splendor sine occasu . Its name was chosen by Queen Victoria in 1858...
. The company has announced plans to open an additional 9 stores in summer and fall 2011. In Ontario, a small number of locations trade under the names GTExpress and Scott's Discount.
The chain employs over 7,000 people.
The headquarters
Headquarters
Headquarters denotes the location where most, if not all, of the important functions of an organization are coordinated. In the United States, the corporate headquarters represents the entity at the center or the top of a corporation taking full responsibility managing all business activities...
and main distribution centre are located on Walkley Road
Walkley Road
Walkley Road is a major road in Ottawa, Ontario, Canada. It runs from Riverside Drive to Ramseyville Road . It is mostly a 4-lane divided road which runs through both residential and industrial areas of the southern part of urban Ottawa.-External link/Reference:*...
in Ottawa
Ottawa
Ottawa is the capital of Canada, the second largest city in the Province of Ontario, and the fourth largest city in the country. The city is located on the south bank of the Ottawa River in the eastern portion of Southern Ontario...
.
Inspiration
In the mid and late 1950s, Giant Tiger founder Gordon ReidGordon Reid (businessman)
Gordon Reid is a Canadian businessperson. He is the founder of Giant Tiger Stores Ltd., Canada’s third-largest chain of discount stores.-Early life :...
, who was then in his early twenties, was a travelling salesman for an importer in the United States. In the American Midwest Reid first saw discount stores, which were a new concept at the time. He was particularly impressed by Uncle Bill's, a chain headquartered in Columbus, Ohio
Columbus, Ohio
Columbus is the capital of and the largest city in the U.S. state of Ohio. The broader metropolitan area encompasses several counties and is the third largest in Ohio behind those of Cleveland and Cincinnati. Columbus is the third largest city in the American Midwest, and the fifteenth largest city...
., which was one of his clients. The discount store concept did not yet exist in Canada, and it therefore represented a business opportunity.
Reid reports that he was also inspired by Frank Woolworth’s continent-wide success, half a century earlier, in creating hundreds of profitable Five-and-Dime stores. Reid’s own retail experience, dating back to his first job as a teenager, had been in department stores rather than in discount, but his mother had worked behind the luncheon counter at a Woolworth’s
F. W. Woolworth Company
The F. W. Woolworth Company was a retail company that was one of the original American five-and-dime stores. The first successful Woolworth store was opened on July 18, 1879 by Frank Winfield Woolworth in Lancaster, Pennsylvania, as "Woolworth's Great Five Cent Store"...
in downtown Montreal
Montreal
Montreal is a city in Canada. It is the largest city in the province of Quebec, the second-largest city in Canada and the seventh largest in North America...
.
Reid would state, four decades later, that he had believed, even at this early stage, that it would be possible to build a Canada-wide chain based on this model. Asked by a reporter whether he had ever imagined that Giant Tiger would eventually have the success it was then enjoying, Reid stated, “Yes. That was the original intention. The idea for the business came when I was a travelling salesman. I saw the discounters growing. My original inspiration was the F.W. Woolworth Co., obviously that was a big chain. So this was always the plan.”
Key features of the business model
The Giant Tiger business model is characterized by a number of features:- Private ownership.
- A unique franchise system.
- Low prices combined with high sales volumes.
- Low operating costs, which are passed on to the customer.
Ownership structure
Key head office personnel are co-owners of Giant Tiger Stores, Ltd. Initially, Giant Tiger’s head office was quite small; and ownership was therefore shared among a small number of people. By 1980, ownership had been shared between Reid and ten key employees. Gordon Reid has stated that Canada’s agricultural cooperative movement was his inspiration for this innovation. Making his employees into part-owners of the company ensured that, as in the coop movement, all employees would share a common interest in maximizing profits.Franchise system
The first franchised Giant Tiger opened in Maniwaki, QuebecManiwaki, Quebec
Maniwaki is a town north of Gatineau and located north-west of Montreal, in the province of Quebec, Canada. The town is situated on the Gatineau River, at the crossroads of Route 105 and Route 107, not far south of Route 117...
, in the late 1960s. The franchise owner’s name was Jean-Guy Desjardins. The benefit of this new way of operating was felt immediately. Up to this point, Gordon Reid and his small head office staff had been trying to make all key decisions, with the result that, despite its small size, the chain was slow-moving and inflexible. But, as Reid would explain it forty years later, from the moment the change was made, “the [Maniwaki] store made money and I didn't have to do anything. [Jean-Guy Desjardins] did the advertising, he found the location, he merchandised it to suit his customers, he did everything….And, I thought, 'by golly, that's a good system.' “
The greater autonomy that could be permitted to franchise owners whose personal financial interests were symmetrical with those of the head office meant that there was less need for Giant Tiger to develop centralized systems. Eleven years after Giant Tiger's first experiment with franchising, Reid emphasized the flexibility that it gave his company: “The weakness of the chain stores is that they try to standardize.” Such standardization was not possible in a small chain which at the time maintained its low prices by locating in awkward and non-standard spaces such as converted bowling alleys or garages, and which refused to put money into standardized fixtures or furniture, or to invest in standardized office systems.
Giant Tiger franchises
Franchising
Franchising is the practice of using another firm's successful business model. The word 'franchise' is of anglo-French derivation - from franc- meaning free, and is used both as a noun and as a verb....
are unusual. A 1980 article describes Giant Tiger's franchise system this way:
The practice of issuing $1 franchises and of attracting the best managers from other chains has continued essentially unchanged since that time. In 2010, Reid reported that the issuing of no-cost franchises to experienced retailers "was a great way to get experienced people. Over the years we had a lot come from Woolworth
F. W. Woolworth Company
The F. W. Woolworth Company was a retail company that was one of the original American five-and-dime stores. The first successful Woolworth store was opened on July 18, 1879 by Frank Winfield Woolworth in Lancaster, Pennsylvania, as "Woolworth's Great Five Cent Store"...
, Kresge
Kresge
- People and characters :* Cliff Kresge , an American professional golfer* Geoff Kresge, songwriter, guitarist, bassist with the band AFI* George Joseph Kresge , American mentalist better known as Kreskin or The Amazing Kreskin...
, Kmart
Kmart
Kmart, sometimes styled as "K-Mart," is a chain of discount department stores. The chain acquired Sears in 2005, forming a new corporation under the name Sears Holdings Corporation. The company was founded in 1962 and is the third largest discount store chain in the world, behind Wal-Mart and...
and later Zellers
Zellers
Zellers Inc. is Canada's second-largest chain of mass merchandise discount stores, with locations in communities across Canada. A subsidiary of the Hudson's Bay Company , it has 273 locations across the country....
." In the same interview, Reid stated that over twenty Giant Tiger franchises are now run by former Walmart employees, most of whom had been attracted by the same franchise system that he had introduced decades earlier.
Low costs, low prices, high sales volume
In the discount store industry, where margins are assumed to be low, two key indicators of the high volume of sales that are necessary for an efficient and profitable operation are gross sales per square foot and the number of times, per annum, that a company “turns over”Inventory turnover
In accounting, the Inventory turnover is a measure of the number of times inventory is sold or used in a time period such as a year. The equation for inventory turnover equals the cost of goods sold divided by the average inventory...
its merchandise.
Over the years, Gordon Reid and other Giant Tiger executives have occasionally announced the chain’s then-current sales per square foot and its annual turn to the media, usually in comparison to some publicly-available metric for the industry. These announcements indicate that Giant Tiger has consistently outperformed the industry. In 1985 and again in 1991, it was asserted that Giant Tiger was achieving sales of $300/sq. ft., as compared to an industry average for department stores of $150 – $175/sq. ft. and for other discounters of $200/sq. ft.
By 1999, the chain was averaging $450/sq. ft. compared to $300/sq. foot for Wal-Mart, which itself was well above the average for the industry. Also in 1999, Reid stated that Giant Tiger was achieving nine turns of its inventory, compared to an industry average of 4½ turns.
Sales volume and number of stores
Gordon ReidGordon Reid (businessman)
Gordon Reid is a Canadian businessperson. He is the founder of Giant Tiger Stores Ltd., Canada’s third-largest chain of discount stores.-Early life :...
opened the first Giant Tiger store, on George Street in Ottawa’s Byward Market
Byward Market
ByWard Market is a district in Lower Town located east of the government & business district, surrounding the market buildings and open-air market on George, York, ByWard and William Streets.The district is bordered on the west by Sussex Drive, on the...
, on May 13, 1961, with a $15,000 investment. First-year sales of $139,781 were far lower than Reid had anticipated, and by the end of 1962 he decided to close the store. Unexpectedly, the rush of customers attracted by his going out of business sale provided enough cash flow to keep the business afloat.
Although the store survived, expansion was slow. A second location, in the small town of Brockville, was not opened until 1965. By the time of the company's tenth anniversary, in 1971, it still had only six stores.
Because Giant Tiger has always been privately held, information on profits are not available, and information on sales is available only through media reports. Based on these sources, it is possible to trace a somewhat sporadic history of the company's growing sales figures, number of stores, and, where possible, the number of employees:
- 1962: $139,000 (1 store)
- 1965: $444,000 (2 stores)
- 1980: $20 million (22 stores)
- 1984: $60 million (29 stores)
- 1985: $75 million (34 stores, 500 employees)
- 1986: $90 million (37 stores)
- 1990 $163 million (54 stores)
- 1991: $200 million (60 stores, 1,200 employees)
- 1994: $220 million (63 stores)
- 1996: $300 million (79 stores, 2,000 employees)
- 1999: $450 million (90 stores, 2,600 employees)
- 2000: $600 million (102 stores, 3,500 employees)
- 2007: $1.3 billion (182 stores)
Geographic expansion
In 2001, Giant Tiger and The North West CompanyThe North West Company
The North West Company is a grocery and merchandise store in remote communities across northern Canada and Alaska. Through its subsidiary, Cost-U-Less stores it also operates in the US territories of Guam, The CNMI, and American Samoa and in the Caribbean....
(NWC) signed a 30-year Master Franchise Agreement that grants NWC the exclusive right to open and operate 72 Giant Tiger stores in western Canada.
The chain has undertaken a major expansion in the Greater Toronto Area since 2005. It has opened seven stores in Bradford, Brampton, Markham, Newmarket, Scarborough and Etobicoke.
The 200th Giant Tiger store opened in Nova Scotia in October 2010.
Giant Tiger attempted an expansion into the United States with a franchised store in Potsdam, New York
Potsdam, New York
Potsdam, New York relates to two locations in Saint Lawrence County, New York:*Potsdam , New York*Potsdam , New York, in the town of Potsdam; site of the State University of New York at Potsdam...
, which closed after a few years of operation.
Franchising
In 1968, Giant Tiger opened its first franchise stores, which now account for the majority of locations. The goal was to better serve the customer by having local owners in the stores.New brands/trademarks
In 1977, Giant Tiger established Chez Tante Marie stores in HullHull, Quebec
Hull is the central and oldest part of the city of Gatineau, Quebec, Canada. It is located on the west bank of the Gatineau River and the north shore of the Ottawa River, directly opposite Ottawa. As part of the Canadian National Capital Region, it contains offices for twenty thousand...
and Gatineau
Gatineau
Gatineau is a city in western Quebec, Canada. It is the fourth largest city in the province. It is located on the northern banks of the Ottawa River, immediately across from Ottawa, Ontario, and together they form Canada's National Capital Region. Ottawa and Gatineau comprise a single Census...
, Quebec.
In 1996, the Scott's Discount brand was launched as an alternative format for smaller stores.
In 2008, Giant Tiger opened its first GT Xpress outlet, in Ottawa's working-class Hintonburg
Hintonburg
Hintonburg is a neighbourhood of Ottawa, Ontario, Canada. It is a historically working-class, predominately residential neighbourhood, with a commercial strip located along Wellington Street West, located to the west of downtown...
neighbourhood. GT Xpress stores are intended to service less mobile residents of densely-populated neighbourhoods, so that residents will not have to leave the neighbourhood to shop at a big-box store
Big-box store
A big-box store is a physically large retail establishment, usually part of a chain. The term sometimes also refers, by extension, to the company that operates the store...
. Because larger retail spaces are unavailable in such inner-city neighbourhoods, the merchandise selection at GTXpress stores is more limited than at a full-size Giant Tiger, let alone a big-box store. Traditional lines of Giant Tiger merchandise are further restricted to free up space for an expanded produce, dairy, deli and bakery section. Effectively, a GTXpress store is a discount version of a convenience store
Convenience store
A convenience store, corner store, corner shop, commonly called a bodega in Spanish-speaking areas of the United States, is a small store or shop in a built up area that stocks a range of everyday items such as groceries, toiletries, alcoholic and soft drinks, and may also offer money order and...
, characterized by a "focus on what the customer needs today, as opposed to [carrying a full assortment of] what the customer wants." In view of the fact that the ethnic makeup of individual inner-city neighbourhoods is likely to differ substantially, franchise owner at each GTXpress outlet will have the authority to tailor "product lines to cater to ethnic diversity in the area."
Trucking/warehousing
In 1987, Giant Tiger launched its own trucking fleet (known internally as Tiger Trucking) to make regular shipments from the warehouse to stores. In 1999 it was reported that the company's trucks were making deliveries to each store three times a week. In 2001, Reid reported that deliveries were taking place daily: "We have the most efficient shipping and distribution system in the general merchandise field.... It is equivalent to the grocery stores. We deliver to stores five times per week. There is no one else in the general merchandise industry that does that and we do it with our own trucks."On May 31, 1996, Giant Tiger purchased and took possession of a 29,000 m2 (315,000 sq ft.) distribution centre on Walkley Road in Ottawa, previously occupied by Sears Canada
Sears Canada
Sears Canada Inc. is a retailer, headquartered in Toronto, Ontario, that operates in all provinces and territories across Canada with a network of 196 corporate stores, 195 dealer stores, 38 home improvement showrooms, 108 Sears Travel offices and a nationwide home maintenance, repair, and...
. The company's headquarters moved to this location later the same year.
In December 2005, Giant Tiger opened a new 3700 m2 (40,000 sq ft.) distribution centre for frozen and refrigerated products in Brockville, Ontario
Brockville, Ontario
Brockville is a city in Eastern Ontario, Canada, in the Thousand Islands region. Though it serves as the seat of the United Counties of Leeds and Grenville, Brockville is politically independent and is grouped with Leeds and Grenville for census purposes only.Known as the "City of the 1000...
.
Merchandising strategy
Over time, "Reid noted a subtle change in the shopping desires of his clientele. They didn't just want the lowest prices anymore. They wanted to buy up-to-the-minute styles inexpensively." In 1990 Giant Tiger responded by establishing a clothing and footwear buying office in the heart of Montreal'sMontreal
Montreal is a city in Canada. It is the largest city in the province of Quebec, the second-largest city in Canada and the seventh largest in North America...
fashion district, in order to be closer to the suppliers and manufacturers, allowing the chain to pick up trends faster and cause merchandise to arrive in the stores earlier in the fashion cycle.
Changes in management structure and key personnel
Over the course of the past decade, Gordon Reid has gradually been relinquishing direct control of Giant Tiger. In 1999, he resigned the presidency of Giant Tiger in favour of Jeff York, an executive with ten years’ experience at the company. In October 2010, Reid stepped down as chief executive officerChief executive officer
A chief executive officer , managing director , Executive Director for non-profit organizations, or chief executive is the highest-ranking corporate officer or administrator in charge of total management of an organization...
of Giant Tiger, in favour of Andy Gross, a twenty-five year veteran with the chain, who started working as a buyer when there were fewer than thirty stores. Gross had, by this time, already inherited the presidency from Jeff York. Reid retains his post as chairman of the board
Chairman of the Board
The Chairman of the Board is a seat of office in an organization, especially of corporations.Chairman of the Board may also refer to:*Chairman of the Board , a 1998 film*Chairmen of the Board , a 1970s American soul music group...
.