Sunday, December 21, 2014

FedEx takes a page from Canada Post playbook with new locations at Home Hardware

TORONTO — As more Canadians turn to online shopping, FedEx hopes an agreement to open shipping centres at Home Hardware Stores Ltd. will help it grab a larger piece of the growing e-commerce market.
Federal Express Canada Ltd. said Wednesday that the centres, which serve as mini-hubs, will offer more “points of access” for customers to drop off and pick up parcels.

The new FedEx locations will look very similar to the Canada Post outlets that are tucked into stores operated by Shoppers Drug Mart, Jean Coutu (TSX:PJC.A) and others such as convenience stores and news stands across the country. They would operate similar to the FedEx storefronts that are situated primarily in urban centres.
“This is about convenience and allowing us to get much closer to our customers in a more convenient way than we had in the past,” said FedEx Express Canada president Lisa Lisson in an interview.
“Really it’s all about providing access.”
FedEx’s move comes as Canadian retailers place a greater emphasis on sales online.
Companies like Canadian Tire Corp. (TSX:CTC.A) and Hudson’s Bay Co. (TSX:HBC) are in the midst of creating new websites designed to make it easier to shop online.
More retailers are also allowing shoppers to select and pay for their items online before picking them up at a store.
Lisson said FedEx needed to boost its presence in many areas of the country.
Together, the company has nearly 100 service centres and office locations across the country, and another 200 authorized ship centres, often drop boxes, at independent businesses and small chains across the country. But the number is dwarfed by the nearly 2,500 Canada Post outlets that run across the country in pharmacies, grocery stores and convenience stores.
“If you lived in a rural area and there (wasn’t) a FedEx authorized ship centre ... you might’ve had to drive a distance to get your package,” she said.
For example, until the Home Hardware partnership, residents in Guelph, Ont., had to drive roughly half an hour to Cambridge, Ont., for the nearest FedEx centre.
A Home Hardware building centre in Guelph was one of the first new FedEx counters to open. The retailer is training its employees to handle the courier’s packages.
FedEx plans to use the same training approach at other Home Hardware counters, rather than hire specific FedEx handlers, said Lisson.
An internal projection from FedEx suggests that global e-commerce will grow to $1 trillion in sales by 2016. The company says that Cyber Monday was the busiest day in its history, though it didn’t provide specific figures.
In November, the company said it expected about 60 per cent of Canadians would shop online during the 2013 holiday season.
Aside from convenience, the new FedEx counters will help lessen the number of deliveries its carriers make to unanswered doorsteps. Lisson said when customers make an online purchase they will be able to select an option that specifies they will pick up their package at the nearest shipping centre.
Home-improvement retailer Home Hardware has about 1,100 locations throughout its national network of independently owned stores and building centres, though the company hasn’t said how many owner-operators it expects will choose to house full-service FedEx shipping centres.
FedEx spokesman James Anderson said FedEx estimates a “first-wave” will have more than 100 Home Hardware locations participating in the partnership.
A Home Hardware spokesman said in an email that the company — headquartered in St. Jacobs near Kitchener, Ont. — will work with the owner-dealers to explain how the FedEx partnership could benefit their businesses and their customers.
The shift in shopping habits has also caught the attention of Canada Post, which dramatically shifted its priorities toward parcel services as it looks for new ways to stay relevant when Canadians are sending fewer letters.
The Crown corporation has also launched a program for small businesses designed to make it easier to ship online orders through the postal service. It has also announced in December that it plans to phase out the remaining door-to-door residential delivery in urban centres over within five years, in favour of communal mail boxes.
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