I was contracted by the Ottawa Citizen to write a series of profiles about prominent Ottawa business people. This article profiles Giant Tiger founder Gordon Reid. Wikipedia references this article in its biography of Gordon Reid. http://en.wikipedia.org/wiki/Gordon_Reid_(businessman)
Giant Tiger Roars Loud in the Discount Jungle
He’s quiet, genial and soft-spoken, but Giant Tiger founder Gordon Reid has a competitive streak about as big as his far-flung empire of discount stores. He actually appears to savour combat with Wal-Mart for the loyalty of Canadian shoppers.
The American juggernaut had other Canadian retailers hiding under their clothing racks when it moved north, but Mr. Reid claims he welcomed the new predator to the discount jungle.
“Wal-Mart destroyed our competition,” he explains.
And he took full advantage of the spoils. He bought up the money-losing stores closed by chains such as Zellers and K-Mart in the wake of the Wal-Mart attack and hired on their former managers to open new Giant Tiger franchises.
”I specialize in buying distress space,” says Mr. Reid, who is now CEO and head of the real estate division in his company. His 1996 purchase of the 270,000-square-foot former Sears Distribution Centre that serves as the company head office is a good example. As much as he wants to update his small Orléans store, he refuses to buy or rent new property in the area because the costs are too high.
This attention to the bottom line isn’t hurting his market share. Mr. Reid says his stores sell an average of $450 of merchandise per square foot, compared with $300 for Wal-Mart. The Tiger empire is expanding — it is estimated about five new stores will open annually in the future. There are now 90 Giant Tigers employing 2,600 people within a 850 km radius of Ottawa. Annual sales exceed $449 million and have increased 50 per cent in the past three years.
“Giant Tiger is competing successfully with Wal-Mart because they are a tightly managed and cash-rich company on a real growth path,” Barry Nabatian, an analyst with Market Research Corp. was quoted in September.
That growth path started at the Woolworth’s lunch counter in downtown Ottawa. Mr. Reid’s mother worked behind the counter, and he has a detailed memory of the menu. “Hot roast beef sandwiches with rich, brown gravy,” he recites with a smile. While the budding entrepreneur was certainly inspired by Frank Woolworth’s Canadian success story, he figured he could do it better — Gordon Reid could undersell Woolworth’s if given the chance.
The best way to learn how to do that was to gain experience in the business. At the tender age of 13, Mr. Reid began his career with Simpson’s Department Store. He worked his way up from the warehouse to a sales clerk position in the men’s wear department. The lure of the lucrative American marketplace then attracted him across the border. He crisscrossed the northern US as a travelling salesman, selling merchandise to discount emporiums like Uncle Bill’s in Cleveland, Ohio.
The young man liked what he saw in the discount stores. “They sell the same item for a lower price than department stores. It seemed a good concept,” he says. The goal of opening his own store was born. Even though he lived closer to the Windsor/Detroit area, Mr. Reid’s market research indicated that the nation’s capital was a good place for his kind of business.
“I chose Ottawa [to open my store] because it was a big enough market and had a stable civil service economy,” he explains.
He scrimped and saved and in 1961, at age 27, he plunked $15,000 of his own money down on the old Le Droit printing plant on George Street. There was precious little money left over for fancy renovations. Mr. Reid even built his own display tables.
Naming the new store was a bit more of a problem. “Top Value” was the moniker originally selected. However, while pouring milk on his breakfast cereal, the words on the carton caught Mr. Reid’s eye. It turns out Top Value was trademarked by Loeb. The store was quickly renamed Giant Tiger after a store Mr. Reid was familiar with in Cleveland. This necessitated hasty changes to the already-completed advertising artwork. It was impossible to find a tiger drawing on such short notice, so a lion shorn of his magnificent mane was substituted in the original ads.
The ads didn’t work as well as Mr. Reid hoped. First year sales amounted to over $139,000, a figure he terms disappointing. In fact, he almost closed down in his second year. However, buoyed by a loyal Franco-Ontarian clientele, Mr. Reid struggled on. Today, he credits the Franco-Ontarian population with his success and commissioned a mural depicting historic Franco Ontarian events. It was painted on the side of the George Street Giant Tiger in 1992.
By 1965, the Tiger was roaring. A second store was opened in Brockville and annual sales reached $444,000. Strongly believing the storeowner should be a member of the community where the store is located, Mr. Reid made the decision to franchise in 1968. The first franchise store opened in Maniwaki in 1968, and more quickly followed. Giant Tiger stores can now be found in Ontario communities as far west as Espanola, as far south as Sarnia, as far north as Cochrane and stretching through eastern Ontario up to Shawinigan, Quebec. As well, Scott’s Discount Stores and Chez Tante Marie are part of the organization.
In 1987, Mr. Reid expanded into the transportation business to serve his rapidly growing network of stores. Tiger Trucking delivers merchandise from the Giant Tiger warehouses to the stores daily. The distribution network gives them more buying power, according to Jeffrey York, the recently appointed president of Giant Tiger. “We purchase for 90 stores and ship it out from one location,” says the 36-year-old who worked his way up to the top from the Tiger warehouse.
In the late 1980’s, Mr. Reid noted a subtle change in the shopping desires of his clientele. They didn’t just want the cheapest prices anymore. They wanted to buy up-to-the-minute styles inexpensively.
To serve this discriminating market, Giant Tiger established a clothing and footwear buying office in the center of Montreal’s fashion district in 1990. Now, instead of buying distress merchandise by the pound at the end of the season, Giant Tiger’s buyers are snapping up the new styles at the same time as typical mall stores like Sears and Suzy Shier.
New advertising flyers showcase women’s clothing with a glossy high-fashion layout that is distinctly different from the regular, somewhat cluttered look of the regular Giant Tiger flyer. One thing that hasn’t changed, however, is the lower prices for the merchandise. “It’ll be half-price or lower than the same style sold in department of speciality stores,” promises Mr. York.
At the same time, decor in the stores is being updated. Wider aisles, brighter lighting and faster checkouts are new features, but don’t bother looking for plush carpets or fancy trim. “The stores are neat, clean and bright,” sums up Mr. York. What he calls “Spartan frugality” is also reflected in the Giant Tiger head office. You won’t find heavy, oak boardroom tables or padded, tilting chairs — just plain, solid, workmanlike furniture.
The fact he doesn’t spend money furnishing his head office in a more luxurious manner than the rest of the store reflects Mr. Reid’s continuing dedication to tight management and attention to the bottom line. That, combined with an aggressive expansion plan and a promising cub in the president’s seat, ensures Giant Tiger will continue to roar well into the new millennium.