The Canadian consumer sector is highly competitive. Aside from other domestic retailers, Canadian consumer stocks are facing increasing competition from large U.S. discount retailers, like Wal-Mart and Costco.

As the competition between retailers continues to heat up, it’s more important than ever for investors to focus on Canadian consumer growth stocks with a proven ability to adapt and prosper in the fast-changing retail landscape.

In a just-published issue of The Successful Investor, we take a close look at an iconic Canadian retailer with a long history: Canadian Tire Corp. (symbol CTC.A on Toronto). The company has been improving the layout of its stores over the last 15 years, and adding new items to the merchandise they carry. It has also acquired and launched a number of new businesses.

Now, Canadian Tire wants to build on its expansion with a new strategy: It will fuel its long-term growth by focusing on its core products, particularly auto-related parts and merchandise. We analyze the growth stock’s approach and update our buy/sell/hold advice in The Successful Investor.

This growth stock’s wide range of operations gives it an edge

Canadian Tire operates 479 stores that sell automotive, household and sporting goods. It also owns other retail chains, including 378 Mark’s Work Wearhouse casual-clothing stores, 273 gas stations (some of which have car washes and convenience stores) and 87 PartSource auto-parts stores.

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The growth stock’s new store formats continue to pay off. The first, called “Smart Stores,” features layouts that make it easier for the company to move faster-selling seasonal merchandise to high-traffic areas of the store.

In 2009, the company converted five stores to this format as part of a test. The test stores reported an average sales increase of 25%, and 14% more transactions. The company now has 36 Smart Stores, and plans to convert 60 more of its stores to Smart Stores in 2010.

The growth stock’s second new store concept is called “Small Market.” These stores, about a quarter of the size of a Smart Store, are designed for rural communities. Like Smart Stores, they focus on high-volume items. Many also include a gas station and a Mark’s Work Wearhouse outlet. So far, Canadian Tire has opened nine Small Market stores. It plans to open four more by the end of this year.

Finance division cuts Canadian Tire’s reliance on cyclical retail business

The company’s financial-services division has been a growth area in the past few years. The division’s Canadian Tire-branded MasterCard credit cards account for 95% of its business. It also offers personal loans and savings accounts.

To cut its risk, Canadian Tire sells its credit-card receivables to third parties. This also gives the company cash to expand its lending activities. The credit crisis hurt demand for new securities backed by credit-card loans. However, strong demand for Canadian Tire’s savings accounts and guaranteed investment certificates continues to give it enough cash to maintain this division’s liquidity.

You can get our full analysis of Canadian Tire’s growth strategy, including clear buy/sell/hold advice on the stock, in the latest issue of The Successful Investor. What’s more, you can get this issue absolutely free. Click here to learn how.