U.S. Targets Zellers’ Canadian market

By Preeteesh Peetabh Singh
Dialog Reporter

‘”Everything must go! Store closing liquidation sale!” this tagline from Zellers, the second largest chain of discount stores in Canada, sounds ominous. It’s the end of an era as another Canadian retail store bites the dust.

All Zellers stores have a grim and deserted look across Canada. Even its iconic mascot Zeddy is left out in the woods and is looking for a new owner. Zellers is being taken over by an American retailing company, Target Corporation. Don’t think Zeddy will have a problem though; he will be adopted by someone soon!

In January 2011, Target Corporation, the second largest discount retailer in the United States behind Walmart, acquired the leasehold of 189 Zellers stores owned by Hudson’s Bay Company (HBC).

The deal was finalized for $1.825 billion. Under the agreement, Zellers is initially supposed to sublease the properties and it can continue to operate until March 2013.

Editorial Cartoon by Joseph Destua showing a man in a suit addressing picketing workers with a thought bubble reading "Just smile and wave, no law says we have to hire any of them" while a speech bubble says "Please re-apply for a new job at Target."

Editorial Cartoon by Joseph Destua

After the closure of these Zellers stores next year, Target will be spending another billion on expansion and renovation of these locations. Out of 189 stores an estimated 125-135 stores will be converted into Target stores, while 39 of them have been already resold to Walmart Canada and the remaining leases will either be sold to other retailers or returned to their respective landlords.

If there was any hope left for Zellers to survive, it was shattered on July 26 when HBC announced that it will close most of the 64 remaining stores that were not acquired by Target and that were supposed to continue operating as Zellers outlets. Lack of viability is being cited as the reason for the closure.

The shutters are expected to close by April 2013. But HBC does not exclude the possibility of keeping some stores open and rebranding them as ‘The Bay’ or ‘Home Outfitters’ outlets in future.

Zellers’ employees are disheartened and angry. They are skeptical about their future as they are being laid off. Target is in no mood to automatically hire all Zellers employees, claiming they need to determine the staffing needs for each store.

The American retail giant maintains that the opening of new Target stores will lead to more than 25,000 jobs in Canada.

Apart from Target, other American outlets like Marshall’s, J Crew, Bloomingdale’s, Nordstrom and Tanger have also placed their foot into the Canadian market.

Share

U.S. Targets Zellers’ Canadian market

Verified by ExactMetrics