Zellers

Company name	Zellers, Inc.
Company logo
Company type	Discount department store
Foundation	1931
Location	Brampton, Ontario
Locations	273
Industry	Retail
Owner	NRDC Equity Partners
Num employees	35,000
Parent	Hudson's Bay Company
Products	Clothing, grocery, footwear, bedding, furniture, jewelry, beauty products, electronics, toys, sports equipments, appliances, and housewares.
Company slogan	Everything From A to Z
Homepage

Zellers Inc. is Canada's second-largest chain of mass merchandise discount stores, with locations in communities across Canada.

History

Early years

The company was founded in 1931 by Walter P. Zeller as "stores for thrifty Canadians". The chain began with the purchase of the fourteen Canadian locations of American retailer Schulte-United, all of which were in southeastern Ontario. Almost immediately, Zellers initiated an aggressive expansion strategy. Within 25 years, Zellers operated sixty stores and employed 3,000 people. In 1952, in a move to expand into Atlantic Canada, it acquired the Federal Stores chain of variety stores, adding more than a dozen new Zellers locations.

Acquisition by W.T. Grant Company

During this period of expansion, Zellers concluded a deal with W.T. Grant, a similar chain of American mass merchandise department stores. This arrangement allowed W.T. Grant to purchase 10% of Zellers shares, and eventually a 51% ownership in 1959. In exchange, the Grant Company made available to Zellers its experience in merchandising, real estate, store development, and general administration. Zellers employees were sent to Grant stores and head office for training and the two companies made common buying trips to the Orient. In the 1950s, the chain again began opening new locations, and in 1956 opened its first self-serve location at the Norgate shopping centre in Saint-Laurent, Quebec. Stores opened in 1960 employed many new innovations, including the first in-store restaurant, the first auto centre, and the first suburban location. In 1975, Zellers changed to the current logo.

By 1976, Zellers had grown to a chain of 155 stores, with annual sales of $407 million.

Acquisition of Fields

Although Zellers was prospering, W.T Grant was facing intense competition in the United States, and was forced to withdraw entirely from its Canadian operations. In 1976, Zellers management and shareholders were presented with an offer from Fields, a clothing retailer based in Vancouver, British Columbia, to purchase a 50.1% stake in the company for $32,675,000. Zellers shareholders, unhappy with the idea of Zellers becoming a subsidiary of Fields, reversed the takeover, and purchased Fields and its hardware store division, Marshall Wells. This sale added 70 Fields stores and 162 franchised Marshall Wells stores to the company. Fields President and founder, Joseph Segal, was appointed as President of Zellers.

Merger with Hudson's Bay Company

In June 1978, Zellers presented a bid to acquire 100% ownership of the Hudson's Bay Company. HBC management, recognizing Zellers' profitability and the potential to enter a new retail segment, decided to purchase Zellers instead. Zellers and Fields, operating in very different retail segments than HBC, were kept intact, and established as separate divisions of the company. HBC acquired full ownership of Zellers and Fields in 1981, and Marshall Wells, in 1982. By 1985, HBC had sold Marshall Wells for $20 million, because it was not relevant to its department store business.

Further acquisitions

In 1990, HBC acquired the 51 stores of the Towers/Bonimart chain, and converted most of them to Zellers outlets, including its flagship location in Toronto. Zellers advertisements at the time featured both the Towers mascot "Sparky", and the Zellers mascot "Zeddy", walking arm-in-arm. During this period, Zellers had the popular and well-known slogan "the lowest price is the law".

In 1993, HBC purchased the assets of the bankrupt Woodward's chain, including 21 store locations. These were converted into both Zellers and the Bay stores, and greatly expanded the Company's presence in Western Canada. In 1998, Hudson's Bay Company acquired Kmart's Canadian division, and merged it with the Zellers division to create a larger combined chain under the Zellers name. Many Kmart locations were closed while some sites became full Zellers outlets. Zellers also took over Kmart's Canadian head office in Brampton, Ontario.

On February 28, 2006, Zellers was taken private when South Carolina businessman Jerry Zucker finalized a takeover bid for the Hudson's Bay Company. Following Zucker's death in 2008, HBC (including Zellers) came under the ownership of a New York-based company, NRDC Equity Partners, the owner of the Lord & Taylor and Fortunoff brands.

Sale of leases to Target

{| style="float: right; width: 300px; border: solid 2px grey; font-size: 0.9em;" ! Target Sale Timeline |- | January 12, 2011: Agreement signed Under the agreement, Zellers will initially sublease the properties, and continue to operate them as Zellers locations until at least January 2012, and at latest the end of March 2013. After the Zellers stores at these locations close, Target will renovate 100 to 150 of them, and reopen them under the Target banner during 2013 and 2014. The remaining acquired locations will be transferred to other retailers; it is speculated that these could include Walmart Canada, Kohl's, and J. C. Penney.

The 220 locations to be transferred to Target were not immediately identified, pending due diligence by the company. In late May 2011, Target announced its first 105 selections, including at least one selection in each province. The company says the vast majority of locations in this first group of selections will be converted to Target, although (notwithstanding some media reports) it should not be assumed that any specific selected location will definitely become a Target store, as opposed to being resold to another retailer. The remaining selections must be made by the time the deal closes, scheduled for mid-September 2011. and the company could theoretically buy back some of the locations that Target elects not to use. However, some media outlets have speculated that the remaining locations could eventually be sold off as well.

Current operations

.]] Zellers operates stores from St. John's, Newfoundland and Labrador, to Prince Rupert, British Columbia, and employs over 35,000 people. The average store size is 94,000 square feet (8,700 m²). "Zellers Select" stores are designed for smaller markets with populations under 25,000, with stores averaging 45,000 square feet (4,200 m²).

Almost every Zellers location in the English-speaking provinces features a pharmacy and an in-store restaurant, the 1950s themed "Zellers Family Diner". Most locations in Quebec don't have a pharmacy, but practically all stores have a restaurant (known in the province as "Restaurant familial Zellers"). Restaurants can also be found in the few Zellers liquidation centres across the country.

Newer Zellers locations are typically larger than 100,000 square feet (9,290 m²), and also feature a hair salon, refrigerated groceries, major appliances, mattresses, and expanded electronics and cosmetics departments. Multi-level stores are gradually being equipped with a new, state-of-the-art shopping cart system known as the "Cartveyor", which is designed to transport shopping carts between floors next to a standard escalator.

In the past several years, Zellers has made a notable push to drive sales through use of exclusive, private label merchandise. In a strategy similar to that used by Target Stores, Zellers sells Big Star, Cherokee, Sportek, "Stuff by Duff", Homestyles, Hunt Club, Midtown, Nest by House & Home, Wabasso "Design Ideas", Alfred Sung Home, Truly, MarketSquare, Beaumark, Home Studio, and many other labels that can only be found in their stores in Canada. Private brands now represent over 30% of Zellers sales.

"The Neighbourhood Market" is Zellers' expanded section of grocery items that goes beyond just selling dry snacks and other food. Frozen and dairy aisles, including ice cream, and frozen pizza, have been added to create an easy one-stop shopping experience. This may seem unusual to many customers, and was practically unheard of in a mass merchandiser in Canada until recently. In these stores, the food assortment has been expanded by 50%. Whenever a new store is built, or an old one renovated, Zellers will make Neighbourhood Market part of it. With a new prototype underway for Zellers, the new Neighbourhood Market will feature a full grocery department including fresh produce and baked goods. This is seen in the newly renovated Winnipeg stores. The company is expected to continue renovating old stores and building new stores with this new format in 2011.

In late 2008, under the new direction of Mark Foote, Zellers rolled out the new Every Day Priced Strategy under the title 'Saving You More'. Products identified with a 'We've Checked the Price' bubble and/or signs are priced similarly (usually the same) as at their major competitor in the marketplace (i.e., Wal-Mart). Zellers' focus with this program and other 'Pricing Programs' such as Price-Cut (monthly price reductions) and Save This Week (Weekly Sale Items), as well with its new focus on Price Matching Canadian retailers on identical items, should improve its pricing message to the consumer.

Several new Zellers stores were opened in 2008 and one in Scarborough, Ontario in 2009.

In July 2010, Zellers unveiled its new format/look stores in five Winnipeg stores, with two more to open late 2010 and early 2011. One store will open on the lower floor of the downtown Winnipeg Bay store making it the first hybrid store in the HBC family of stores. Plans are underway to renovate stores in Edmonton and Regina in 2011.

Starting at the beginning of November 2010, a pilot project will be launched at certain Zellers stores. This new pilot project now allows customers can now trade-in their video games in-store to receive in-store credit in the Electronics department. The project was expected to be launched in the first week of November 2010 in:

Mississauga (four stores)

Brampton (four stores)

Lindsay

Peterborough

Zellers shares a loyalty program, HBC Rewards, with the Bay and Home Outfitters. Customers can collect these points for free every time they shop at an HBC store. Customers can earn double points and even collect points when they shop outside of HBC with an HBC MasterCard issued by Capital One. Customers can redeem points immediately in stores for Hbc Gift Cards and other special promotions which are found at www.hbcrewards.com. Every 80,000 points equals $10 in the store.

Zeddy

Zeddy was a teddy bear mascot used by Zellers all over Canada. He was first used in the mid-1980s as an advertising campaign, and then rose to his popularity by the early 1990s. Zellers would provide a stuffed Zeddy bear for any child who had a birthday party sponsored by Zellers. There would also be a Zellers employee in a giant Zeddy costume hosting the party. Lineup toys of Zeddy were also created.

Zeddy was no longer used by late 2005.

References

External links

TheRecord.com: Zellers chain has roots in Waterloo Region

Zellers store website

Zellers store website

Hudson's Bay Company corporate website

Category:Companies based in Brampton Category:Companies established in 1931 Category:Department stores of Canada Category:Discount stores Category:Hudson's Bay Company