Zellers

Zellers, Inc.

Type	Discount department store
Industry	Retail
Founded	1931
Headquarters	Brampton, Ontario
Number of locations	272[1]
Products	Clothing, grocery, footwear, bedding, furniture, jewelry, beauty products, electronics, toys, sports equipments, appliances, and housewares.
Owner(s)	NRDC Equity Partners
Employees	35,000
Parent	Hudson's Bay Company[2]
Website	www.zellers.com

Zellers Inc. is Canada's second-largest chain of mass merchandise discount stores, with locations in communities across Canada. A subsidiary of the Hudson's Bay Company (HBC), it has 272 locations across the country.

In 2011, Target Corporation acquired the leaseholds of 189 Zellers stores^[3] (including locations being resold to other retailers) as the chain prepares to expand into Canada in 2013 and 2014. HBC will continue to operate these locations until at least early 2012, at which point they will close for renovations, with individual closing dates varying by location. Target is not buying the Zellers chain, and HBC is reviewing options for the remaining 84 Zellers locations.^[3]

History

1930s–1960s: Early years, partnership with W. T. Grant

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 Southern 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 12 new Zellers locations.

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.

1970s–1980s: Zellers acquires Fields, HBC acquires Zellers

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.^[4]

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.^[5]

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.

1990s–2000s: Zeddy mascot, further acquisitions

A Zellers in Hamilton, Ontario, that will become a Walmart after the takeover by Target Corporation

In 1990, HBC acquired the 51 stores of the Towers/Bonimart chain from the Oshawa Group, 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.

2010s-present: Sale of leases to Target

Zellers closeout sale at the Gloucester, Ontario location. It is one of the 39 Zellers acquired by Walmart Canada through Target Canada.

On January 13, 2011 it was announced that Target Corporation of the United States will purchase the lease agreements of up to 220 Zellers stores for C$1.825 billion.^[6] 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.^[7] After the Zellers stores at these locations close, Target will renovate 100–150 of them. Target will then reopen the stores under the Target banner during 2013 and 2014. The remaining acquired sites will be transferred to other retailers.^[8]

Of the maximum 220 locations, 105 to be transferred to Target were identified in late May 2011,^[9] and another lot of 84 locations in late September 2011, bringing the total number of Zellers stores acquired by Target to 189.^[3] Of these 189 stores, an estimate of 125–135 stores will be converted into Target stores,^[10] 39 others were resold to Walmart Canada,^[11] and the remaining 15–25 leases will either be sold to other retailers or returned to the landlords who own the sites.^[10]

The remaining 80 Zellers stores and all four Zellers Select stores that Target did not acquire were usually situated in towns or small cities, located in shopping centres with less than 30 tenants, or unionized. It is unclear what exactly will happen to the chain,^[3] although Zellers' "Festive Finale" and "Memory Showcase" advertisements suggest that the retailer will gradually cease operations. On July 2011, HBC announced the closing of a Zellers store in Dorval, Quebec effective for January 2012^[12] and although it is scheduled to be replaced by a Walmart,^[13] it is not part of the 39 Zellers stores acquired by Walmart Canada from Target Canada.^[14] Another Zellers store that is not part of the deal, on Sparks Street in Ottawa, is slated to close for March 2013.^[15]

In March 2012, 50 Zellers stores from the Target purchase were put on liquidation and are having their closing sales.^[16] The majority of these stores are slated to become Walmart outlets.

Stores

A Zellers store in Moncton.

Zellers Select logo.

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). Some multi-level stores are equipped with ashopping cart system known as the "Cartveyor", designed to transport shopping carts between floors next to a standard escalator.

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 opened on the lower floor of the downtown Winnipeg Bay store making it the first Bay/Zellers hybrid store in the HBC family of stores.

Restaurant

Many Zellers have a restaurant known as Zellers Family Restaurant outside of Quebec and Restaurant Familial Zellers in Quebec. Weekly specials for the restaurants are advertised in store flyers, and special deals are available during "Moonlight Madness" events.

Pharmacy

Almost every Zellers location had a pharmacy, although fewer stores in Quebec had them. Prescription records were sold to other pharmacies in 2011, and Zellers pharmacies ceased operation throughout 2012. Zellers was subject to controversy regarding its sale of patient records.

Products

Products sold at Zellers include clothing, grocery, toys, electronics and home supplies.

Grocery

All Zellers sell basic groceries such as dry snacks and other prepackaged foods. "The Neighbourhood Market", available at some locations, is Zellers' expanded section of grocery items which include frozen and dairy aisles. Prototype stores in Winnipeg featured full grocery departments including fresh produce and baked goods. Such plans have been dropped following Target Canada's acquisition of many Zellers leases. In fact, some stores lated removed Neighbourhood Market.

Private labels

Criticism

Numerous criticisms have been made regarding Zellers.

Boxing Week sale

During the Boxing Week sales event in 2011, Zellers issued a coupon on Facebook allowing customers to get any one item (with some exceptions), including sale items, for 50% off by presenting the coupon and giving the codeword 'Cucumber'. The retailer's Facebook representatives have confirmed many times that the coupon could indeed be used on sale items, Zellers' flyer offers and price matches from competitors.

Initially, people flocked to the sale thanks to deal websites such as RedFlagDeals, but Zellers apparently became overwhelmed by the response, after they realized people abused the coupon by buying high priced items, such as Tossimo coffee machines, with intentions to sell on Craigslist and eBay and refused to accept the coupon as worded in their stores, adjusting it to regular priced items only. The backlash reached national media and became a public relations nightmare for the company.^[17]

Customer service

On January 6, 2012, CBC Marketplace announced that Zellers received the title of "Canada's Worst Customer Service" as a department store, based on a survey conducted by CBC with the Léger Marketing research firm in eight metropolitan areas. The retailer refused to be interviewed by Marketplace host Erica Johnson regarding its ranking, providing her with a written statement instead. Zellers also did not offer a refund to the mystery shopper who bought a used coffeemaker that was presented as new, and attempted to return the product after the advertised 30 day return period. Zellers instead offered the customer an exchange or store credit. Zellers Customer Service did not respond to this customer's Twitter message seeking satisfactory resolution.^[18]

YouTube advertising

Zellers has been criticized for paying YouTube to promote one of its "Festive Finale" advertisement videos in the "Trending Videos" section of the site. YouTube failed to warn visitors that the video was an advertisement.^[19]

Advertising

Zellers ran a "Festive Finale" advertising campaign in late 2011. Zeddy was also used as a mascot to advertise the retailer's toy selection.

Festive Finale

The Festive Finale campaign was used to advertise Zellers' last Christmas and holiday season sale in December 2011. There is a website called ZellersFacebook.ca which allows customers to vote for their favourite coupon and musical genre. While Zellers recommends that customers have a Facebook account and "Like" the company, both of these steps are completely optional. It was also possible to record a radio commercial for Zellers' "Moonlight Madness" sale by using a computer microphone and reading the site's teleprompter. Zellers also has social networking service accounts on Twitter and YouTube. Festive Finale has been criticized for its Boxing Week coupon, Zellers' lack of interaction with customers on Twitter and misleading YouTube advertising.

Loyalty program

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.

Zeddy

Zeddy is 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. The main purpose of Zeddy was to advertise Toyland, the toy section in Zellers stores. 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.^[20]

Many stores feature a "Zeddy Wheel" ride, which accommodates one young child on a miniature ferris wheel-type ride. The ride costs $1 and plays carnival music when in use. When no one is riding the wheel, Zeddy says on a regular basis: "Come ride with me! All aboard the Zeddy Wheel!" in an attempt to attract customers.^[21] Despite Zeddy being withdrawn as Zellers' mascot. The Zeddy Wheel remained in operation at stores featuring it unless it is out of service, and the voice track was unchanged over the years. Some wheels removed the big Zeddy sticker in favour of multiple, small generic stickers.

Zeddy remains used as a baby brand for products such as diapers, as well as baby bath products.^[22]

During the "Festive Finale" campaign in 2011, Zeddy was reintroduced in weekly flyers for Zellers' Toyland before closing their stores for Target. The character was used as a static picture, but no animated television commercials of him were made during this season. However, some employees decided to wear the Zeddy costume to celebrate the return of this teddy bear. Shortly thereafter, in December 2011, Zellers launched a "Zeddy Bucks" promotion. Those who spend at least $50 before taxes on toys would receive a pair of red 2012 Summer Olympics mittens, plus a $10 Zeddy Bucks voucher. This voucher could only be used on a later date.^[23]

• 

  1 – early 2000s

• 

  2 – November 2011

• 

  3 – November 2011

1. Zeddy, on the far right, is walking in a parade in the early 2000s.
2. Zeddy appears in the Toyland section of Toyland in November 2011.
3. Zeddy is featured in the "Festive Finale" flyer for Zellers in late December 2011.

• Bulleted list item

References

External links

• TheRecord.com: Zellers chain has roots in Waterloo Region
• Zellers store website
• Zellers store website (French)
• Hudson's Bay Company corporate website