Canadians can officially say goodbye to the Zellers brand, as most of the 64 locations that aren’t being converted to Target department stores will close by March 2013.
Some locations could reopen as part of other retail chains, Hudson’s Bay Company spokesperson Tiffany Bourré said.
With an average of 100 employees per store, about 6,400 Zellers employees will lose their jobs.
Ms. Bourré declined to comment on financial specifics but said employees would receive “comprehensive career transition support.”
The locations were not considered viable, and were left out of Target’s acquisition of Zellers from HBC in 2011. There is no geographical trend to the closures, which are happening in communities from Kenora, Ont. to Winnipeg and Toronto. Ontario is the biggest victim, with 29 locations set to close, followed by Quebec with 15.
“We’ve been reviewing our options for the brand since the completion of the acquisition agreement with Target,” Ms. Bourré said.
Zellers, which offers everything from housewares to hoisery, has faced an onslaught of competition from large U.S. retailers in recent years, most notably from Walmart, which has been expanding into a one-stop destination with dry cleaning services and a full suite of groceries. Zellers was one of the last remaining large Canadian discount retailers after the Woolco, BiWay and Bargain Harold’s brands became extinct years ago.
Uncertainty has been a recurring theme since the first acquisition announcement, said Kevin Shimmin, national representative for United Food and Commercial Workers Canada. His union represents workers at 15 Zellers locations across Canada, nine of which are keeping the Zellers brand until it folds in 2013.
“It’s bad news for everybody,” Mr. Shimmin said. “One of the biggest things with all those workers has been the frustration of not knowing what’s going to happen. Nobody knows what’s going to happen until the last minute.”
Stellarton, N.S.-based Crombie Real Estate Investment Trust is the landlord of seven Zellers outlets in the Maritimes. Three sites were not accepted in the Target deal; one of those locations has a year remaining on its lease with Zellers, but the other two have nine. HBC retains control of the sites and will decide what to do with them, Crombie chief Donald Clow said.
“We will work with them to understand what their plans are,” Mr. Clow said.
As for the possibility of new retail space to soften the blow of job losses, Mr. Clow said it’s up to HBC. “They are in control, and therefore if they are able to sell it to other retailers, we would have to deal with those retailers.”
Target plans to open 125 to 135 stores in Canada. It has purchased the leasehold interests of 189 sites currently operated by Zellers Inc. and it says about $10-million to $11-million will be invested to remodel each facility.
The U.S. retailer is poised to begin opening the first of between 125 and 135 stores in Canada at former Zellers locations acquired from Hudson’s Bay Co. The store openings are set to start next year.
Zellers has been a key part of the Hudson Bay portfolio since 1978, emerging as the company’s discount retail subsidiary by offering clothing and household items at lower price points. It remained in the HBC fold as the company refocused its efforts on its core retail business in the 1980s and 1990s.
In recent years the company has made efforts to revitalize its The Bay stores, hiring former Holt Renfrew executive Bonnie Brooks as chief executive officer, introducing high-end boutique spaces in its Toronto flagship store and securing the rights to produce uniforms and merchandise for Canada’s Olympic athletes.
The sale of Zellers stores to Target has been discussed since at least 2004, when Target was rumoured to be in talks with Hudson’s Bay Co. to buy its Zellers stores.
HBC has said it plans to use the proceeds from the sale to pay down debt and “spend aggressively” on its other brands, including The Bay and Home Outfitters, as well as Lord & Taylor’s in the U.S., adding that an initial public offering of the revamped company is “a very possible scenario.”
With files from The Canadian Press
Where Zellers stores are set to close
White Rock (Surrey), B.C.
Rocky Mountain House, Alta.
Moose Jaw, Sask.
Prince Albert, Sask.
Winnipeg, Man. (both Downtown and Northgate locations)
Regina, Sask. (Victoria Square location)
Ottawa, Ont. (Highway 15 location)
Toronto, Ont. (High Park location)
Barrie, Ont. (Kozlov Centre location)
Sudbury, Ont. (Southridge Mall location)
Sault Ste. Marie, Ont. (Northern Avenue location)
Elliot Lake, Ont.
Etobicoke, Ont. (Queensway location)
North York, Ont. (York Gate Mall location)
Niagara Falls, Ont. (Morrison Street location)
St. Thomas, Ont.
Windsor, Ont (Tecumseh Mall location)
Riviere Du Loup, Que.
New Minas, N.S.