Aug. 25, 2022 "'What's going on at HBC?': Bringing Zellers back from the dead is going to be tricky": Today I found this article by Bianca Bharti on the Financial Post:
Hudson Bay Co.’s (HBC) announcement last week that it is reviving value retailer Zellers generated a lot of attention, with Canadians reminiscing about the iconic in-store, 1950’s-themed diner, Zeddy the mascot, and the no-frills ethos.
But retail experts are scratching their heads over HBC’s strategy and question whether executives behind the beleaguered department store can successfully bring Zellers back from the dead.
“What’s going on at HBC?” retail strategist Lisa Hutcheson asked.
Indeed, what is going on at HBC?
The 352-year-old company — which owns the eponymous department store, luxury department store Saks Fifth Avenue and discount luxury retailer Saks Off 5th — has spent the past decade trying to cope with a shifting retail environment.
In March 2020, HBC’s owners took the company private so it could change direction without having to answer to shareholders amid declining sales, which were down 1.7 per cent in its final earnings release. Adjusted earnings before interest, taxes, depreciation and amortization had also fallen 32 per cent year over year.
The company has announced a number of changes to its business since going private. In the beginning of March 2021,
HBC split the Saks brand into two separate enterprises,
complete with different CEOs so one could focus on e-commerce
and the other on physical stores.
HBC carried out a similar split for its Hudson’s Bay unit last August.
A few weeks after the Saks division, HBC launched an e-commerce platform called Marketplace, a direct competitor to Amazon.com Inc. featuring
products from third-party retailers,
brands not available in-store,
and wares from smaller, artisanal companies housed in automated distribution centres.
It plans to offer same-day delivery eventually, the Toronto Star reported in June.
It has also dabbled in the co-working space, partnering with WeWork Inc. in 2019 to leverage unused retail space.
Meanwhile, to shore up sales, HBC has added a number of individual brands to its stores,
such as Forever 21
and Mango.
Mountain Equipment Co. (MEC) shops
are also coming to some Hudson’s Bay locations, it announced last week.
And then came the Zellers announcement. Details are scarce, but the retailer said a new e-commerce site dedicated to the value brand is on the way, along with some kind of physical presence in Hudson’s Bay stores.
“Zellers and Zellers.ca will deliver a digital-first shopping journey that taps into the nostalgia of the brand Canadians know and love, while introducing a refreshed identity and a unique and exciting product assortment for families at everyday value,” HBC said in a press release.
HBC declined to make anyone available for an interview.
All those changes signal a lack of focus and direction on HBC’s part, Hutcheson said, throwing doubt on a successful revival of the Zellers brand.
“We’re strategy folks (and) I don’t quite understand what their strategy is,” she said.
“Their identity,
their strategy,
who they’re trying to cater to,
it’s just very murky in my mind.”
Tailwinds
HBC hasn’t yet disclosed the business case for bringing back Zellers, but retail analyst Bruce Winder has a few theories.
For one, having a brand that offers discounted or cheaper goods amid an economy reeling from high inflation could help bring in more revenue from customers too price-sensitive to shop at The Bay.
Plus, HBC’s “state-of-the-art” automated warehouses make the Zellers’ digital-first plan easier to execute, Winder said.
There’s also the nostalgia card.
“One thing they got (last) week is they’ve started a massive discussion online with people about the nostalgia of the Zellers brand. So they’ve created a buzz.
If that was the goal, they created it, it worked, but you can’t always translate a buzz into an ongoing business,” he said.
There’s also a possibility the company is reviving the brand to help win a court case against a Quebec family, who began using the Zellers name after HBC let the trademark expire in 2020, Winder and Hutcheson suggested.
Headwinds
Bringing back Zellers won’t come without some big challenges, however.
For example, HBC faces the same inflationary environment as consumers, Yu Ma, a McGill University associate marketing professor with a focus on retail, said.
The price of inputs —
wages,
materials,
manufactured goods
— has gone up.
On top of that,
supply chains are still jammed,
the cost of fuel has climbed
and there’s excess demand for goods,
all putting upward pressure on prices.
“I don’t even know if it’s a perfect time to launch a big business because the supply chain is pretty chaotic at this moment,” Ma said.
Meanwhile, as Zellers lay dormant, the competitors that forced it off the field —
Walmart Inc.,
Giant Tiger Stores Ltd.,
Costco Wholesale Corp.,
Dollarama Inc.
and Amazon
— have only gained a stronger foothold in Canada.
“I’m puzzled a little bit about how they would make this into a viable business, because there’s already some very strong discounters in Canada,” Winder said. “I don’t see a lot of room here for them to get in there. They have the awareness but awareness only gets you so far.”
It’s also unlikely the revamped Zellers will look like the big-box store customers remember, raising the risk HBC could ruin Canadians’ nostalgia for the brand.
“There’s some nostalgia around the restaurant, for example, which (customers) are definitely not going to get in an e-commerce or digital format,” Hutcheson said.
On top of that, HBC’s target customer is the affluent millennial — the opposite of a typical Zellers shopper seeking out value, discounts and deals.
“The folks who are struggling, you’re not going to a mall with a Bay in it. You’re certainly not going to The Bay. So it’s a major disconnect,” Winder said.
“It’s obvious that (HBC already has) all the space and they figured, ‘Let’s jam a round peg into a square hole and see if we can sort of make this work.’”
• Email: bbharti@postmedia.com | Twitter: biancabharti
Is HBC's Zellers revival doomed to fail? Experts say it will be tricky | Financial Post
Bringing back Zellers is a great idea. Hopefully they will have physical stores in addition to on-line. Zellers was a great department store with a good variety of goods, so that you could do all your shopping in one place. The quality of their merchandise was good and the prices were reasonable. Although Zellers stores were relatively large, the layout was more congenial than the current "big box" stores, with a good overview of the store, which made it easy to find products. None of the current "big box" stores have completely filled the void that was left by the closing of Zellers. Target might have done it, but they botched their entry into the Canadian market.
You're not wrong this time. Just look at the stock price and earnings of this company and you can clearly see it's run by boobs. These guys should be politicians, not executives.
Jan. 18, 2023 "Zellers stores set to open inside 25 The Bay locations across Canada": Today I found this article by Pete Evans on CBC:
More than two dozen The Bay locations across Canada will soon be home to Zellers stores, as the retailer has announced more details of its plan to resurrect the defunct discount brand both online and in physical stores.
The Hudson's Bay Company says that later this month, Zellers pop-up shops will open up in 25 Bay stores across Canada. At launch,
four will be in British Columbia,
three in Alberta,
one each in Saskatoon
and Winnipeg,
nine in Ontario,
five in Quebec
and two in Nova Scotia,
but the chain says more may follow.
While the Zellers brand was a household name in Canada for decades, it largely vanished from the retail landscape in 2011 when Target expanded to Canada, setting up shop in 220 Zellers locations.
Another 64 operations owned by HBC continued to operate until 2013, when the plug was officially pulled on the discount chain.
Though a few locations remained open for a while after the Target launch, they eventually closed down, too.
While the stores were gone, HBC retained the trademark rights to the brand name until at least 2020. The following year, the Moniz family of Montreal, which runs a small retail empire, tried to register the Zellers brand name for themselves and open stores under that banner, leading to a legal fight with HBC over trademark infringement.
That court battle is ongoing, but HBC has been hinting it has its own plans for the Zellers name for a while now, launching pop-up shops in a small number of Bay locations during the pandemic.
Wednesday's news is a major expansion of those plans. In addition to the 25 physical stores set to open soon, HBC is also launching a full-service online store at Zellers.ca soon.
"Customers can expect a helpful, playful shopping experience packed full of low prices day in, day out," the retailer said in a press release.
HBC is hoping to tap into consumers' sense of nostalgia in reviving the brand, but retail consultant Doug Stephens says that can only go so far.
"Maybe consumers will gravitate to this concept, but I just don't see it happening," he told CBC News in an interview.
He says that while the pop-up shop concept may bring in some new customers as a novelty, HBC will be hard pressed to convert that traffic into sales at its core Bay locations.
"Is this more aimed at trying to breathe new life into Hudson's Bay? If that's the case, I think it's a day late and a dollar short," he said.
Others think the brand might manage to find a sweet spot with consumers. Darian Kovacs, a digital marketing expert with Jelly Academy, says the company has quietly kept up a social media presence for the last little while, and so far has been cleverly targeting their potential customers.
"I think the target audience is that nostalgic market," he said in an interview. "People that remember Zellers as children and now can go back as adults and bring their children."
Turning that sassy marketing into sales, however, is the real test.
"Once they do open, then that's where the rubber meets the road."
Wow, now we can remember how bad it was and why it went out of business in the first place.
Jun. 23, 2024 My opinion: I went to the Hudson's Bay at Kingsway mall. There was a small section of Zellers. They sold some home decor. There wasn't anything that stood out to me.
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