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Hudson’s Bay revives discount retailer Zellers across Canada — but skips downtown Toronto


Entrepreneurs

Hudson’s Bay revives discount retailer Zellers across Canada — but skips downtown Toronto

This retail nostalgia trip doesn’t have a stop downtown.

Hudson’s Bay announced the first 25 bricks and mortar locations for the revival of its long-dormant discount brand Zellers Wednesday, and downtown Toronto — the most densely-populated area of the country — wasn’t on the list.

The closest will be inside the Hudson’s Bay store at the Scarborough Town Centre, while the only other one in the Greater Toronto Area will be inside The Bay’s Erin Mills Town Centre location.

The company didn’t respond to questions asking why it skipped over downtown for the spring launch, which includes nine locations in Ontario.

“Opening in communities across the country, the brick-and-mortar locations will complement the first-ever Zellers.ca eCommerce site, ultimately bringing Zellers to nearly every community in Canada,” the company said in a press release.

The Zellers areas will effectively be stores within a store, taking up anywhere from 8,000 to 10,000 square feet.

Retail industry analyst Lisa Hutcheson said reviving Zellers gives Hudson’s Bay an important new tool — a discount store at a time when the economy is slumping. Zellers’ most well-known slogan during its peak was “Where the lowest price is the law.”

“Luxury is doing well. Value is doing well. But HBC has always kind of been in the middle. This is a way for them to grab some of the value customers,” said Hutcheson, managing director at retail consultancy J.C. Williams Group. “With the way the economy is going, the timing could be right for this.”

Still, Hutcheson was surprised at the number of Zellers locations Hudson’s Bay is planning.

“Twenty five stores is a serious commitment,” said Hutcheson. “I would have thought they might’ve gone a little softer to start.”

The size, says Hutcheson, shows that this is more than just a token effort to revitalize a brand which Hudson’s Bay filed a lawsuit to protect in 2021. A Quebec family registered several company names using the word Zellers after Hudson’s Bay allegedly let their trademark for the brand expire. The litigation in Federal Court is ongoing.

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Hudson’s Bay had owned the Zellers brand. The company was founded in 1931 in London, Ont., and at its peak in the 1990s, had 350 stores before closing in 2013. From 2013 until 2020, Hudson’s Bay operated three Zellers-branded stores as clearance outlets for The Bay.

Skipping downtown is less a shot at Toronto than it is Hudson’s Bay going to where the Zellers customers are. Or at least the customers who’d remember the Zellers brand, which saw its heyday in the 1980s and 90s, said Hutcheson.

“It’s about going where the customers are who the brand would resonate with,” Hutcheson said. “And downtown, younger consumers don’t really know the brand.”

Trying to revive a brand which is known mostly to older consumers is a puzzling decision, says marketing veteran Ken Wong, professor emeritus at Queen’s University’s Smith School of Business.

“How many people in their 20s and 30s have really heard of Zellers? They’re the ones who are spending money,” said Wong. “I just don’t understand what Hudson’s Bay is doing.”

Having two separate retail banners under the same roof could also be trouble, both logistically and from an image perspective, Wong said.

“If the Zellers areas are truly going to be more on the value side, that’s probably going to mean there are fewer staff,” said Wong. “And customers are going to get frustrated.”

Having a cheaper store within a store is a task which isn’t impossible, but Wong says it will be an uphill battle, which risks confusing consumers and could see Hudson’s Bay undercutting its own sales.

“The last retailer in Canada which tried something like this was Eaton’s,” he said “just before they went out of business.”

Hutcheson agree that there are logistical challenges, but said Hudson’s Bay will likely try to cut down on duplication of product lines.

“I think they’ll be very careful about overlap,” said Hutcheson.

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