Zellers for Sale

The Guardian
January 13, 2011

A deal could be announced as early as this week to sell the iconic Canadian retailer
A possible U.S. takeover of the iconic Canadian retailer Zellers would benefit consumers, says a P.E.I. retailer developer, but many customers say they don’t want to see the retail giant fall into foreign hands.
Published reports say the Hudson’s Bay Co., which owns Zellers and the Bay, is in talks with American retailers to unload some of its Canadian locations. A deal could be announced as early as this week, although sources cautioned that nothing has been finalized.

Zellers is the anchor tenant for Prince Edward Island’s two largest malls, the Charlottetown Mall and the County Fair Mall in Summerside.

Developer Tim Banks says if a major U.S. retailer like Target takes control of Zellers it will mean lower prices and a better selection for Prince Edward Island shoppers.

“Today, Zellers is trying to fight it out with Wal-Mart and I just don’t know how well they are doing at that,” said Banks, who owns APM. “Target has built its business fighting Wal-Mart and so I think they would have the tools to give them a better show.”

Banks believes Target entering the Charlottetown market may finally get Wal-Mart to move on much talked about plans for a Wal-Mart Supercentre in Charlottetown.

Among the U.S. chains that are known to be scouting out locations in Canada, according to the Globe and Mail, are Target Corp. and Kohl’s and Marshalls, a sister chain to Winners Corp.

Wal-Mart Stores Inc. and some Canadian players are also said to be part of the talks.

But sources tell the Toronto-based paper that if a deal was done, it would be very complicated and that a straight takeover of Zellers by Target was not on the table.

Consumers shopping at Zellers in Charlottetown on Wednesday were not convinced the deal would be a good one.

Angelica McKann of Millvale was shopping with her daughter, Zora, 9, and son Fidel, 6. McKann said Canadian consumers should be concerned about the possible sale of Zellers to U.S. interests.

“It means the money being spent here is no longer being kept in Canada,” said McKann, who is an American who has spent the past 15 years living in Canada.

“I don’t go to Wal-Mart. I come to Zellers because Wal-Mart is American. I know the prices may be slightly cheaper but I know at least the money is staying in Canada.”

Rejane Gabrielle is a loyal Zellers shopper. She also shopped at The Bay when she lived in Montreal.

“I don’t go to Wal-Mart. I come to Zellers because Wal-Mart is American. I know the prices may be slightly cheaper but I know at least the money is staying in Canada,” - Angelica McKann of Millvale

“I’m sorry to hear this,” she said. “We’re getting so Americanized.”

But Eileen Gillis of Charlottetown said she’d like to see a Target sign hanging over the Zellers store.

“Target would be a good store, it would be better than Zellers.”

Ethel McMahon of St. Peters said she’d trade Zellers for a Giant Tiger store if one would open on the Island.

Giant Tiger is a discount retailer with stores in Moncton and Truro but the there are no locations in P.E.I.

“Really, I’m not a big shopper at Zellers,” said McMahon, who added she was just looking around.

“A lot of our stores are probably owned by Americans and we don’t know about it anyway, so that doesn’t concern me.”

Nobody from Zellers in Charlottetown or Summerside was available for comment.

Despite its size, Prince Edward Island is a strong retail market and Banks believes that any new owner of Zellers would want to purchase and continue to operate both Island stores.

“Both Summerside and Charlottetown would be a pretty secure site for them,” said Banks.

“I don’t think it will hurt P.E.I. at all. In fact it may reinvigorate some of their competitors to step up their game a bit simply because Target is a pretty focused organization, Wal-Mart will react to them so anybody around them has to do something.”

wthibodeau@theguardian.pe.ca

Zellers Fast Facts

- 276 Zellers stores located from Newfoundland and Labrador to British Columbia;

- 35,000 employees work for Zellers across Canada;

- Brampton, Ont., near Toronto, is where Zellers is based.

Target Fast Facts

- Target operates nearly 1,750 stores in 49 states, including more than 240 SuperTarget;

- There are no Target stores in Canada to date;

- The first Target store opened in Roseville, Minnesota, in 1962.

- Target is the second largest discount retailer in the US behind Wal-Mart;

- Target has 351,000 employees.