Yesterday the official announcement came on a deal that has been rumored for the last little while, Target is acquiring Zellers from Hudson’s Bay Company (HBC). The deal values the chain at $1.8B, and Target won’t actually open a store in Canada until 2013. Since Zellers leases all their retail space, the deal is just for the right to take over the leases if Target chooses. There are currently 220 Zellers stores, Target will close some stores to lower the number to 100-150 stores. The Zellers brand will remain until Target rebrands the stores.

As a Canadian consumer, let me just say one thing: YESSSSSSSSSS!

Have you been to a Zellers lately? I have never seen a nice Zellers. They are all dumps. What a horrible shopping experience. You know your stores are crap when Walmart and No Frills seem like palaces in comparison. Nobody buys clothes there, their food section is beyond horrible and everything is just grungy and dirty. They clearly don’t spend more that $1.25 a year maintaining their stores.

The restaurant is pretty solid though. I like the milkshakes.

Zellers was always HBC’s forgotten little brother. Things were going along great, then Walmart showed up in 1994. Zellers promptly got their ass kicked by real competition. It’s clear to anyone with a set of eyes and a functioning brain that Zellers needs some sort of change. The stores languished and the stock price of HBC sank right along with them.

The company was purchased by Jerry Zucker in 2006 for $15.25 per share after a long fight between him and HBC’s board of directors. Jerry’s wife sold the company to Richard Baker’s NRDC Equity Partners in 2008 after Jerry passed away from brain cancer. The final price for that deal was $1.1B. Baker has already made a profit from the deal. Zellers represents about half of the company, the other half are HBC stores, as well as Home Outfitters and Fields. Baker plans an IPO for the rest of the company at some point in the future.

It’ll be interesting how another player in the Canadian retail market affects Sears Canada or the existing HBC stores. While Target is a discounter, they do a nice job being trendy and cool. When people look for cheap stuff they go to Walmart. When they go shopping for stuff a little nicer, they go to Target- hence the nickname Tarjay. Walmart isn’t really scared of any competition, but Target is a threat to Sears.

What always happens when a new chain opens is people flock to the new guy. Over time, they settle down and get their share of the market. They take a little from store A, a little from store B, harming everyone a little but no one critically.

Then there’s Fields.

If you live in a small town in western Canada, chances are there’s a Fields in your community. The stores are small, (less than 30,000 square feet) crowded, ran down and only benefited by being the only choice in town for children’s clothes and certain household essentials. They make Zellers’ stores look like Banana Republic. For some reason, there are still 150 of these dumps still open. They are everything that’s wrong with retailing and I want them dead.

As a consumer, I’m excited for Target to get to Canada. I want to go check out their stores. They’re famous for having nice clothes at decent prices, so I’ll probably buy something nice so I don’t look like a hobo anymore. Maybe Target paid a little too much for the space, but at least they’ll gain a foothold immediately and they’ll have some high traffic mall locations.

  • http://www.boomerandecho.com Echo

    I thought Target was referred to as "Tarjay" because it was incorrectly believed to be owned by a French company. But since I'm from Western Canada I don't know any French and can't confirm or deny that.

    • http://www.FabulouslyBroke.com FabulouslyBroke.com

      That's not true :) They didn't think it was a French company.

      It was more that people call it "Tarjay" as a way to make it sound more elegant, (which by stereotype is associated with the French language) because it's essentially a cheap and chic discount store.

      Like a Wal-Mart but sexier. So they turned the name "Target" into "Tarjay" to make it sound nicer.

    • financialuproar

      I had a look on Google, and couldn\’t come up with a reason why. I\’m too lazy to search for more than 5 minutes, so I guess we\’ll never know.

  • http://www.FabulouslyBroke.com FabulouslyBroke.com

    Didn't they say 5 years before they rolled out as real Target stores?

    Nevertheless I'll be long gone from Canada before then. I'll be rolling around in the Target aisles in the States while you're all waiting in Canada.

    BWAHAHAHAHAHAHAHAHAHHAA

    • financialuproar

      Good! We don't want you in Canada anyway!

      • http://www.FabulouslyBroke.com FabulouslyBroke.com

        Sour grapes. :) You'll miss me.

  • http://www.youngandthrifty.ca youngandthrifty

    LOL "Tar-jay"…

    I remember FIELDS! We used to have one in Vancouver. It was awesome. Very dumpy.

    I'm sad that Zellers is going to be taken over by Target, but you're right, Target makes discounted COOL (especially with that bull terrier as their mascot, and how they can get designers like Isaac Mizrahi to do target clothes).

    Funny, I used to work at the Bay and remembered it being bought out by an American company. That was a sad sad day…. hundreds of years of Canadian history bought out. :(

  • Charlie

    Hooray!!… Zellers has always been a dump: store architecture is depressing, prices are always a mystery, until you're ready to pay, products on the shelves are dusty, and employees have no idea of what they have in stock, or what the offers are… not even to mention that stuff is overpriced, and usually sold in bad shape. Thank you Target for starting the process of erasing one of Canada's biggest and saddest shameful stores: Zellers!

    • financialuproar

      Zellers sucks. Well said Charlie.

  • disgrunt

    I worked in two different Zellers stores from 1991 to 1997
    and have always had fairly strong opinions on why the chain would fail. In the
    early days of my employment I was working in a very recently converted former
    Towers store. Immediately I was thrust into an environment full of grumpy
    employees who were taken over as well, who had their wages frozen indefinitely
    as the pay scales of Zellers were less generous of those at Towers. It is quite
    possible that some of these folks were just plain overpaid to begin with, and
    maybe that’s what killed the Towers chain amongst many other things. Anyways,
    Zellers did not seem to bring any sense of excitement to anyone. Many felt they
    were a small fish being gobbled up by a whale. I once overheard a former Towers
    assistant store manager say that the takeover was handled badly, with no regard
    for the employees. Surprise surprise. The way Zellers upper management took
    care of business became more and more apparent as I continued in my employment
    there.

    At first I was hired as a cashier. Before long a full-time
    position opened up in the Housewares department of the store. I got the
    position and found myself inheriting a complete disaster. Boxes had been
    opened, were torn and tattered, merchandise was strewn across the floors,
    display models were incomplete, missing, or existed for items no longer sold,
    and items were not where they should have been on the shelves. At first I was
    shocked, but as time wore on, I realized that I was only expected to have
    things picked up off the floor and thrown back on the shelf each night, just so
    that the cleaners could mop the floors. This was a far cry from my previous job
    in a grocery store where we could not leave the store until everything looked good. This included
    “facing” items on the shelves- retail lingo for bringing things to the front so
    that merchandise was accessible and made the shelf look full even if it wasn’t.
    At Zellers the only time this practice was followed was in the days prior to
    what we used to call “Royal Visits” when managers above the district manager
    level would visit. I found this somewhat puzzling. Why didn’t these people
    leave the visits unannounced and show up dressed like regular joes, and see
    what the front lines, the stores, actually looked like on a normal basis? These
    guys, and yes, they were ALL men at the time, mostly grey haired tall men in
    impeccable suits, wanted everyone employed at the store to make a huge fuss
    over them.

     

    The sad part about these visits was the way the store
    manager and department managers were treated. They were essentially given no
    salary budget, yet were expected to have things looking spic and span at all
    times. Sometimes the upper management guys would pull a power trip and force a
    store manager to clean up a department himself while his shocked employees
    looked on. It was a real power trip for these bullies as they threw their
    weight around.

     

    Oddly enough, I was encouraged to apply for the store
    management program, and being a high-school educated kid with nothing to lose,
    I took them up on the offer. In late 1993 I started my first assignment in
    another store, and for some time was pleased to be amongst employees that
    seemed more positive. I was told almost immediately that the store I was now
    working in had not seen the salary cuts of the previous store, but that they
    were coming, and come they did. Almost overnight the location went from being a
    decent place, to the same shithole as the first store. Somehow they thought
    that less employees would save them enough money to make the store more
    profitable. In the ensuing year I learned many things about how the company
    operated, and here is a list of “beefs”:

    -         
    Aisles cluttered with junky unnappealing items
    that were old, tattered or had been returned. We were told NOT to reduce these
    items to clear. The end result is that they never sold and wasted space. The
    stationery department was one of the worst examples.

    -         
    Sale items were seemingly never in stock. In
    fact, the store was in stock, but the
    merchandise was on a pallett deep in the stockroom where no one could get it.
    The stockroom was tiny, so tiny, in fact, that in stuffing it with more
    palletts, the aisles between the rows of palletts were eliminated. Essentially
    we had a block of palletts about 8 across and 10 deep, the only way anyone
    would find the sale merchandise would be if they hauled each pallett out and
    stuck it in the aisles of the store. This, of course, was forbidden.

    -         
    Outdated computerized inventory system. I’m not
    sure if it was replaced, but up to 1997 the PIMS system was in place. This
    system, developed in the 70’s, was supposed to automatically re-order items as
    they got low. Someone had the great idea of building a little caveat into the
    system. If the number of items went into a negative, the item would not be re-ordered
    and a problem would be flagged. Somehow this would keep happening on stuff like
    sewing items, and since the store didn’t have anyone investigating the problem
    items, entire aisles were full of empty shelves and pegs. Customers would come
    back time and time again asking when we would get the items. We essentially
    looked like idiots when we told them we didn’t know.

    -         
    Poor quality merchandise. The worst by far was
    the shit ass Permatech/Eurotech line of small appliances. Sure they were
    cheaply priced, but even for $10 I would expect a toaster to work when I
    plugged it in. We saw the same garbage get returned over and over for years,
    but they kept selling the junk.

    -         
    Credit. These fuckers were making 30% of their
    profit on credit. You know, the kind of profit that requires people to be slow
    on their payments so they can reap huge interest charges. Cashiers were hounded
    to push this on everyone, to the point that they were giving long speils to
    customers like a Jehovas Witness does at your front door if you don’t slam it
    on them first. Even worse, Zellers willfully declined to use debit machines in
    their stores for fear that people would stop using thier credit cards. The
    finally made the switch sometime after 1997, likely due to customers leaving
    merchandise at the register and leaving in a huff, vowing to never shop at
    Zellers again.

    -         
    Lack of staff. Did you know that in the 1960’s,
    American railroad companies tried to save money by deferring maintenance
    projects? The result was bad track with slow trains, and a mess that ended up
    costing a fortune to fix, unless of course, they went bankrupt first as
    customers turned to trucks. Well, Zellers somehow though they could run stores
    without those pesky employees gobbling up their profits. A prime example of
    this was how they would let one employee be in charge of helping customers in a
    30,000 square foot area on a Sunday afternoon. Why did this happen? Most times
    there was no one to cover lunches. Other staff had to abandon ship at a seconds
    notice to open another cash register to reduce exorbitantly long lineups. Cashiers
    were getting lunch breaks at 2 and 3 in the afternoon “because it was just too
    busy”. They were made to feel that they were part of some sort of important
    struggle to help their comrades survive or something. Customers in the
    meanwhile were looking for help in the aisles, and nobody was there to give it.
    Once I was working cash in such a situation. An item didn’t scan or had a
    problem (as was often the case) and the customer asked “why don’t you call the Hardware
    department?”. My response: “That’s because I AM the hardware department, and
    for that matter, toys, housewares and linens”.

    -         
    Cheesy gimmicks. Zellers was a firm beleiver in
    this weird sort of 1950’s corny style of advertising and promotions. Instead of
    trying to sell cool stuff, they resorted to silly balloon drops, flashy flyers,
    Zeddy, and good old “Zellers Radio”. What was Zellers Radio, you ask? A stupid
    tape message that would play every 10 minutes that usually began with
    “Shhhhhaaaappers!!”. The elevator music they played was no better. The grocery
    store I worked at previously played some classic pop music from the 70’s and
    80’s. Still a bit lame, but not as bad as muzak. It seemed they did not want to
    deviate from the practice of appealing to the senior citizen crowd. The TV ads
    weren’t any better. For the longest time they were a televised version of the
    weekly flyer. Later on they got some Hillary Duff clothes in their stores and
    managed to get some decent ads going. This did not last, and an ad campaign was
    launched with purported Zellers employees saying “we’re getting better and
    better”. Wow. Talk about admitting you suck. It’s like they were begging people
    to give them a second chance, and forgive them for the shit service they gave
    them before.

    -         
    Ridiculous policies for shoppers. Come on, if
    someone isn’t satisfied, give them their money back. Sure there is always some
    fucker trying to rip you off, but why treat everyone like criminals? People
    usually got store credits after getting the runaround and waiting in long
    lineups. Supervisors would tell their employees to enforce these policies until
    someon really lost it. What then?
    Give the customer what they wanted and make the employee look like a complete
    asshole in front of them. Seems these little Hitlers didn’t have the balls to
    enforce these policies themselves.

    -         
    Clueless upper management. It seems that they
    only way these morons knew how to react was to fire people. It seemed like
    management shuffles were happening constantly as someone got the boot for
    underperforming. And do you know who didn’t get fired? Guys like the Regional
    Director of Stores who showed up on the front lines during a “Royal Visit” and
    yelled at people. Such a nice human being.

    -         
    Panic at the sight of Walmart, but reacting like
    a deer in the headlights. Instead of trying to figure out what  makes Walmart a generally better place to
    shop, Zellers instead tried to undercut them on many items, and lost an arm and
    a leg in doing so. Walmart isn’t just about price. It was also about the
    “shopping experience” that Zellers never seemed to be able to figure out. It
    seems the cheaper “solution” to the Walmart question was usually taken. Why
    make fundamental changes to your stores when you can authorize a 10% cut in
    prices on ass-wipe?

    -         
    Morning meetings. The dreaded daily “pep talk”
    was nothing more than an attempt into performing better OR ELSE. What was
    discussed? The weeks sales, which didn’t really register in most people’s
    minds, and a couple of minutes of badgering employees to get more credit card
    customers, and just generally work harder if sales were supposed to get better.
    One time our store manager decided to go off on a rant about employee morale
    and how the employees had only themselves to blame for it. In his mind the
    skeleton crew often appointed to run the place, should all work twice as hard
    to acheive the results of double the people. He couldn’t seem to understand why
    people were not motivated to shed blood, sweat and tears at minimum wage.

    I left the company fifteen years ago. I had always wondered
    if things had improved after I left, and after reading other people’s blogs
    posted since the announcement that Target was acquiring Zellers leases, it was
    obvious they had barely changed at all. It was eerie to read what employees
    were saying about the company as it was so familiar.

    Shame on you Zellers, and good riddance. It’s sad that the
    employees of the companies are the ones to suffer, while the upper management
    folks will all leave with a huge chunk of change. Pathetic.

   
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