Resurrecting Zellers, HBC Sets Strategy

HBC is reviving Zellers in a big way.

HBC announced Wednesday that it will launch 25 Zellers shops, ranging from 8,000 to 10,000 square feet, inside Hudson’s Bay department stores across Canada.

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Simultaneous with the openings, set to begin sometime this spring, the Zellers.ca e-commerce website will launch for Canadians. It’s possible HBC sets up more than 25 outposts at its other Hudson’s Bay locations later in the year and into 2024. Last year, the company tested two Zeller pop-ups in two Hudson’s Bay stores.

The company stated, “Customers will be greeted with a thoughtful selection of design-led products across home decor, toys, baby, apparel and products for pets, housed within Zellers’ signature red and white,” logo.

Zellers, a value-oriented discounter, first opened in 1931 and became a major retail player in Canada. HBC acquired Zellers in 1978. At its peak Zellers had more than 300 freestanding stores in the ’90s.

But the business later floundered, running up against Walmart’s expansion into Canada among other competitors. HBC, unable to turn around Zellers, focused on its other retail assets, and in 2011 sold many of the leases to Target in a $1.83 billion deal, while retaining 64 locations. However, the deal foreshadowed the eventual demise of the Zellers business.

Target converted many of the Zellers sites to Target stores, but some operational and pricing misfires and a failure to win over Canadian shoppers resulted in the liquidation of the Target locations in Canada. Not too long after that HBC decided to liquidate the remaining Zellers sites, but retained ownership of the brand name. 

The Zellers shops should not cannibalize business from the the Hudson’s Bay department stores, considering Zellers merchandise is value-oriented, while Hudson’s Bay is more upscale and fashion-oriented.

Among the 25 locations, Zellers shops will be inside Hudson Bay department stores in downtown Vancouver, Rideau Center in Ottawa, Erin Mills in Mississauga, Sunridge Mall in Calgary and Carrefou de l’Estrie in Sherbrooke.

Last week, Sophia Hwang-Judiesch became president of The Bay and Hudson’s Bay, succeeding Iain Nairn, who is retiring.

HBC operates the 84 Hudson’s Bay stores and Thebay.com, which is an online marketplace. The stores and the e-commerce operation are separate companies. Founded in 1670, HBC is North America’s oldest company. The HBC portfolio also includes Saks Fifth Avenue and Saks Off 5th.