Almost a decade after Zellers left suburban malls across the country sitting empty, Hudson’s Bay Company (HBC) is looking to launch its Canadian discount chain back into relevance.
What happened: Zellers will open in certain Hudson’s Bay locations next year and launch an e-commerce website that taps into the “nostalgia of the brand,” which we assume refers to the Zeddy Wheel and hot chicken sandwich.
Catch up: In 2008, HBC decided that instead of continuing to burn money through Zellers it would sell off leases for its 186 locations to Target, which was expanding into Canada.
- Despite the strength of the Target brand in American suburbs and a new set of ideal locations across Canada, the company’s cross-border efforts failed soon after.
Why it matters: While it might look like HBC’s strategy has pivoted to slowly replacing its stores with dozens of little stores inside one big store (see: MEC announcement), the move makes sense given recent pressures to monetize $11 billion worth of its real estate.
- HBC owns or controls (either entirely or with partners) ~40 million square feet of leasable space—more than ten times the size of the entire West Edmonton Mall.
Zoom out: HBC is also hoping to capitalize on consumers turning to discount retailers in search of lower prices, as soaring inflation drives even the wealthiest of families to Walmart.
Yes, but: Consumers may be turning to discount retailers for groceries, but they’re dialling back on discretionary purchases, like clothing and home goods—Zellers’ main offerings.
Zellers struggled in the past against competitors like Walmart on price, supply chain strength, products, and customer service—but we’re here for the Canadian comeback story.