Zellers returning to Ottawa, but chain will have ‘tough time’ winning market share, biz prof says


Once known as the place where “the lowest price is the law,” Zellers might find the rules of engagement have changed since it last tried to compete in the discount retail space, a prominent local business expert says.

On Wednesday, Hudson’s Bay Company unveiled a list of the first 25 Zellers locations to open inside select Hudson’s Bay department stores across Canada. Three of the stores will be in the National Capital Region – at HBC’s Rideau Street location, the St. Laurent Shopping Centre and les Promenades Gatineau.

This past August, HBC announced that it was reviving the Zellers banner a decade after the discount chain closed most of its stores in Canada. The company said these new Zellers locations will offer home decor items, toys, baby gear, clothes and pet accessories. 

OBJ360 (Sponsored)

The return of Zellers comes as soaring inflation drives consumers to discount retailers in search of lower prices and fierce competition from existing stores like Walmart, Dollarama and Giant Tiger.

While Wednesday’s news release declared that “Zellers holds a special place in Canada’s maple leaf-shaped heart,” Ian Lee isn’t so sure the brand will resonate with a new generation of consumers who are used to buying goods from retail behemoths like Amazon, Walmart and others.

Lee, an associate professor at Carleton University’s Sprott School of Business, said the discount retail space is “significantly more competitive” today than it was 10 years ago.

Amazon, Walmart and other big-name retailers have developed sophisticated infrastructure that uses big-data analytics to track consumer spending and target merchandise at specific customer groups – tactics that Zellers will be hard-pressed to duplicate, Lee explained.

“I think (Zellers) is going to have a tough, tough time,” he said. “The Bay does not have the resources of Amazon or of Walmart, which are both gigantic companies.”

The chain is promising consumers a “helpful, playful shopping experience packed full of low prices.”

Zellers also says it plans to offer “a hint of the nostalgia that Canadians know and love,” harkening back to its heyday in the 1980s and early 1990s when it was the undisputed king of Canadian discount retailing.

Lee said “nostalgia marketing” has its merits. But he’s not convinced such an approach will have mass appeal, especially to younger shoppers who aren’t old enough to remember when the brand was a dominant force.

Brick-and-mortar department stores across North America are struggling to hold on to market share amid stiff competition from online retail specialists, Lee added, and reviving Zellers likely isn’t going to move the needle much for HBC. 

“I liked going to Zellers,” he said. “There’s going to be a market, but anyone who thinks this may be the key to the resurrection of the Bay, I think it’s not an accurate assessment.

“I can see it becoming essentially a niche brand as part of the Bay. It will generate some additional sales, but I don’t think it’s going to become the Zellers of the days of yore, when Zellers was at its peak before Walmart came to Canada.”

As well as opening in-person locations, Zellers is launching a new e-commerce website.

Zellers was founded in 1931 and acquired by HBC in 1978. The banner reached its height at the end of the 1990s, with around 350 locations, before losing ground to big-box competitors like Walmart.

In 2011, HBC announced it intended to sell the majority of its remaining Zellers leases to American company Target, closing most of the locations by 2013, though Target’s subsequent venture in Canada was a fiasco. 

The retailer kept a handful of Zellers locations open as liquidation outlets, including a store at 2065 Robertson Rd. in Nepean, until 2020.

Last year, the company recently launched pop-up Zellers shops inside Hudson’s Bay department stores in Burlington and in Anjou, Que.  

– With additional reporting from the Canadian Press

Get our email newsletters

Get up-to-date news about the companies, people and issues that impact businesses in Ottawa and beyond.

By signing up you agree to our Terms of Use and Privacy Policy. You may unsubscribe at any time.