The Ode: Zellers (1931 - 2011)

A Canadian retail chain once mighty enough to contemplate purchasing HBC, stumbled when big American players arrived and now finds itself a target of another kind.

See also “7 things you need to know about Target”

The discount store Zellers was founded in 1931 by Kitchener, Ontario-native Walter P. Zeller. The entrepreneur bought 14 Canadian stores owned by American retailer Shulte-United for $500,000 and the next year opened 12 Zellers stores across Southwestern Ontario, Quebec and New Brunswick that sold everything from stockings to spatulas. By 1943, Zellers was generating $10 million a year in sales, and boasting the slogan ‘quality goods at low prices.’

The company continued its expansion and nine years later took over the Federal chain of five-and-dime stores, which added more than a dozen new Zellers locations in Eastern Canada. Under Zeller’s guidance his store quickly became an innovative company. It partnered with The Grant Company — an American discount store that bought Zellers’ shares — to help train its employees and embark on joint buying trips to Asia.

The company’s 25th anniversary was marked by celebration and mourning: there were 60 stores and sales had grown to $43 million, but Zeller himself, known for rewarding employees’ hard work, passed away at 67.

In 1960, Zellers opened its first in-store restaurant, The Skillet, as well as an auto-centre, and its first store in a suburban mall.

In 1976 Zellers acquired Fields — a Vancouver-based clothing store — and in 1978, bid to acquire the Hudson’s Bay Company (HBC). HBC saw profitability in the discount store chain and reversed the acquisition, purchasing Zellers itself. It proved a good move. Five years later, Zellers’ sales hit $1 billion, and by 1989 had doubled.

HBC continued its buying spree in 1991, acquiring the Towers/Bonimart discount store chain with 51 stores and, three years later, purchasing B.C.-based chain Woodward’s, expanding Zellers’ presence in Western Canada. Zellers’ slogan developed into the catchy ‘the lowest price is the law’ and advertisements featured both the Towers squirrel mascot, ‘Sparky,’ and the Zellers bear mascot, ‘Zeddy.’

That same year, 1994, Zellers faced trouble. There was a new kid on the block: Walmart, and the U.S. discount franchise cast a long shadow when it purchased retail chain Woolworth Canada Inc. and set up 131 stores. Zellers’ earnings dipped for the first time in a decade, from $256 million to $216 million, and the next year fell more than 50%, the lowest since 1987.

Despite attempts to make a comeback with store redesign, new slogans, and the launch in 1998 of a large-format discount chain, Best Value, that focused on higher-class brands, HBC decided the work was best left to someone else. The announcement came yesterday that U.S. discount store Target would be taking over Zellers and up to 220 of its locations. By 2014, 100 stores will bear the company’s trademark red-and-white bullseye.