Zellers relaunches 12 stores across Canada today — and nostalgia is the door crasher
A dozen locations set to open, despite tough outlook for department stores
A dozen Zellers locations were opened across Canada on Thursday, a decade after the discount chain vanished from the country's retail landscape.
Hudson's Bay Company, which began the lengthy process of shuttering Zellers locations in 2013, announced earlier this year that it planned to resurrect the chain at 25 locations scattered across the country soon.
The first dozen opened their doors for the first time on Thursday — nine in Ontario and three in Alberta — in a move that retail analysts say faces an uphill climb in a tougher-than-ever retail landscape.
"Department stores are in trouble, and have been for quite some time, in the sense that the way that we shop at them is fundamentally different," said Joseph Aversa, who teaches retail management at the Ted Rogers School of Management at Toronto Metropolitan University.
That's because the pandemic brought about a sea change in how Canadians shop, from the rise of online shopping to a split in physical stores between high- and low-end — with those in the middle getting crushed.
Aversa says it's telling that, rather than launching standalones, the chain is building Zellers locations inside Bay stores. That's likely because parent company The Bay is trying to find innovative ways to drive customers to hundreds of thousands of retail square footage it already has.
"[They're saying] in most of our stores, we have too much real estate for what we sell so this is maybe an option to try to shake things up a little bit."
HBC says customers can expect a mix of products in the store and online at zellers.ca, from housewares to toys, and from fashion apparel to a limited selection of furniture. The chain is introducing a new in-house brand called ANKO but will feature products from a variety of name brands, too.
Pricing is based on what it calls a "rounded retail" strategy, which means all items will be priced in round numbers like $1 — no extra cents added.
From the throwback logo to the presence of "Zellers diner"-branded food trucks outside launch locations — a nod to the restaurants that used to be inside Zellers stores — the entire launch is playing on a sense of nostalgia for something consumers have lost. And that's very much by design.
"Canadians never forgot about Zellers," the chain's vice-president of marketing, Shelley Tangney, told CBC News in an interview on Thursday. "The love for the brand never went away."
That was certainly the mood inside one store in Toronto on Thursday, as Canadians with fond memories of the chain lined up for their first look.
"I wanted to know what the hoopla was," said Helen Sheppard. "I was curious to see how many people love Zellers like me."
Sheppard is like many shoppers who came to take a look because of the nostalgic attachment, but she says she'll need to see savings in order to keep coming back. "Price is a big issue for me, living on a small budget I have to manage what can I afford this month versus take off my list," she said. "I'm trying to restrain myself."
Another shopper, Len Donalds, told CBC News he also has fond memories of the chain but says it will take real value for him to turn into a loyal shopper. "Price is very important," he said. "Nowadays everything is so expensive, food and clothes, you've got to try to get the best bargain you can."
Tangney said the chain has recognized the potential in the discount space ever since Target went bust in 2015. "After listening to feedback for many years, it just made a lot of sense to fill that gap," she said.
Ela Veresiu, an associate professor of marketing at the Schulich School of Business at York University, says nostalgia can be a powerful marketing tool, but getting customers to come in and spend based on it is easier said than done.
"Converting nostalgia into a meaningful business model is how I see Zellers succeeding," she told CBC News.
While the chain has its work cut out for it, Veresiu says if Zellers can get consumers who remember the brand in the door, and offer value to them once they're there, it has a shot.
"Zellers already has the image in the marketplace as being a discounted retailer, whereas the Bay has the image of being a confused retailer that doesn't know what it is anymore," she said.
Nostalgia might play with Canadians who remember the brand, but Veresiu says it's clear the chain also has plans to win over the younger generation by engaging with them where they are: online.
She notes that a Zellers Instagram account that sprang to life earlier this year already has almost 34,000 followers, despite having made only 18 posts — half of which were a photo collage showing the logo.
"They're going the route of Wendy's account to be highly humorous, to tease consumers ... or potential consumers," she said.
"If they can maintain this playful, light, funny tone across their, their social media, and as well with retro or nostalgic elements, I think that would go a long way to help guarantee their success and their sustainable business plan."
With files from James Dunne and Sophia Harris