Dozens of Zellers stores to close

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TORONTO -- Zellers stores may soon join now-defunct Canadian chains as a relic of the retail past after its parent company said Thursday it will close most of the 64 remaining locations, affecting up to 6,400 jobs.

Hudson's Bay Co. -- Zellers Inc.'s parent company -- has been contemplating what to do with the brand since last year, when it sold the majority of the leases for its 279 discount stores to Target Corp. for $1.83 billion, said spokeswoman Tiffany Bourre.

"After a lengthy review and numerous discussions with various parties it became apparent that continuing to operate the Zellers banner in its current form was not viable, particularly given the geographic footprint of the remaining locations," Bourre said.

Most of the remaining stores will be closed by March 2013.

But Bourre added the company hasn't ruled out the possibility of maintaining some of the store locations and opening them under another retail banner. Zellers is "considering options" for certain locations, including "rebranding some stores" -- a determination that has yet to be made, she said.

Hudson's Bay Co. did not provide any indications as to which stores, or how many, would remain open.

That includes the location in the basement of the Bay store in downtown Winnipeg as well as Zellers locations in the Northgate and Fort Richmond shopping centres, the three current Zellers locations that have not been included in Target's Canadian store rollout.

Zellers, which offers everything from housewares to hosiery, has faced an onslaught of competition from large U.S. retailers in recent years, most notably from Walmart, which has been expanding into a one-stop destination with dry-cleaning services and a full suite of groceries. Zellers was one of the last remaining large Canadian discount retailers after the Woolco, BiWay and Bargain Harold's brands became extinct years ago.

The company said it operates 64 stores that were not acquired by Target, or were already slated for closure.

A spokeswoman for Walmart Canada wouldn't comment on whether Canada's largest retailer is interested in acquiring any of the locations. Target Corp. could not immediately be reached for comment.

Target has said Zellers employees would be encouraged to apply for jobs at their stores, but a Zellers employees' union has launched the Target Fairness campaign to raise awareness about Target's failure to commit to take on Zellers employees.

But the campaign has achieved little so far. Target has not responded to its demands and Walmart has recently said it won't automatically hire Zellers employees, said Kevin Shimmin, national representative for UFCW Canada, the union representing employees at Zellers stores in B.C., Quebec and Ontario.

"At the end of the year, you're looking at probably more than 10,000 Zellers employees that are out of a job," he said.

Shimmin is worried about the treatment of Canadian retail employees as more Canadian brands disappear and the number of U.S. chains grows.

"What we can expect from Target is exactly the same as Walmart, as far as no job security, low wages and part-time work," he said.

Target plans to open 125 to 135 stores in Canada. It has purchased the leasehold interests of 189 sites currently operated by Zellers Inc. and it says about $10 million to $11 million will be invested to remodel its stores.

Target has announced its plans to have its new stores open in former Zellers locations in the Shoppers Mall in Brandon and Kildonan Place Shopping Centre and Southdale Centre in Winnipeg in the spring of 2013. By winter 2013, the company said it will open at the former Grant Park Zellers location.

The Free Press reported last week a tentative plan to build a stand-alone Target store at Polo Park has cleared a pair of hurdles at city hall to allow construction of a 170,000-square-foot retail store on the Canad Inns Stadium site.

The developers hope Target will build on 3.2 hectares at the northwest corner of the stadium site. But the U.S. chain may choose to redevelop the existing Zellers store in the mall instead.

-- The Canadian Press, with files from staff

Republished from the Winnipeg Free Press print edition July 27, 2012 B4