Target vs ZellersTarget vs Zellers

Team 5*Emily Yu*Jessica Wicks*Christopher Trotman*Kay Zwolak*Ani Yildigrim

OutlineOutlinePress Releases

HBCTarget

Financial Post Article Target In Canada . . . Finally

Globe and Mail ArticleTarget Knows What They Are

SummaryDiscussion

Hudson’s Bay Press Release Target’s Press Release

HBCHBC

TargetTarget

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Hollie Shaw  January 13, 2011 – 12:30 pm“When is Target going to buy Zellers and come to Canada?” has been the most-asked question posed to this reporter over the years at the office water cooler and at parties — it seems most consumers who have visited the cheap chic Wal-Mart rival as it successfully expanded across the U.S. prefer its cheap chic stylings to that of Zellers. (Close behind in popularity: “When is J Crew coming to Canada?” That is supposed to happen at a mystery location in Toronto later this year. Stay tuned!)Five things you need to know about the Target/Zellers deal:Target is not buying Zellers, per se. Target is shelling out $1.825-billion for up to 220 leasehold interests of Zellers locations that have yet to be decided. Zellers’ owner, U.S. real estate investor Richard Baker, took over the mostly-leased Zellers chain when he bought Hudson’s Bay Co. in 2008 for $1.1-billion. The worth of those long-term leases with large landlords such as RioCan Real Estate Investment Trust and and how much another business would pay for them were the largest barrier to a deal like Thursday’s under its prior two owners.Zellers will still exist, albeit in a scaled-down version, for a while. There are currently 279 Zellers outlets across Canada and there is no guarantee at this point that Target will take over all but 60 of them — the Minneapolis-based corporation simply has bought the right to do so. The U.S. mass merchant wants to open 100 to 150 Target stores across Canada beginning in 2013, and Mr. Baker will keep operating many of the remaining locations as Zellers outlets until Target decides over the next few months which ones it wants to keep.Zellers will likely disappear in the next five years. Industry experts predict Mr. Baker will negotiate the sale of the remaining leases to parties who want to cherry-pick locations that are compelling to them. Depending on the square footage and demographics, that could include established Canadian retailers such as Dollarama and Giant Tiger; parties that have been expanding and looking for big pieces of real estate, such as home improvement chain Lowe’s or Marshall’s, a corporate sibling to Winners and Home Sense; or retailers that have reportedly been eyeing the Canadian market, such as Kohl’s or J.C. Penney.Canadians will finally be able to get their mitts on Target’s private brands, including its top-selling Target Home decor and furniture collection and limited-edition goods from partnerships with A-list designers such as William Rast or Stella McCartney. “We are very excited to bring our broad assortment of unique, high-quality merchandise at exceptional values and our convenient shopping environment to Canadian guests coast-to-coast,” said Gregg Steinhafel, Target’s CEO.You can expect some attention-grabbing deals from Wal-Mart Canada as it prepares for Target’s entry. The world’s biggest retailer won’t take the arrival of its biggest U.S. rival into one of its top-performing markets in the world lightly.

Read more: http://business.financialpost.com/2011/01/13/fp-marketing-target-canada-finally/#ixzz1BdTn8eQi

Target Comes to Canada . . . Finally

January 13, 2011'Target knows what they are'By Rita Trichur & Marina Strauss

Clean, bright and well-organized, experts say there's a pent-up demand in Canada for the chain's cheap-chicThe secret to Target Corp.'s success is getting consumers to see beyond the bulls eye."Tarzhay," as devout fans affectionately call the retailer, has succeeded where Wal-Mart Stores Inc. has fallen short. It has persuaded middle-class America that discount shopping need not be a guilty pleasure.Essentially, Target is discount shopping without the bargain-basement feel.Target stores are clean and bright, and the shelves are stocked with trendy items along with everyday basics at good prices. The Target logo is synonymous with cheap-chic.And experts say there is pent-up demand for its hip cachet here.Canadians will embrace Target because it evades the stigma of thrift, said Howard Davidowitz, chairman of Davidowitz & Associates, Inc., a New York-based retail consulting firm."You've had so many lousy retailers like Zellers and all these crappy guys. You've had all these dumps who acted like retailers but really were cadavers," Mr. Davidowitz said."Everything is all messed up, they never got it right, they never knew what they were. Target knows what they are and they execute beautifully."Over the past 10 years, Target has roughly doubled both its sales and profits. Revenue for the 12 months ended Jan. 30, 2010, totalled $65.36-billion (U.S.), while net income was $2.49-billion, according to S&P/Capital IQ.Target is now set to invest $1-billion in converting the Zellers stores into Target outlets, said Gregg Steinhafel, Target's chairman and chief executive officer.Target already generates 50- to 200-per-cent more sales in each of its stores, compared with a Zellers outlet, Mr. Steinhafel said.He is betting that he can run better stores than Zellers by putting more staff into them. Each Target store has between 50- and 100-per-cent more employees than a Zellers, he said. More staff help, for example, keep the store tidier and easier to shop, he said.Over the next decade, he envisions more than 200 Target stores in Canada. Some analysts say there is room for as many as 250. "We want to be the preferred shopping destination for the Canadian consumers," he said.Target stores - on average about 125,000 square feet - are larger than Zellers stores, which are closer to 100,000 square feet or less.

Still, while many Canadians have heard about the success of Target, they may never have never visited one, Lakeshore Group retail consultant Rick Pennycooke said."Target must make certain that they do not disappoint the Canadian consumer when they do arrive," he said. "They will have to be different and better than Zellers."Target and Wal-Mart have followed very different business strategies.Target was founded in Minneapolis in 1902 as the Dayton Dry Goods Co. In 1911, it was renamed the Dayton Co. but was commonly called Dayton's department store.Its modern-day fashion finesse is rooted in its early history as a department store, Mr. Davidowitz said. From the beginning, Target established itself as "the king of apparel." Matching tops, bottoms and accessories are displayed together on the floor, meaning customers do not need to worry about making an outfit work.The retailer has also invested heavily in promoting its private labels across a range of merchandise. Their stable of designers has included Isaac Mizrahi, Mossimo Giannulli and Michael Graves.Additionally, Target employees travel the world, scouring for the latest trends in fashion, accessories and housewares.With a lower price point in mind, the company then "Targetizes" a potential product for mass consumption. The quality may be less, but the cool factor is conserved.In contrast, Wal-Mart founder Sam Walton's origins are in the convenience store business in America's deep south. With price a key priority, Wal-Mart's early focus was on basics like food and other consumables, rather than apparel."Here's the key to Target: the fashion is right. And it is presented in an environment for fashion," Mr. Davidowitz said."With Wal-Mart, do you think you want to buy fashion surrounded by a giant pile of cookies? I mean, it is ridiculous."It is unlikely that Target will have to radically alter its business strategy in Canada, said John Williams, a retailer consultant with Toronto-based J.C. Williams Group Ltd.That's because Target already enjoys a groundswell of goodwill here - much more so than other U.S. retailers like Kohl's or Marshalls.Most Canadians have already seen Target's slick ads that hold out the promise of simplifying middle-class life with a dash of glam."When they go to the States, the first store they go to is Target. That's the baseline for cheap chic," Mr. Williams said.Beyond business, Target is also wooing Canadians by promising to extend its popular community outreach programs on this side of the border. Since 1962, it has earmarked 5 per cent of its income to support local communities."It is important to people to know these so called impersonal companies care about the community," Mr. Williams added.

The Globe and Mail The Globe and Mail Analysis Analysis

Loss of Control - What was released vs. what was printed- references material from sources other than the press release- quotes from consultants- has the tone of an opinion

HBC Press Release: "... will provide a broader offering to Canadian consumers"- article makes a focus around this- talks about Target employees traveling the world to find trendsTarget Press Release: "... tens

of thousands of jobs will be created to operate the new Target stores", "150 to 200 team members"- article shows some research has been done "50- and 100-per-cent more employees than a Zellers"- notes that this will result in tidier and easier to shop stores

Target vs. Wal-Mart- makes comparison

‘Targetizing’- Finds a trendy product- Mass produces with price in mind- Results in a lower quality product with "cool factor"

Article Conclusion- beyond HBC (Zellers) and Target's control- Positive for Target- Negative for Zellers

Is Zellers a ‘Target’ for takeover as U.S. stores enter Canadian market?

Target buys Zellers leases for $1.8B

Target Announces Deal To Buy Zellers

Target to take over Zellers stores

Target buys Zellers leases from Hudson’s Bay Co.U.S. chain plans to convert 100 to 150 stores Canadians, eyes on

Target, unconcerned about losing Zellers

Discussion Discussion QuestionsQuestions

How do you feel about Target coming to Canada?

What PR challenges will Target face by moving into Canada?

If you were the head of Target’s PR team how would you connect with Canadian publics?

Questions?Comments?

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