Does the Cobourg Zellers have a Target on it?

By Darrell Flewell

The arrival of Target Corp to Canada is touted as positive economic news on a national scale. The patriotic ego of discount retail shoppers in Cobourg who have chosen to stick with Zellers over Wal-Mart, will initially suffer a significant blow if our local Zellers store is on the list of stores to be converted or closed.

On January 13, the Hudson’s Bay Co (HBC) issued a remarkably short press release stating Target Corp paid C$1.825 billion to acquire up to 220 Zellers real estate leases.  HBC is a conglomerate operating The Bay, Zellers, Home Outfitters, and Fields.  Note Zellers as a business has not been purchased.  Target Corp plans to reopen 100 to 150 stores in 2013 and 2014 as Target outlets.

One-hundred to 150 stores are much less than the 220 business leases purchased.  According to the release, Zellers stores in certain communities will continue to operate.  It seems then, that a large number of stores will initially close; some to be renovated into “cheap-chic” Target stores (in some cases perhaps, a Target Superstore with a grocery) and some that will simply not reopen at all.

The press release also says a net gain of over 20,000 jobs will result across Canada and over $1.5 billion in economic activity generated due to the renovation of Zellers locations and offer Canadians a broader retail product offering.  Come on, really?  It would be nice to know what these stats are based on. Target stores are known to have a great deal more staff than Zellers stores.  This  could be a plus, having a staff person available to assist when needed, as well as enough staff to keep aisles clean and organized and clothes off the floor.

There are three likely outcomes.  The store could continue to operate as Zellers, close for renovation into a Target, or just close.

Have you been to the mall lately?  I can hardly imagine what the closure of Zellers, even a temporary one, will have on the level of mall traffic.  Not good if your small business is currently renting mall space.  That, compiled with tighter household spending in light of the depressed economic times, could make for a long couple of years (2013 and 2014 remember).  If the economic situation worsens, perhaps the store closure could become extended or permanent.

If the Cobourg store is not to be renovated, then it’s  business as usual. The allure of Wal-Mart, with the same low quality household merchandise and a brand new grocery section is hard to refuse.

Target Corp clearly needs the Canadian economy and compared to its U.S. homefront, a remarkably strong consumer demand, to prop up its shareholder return in order to  compete with Wal-Mart.  It plans to do this by offering high quality products at discounted prices and significantly increasing staff. Canadians will need to turn out in droves and turn their backs on Wal-Mart.  That’s a tall order.

There is one clear winner.  U.S. real estate developer Richard Baker paid roughly $1.1 billion to buy the entire HBC a few short years ago.  To sell off just a portion of the business leases for $1.8 billion is a nice return.  Is there any return on investment to loyal Canadian shoppers?

4 thoughts on “Does the Cobourg Zellers have a Target on it?

  1. Cobourg’s Zellers store is going to be converted into something else just not a Target store. 🙁 Which pisses me off because we have a prime location. 🙁

  2. Dear Buckey ……… i have no idea where you get your info but CN had hired hundreds of people to work on this project and alot from this area , yes CN is americanzied to the hilt and its terrible… If you wanna make a difference and show your displeasure of Americans working in our back yard do what i did and personally send a letter to CN s new president .. From what i understand hes not a bad guy!

  3. What is happening in Cobourg and many other parts of Canada is a result of federal government trade policies, especially the NAFTA agreement where, since 1986, over 13,000 Canadian Companies have been sold to foreigners, mostly American. NAFTA gives foreign corporations the same rights as Canadian Corporations, and the ability of Canadians to allow only foreign investment that is beneficial to Canada has disappeared. A good local example of this is the selling of Canadian National Railways to an American corporation. The hundreds of millions of dollars that Via Rail pays CN to operate on their tracks is paid to a foreign corporation, and not to a Canadian company. When CN was sold to a for profit foreign corporation, CN moved many of its office functions to the US. The recent expansion of CN trackage in the Cobourg area, supported by Canadian taxpayers, was constructed using a US company with personnel from the Port Huron Michigan area, and most of the materials are of US origin. When CN was Canadian, the Via funds went back into the Canadian economy, the purchase of Canadian products was encouraged and most of the head office activities were conducted in Montreal.

    The Conservative leader S. Harper +has made his views clear on Canadian sovereignty clear – “And we cannot be effective at major economic matters any longer unless we work with our economic partners around the world and work with them closely and intimately. That is essential. I know some people don’t like it. It is a loss of National Sovereignty but it is a simple reality. It is a simple reality.”

    It is time that Canadians told their politicians we want policies that will benefit Canadians, not foreign corporations.

  4. Before HBC was sold to American interests a few years ago, I was one of those people who rarely shopped at Wal Mart, since supporting Canadian businesses is important to me. It seemed pointless after that but I kept going to Zellers anyway because Wal Mart’s labour practices are so odious.

    Unfortunately our local Zellers has gone down hill recently. The store is a mess with stuff lying around everywhere, and it seems like every couple of months they try to re-organize it without ever quite finishing the job. I hope they can stick around under their own banner but the place needs improvement, and if sales aren’t strong enough, will their owners bother to invest in it or just get rid of it? We can’t afford to lose the store, that is clear. Aside from anything else we’d have to face all those Wal Mart opponents running around yelling “I told you so” all day long.

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