Target

EngineerBlake said:

Remember how Comwave owned the trademark for the name iphone in Canada? The iPhone still came here. I'm sure this will be a minor speed bump in Target's plans to come north.

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I assume Apple just eventually paid Comwave's asking price and Comwave gave up rights to the name. That might happen in this case, or the Canadian Target could dig in their heels.

It would be sad if the Canadian Target stopped the US Target from coming. I personally think the Canadian retail scene would benefit much more from having an innovative, clean and well-run discount anchor than protecting a defunct chain(?) of cheap tacky clothes. Issac will not doubt take a massive cheque then use Target as the dream anchor to expand his other brands.

I wonder if they would ever trade in Canada under a different name? Similar to Winners and HomeSense and TJ Maxx and HomeGoods? Especially if they purchased Zellers? I think the Target Apparel Co. will eventually be bought out, but I guess the Winners examples shows that brand equity isn't everything (though TJ Maxx has a much lower level of brand recognition).

Target's biggest challenge in Canada, should they proceed to open here, is space.

Assuming they didn't buy out Zellers.....

I don't see Walmart selling to them.......(Canada)

There really is no one else, no meaningful inventory of vacant space of the dept store size............

Canadian landlords, like most Cdn businesses are more risk-adverse than their U.S. counterparts, they wont' want to build completely new 140,000 sq ft stores, without a strong sense of security that Target is staying.....

And the capital cost rollout of even a two dozen completely new stores and 1 warehouse, to start, is not small potatoes, even to a big U.S. retailer.

Keep in mind, even Walmart 'cheated' in buying Woolco Canada.

There really is nothing similar on offer this time (excepting Zellers)....which officially, for now, is not for sale.........

Depending on how many stores they open initially, they may not build a warehouse for a few years and will just use one of their closeby warehouses in the meantime.

That said, yes, space is a big issue for Target. What's the likelihood of HBC selling Zellers to Target?

Once Target opens one store in Canada Zellers value is in the toilet.

Zellers only value is the real estate, however, its also a curse for a purchaser. Zellers has many small markets stores and has a very scattered footprint.

Walmart sort of scored because Woolco was in more significant markets and had very prototypical stores

from today's Star......

Target to open more than 100 Canadian stores

Cheap-chic discount department store retailer Target Corp. Has confirmed it will enter the Canadian market through the purchase of Zellers’ leaseholds.

The deal, valued at $1.825 billion, will allow Target to open its first Canadian stores in 2013.

The company, which is the second largest U.S. Discount retailer behind Wal-mart, said it is purchasing 220 leaseholds from Hudson’s Bay Co.

Under a complex leaseback arrangement, the stores will continue to operate as Zellers for the time being.

Target plans to convert 100 o 150 stores to its banner. Additional sites may be converted to other retail brands, the company said in a statement Thursday.

The retailer has long been exploring opportunities north of the border.

However it hit several roadblocks that run the gamut from unattractive real estate locations for potential stores to the economic slowdown that reined in consumer spending.

The move will put Target in competition with retail giant Wal-Mart, which opened its first stores in Canada more than 12 years ago and currently has more than 300 locations here.

The move marks the first time ever that Target will expand outside the U.S.

What's the likelihood of HBC selling Zellers to Target?

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100%

Fantastic news! Target is the only retailer that's able to compete with Wal Mart.

Finally! That's something I've been looking forward to.

AoD

And not one bit surprising. Have you been to a Zellers recently? They are so awful.

A few of us here called the Zellers and Real Estate angle, ie. this had to happen (or was at least every likely) for Target to enter the Canadian market.

At one level it is sad to lose another Canadian institution. Truth be told though, I'm not a Walmart shopper and rarely a Zellers one either.

We could all see that HBC for any number of years has just not had a clear vision on how to handle this banner.

Its not so much that it was awful, a bit downmarket for my taste.....

But it was the ordinary-ness of it, at best; the simple notion that they kept getting the small things wrong, from ridiculous waits at cashiers, to not being able to keep product in stock; and even when building new, they seemed to just get things wrong (low visibility of location etc.

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Its time had come

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Now for the interesting bit, Target is claiming 100-150 of the stores.

Meaning 70-120 will be put on the open market.

Who else gets the space? Kohl's seems likely. Walmart apparently wants a couple; I heard a bizarre rumour to me, which was that JC Penny is sniffing around. I don't seem them as a good fit in the market, but I could be wrong.

There's also the funniest location, HBC just renovated their downtown flagship in Winnipeg with much fanfare, putting Zellers in the basement of that Bay store. I assume the Bay brand will end up reclaiming it, what a colossal waste of money.

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PS. Richard Baker (effective controlling shareholder of HBC) is making out like a bandit.

Get a load of this Zellers owns virtually none of its locations (they're mostly leased); any holdings they have are Class B at best; he is therefore selling the right to takeover Zeller's leases; so far as I can tell, he hasn't sold the banner, the working business, such as it is; or even any inventory. So for the right to pay his rent.......he got $1.8 Billion (he paid $1.1B for the whole company, including The Bay and Home Outfitters just a few years ago)

Anyone want to rent pay me $200,000 for the right to rent my apartment? Just thought I'd ask.

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Wonder what they'll do with HBC points?

The HBC points program works at the Bay and Home Outfitters so people can still collect points there. You can redeem online, and gift cards work at those two stores, so why would they need to do anything with it? It can still exist, there will just be one place less to collect them.

This had to happen. Every time I walk in to a Bay store these days, I see improvements. I work near the Queen Street Bay store, and for the first time ever, I see the women in the office routinely carrying Bay shopping bags from lunchtime shopping. I never used to see that.

But I whenever I am in a Zellers store (which isn't that often, but I am occasionally near one and it's easier than going elsewhere), I don't see any real improvements. Maybe they are renovating other stores, as opposed to the ones I have been in lately, but from what I saw HBC wasn't really working to improve the chain the same way they are doing with the Bay. It's apparent now what their intent was.

It will be interesting to see what happens with the Zellers stores that Target doesn't want. Presumably, Target will take the best locations. While there might still be some desirable locations among the "leftovers" (i.e. an older Zellers too small for a modern Target store, but with a floor plate appealing to another retailer or retailers), I still wonder if the leftovers will be good enough to attract a U.S. chain that doesn't already have Canadian expansion plans in the works. For example, would J.C. Penney really expand to Canada on the basis of a group of stores on which Target had first dibs and passed?