Craig and Lee discuss the relaunch of the iconic Canadian retailer including what’s in-store, and Craig’s opinion of the success of the future of the new Zellers concept. Included is a discussion on Zellers’ new Anko line and its various categories, which has seen success at Kmart Australia where it first launched.
The Weekly podcast by Retail Insider Canada is available on Apple Podcasts, Stitcher, TuneIn, Google Play, or through our dedicated RSS feed for Overcast and other podcast players. Also check out our The Interview Series podcast where Craig interviews guests from across the Canadian retail landscape as part of the The Retail Insider Podcast Network.
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Lee Rivett 0:08
Welcome to this week’s episode of “The Weekly” by Retail Insider. I’m Lee Rivett and I’m joined with the owner and publisher of Retail Insider Media, Craig Patterson, to discuss this week’s most read articles on retail-insider.com. So thanks for joining me, Craig!
Craig Patterson 0:22
Lee Rivett 0:25
Craig, on March 22nd, you had the opportunity to head over to Scarborough Town Centre, and look at the new Zellers location that opened. You’re quite impressed so you wanted to have a podcast on that, which is very exciting, because we’re going to be getting one in downtown Vancouver as well, but it just hasn’t opened yet. So Craig, tell me about your Zellers visit.
Craig Patterson 0:46
So I wasn’t I mean, I sort of knew what to expect when we saw the Zellers because we were told what the concept was about. So just as a bit of a recap, what the Hudson’s Bay Company has done is it’s relaunched the Zellers brand. These are shopping stores within existing Hudson’s Bay department stores in Canada. Each of these shopping stores are somewhere between about eight and 10,000 square feet. So they’re about 1/10 the size of these Zellers stores that people would have known that existed up until about a decade ago in Canada.
Lee Rivett 1:15
What do they look like?
Craig Patterson 1:16
The appearance of these new Zellers 2.0 (as we’ve coined it) definitely looks like the old Zellers stores in terms of the aesthetics – with the red and the white and the branding and the logo. So it’s very much a nostalgia play that could work at least to get people in the door initially. But I can tell you a little bit about what I experienced inside the space because I was pleasantly surprised, at least with the products and what was there.
Lee Rivett 1:42
Walk us through it like you’ve got there and what happened?
Craig Patterson 1:45
So got into the Scarborough Town Centre location, it was Tuesday evening, the stores open to the public on Thursday, and had a look around and we had an opportunity to shop the store as well. So there was a little bit of a talk about what Zellers is and the product and then they basically just sent us on our way there was a DJ music and, some food, we got to try some of the food that would be in the food trucks, which are driving around Canada to these different Zellers locations.
Lee Rivett 2:10
So Vancouver hasn’t opened yet, which locations have opened for Zellers?
Craig Patterson 2:15
On Thursday, 12 of the 25 announced Zellers stores open to the public and then – well Lee, you’re in Vancouver, so you have to wait a little bit, you’re getting one in downtown Vancouver, but the remainder of those 25 initial locations will open and I was chatting with some Zellers people there and even the president of Hudson’s Bay was there, or The Bay I should say. And there are plans for more locations, nothing was confirmed in terms of the actual locations. But if this is successful, and takes off, there could be more is what the official word is, I suspect there will be a few more at least
Lee Rivett 2:44
I was very confused. When you came back from that location and was super excited about the products that were there. For me, that was a big question mark (mystery) because what was Zellers going to do to try to make it relevant and make it interesting for people to have a reason to come in. So Craig, tell us about that as your excitement was completely a surprise for me.
Craig Patterson 3:06
I had written an article already about this and done a little bit of homework around the core brand, which Hudson’s Bay is brought with Zellers into these Zellers shop-in-stores. Now this brand is called Anko which is a brand, which originated in Australia through Kmart, Australia. It’s their private label. And this brand showed tremendous success in the Australian market to the point that the company said, “Well, let’s distribute this around the world to other retailers so that they can also have this brand within their stores”. Brilliant move on their part, the first international market outside of Australia, where Anko is now being distributed, of course, is within Zeller stores here in Canada, and we’ll see more of this in some other countries. We’re saying that I read an article in the Sydney Morning Herald from the gentleman that is involved in this in Australia. And he’s saying that there’s going to be more countries with more stores having this as well.
Lee Rivett 4:01
What what did the Anko brand products look like?
Craig Patterson 4:06
So I got to actually see this Anko line in action or guy got to see the products within the Zellers stores. And I have to say, I was quite impressed actually, with what’s on offer in terms of what the goods look like. Well, I could see in terms of I think, quality, I’m not the greatest person to judge that. But the pricing was absolutely tremendous. I don’t know if the “Lowest Price is The Law”, but it certainly was not that expensive overall. And I spent money there on that evening as well.
Lee Rivett 4:33
Wow. And that’s quite a testament since you actually bought some of the product as well. But what makes it such a darling product in your thoughts?
Craig Patterson 4:39
I think the Anko line is interesting, because it’s actually, in my opinion, quite a bit better than what Zellers used to have before. In terms of I remember the old Zellers of about 10 years ago, and it had a private label line called “Truly” which was introduced in 1999. And it had other products and other categories as well and some of the quality was good I mean they had other brands that were there that you know people would would definitely want to buy. But the “Truly” line itself I don’t think was was overly innovative or even that attractive. It wasn’t something I think people aspired to get but this new Anko line from Kmart Australia, I found it to be quite urban, it’s quite modern, it’s something would actually really work in a place like downtown Toronto I think because a lot of these products – say the furniture line and whatnot – could really work for say a small apartment that person might have. The home goods are again quite modern looking. Something that would work say in an urban environment.
Lee Rivett 5:36
That’s cool and so where did the name ‘Anko’ come from?
Craig Patterson 5:39
The Anko name itself is quite interesting. So up until about 2018, Kmart Australia had a few different brands under this private label umbrella for its fashion line it had “Clothing and Co.”. So this was clothing & co. And then for home goods it had “Home and Co.”. For children’s wear and whatnot it had “Kids and Co.” and “Active and Co.” was the athletic wear by the way, the gym stuff is great. And I would say I own quite a bit of it again, what I purchased last week, but what Kmart Australia did in 2018 Was it renamed everything to simplify things to “Anko” so instead of “Clothing & Co.”, now the name is “AN” and then the “K” for Kmart (referencing the retailer which you know founded everything) then “O”. So that is where “Anko” came from. So it’s completely a derivative from Kmart Australia.
Lee Rivett 6:40
For myself I’m very impressed with what you’ve been describing. For me Zellers has products that are coming from an international success story from Kmart, as well as having a little bit of that nostalgia to pick up on. So how successful do you think this is going to end up being?
Craig Patterson 6:56
Now, I think that this sellers concept could be successful if people come back into the stores. Chatting with people from Zellers last week, they were saying that more products are coming in, I spoke to someone that does some of the buying. So this Zellers concept keeps bringing in new Anko stuff. And if Canadians want to buy it, and it’s something that’s receptive, which probably it will be, I think, I mean, I think the line is great, I’ll buy more. And I think, you know, this could be something which would really take off. I don’t know how much this is going to drive in terms of huge profits for the Hudson’s Bay Company just given that these are smaller stores, but the buzz that’s being seen here with this new Zellers concept, people are coming into the Hudson’s Bay stores…
Lee Rivett 7:36
I just want to pause on that for a moment. You were saying that one of the strategies for having the Zellers pop up within the larger Hudson Bay store was to try to draw foot traffic into the larger Hudson Bay store – to drive sales, right? So are you thinking that maybe people are going to be just coming in for the Zellers pop up and bypassing the broader Hudson Bay store (because that would be not necessarily a successful strategy then for Hudson Bay overall)?
Craig Patterson 8:03
Now, I was told I mean, I’ve had a lot of people giving me feedback already that they weren’t necessarily seeing people shopping in other parts of the Hudson’s Bay store, even though these Zellers around opening day (and a bit after) we’re very, very busy. But in theory, this could actually be something which would drive extra sales per square foot within Hudson’s Bay stores. So I really do hope this is successful. I wasn’t as optimistic before I actually saw it in terms of I thought, “Oh, Jeez. This is an effort which could potentially fail but but I’m cheerleading this one right now, because we haven’t seen a lot of brands being revived and succeeding. But in this case here, I think sort of the kitchiness of the original Zellers concept, coupled with the fact that this is actually some pretty darn good stuff. There’s some other brands in there as well, I should say, I saw some Disney Toys and some Mattel and Crayola crayons and, you know, in the kids section and whatnot. So there are a few little other brands in there, but I’m sure at least 80% of the stuff there is from this one, individual Anko line. So, you know, again, I’m cheerleading this, I hope that the Zellers concept really does take off. I’ve got some ideas on how they could revamp this and I think I want to speak to someone about it, but I won’t give away that information just yet. Because who knows, they may use it and then we’ll see.
Lee Rivett 9:12
When besides the Anko brand, is there any reason why you think shoppers may be coming into the Zellers pop up besides the nostalgia factor?
Craig Patterson 9:21
That’s a good question. Actually. I mean, I think it’s going to come down to people discovering new products because the Zellers shop-in-stores themselves don’t have the restaurant and this is something that people were definitely requesting, sadly, maybe more so than even the store itself. They almost should have started maybe with a restaurant concept and had some merch or something, but maybe that’s not the best strategy either. But nevertheless, I’m being honest about that, I think new products are going to have to come in and new locations. For this Zellers to I know for myself living in downtown Toronto, it’s quite hard for me to get to either the Scarborough Town Center, which would be the easiest in theory for me to get to on the subway, it’s kind of a soap and then an LRT trip, or something like Erin Mills Town Centre, which is really not that accessible to me without driving a car. So I think you know that downtown stores would work. So I think more locations are going to be important. This food truck situation, “Will that drive traffic to these other stores?”, in theory, probably, I mean, if people want to have that full experience, they may get some food from these trucks when they’re in the Zellers locations (outside the stores, that is, you’re not driving them through a store inside) but this may create a bit of an event atmosphere, I don’t know how often by the way food trucks are coming in, but this event atmosphere that’s going to be created when the food trucks are there could in theory, again, just bring people in for the Zeller stores. So maybe they’re going to need to have those trucks zipping around the country continuously, I don’t know. And at the prices they’re charging, which are pretty low for the food, you know that I don’t know what margins are there, it might be a loss leader, ultimately, just given the cost of goods and services, transport and labor.
Craig Patterson 11:01
But again, I think it’s going to come down to the Anko product. Are people going to be receptive? Someone like me, do I need new bedsheets? Am I going to look at the Anko line? Well, actually, probably I will. But also, I think that the online channel is going to be really important for Zellers because I know for myself, I do like the underwear line, not to give too much information. I guess it’s not really but I the next I actually want to buy more, but I’m going to do it online because the stores for me being this downtown person, they’re not as accessible. But I know what that how they look and how they fit and I’ve seen the furniture and I’ve seen the blankets and everything. So if I want more stuff from from Zellers and I definitely am considering this as a brand, the Anko brand specifically for a few different things furnishing my home here and there as I upgrade little things. We all seem to do that. Yeah, this is definitely a consideration that’ll have your I like the stuff because the prices are, I think lower than IKEA. And in on a lot on a lot of stuff. And I mean, things like essential oils, I bought this as a gift for someone, but they were $5 each and apparently they smell really nice. He was telling me so quite interesting there that that’s low, low prices for stuff that also looks nice. I mean, this is not bad looking stuff in terms of the packaging.
Craig Patterson 12:11
It’s almost a lot better than the old Zellers I would say. There’s a gentleman I forget his name. He’s a comedian, and he’s a singer. And he did a song about Zellers being better than I remember. And I kind of thought, oh, geez, because this is before I got to go visit. I’m like, Oh, come on. Really, this is a marketing play. This is just so silly, whatever. But I got into the actual Zellers. And I thought, Well, ya know, he’s right. I mean, well, the old Zellers couldn’t have been much worse. That’s the problem, I think, at least in my opinion, because the old stores have 10 years ago, they didn’t look that nice, they kind of smelled funny. You know, the product wasn’t amazing. I mean, it wasn’t a place that most people would really aspire to shop at. I hate to say that and I don’t want to sound snobbish saying that, but that is my opinion of what Zellers was. I would shop at these new stores if they were near me, or I’ll shop online for the product. So in theory, yeah, no, this is better than the old Zellers. At least for someone like myself, that’s a bit more of a modern urban dweller looking for certain products, and the great prices are always going to be a benefit as well. So this could be a slam dunk if things are executed properly and if people come back and and keep shopping.
Lee Rivett 13:15
Didn’t Anko open independent stores in western the United States? It’s great that they’re going to the wholesale kind of relationship with Zellers right now, but this is not the first time that this Australian Kmart brand has come to North America, right?
Craig Patterson 13:31
In about 2018 Kmart Australia started opening these little Anko stores in the United States. It was part of a planned rollout to bring the brand in with retail stores. So they opened up a little pop up stores and then they built a flagship store in the suburb of Lynnwood (right by the I think it’s the Alderwood Town Center shopping mall) was about 18,000 square feet. But in 2020 with the pandemic Anko closed these stores because the pandemic disrupted everything from the supply chain to people shopping, even people going out of their home. So unfortunately, this shutdown so this new newly released Anko is now a wholesale situation. So instead of taking that risk of opening all these new stores that are standalone for Ankle. Kmart Australia is wholesaling this brand to the retailer so they’re taking this risk and they’re distributing things so Anko doesn’t have to pay this rent for these stores.
Craig Patterson 14:31
I have a peek on the boxes as well. I also now have some product at home because I was able to buy it but it does say important for the Hudson’s Bay Company so these are items that are actually have been brought in. If you actually look on that was a few days ago anyways on the Zeller’s website, I was zooming in on a few of the products and it said you can see on the box there’s something about for Kmart, Australia and New Zealand and an even had something about Lynnwood, Washington. I think these are some old products and some old photos they were just putting them on and I’d have to go I can check honestly to see if they’re still there, but it doesn’t matter. It’s if that’s not what you’re seeing in the stores anyways.
Lee Rivett 15:05
Do you think there’s going to be any retailers in Canada that would be worried about how successful this Anko brand is going to be in the pop up if it takes off?
Craig Patterson 15:16
There are a few competitors out there that could be at least a little bit impacted by this new Zellers 2.0 and it’s Anko line. I’m just thinking the kitchen goods at this new seller seemed really good. There was lots of knives and forks and plates and, and all kinds of other stuff of kitchen appliances. This could certainly impact retailers like say in Ontario, I don’t think it’s something outside of Ontario. “Kitchen Stuff Plus”, kind of a discounter of kitchen goods. I don’t even shop there anymore, unfortunately, because we just have a store on Young Street and Yorkville and they shut it down. And for some reason I seem to be a bit of a physical shopper. Even though I can buy all the stuff online for some reason I still like going into the stores and even if I can buy it online, I still like to see it sometimes it which is silly. But anyways, I haven’t bought anything from “Kitchen Stuff Plus” since they closed that store, not even online or anything. But other brands – I was in a Winners store yesterday and I thought “Oh geez, there’s lots of categories and Winners”. I should say more HomeSense perhaps because this is connected to this particular Winners. It’s kind of a dual store. Lots of categories, but some of the prices at Winners were higher than the Zellers. So I thought that was kind of interesting. I mean, and with Winners. It’s kind of a crapshoot in terms of what you’re getting, right. Sometimes certain things are in stock and others aren’t. So you know, they’re bringing things in, it’s really is far more reliable than say Nordstrom Rack to get certain things but Zellers with its ankle line this is this is purpose driven in terms of a brand and categories as long as they can keep it in stock, which hopefully they can sign if they can’t because people are buying it all and at Zellers. As long as they can keep that in stock, you know, it’ll be a reliable source for people to buy things and even retailers like IKEA. You know, like he has a gigantic store and these Zellers locations are teeny-weeny tiny in comparison, but certainly there is some a bit of market share that could be taken from Ikea, a little bit, the furniture area, a bit in the kitchen area. Any retailers that say sell pet goods could be impacted by this, because there’s lots of pet stuff and it’s really cute stuff. With this, this Anko stuff is Zellers really kitschy. So you never know. I mean, again, there’s lots of pet retailers out there and the pet industry is growing quite quickly. So there’s probably room for everyone but you know, not everyone’s going to need a ton of stuff over the years for pets. So if they move to a different brand don’t shop at a certain store that is going to have an impact. And then even I’m just thinking I mean at $5 for essential oils, I mean I’m not an expert and you know, the ultimate quality, retailer like sage, natural wellness, well, they’re not selling them at that price. So and I haven’t tried the bath bombs yet from Zellers, but you know, they’ve got these bath fizzies or whatever, I think they are bath bombs, nine for $9. Well, you know, it’s nine to $12 for one at Lush Cosmetics. They’re a little bigger at lush, but, you know, the price point at Zellers was was a fraction like 15% or less of what you’d be paying at the other store. So again, I think this is a bit of a concern. If a value shoppers are going to step away from other retailers to shop at Zeller specifically. That could be an interesting situation.
Lee Rivett 18:12
Any other final thoughts before we wrap up the podcast?
Craig Patterson 18:17
So since Zellers has opened its first 12 stores on Thursday, I’ve had all kinds of people messaging me on social media and texting and people checking it out. I would say that overall, there wasn’t a lot of negative feedback. I mean, maybe there’s some analysts saying this may not go on forever, you know, they’re gonna need X Y, Z, but even some of those analysts who might be a little bit contrarian or may not, you know, always say positive things in the press. Are giving me pretty positive feedback, at least on the product itself. People seem seem to like it. And I thought that was kind of neat. So one of the things that made the Anko line through Kmart Australia popular was people posting their purchases on things like Instagram and Tik Tok. And apparently, that social media presence really bolstered the brand in that country. And we’re seeing all kinds of social media now here in Canada about Zellers and people liking the product. It’s not tied nearly in the same degree to the word Anko. itself, but it certainly is, in terms of what’s available at sellers. So again, if this excitement continues, from people that are shopping in the store, if they continue to like the product and if Zellers and the team behind it, that’s doing the marketing continues to push the messaging out and try to get people excited about this. There could be legs here in terms of this concept being successful, at least for an extended period of time. So hopefully, that time extends indefinitely, because it’s kind of neat to have something back from the past, in terms of nostalgia, and finally, I mean, I think that we’ve come out of this pandemic and I think that you know, people have lost family members. We’ve got a situation where you know, The world just seems to have changed a whole bunch. And some people are kind of looking for a few things, memories of the past and even though this new Zellers isn’t what the old one was, maybe better I wouldn’t I don’t wanna say for worse, but maybe for better. I like this one better, but it just brings back a little bit of that nostalgia and remembering that things were a little bit different a decade ago. And sometimes I’d like to remember that as well. So at the same time, we always have to look to the future.
Lee Rivett 20:28
Well, thanks for going through this article with me. Well, it’s your trip that you went all the way to Zellers for and as well as writing about it. Other than that, I’ll chat with you next week. Craig.
Craig Patterson 20:38
Thank you so much, everyone for listening. Take care and bye for now.
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