Target to enter Canada via Zeller’s deal
Minneapolis — In its first-ever expansion outside of the United States, Target Corp. on Thursday said it would acquire up to 220 Zellers discount department stores in Canada from the Hudson’s Bay Co. for $1.8 billion. The deal will allow Target to open 100 to 150 Target stores throughout Canada in 2013 and 2014.
“This transaction provides an outstanding opportunity for us to extend our Target brand, Target stores and superior shopping experience beyond the United States for the first time in our company’s history," said Gregg Steinhafel, chairman, president and CEO of Target Corp. "We believe our investment in these leases will strengthen the surrounding communities, as well as create strategic and financial value for Target stakeholders."
In a related announcement, Target said that company’s chief marketing officer, Michael Francis, will serve as the executive committee sponsor of Target’s entry into Canada.
Target will not start converting the Zellers locations until 2013. Until the new Target stores begin to open, Hudson’s Bay will sublease the stores back from Target and keep operating them as Zellers.
“This transaction provides attractive long-term value and will allow us to invest substantial capital into our department store and specialty store businesses to continue to drive growth,” said Richard A. Baker, the chief executive of NRDC Equity and the governor of Hudson’s Bay, in a statement. Hudson’s Bay and its Zeller’s subsidiary was acquired NRDC, whose holdings include Lord & Taylor, in 2008.
CCR is just the beginning, says Walgreens CEO
Chicago — Walgreens’ massive Customer Centric Retailing initiative is transforming the way the company’s stores are merchandised and designed as it rolls into an ever-larger proportion of its more than 7,600 stores across the United States. But it’s only the opening drive in a campaign to “reinvent the customer experience in our stores,” president and CEO Greg Wasson told shareholders Wednesday.
That effort to significantly upgrade customers’ shopping experience “began with CCR,” said Wasson, who dubbed it “a much-needed, low-cost refresh of the majority of our stores.” But the full impact of the transformation — which involves a tighter, faster-turning front-end product mix, improved departmental adjacencies, better signing and other changes — will go far beyond the initial improvements in store appeal, he noted.
“To date, we’ve converted or opened [more than] 2,100 stores to the CCR format, and a little [more than] 28% of the chain,” Wasson said. In those stores, he said, “we’re hitting on all four cylinders of our four-way win, which was to increase total sales, reduce our inventories, increase our store efficiencies … and, most importantly, to improve the customer experience. This time next year, we will have converted or opened approximately 5,500 [CCR] stores, which is about 73% of the chain,” Wasson added.
With that conversion well under way, “once we’ve moved beyond CCR, we have a lot of exciting opportunities we’ve been piloting and studying that we can now begin to move forward with,” Wasson said. For instance, he added, “We believe we have tremendous opportunity in the front end of our drug stores. We’re expanding our private-brand offering to meet the needs of the new consumer. We’re piloting a loyalty program in three markets across the country, and we also acquired a loyalty program from Duane Reade to help us … study and capture their learnings as we go forward.”
In addition, Wasson said, “We’re looking to offer a Duane Reade-like beauty department in many stores across our company — we’re testing those in several markets — and we’re expanding our fresh food offering.” That expansion began last summer when Walgreens rolled out several more stores with much larger selections of produce, fresh-prepared foods, dairy products and other groceries in parts of inner-city Chicago that have been called “food deserts” because they lack access to full supermarkets or other healthy-food options.
Chicago now hosts 10 Walgreens fresh-food stores, including at least one unit that reportedly has dedicated 40% of its retail area to food. “By leveraging the drug store locations we have across this country in food deserts, we can become the food oasis in those communities,” Wasson asserted. “We think there’s tremendous opportunity to do good business while we’re there.”
Target sets sights on Canada
MINNEAPOLIS -Just days after announcing 2011 U.S. expansion plans, Target announced an acquisition in Canada that will enable it to open between 100 and 150 stores during the next four years. The company announced that it hasagreed to pay C$1.825 billion to purchase from Zellers Inc., a subsidiary of the Hudson’s Bay Company, the leasehold interests in up to 220 sites currently operated by Zellers Inc. This transaction will allow Target to open its first Target stores in Canada beginning in 2013.
"This transaction provides an outstanding opportunity for us to extend our Target brand, Target stores and superior shopping experience beyond the United States for the first time in our company’s history," said Gregg Steinhafel, chairman, president and chief executive officer of Target Corporation. "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. We believe our investment in these leases will strengthen the surrounding communities as well as create strategic and financial value for Target stakeholders."
Target said it expects to open 100 to 150 Target stores throughout Canada in 2013 and 2014. The financial returns on these stores are expected to be in line with returns on new Target stores in the United States, resulting in dilution to earnings prior to store openings followed by accretion to earnings in the first full year of store operations, according to the company.
According to Target, its presence in Canada should create thousands of jobs, including several in the initial construction phase and associate positions once the stores are open. The company noted that atypical Target store in the United States employs approximately 150 to 200 team members.