Target Versus Zellers – Location, Location, Location
Well the buzz on both sides of the border right now is the acquisition of the Canadian Zellers stores by the American Target company. While most Canadians and Americans are sitting back thinking that Target acquired Zellers due to its customer base and brand, real estate agents understand that this was only the tip of the iceberg.
In this case location location location is the prime reason for the takeover. This decision was driven more by real estate than anything else.
The vacancy rates in Canadian malls are usually low in the cities and it can be difficult finding a spot if you are a major retailer. Zellers has negotiated leases for the long-term with reasonable rates and Target can just slip into the store location, virtually unnoticed, and start running shop.
This gives a running start to Target and from a real estate perspective they couldn’t have made a better choice. This takeover is very similar to the one Wal-Mart made when it purchased the Woolco stores back in 1994.
Retailers South of the border have been looking for ways to expand into Canada but have been having difficulty finding the retail space required. The majority of Zellers stores are located in malls and the rest of the stores can be found in power centers.
Target plans on opening up to 150 new stores out of the 220 stores owned by Zellers. This is really going to spark more interest in American takeovers of Canadian companies in the near future and it will be interesting to see the reaction of Canadians, if any, to the new Target stores.
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