Zellers in. Towers out.
Source for this material is the HBC Annual Report for 1991.
Towers re-launch a big success!
It was a formidable task; to transform 47 active Towers/Bonimart
department stores in Ontario, Quebec and the Maritimes into fully-operational Zellers stores within 11 weeks without business interruption.
When Zellers purchased Towers Department Stores Inc. from the Oshawa Group Inc. in November 1990, it knew it had acquired the best possible opportunity to accelerate its growth in eastern Canada.
The purchase boosted Zellers total square footage by 30% and would increase its DSS market share by a full four percentage points if it could retain its new Towers customers.
Towers stores were, on average, about 20% larger than Zellers stores; only about 30% of Towers merchandise was the same as, or similar to that, of Zellers; Towers enjoyed a solid franchise with its customers.
But Zellers knew that it could offer Towers shoppers lower prices, especially during promotional events, on a similar assortment of merchandise. In addition, it believed that the introduction of the Zellers credit card together with Club Z would attract and build customer loyalty.
Zellers established a task force, led by John Urie, Executive Vice President, which included Dave Owen, Vice President Stores and Mike Martin, Vice President and Controller.
The first task was to identify and eliminate all duplicate functions within the two organizations. More than 400 positions were eliminated as major Towers operations, including its head office and buying office, were closed. All displaced executives and staff members received salary continuance related to length of service and relocation counselling.
The second task was to eliminate, as stocks were sold, all merchandise in Towers stores not also carried by Zellers and to assign an appropriate Zellers assortment to each acquired store. With increased buying power, the Company was also able to negotiate better terms with its suppliers, increase advertising penetration and reduce costs as a percentage of sales.
New layouts for the Towers stores and leasehold improvements totalling some 540 million were planned. Changes and improvements included new fixturing and 119 exterior neon Zellers signs.
By the end of January 1991 all Towers systems had been replaced by Zellers systems and by February all Towers merchandise had been replaced by Zellers offerings and Zellers and Towers advertising was merged as both companies began to promote the same items at the same prices.
Between February and the grand opening in mid-April, Zellers distributed 11 "side-by-side" Towers/Bonimart circulars.
Customer response was positive and although in-store renovations were in progress, customers continued to shop.
Finally, on April 15 the sign covers and banners were removed and 47 new Zellers stores moved the Company significantly closer to its goal of becoming the largest retailer in Canada.
Multimedia promotion, including a special grand opening circular, newspaper, radio and television advertising, was aimed at building store traffic while in-store excitement was created with giveaways, contests, the Club Z launch and Zeddy Bear for the most comprehensive campaign by Zellers since the launch of Club Z in 1986.
Increasing Zellers credit card penetration was a major undertaking. With no existing credit base to leverage, Zellers employed telemarketing, in-store solicitation, direct mail and staff in an aggressive marketing campaign that resulted in more than 500,000 new Zellers accounts.
Best of all, the whole exercise was successful despite the continuing economic recession.
Sales of the former Towers stores were up in 1991 after adjusting for FST.
Even more encouraging, operating profit of the 47 stores was ahead of the prior year by a substantial amount.
The integration of Towers management and staff strengthened Zellers greatly and has moved the Company closer to maximum market penetration. It has also reinforced the confidence of management to pursue other greater opportunities in the future.
Zellers - the new format featuring
The formidable task complete, employees are ready to welcome customers at a relaunched Zellers in Ontario.
Lawrence and Midland, Toronto.
Lawrence and Midland, Toronto.
Thank You For Shopping At towers. Bye.