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Bad planning and the domino effect

Web posted on April 10, 2001

In My Opinion
by Ben Bennett

It has to be tough being Zellers. As the kid that is already on the block, it is easy to criticize. Zellers and Wal-Mart sell, for the most part, the same thing, but people carry on as if the American store is something special. The fact is that both offer a lot of goods for generally lower prices. They are both classified as junior department stores.

As far as I can make out, that means they don't sell furniture - although even that is changing. To say they don't sell a lot of big furniture is probably a safer statement. A regular department store, which today would be Sears, Eatons (what's left of it) and the Bay, Zellers' big brother, usually sell big furniture and larger appliances, plus the other good they all sell.

With all the controversy that the proposed Wal-Mart has caused in Guelph, there are probably still a lot of folks who don't even know that Zellers is planning a mega store on Stone Road. There is already a 80,000-square foot Zellers in the Stone Road Mall, and smaller stores in the Willow West Mall and on Eramosa Road next to Zehrs.

Zellers pretty well has the show to itself in this city, and for a long time it was the same in other cities, especially since K-Mart was swallowed up. Since Wal-Mart came to Canada, Zellers has fought it at every turn. Most of the Ontario Municipal Board (OMB) hearings against Wal-Mart have been led by Zellers, anxious to protect its turf.

Whenever Wal-Mart does open a new store, Zellers usually responds by opening a big store too. Thus, if Wal-Mart does end up in Guelph, Zellers needs to meet it head-on with an equally large store. This is why the company which owns Zellers, the Hudson Bay Company, is investing millions of dollars in legal fees and development costs so it can build a 120,000-square foot, stand-alone store up the street from the Stone Road Mall. The theory is that it will close the store in the mall and replace it with a Bay.

There hasn't been a lot said about the proposed Zellers store, just as there was little said about the proposed Canadian Tire which was to accompany it on the empty field next to the fire hall.

We've all heard how Wal-Mart will have a dramatic impact on the shopping structure of the city, including the downtown, because of its tremendous retail performance. We don't hear this about Zellers, mainly because the store's sales are not as high.

The reason Residents for Sustainable Development has been fighting both developments is not about sales it's about planning.

If Wal-Mart moved to the west end, to a legitimate retail site, there would be nothing to stop it and its sales level would be academic - but at least all the retailers would be on a level playing field.

But when you start ignoring the retail structure, there is a domino effect. We have all seen what has happened to food stores. As they get bigger, they get fewer. There is only so much retail pie to be shared.

So, if Wal-Mart comes in and/or Zellers builds a mega store on Stone Road, other stores will close. The prime candidates would be the Zellers on Eramosa and the Willow West Zellers. The company had said the "intention" would be to keep both open, but let's not kid ourselves.

Zellers wrote to city council and said if Wal-Mart comes in, at least one Zellers would close. Yet, one of the OMB retail experts said a new mega Zellers would have more impact on its sister stores than a Wal-Mart would. Either way, one or both smaller Zellers will close. What happens to the adjoining Zehrs stores if their neighbouring department store closes? How long would it be before they close and build a mega store somewhere else?

A lot of people make house-buying decisions based on where the shops are, and where the schools are.(Tell that to the school board.)

With the OMB's approval of the mega Canadian Tire for Stone Road, there is yet more competition for the shopping dollar. Other than clothing, Canadian Tire sells the same thing as Zellers and Wal-Mart.

If either of the shopping centre proposals is approved, our retail structure will be forever damaged, and traffic congestion, pollution and air quality will just get worse.

But it will be very good for Wal-mart and Zellers.
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