Zeller's New CEO Overly Ambitious

Zeller's new CEO, Mark Foote, is trying to pitch the public the idea that Zeller's is in a position to profit from the recession in the same way Walmart is, as the discount retailer in the HBC brand. If you read my post about why Canadian's can't seem to compete at the same levels of our American cousins, you would be (and should be) a bit skeptical.

While Mark has his direction and focus in the right area, "supplier relations" and "productivity" (as measured by sales per square inch) will hardly be easy challenges to surmount.

As far as supplier relations go, if Zeller's wants to compete with Walmart, they have a long way to go in terms of cut throat relationships to drastically cut prices that characterize successful discount retailers. Walmart has also had a good head start with "supplier relations" (notoriously so that they've constantly been targeted by activists for having "bullied" suppliers). But worst of all, Zeller's won't have the strategic leverage they can apply against their suppliers for better conditions as their parent company is having financial troubles of it's own. Also their distribution channels are not particularly noteworthy versus other retailers. It's hard to be the school yard bully if you're the skinny and sickly nerd.

In terms of "productivity", it isn't a cause of their woes, it's a symptom of their diluted brand equity. This is the consequence of their brand swaying back and forth and not entirely owning the discount space. Been to a Zeller's recently? In peak hours, there's no one there. Walmart's continue to be constantly packed. The Zeller's brand isn't even bringing people through the door.

Mr. Foote's "sanguine" attitude is encompassing and descriptive: Win or lose, The future looks both hopeful and bloody.