Zellers is trying to cast off its discount-store label with its relaunch as the ‘new Zellers’, a mass-merchandiser with a new look, new brands and renewed commitment to low prices.

This new positioning comes at a time when Sears and Zellers’ parent Hudson’s Bay Company (hbc) are focusing on core categories and spinning off specialty stores devoted to home furnishings and fashion – leaving the field open for Zellers to take on the mass-merchandiser role with a full range of department store and household items, albeit at lower prices.

It also unveiled a major refurbishing and redesign of its stores following the integration of the Kmart properties purchased by parent company Hudson’s Bay Company in February.

Two of the smaller Kmart locations that didn’t fit the regular Zellers mold were the impetus for Zellers’ launch of a new large-format discount chain called Best Value.

The first two have opened in the Greater Toronto Area and five more are expected by Oct. 1.

Along with the new Zellers look, there are also new brands – big names like Martha Stewart Everyday bed and bath furnishings, a line introduced this spring, and Cherokee, a line of affordable, casual fashion for men, women and children that is a big seller in the u.s.

Peter Housley, vice-president of marketing for Zellers, says there’s lots more to come.

‘In the spring, we’ll be launching Gloria Vanderbilt apparel, which will be a little dressier than the casual Cherokee brand.

‘We’re also developing some other national brand exclusives. We definitely want to have the brands people want – at fiercely competitive prices.

‘We also believe we’re able to differentiate ourselves from Wal-Mart by giving our customers more of a fashionable point of view.’

But Zellers isn’t relying only on fashion to fight Wal-Mart. Even though ‘The Lowest Price is the Law’ is no longer being used as Zellers’ advertising tag line, Housley says it’s still the chain’s pricing policy.

‘If anyone thinks we’re walking away from pricing competitiveness, they’re completely mistaken.

‘In the ’90s, the customer is now trained to pay less, expect more, [and] get more quality and more fashion. We believe we are stepping up to that big time.’

Maureen Atkinson, senior partner at retail and marketing consultancy John C. Williams of Toronto, says it’s a good time for Zellers to be looking for some differentiation because although it’s doing extremely well, the company’s going to need every advantage in the future when things aren’t so healthy.

‘Zellers has been too successful for too long to abandon the price niche they have.

‘What Zellers is doing is trying to get away from the price emphasis they’ve had, but they’re not going to change the price point they sell at. They can’t.

‘It’s a strategy of trying to differentiate themselves in the low end rather than trying to get out of the low end.’

Atkinson says Zellers is taking a page from Target’s book in the u.s. Up against Wal-Mart, the Target discount chain has also been very successful by positioning itself as having a more fashionable orientation to its merchandise offering and being a little more classy.

Coincidentally – or maybe not – the Cherokee brand, while exclusive to Zellers in Canada, is only found in Target stores in the u.s.

Wal-Mart Canada is continuing to keep its eye on the everyday-low-price ball, although it has recently introduced a new slogan to reflect this commitment.

The line it has been using since 1996, ‘Better Every Day Low Prices’, has been changed to ‘We Sell For Less Every Day.’

Signage and other in-store material in its 145 stores, as well as advertising, will reflect the new theme.

Zellers is not being shy in telling consumers about its new positioning. It’s launched glitzy new advertising from Ogilvy & Mather of Toronto that really lets the creative teams under Steve Landsberg strut their stuff.

Customers will also be pulled into Zellers 350 stores by one of the biggest contest giveaways in Canadian history – The Zellers ‘A Van Would Be Good’ Sweepstakes.

Zellers will be giving away 25 Chrysler minivans a week for five weeks and all customers have to do to enter is use their Club Z loyalty card when they make a purchase.

Television advertising will be heavy between now and Christmas with a few of the 10 spots planned for fall already on air and planning underway for the holiday season.

In addition to television and the nine million flyers it drops each week, Zellers has added billboards to the mix – 442 of them across Canada posted with one of three executions for Cherokee brand, as well as one superboard in Toronto for Martha Stewart Everyday.

Zeddy Bear is absent from the television campaign, although a few other celebrities show up – Ivana Trump and Eric Braeden (Victor Newman on the daytime soap, The Young and the Restless).

The whole new Zellers offering is being launched with ‘Showtime’, a 60-second spot featuring sales associates dancing in the aisles as they prepare for the store opening and the inevitable onslaught of customers.

There is no tag line replacing, ‘The Lowest Price Is The Law.’ Instead, Housley has chosen to brand Zellers and have Zellers as the hero in all the spots.

‘One of my fears about Zellers is that because we do $4 billion in sales and have such a big customer base, that people are overly familiar with the company.

‘We’re trying to say we’re a new Zellers and there’s a lot of new things for you here.

‘That’s why the advertising takes a very fresh and different approach and why I have elected not to keep the tag line.’