With the department store sector in decline, HBC continues to find ways to reimagine their retail space to connect with consumers.

When Sears Canada announced it was closing all of its stores in 2017, Hudson’s Bay Co. saw an opportunity: HBC’s Canadian department store chain would swoop in and snatch Sears’s customers. The plan worked at first. But then the Bay — as the Canadian division is popularly known — started losing fashionistas in cities like Montreal and Toronto. HBC Chief Executive Officer Helena Foulkes says the strategy was ill-considered.

Foulkes, recruited last year from CVS Health Corp. to help turn around Hudson’s Bay, has since rectified the problem. She has also been closing stores and selling assets to put the company on more solid financial footing. Now she can focus on the two remaining “crown jewels” in her portfolio: Saks Fifth Avenue and the Bay.

Luxury-focused Saks has been the star of late, selling more at full price and connecting online shoppers to store sales staff for advice. The Bay, which gave the company its name, is having a harder time as a mid-range department store.

And while Foulkes is correcting merchandising mistakes, improving service and making the e-commerce experience smoother, experts say the Bay has deeper issues. With millennial shoppers keener to buy online or directly from brands, the retailer has yet to offer something they can’t find somewhere else and risks drifting into irrelevance.

“Overall the department-store sector is in decline and when you look at the Bay there isn’t a lot in its current form that really differentiates it,” says Bruce Winder, co-founder & partner at the Retail Advisors Network in Toronto.

For much of the 20th century, Canadians had plenty of reasons to shop at the Bay, a storied company whose 349-year history is deeply entwined with that of the nation. The department store’s epic beginnings as a fur trader founded by two French adventurers and their influential British backers have inspired Hollywood movies, including the 1941 historical drama “Hudson’s Bay.”

The company’s subsequent transformation into a full-fledged merchant paralleled the birth of Western cities like Winnipeg and Edmonton. The original stores, situated on fashionable downtown avenues, were imposing temples to consumption. And its coast-to-coast presence was built buying other household names in retail.

CEO Foulkes believes the Bay retains much of its cachet. “There’s definitely not a brand in the United States that has the connection that the Bay does with its customers,” she says. That legacy comes at a cost, including 15.7 million square feet of physical space to maintain. With cash short, the company is renovating its urban, flagship stores.

The Bay must also appeal to younger shoppers. A decade ago, it dusted off its image under then president Bonnie Brooks — now CEO of women retailer Chico’s FAS Inc. — who overhauled women’s apparel and accessories to cater to fashionistas.

While that gave the company focus, simply selling products no longer suffices in an age where brands develop a direct relationship with customers. The Bay could carve out a new role, says David Zietsma, a senior vice president at Toronto-based consultancy Jackman Reinvents, by helping clients discover and learn about brands.

The Bay has another problem, according to Robert Soroka, a business professor at Concordia University in Montreal. While it has positioned itself as a fashion house of sorts, the retailer constantly advertises discounts and promotions, sending a muddled message to customers about what kind of retailer it exactly is. Selling cheaper products to appeal to Sears shoppers confused shoppers even more.

The company has cut out 300 home and apparel brands and added 100 new ones. It has been experimenting with pop-ups, including with FAO Schwarz last holiday season. And two floors of the Bay’s flagship store in Toronto will be converted into WeWork co-working space, bringing more millennials through the doors.

Retail Advisors Network’s Winder has a more drastic suggestion: Draw on the Bay’s history and go full Canadiana.

While the Bay already carries a selection of signature heritage products, such as a wool point blanket first sold in the late 1700s, he says the chain could build stores around such merchandise. “It has huge history and it has a huge pedigree and a story to tell,” he says. “Shrink it and make it more profitable, redefine it, and then start to grow it.”

Source:  The Star