Does Hudson’s Bay liquidation signal the end of an era for department stores?

The Hudson's Bay Company, an organization older than Canada itself, is liquidating its full operations. Mason DePatie reports.

As Hudson’s Bay prepares to liquidate all stores, there’s one underlying question that keeps popping up among industry experts: is this the end of department stores?

One retail analyst believes that we could be looking at a day when all department stores cease to exist.

Doug Stephens, a retail industry futurist and an author, said in an interview with CTV News Channel on Sunday that department stores are finding themselves squeezed between three things: online retailers, malls and the mid-tier of market that is the stores’ target audience.

“It’s that mid-level of retail that used to appeal to a robust middle class. But as the economy polarizes and income and wealth polarize, so too has that middle ground contracted,” Stephens said. “Department stores find themselves very much in that sort of widening chasm in the middle.”

In recent years, multiple different retailers operating in Canada have shut their department stores including Nordstrom, Sears, Target, Sam’s Club, Bed Bath & Beyond, Zellers, Peavey Mart and Express.

Due to the challenges faced by department stores, starting with shift in consumer behaviour to online retailers, Stephens says they are left struggling with relevance and profitability, according to Stephens.

“The writing is certainly on the wall,” he said. “This is not new writing on the wall. We’ve seen the same thing play out with Sears.”

Sears Canada closed all stores in 2018 after operating in the country for more than 65 years.

The liquidation sales began with 130 stores in Canada by the end of 2017, followed by the shuttering of the remaining 37 locations the next year.

According to a report from the U.K.-based Kadence International, the two factors that made department stores successful are now the reason for their downfall.

“The rise of e-commerce has fundamentally changed consumer behaviour, offering an unprecedented level of convenience and choice,” the report said.

According to Statista, global e-commerce sales reached a staggering US$5.8 trillion in 2023, more than almost US$1 trillion from the previous year.

The report points out that this growth comes at the expense of physical, large department stores that struggle to compete with online shopping.

However, Liza Amlani, retail analyst and the founder of Retail Strategy Group, believes that department stores can survive if they adapt and evolve as their consumers evolve.

“Shoppers have changed (their) habits. We know spending habits and how they shop has changed, but the fact is, the Bay did not keep up with the customer,” Amlani told CTV News Channel in an interview on Sunday.

“That was a direct result of not taking care of their stores, not investing in the right sales associates, (and) training for those sales associates.”

According to Amlani, despite having dedicated employees, the lack of investment has deterred the chain from meeting customer expectations.

The liquidation plan at Hudson’s Bay could begin as early as Tuesday and last for around 12 weeks, The Canadian Press reported.

Lawyers for the retail chain said on Monday the liquidation would span all 96 stores including Saks Fifth Avenue stores and Saks Off 5th stores, if they get the judge’s approval.

Hudson’s Bay will stop accepting gift cards after April 6 and has paused the loyalty program, with more than eight million Canadians holding around C$58 million in unused points.

With files from The Canadian Press