Heather Thomson with the Edmonton Chamber of Commerce joins Alberta Primetime host Michael Higgins to discuss the future of Hudson’s Bay, after Canada’s oldest company filed for creditor protection.
This interview has been edited for clarity and length.
Michael Higgins: A court in Ontario has granted Hudson’s Bay permission to liquidate all but six of its 80 stores.
Those six are located in the Toronto and Montreal areas.
How far does that go to retaining the legacy of such an iconic company?
Heather Thomson: It will be interesting to see how the consumer is going to respond to those six remaining stores. I know that sales have increased a lot over the last few weeks, ever since this announcement around the Hudson’s Bay closing down the majority of their stores. Those sales in and of themselves, have been enough that they can actually probably save six - hoping to save a few more.
It’ll really be dependent on how the consumer continues to use those stores. The other question will be, what does Hudson’s Bay want to do with those stores? Is it going to remain the same? Is it going to be a different sort of concept? Are they wanting to resurge the brand.
It’s good news in that it’s not closing down. This is the longest brand that we have in Canada. It’s hundreds of years old. There’s so much nostalgia and tradition and legacy within this brand. So it’s good news that the brand is not disappearing completely - what it will turn into, and what it’s going to be, remains to be seen.
MH: There will now be a big sell-off of inventory as the remainder of the stores go into liquidation.
How big of a blow overall is this to the retail landscape?
HT: It’s another blow - I’ll say that.
One of the things that we have to deal with here in Canada and really in North America, is that there’s just so much square footage of retail space that we have to figure out what to do with. The model of how consumers are purchasing their goods just looks completely different.
Before, we needed to have this space on hand so we could house the product - because consumers couldn’t get something online or travel far places, so they had to have the product ready to go. Now we have this extra space.
A store like Hudson’s Bay or any department store is 160,000 square feet - whereas most retail bays now are anywhere from 800 square feet to 5000. So that whole concepts going to look different.
Retail, physical retail, is actually doing quite well. It’s just it doesn’t look great because there’s so much real estate now that is becoming vacant. What we do with that real estate is going to be really interesting, because we have a space crisis when it comes to housing and schooling and lots of other lifestyle amenities, but we have too much office space and we have too much retail space.
MH: What is the bottom line on why The Bay is up against a brick wall?
What’s the root of the company’s downfall?
HT: When you talk to the experts and you look at what happened with The Bay, it didn’t take an opportunity to invest in into where consumers are wanting spend their money now.
This is not a unique situation to The Bay. We saw this with Sears decades ago. We’re seeing this now with Macy’s, and even Nordstrom left Canada completely. So there’s a lot of different things that are coming into play, but when you actually look at how consumers want to spend their money and spend their time, it’s not a department store that hasn’t evolved in any way, shape or form for the last two decades.
I think it also the customer service wasn’t as ideal as it used to be in the 80’s and 90’s, when the store was performing really well. There’s a bunch of different things that are kind of really coming into play in terms of like what the consumer is looking for.
If you speak to different retail experts, they’re going to say that Hudson’s Bay did not invest into the customer experience to make sure they could attract the younger demographics and different demographics to ensure that they have a fair market share.
MH: There are hundreds of employees at the varied Bay locations, just here in our province alone.
How likely are they to be absorbed back into the existing retail landscape?
HT: Very likely, I think.
The labour pool in general in the retail world is pretty good. There’s different sort of opportunities for people who work at the Hudson’s Bay to find other retail jobs. Retail, just as a reminder, looks very different. It’s not necessarily a store specific job. We can look at food and beverage. We can look at different experiences. There’s a whole bunch of different things that we can look at where people who are looking at potential layoffs will have an opportunity to find other employment.
MH: There are some old, unique architectural storefronts out there – including the one on Stephen Avenue in Calgary.
What comes of those locations?
HT: It’s a great question. The Bay has so much value in the real estate alone, and that’s arguably, a lot of people say, where their main value is. We can look at other stores that the Hudson Bay has had to liquidate - even in Edmonton when they left Enterprise Square. Now the University of Alberta shares that space.
I think lots of people are going to be interested in having that space and buying that building and turning into potential residential if the floor plan allows - or potentially a private organization.
Some of the spaces, especially not attached to malls, are historic buildings. So I’m really excited to see what the plan is for those spaces, and how they’re going to be protected - and how they’re going to be potentially re-energized for the future.
MH: How would you rate hope of a Hudson’s Bay brand revival at some point in the future?
HT: I think it could be done. When you think about the brand itself, over eight million people are members of the Hudson Bay rewards. I was just looking and it’s about $58 million of unused rewards. So if you do have those - you might want to get going to that store right away to use them.
I think it’s such an iconic Canadian brand, that there’s a small window of opportunity for them to re-energize it and make it fit with consumers today. The Hudson Bay needs to understand the demographic and where the market share and where money is being spent - with younger people.
How they’re going to do that, how they’re going to connect to those newer demographics in the market will be interesting. I don’t think it’s impossible. They have a very strong case to make it work. It’ll just be interesting to see what they’re what they’re going to do. Time will tell.
Editor’s Note: The company paused its rewards program after filing for creditor protection.
