With the recent release of Hudson’s Bay Company History Foundation’s narrative series, “A Country of Adventurers”, it’s hard to ignore the adventure that Hudson’s Bay is currently on. This time last year Hudson’s Bay Company’s shares were valued at $28.65 (March 9, 2015), today they hover just above $18 (March 7, 2016). This 40% drop has left Richard Baker, Governor of HBC, to reinvent the department store business model, using inspiration from HBC’s past to diversify it’s business and counter the so-called “death of department stores”.
A previous Hudson’s Bay Company blog post, “From Frumpy to Fabulous”, focused on HBC’s shift from an outdated department store to a fashion forward retailer, taking into account their rebrand in 2013. I instead will discuss HBC’s strategy to diversify their business and the use of their heritage to market their brand. Their strategy parallels their past: venturing into unchartered territories and discovering new paths to innovate their business.
Although HBC has seen a large decrease in their share price they have recorded 5% growth in same store sales in their department store business in the most recent quarter. This growth can be accredited to HBC’s strategy to turn retail brands into the best in segments evidenced by Saks Fifth Avenue, adding to the company’s portfolio by way of mergers and acquisitions, and selling portions of real estate through joint ventures. In September HBC acquired European retailer Galeria Kaufhof for $3.8 billion. In relation to this HBC recouped $3.9 billion from the acquisition of 41 Galeria properties as part of a real estate joint venture with Simon Property Group, retaining co-ownership. More recently HBC has strengthened their e-commerce business by purchasing Gilt, a membership based e-commerce retailer with over 9 million members. This acquisition has added a new dimension to HBC’s business, allowing them to sell to members through Gilt’s mobile platform. Mobile shopping is becoming a trend among e-commerce customers who are using their phones more often then their computers to buy online. All of which demonstrates that the Hudson’s Bay Company has not followed traditional department store strategies of focusing on high volume and breadth and depth, and instead have innovated to not only acquire other banner retailers separate from the HBC brand but also engage in global real estate ventures and e-commerce expansion. Providing more convenience to their retail shoppers through omnichannel retailing and staying true to their retail value proposition of being best in their differing banner segments. This has currently led them to post better numbers than any other retailer according to the Globe and Mail.
The majority of Canadians are first familiarized with the Hudson’s Bay Company during school when Canadian history is taught, much of this history can be attested to HBC and their network of explorers and trading posts. This is where my experience with the Hudson’s Bay Company began, and soon developed into me becoming an avid shopper at their many locations; finding my favourite brands, including Ralph Lauren, Strellson, and Ted Baker, all in one place. Many people do not directly associate HBC’s heritage with Hudson’s Bay as a retailer. It is this Canadian story that Richard Baker, an American, realized was the strength of the HBC brand. This soon developed into recent commercials and advertising spots called “A Country of Adventurers”, highlighting HBC’s beginnings before Canada was even a country and the role that they played in moulding it. Present day adventurers such as Rick Hansen and Les Stroud narrate HBC’s first explorers including David Thompson, a mapmaker for HBC, and Dr. John Rae, a HBC Northwest Passage explorer, respectively. Both of their journeys capture the essence of the HBC brand and the spirit of Canadians that comes from our heritage as adventurers. This advertising plays to our system 1 mode of information processing being emotional by telling the story of HBC to gain awareness and draw Canadians to be a part of the HBC story by shopping with them. This is something that HBC has not only used to market themselves and add to their brand equity but have embodied in their strategy: discovering new opportunities to innovate their business through acquisitions to expand internationally and online through e-commerce.
It is safe to say that the Hudson’s Bay Company is staying true to their past, exploring the unknown and finding new ways to stay relevant, whether in the fur trade or the retail trade.
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