TORONTO, Canada - When Richard Baker, CEO of NRDC, bought The Hudson's Bay Company for a cool $8 billion last month, he announced his plans to turn Canada’s oldest retailer into an industry leader, using a similar strategy to that of US retailer Lord & Taylor. Lord & Taylor, which happens to be America’s oldest department store, was also recently acquired by NRDC. So, with two of the oldest department store chains on the continent in his portfolio, what are Baker’s grand plans?
In Canada, Baker believes that there is a gap between mass-market The Bay and luxe player Holt Renfrew. Thus, he plans to open 10 to 15 Lord & Taylor stores within existing Bay flagship stores or within HBC real estates. According to a source at HBC, large city centre The Bay flagships of 600,000 sq. ft. and up will be split into two entities, containing both The Bay and Lord & Taylor across, say, 2 floors each. NRDC will also introduce more prestigious brands to The Bay’s lineup, including those of NRDC-owned Creative Design Studios, Peter Som’s parent company.
As part of the HBC acquisition, NRDC also acquired Home Outfitters, Fields, and Zellers, a mass consumer store which had been losing ground to Wal-Mart Canada. For Zellers, Baker says he plans on improving customer service, and rolling out a 125,000 sq. ft. prototype to fight Walmart.
To make this complex strategy happen, Baker has called on some high-profile industry veterans. Jeffrey Sherman, who had been serving as President and Chief Operating Officer at Polo Retail Group, was named President and CEO of HBC. Previously, he was President and COO of Bloomingdale’s and CEO of The Limited.
Sherman himself hired Canadian Bonnie Brooks to become President and CEO of The Bay. Brooks was previously President of Lane Crawford Joyce Group in Hong Kong, where she “tripled its business in the last five years and expanded its scope beyond Hong Kong and Macau into China, Japan, Taiwan, Singapore, Malaysia, Thailand and Indonesia,” according to WWD.com.
But even with a retail dream team in place, the task ahead will not be easy.
Department stores such as Eaton’s, once Canada’s largest department store chain, have been fading from the Canadian retail landscape over the past 20 years. When the 1980’s and 1990’s gave rise to new competitors such as Winners, H&M and Zara, the once-venerable Eaton’s began to struggle, and was eventually sold to Sears Canada in 1999. The latter tried to re-launch Eaton’s as a younger, more upscale department store (not so different from the Lord&Taylor positioning being proffered by Baker) and failed. In 2002, Sears Canada finally decided to close and retire the Eaton’s name for good.
As Baker sets his sights on the Canadian market, he will have his work cut out for him. Luring customers back into the department store fold won’t be easy. But, we won’t know if his strategy is working for some time yet as significant operational changes aren’t expected at HBC before 2009.