Only a day after reporting that Hudson Bay Company owner, Richard Baker, was in hot waters with his flailing retail purchases, The Bay announced a cut back of 1,000 jobs. This cut is part of a restructuring The Bay is undergoing, claiming it will refocus the department store. I’m not quite sure how you can offer better service if department staff are taking the axe though.

Today, the Globe and Mail reports that The Bay is relying heavily on the Vancouver 2010 Olympic Games to boost sales. The Bay is the official company  who will be dressing the Canadian Olympic team and will reveal their corporate logo for the Winter Games next week.

Exactly how patriotic will Canadians be about the Winter Games of 2010? The Bay had released official Olympic products for the Beijing Games last year, and failed to make any significant retail waves. Jeff Sherman, HBC’s CEO, acknowledged the shortcomings of last year’s fashion flop and promised to “not make those mistakes again.” They’re apparently working on “sought-after designs” that should have better retail longevity.

What HBC really hopes to accomplish is to reproduce Roots’ Olympic success. According to the Globe and Mail back in Oct:

The Olympics work had helped put Roots on the world map after its poor boy cap created a sensation – and a selling frenzy – at the 1998 Nagano Winter Games.

Since then, Roots had been the official outfitter for the U.S. Olympic team until last year when famed American designer Ralph Lauren designed the team’s jackets. The collaboration also proved fruitful as sales were still strong on the retail floor even after the Beijing Games were done.

Were HBC have made a collaboration with a Canadian fashion brands like Pink Tartan or DSquared, as Adidas made with Stella McCartney, that could help boost visibility for The Bay with their exclusive Olympic line.

Last year’s fashion flop – Who would actually wear these?

Another problem are the numerous licensees who are developing other Olympic products as listed by Vancouver Sun in February 2008. The list of products also include clothing apparel, which could place it in direct competition with The Bay’s designs. Although, Olympic Canadian fashion doesn’t really whip up my style senses into a frenzy.

With the news of the global recession, the implementation of Lord & Taylor into the Canadian market has been scraped for now. It will be a slow and painful process for Richard Baker to turn around two department store chains in 2 different countries.

Image credits: HBC, official Vancouver2010.com muk muk plush

If you’re not familiar with Lane Crawford, they are one of the most well-established department store chains in Hong Kong on par with our Canadian counterpart Holt Renfrew or Ogilvy. Under Brooks’ management, “the Lane Crawford group has 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.

Baker says that there’s a gap between The Bay and Holt Renfrew, and he wants to fill that gap, but many Globe and Mail commentators were skeptical. Raising the usually affordable Bay prices might drive consumers away even if they were offering a better selection of brands. This is especially true with the failed project of Complexe Les Ailes in downtown Montreal where they were offering high end brands with considerably high price points for shoppers. Toronto-based Fairweather Group bought Complexes Les Ailes in 2005 and the upper levels have since been turned into office space.

Bringing in a luxury player and turning The Bay into a brand that sits between The Bay (the old one) and Holt Renfrew will prove to be tricky. Here’s a pricing breakdown between the two.

Holt Renfrew: Carries ready-to-wear and some bridge collections. $200-$5000 on average.
The Bay: Carries fast fashion, local, and some bridge collections. $20-$300 on average.

A premium price point would probably be somewhere between $75-$1000, if they indeed intend to offer better brands. However, I don’t know why this hasn’t been mentioned but what about Simons? They clearly have that premium price point – offering unique different brands, established an attractive shopping experience, while also offering a chance to pick higher quality brands. The demographic is however geared towards 18-25 year olds, while The Bay is probably targeting 25-35 yr olds. If anything, the new Bay (or Lord & Taylor) should perhaps take a cue from Simon’s and just make the experience a little more fun and luxurious without alienating their intended consumers.

Some might scoff at the idea of paying more for clothes, but these are people who don’t care for quality or don’t know what quality clothing is. What with the way stores are churning out new stock every month, it’s no wonder the general public demand cheap clothing. But I really think all this fast fashion lifestyle will turn around bite them in the butt. Soon people will tire of keeping up with trends (especially as we get older) and we would eventually want something durable and trendless. Fashion designers are already working towards seasonless collections, so “trends” per se are becoming obsolete. Therefore, stores will now have to make up for their seasonless collections and improve elsewhere such as price point, quality, branding, service and consumer experience.

So the appointment of Ms. Bonnie Brooks does inspire hope for The Bay brand, or really just the department store experience as a whole. We’re in serious need of quality stores in Montreal, and despite my initial reactions of The Bay possibly losing its brand name and appeal, at least they’re making an effort in changing it for the better.

So there is a risk that in Montreal, the downtown Bay store can be on the death list and turned into a Lord & Taylor. Among the department stores left in Montreal, if The Bay goes, only Ogilvy will remain as the only original department store (previously there was Eaton’s and Simpson’s) established since the 1800′s, still standing.

Acquisitions of Canadian companies has been on the rise as of late. Limited Brands Inc, which owns Victoria’s Secret, bought out La Senza in 2006. It also owns Bath & Body Works and plans to expand 6 specialty stores this fall in Canada, don’t be surprised if they’re gonna try and buy out Canadian equivalent Fruits & Passion in the near future.

I find it a little sad that HBC didn’t make enough effort in turning this iconic department store around. And that has to take some business savvy American to come and outright buy it and have the galls to rename the store. So enjoy what you can of what’s gonna be left of The Bay as you’ll soon find it replaced by a more posh Lord & Taylor.

Image source: The Globe and Mail