Hudson’s Bay opens first store outside Canada
TORONTO: Hudson’s Bay Co’s (HBC) commitment to Europe “is rock solid,” chief executive officer Gerald Storch told Reuters in an interview, ahead of the opening of the first of 10 planned name-sake department stores in the Netherlands yesterday, bucking a trend away from bricks and mortar.
The European expansion comes in the face of pressure from activist investor Jonathan Litt, who has asked HBC to consider various options in the wake of flagging sales, including going private, monetising its real estate holdings, valued at about $10 billion, and selling its European operations.
HBC’s new market launch, first announced last year, is in contrast to the strategy of some other North American department store operators.
The industry is besieged by fast-changing consumer preferences and retail trends and has seen sales deteriorate at a more rapid clip than many expected, sparking a sharp fall in share prices.
Despite the challenging market outlook, HBC is slated to open nine more stores in the Netherlands later this month, as the company forges ahead with its expansion amid shareholder calls to rethink its retail strategy.
Storch said the Dutch entry was important given the oversaturated US retail market and brings HBC’s total European retail presence to about a third of the company’s global footprint.
“We had an opportunity, that never existed, to design a department store from scratch,” Storch said. “We set out to design the department store of the future.”
The company is planning to invest €300 million (US$350 million) in its Dutch expansion.
The 183,000-square-foot (17,000-squaremetre) Amsterdam location will be the first international Hudson’s Bay store in the Canadian company’s 347-year history, and marks another link between the two countries dating back to World War II, when Canadian forces liberated the country from German occupation.
Last week, Reuters reported the Saks Fifth Avenue owner plans to review its options, including taking the company private, following pressure from Litt, who through his investment vehicle, Land & Buildings, owns about a 5% stake in HBC.
Storch declined to comment specifically on those plans but said HBC’s goals remained aligned with those of investors and that the company was always evaluating opportunities for its real estate.
“We’ve demonstrated that consistently through the actions that we’ve taken,” said Storch, but he also reiterated HBC’s commitment to its retail business.
Industry analysts say the challenging retail conditions have spurred a broader industry push to turn bricks and mortar shopping into an “experience,” incorporating concepts aimed at attracting customers to the stores in a way that online competitors can not replicate.
The Dutch stores feature special spaces to launch products and host events, “popup” sites, restaurants and interactive play areas for children.
They also offer services including personal shoppers, facial treatments, salons, and in-store “click and collect,” which allows visitors to scan what they want to buy and pick up the items when they leave the store.
“The problem isn’t department stores,” Storch said. “The problem is bad department stores.”