Essay: Hudson’s Bay Company (HBC) strategy

Known as Canada’s oldest retailer, Hudson’s Bay Company (HBC) upgraded from rural outposts to over 480 locations and nearly 66,000 associates located across Canada. From 1670 to the late 19th century, Canada’s landmark institution began as trading post for traded goods such as oil and gas. The diminishing popularity of traded goods over time forced HBC to diversify into a full-scale commercial property holding and development organization. In addition, HBC operate Saks Fifth Avenue, Lord & Taylor (U.S), and GALERIA Kaufhof (DE). Currently, HBC is struggling and unable to compete within the aggressive retail sector due to leadership changes, intense competition, a crumbling retail market, and plunging sales. Porter’s five force analysis is utilized in order to understand the forces shaping the competition HBC currently faces. These forces include new entrants, substitute products or services, industry competition, bargaining power of suppliers and bargaining power of customers.  To begin, “Big-box” stores such as Walmart, Old Navy, and Future Shop act as new entrants that affect HBC by driving consumer behaviour away from department store shopping. The consumer behaviour switch acts as the bargaining power of customers, where customers are able to influence the price by shopping habits. The bargaining power of suppliers causes HBC to compete on selection of merchandise. Despite trying to reinvent itself in 2001 with a more fashionable image by reducing the focus on steep discounts, frustrated customers that prefer substitute products forced it return to a value-based focus. Industry competition influenced HBC to remain competitive with other low-cost retailers through Designer Depot/Style Depot, which operated unsuccessfully from 2004 to 2008. The company’s strategic implication will be distinguishing its contributions from other entrants that hold power within the retail sector. This includes relations with customers and suppliers, as well as a steady flow of sales that will allow HBC to compete at a competitive pricing
2) In 2006, HBC was purchased by Jerry Zucker, a financer who wanted to revive the firm by focusing on improving operations and customer satisfaction. After his death, the company was purchased by U.S. private equity firm NRDC Equity Partners. NRDC wanted to revitalize and revive HBC by equipping stores with better brands and services. After being sold, HBC implemented a differentiation strategy to seek competitive advantage through uniqueness. In addition, HBC adopted a turnaround strategy to improve their performance and return assertively to the retail sector.  HBC dropped 60 percent of its former brands. Their sole focus was to re-attract customers, and by doing this, they drew customers back into their store. HBC relaunched “The Room”, a luxury VIP suite with high-end designer clothing, shoes and accessories such as Armani, Ungaro, Channel and many more. The $100-million deal made HBC the clothing provider for the 2006, 2008, 2010, and 2012 Olympic games. HBC became an official sponsor for the 2010 Vancouver Olympics. In order to expand their market segment, HBC sold Olympic brand merchandise. That way, fans are able to purchase Olympic merchandise. Now, HBC’s CEO Richard Baker has taken the initiative to re-invent the large retailer into Canada’s top seller of woman cloths and shoes using a more focused differentiation strategy. Currently HBC, is aiming to offer unique products to a special market segment. In January 2016, HBC announced it would acquire online flash sales site the Gilt Groupe for $250 million (U.S.). HBC spokesperson Jerry Storch, states that “The two most rapidly growing areas in retail today are Internet and off-price. We think this is a marriage made in heaven.” In the future, HBC hopes that the deal will bring in $500 million to HBC’s fiscal year. HBC announced that it would open up to 20 Hudson’s Bay and Saks Off Fifth stores in the Netherlands—the first Hudson’s Bay stores outside of Canada. Apart from differentiation strategies, HBC is also adopting an international expansion strategy to globalize their products