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Hudson’s Bay Splits E-Commerce From Stores

Hudson’s Bay Company (HBC) is splitting its Hudson’s Bay retail business into two separate, distinct entities, mirroring the decision to split its Saks Fifth Avenue operation earlier in 2021.

As part of the Canadian department store’s digital transformation efforts, Hudson’s Bay is officially splitting the e-commerce and store operations in an effort to grow the businesses and give dedicated leadership for each.

HBC indicates that the businesses will still work closely together as they make strategic investments in their respective growth plans. The company believes the move will benefit customers, elevating their overall experience with services enhancements, whether they shop in stores or online.

Going forward, the e-commerce business will operate as “The Bay” and the 86-store fleet will operate as Hudson’s Bay. The Bay will still be responsible for the brand direction, marketing, buying, planning and technology departments for both businesses.

Returns, exchanges, Hudson’s Bay Rewards and Hudson’s Bay credit cards will continue to be accepted both online and in stores, the company said.

Iain Nairn will lead the e-commerce business as president and CEO, and Wayne Drummond has been appointed president of the stores business.

“Establishing e-commerce and stores as distinct businesses is a pivotal next step in the future of Hudson’s Bay. With the launch of Marketplace on earlier this year, Hudson’s Bay set in motion a rapid expansion of its e-commerce business to gain significant market share and become the country’s largest premium hybrid online shopping experience,” Richard Baker, HBC’s governor, executive chairman and CEO, said in a statement. “To date, digital performance and onboarding of new sellers has dramatically exceeded expectations. Furthermore, this move enables each team to make unencumbered strategic investments into their respective businesses to deliver an incomparable customer experience for Canadians.”

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Since Marketplace launched in April, The Bay has introduced more than 1,500 new or expanded brands and more than 25,000 new products through the new Marketplace Technology platform. Recently, the department store added Forever 21 products into the marketplace in an exclusive partnership as the 351-year-old retailer aims to attract younger audiences across the new platform.

HBC says the Marketplace is currently the sixth largest e-commerce business in Canada.

“Hudson’s Bay is undoubtedly one of the most iconic retail brands in the world, and has proven itself incredibly nimble and responsive as consumer behavior evolves,” Nairn said. “The digital-first transformation of The Bay takes us to the next level, with significant focus on technology investment and innovation, including the creation of Technology Hubs in both Toronto and Seattle, increased fulfillment capabilities, expanded marketing and extended vendor partnerships for a highly-curated assortment.”

In March, the retailer split Saks Fifth Avenue into two entities: SFA, the entity that operates Saks Fifth Avenue’s physical locations, and O5, the operating company for the online business.

Saks’ split-up appears to have set a precedent for how HBC plans to attract investment for Hudson’s Bay. As part of the Saks e-commerce spinoff, private equity firm Insight Partners poured $500 million in the company, valuing it at $2 billion. Insight Partners led a $200 million investment in the store operations.

The transformation of Hudson’s Bay isn’t limited to its business operations, but its real estate. In April, HBC announced it was renovating its flagship store in Montreal, adding aspects such as showrooms and concierge services “that reflect the modern lifestyles of our customers and the vibrancy of Downtown Montreal,” according to Nairn.

The mixed-use real estate project also was slated to include the construction of a 25-story office tower of approximately 1 million square feet, but the city’s public consultation office requested the height to be scaled back. Construction on the project is expected to be underway by 2023, with its completion targeted for 2027.

Last month, HBC revealed that it is exploring options for a former Hudson’s Bay store in Winnipeg that closed in February 2021, and has received interest from a number of stakeholders about the location’s future use.

The HBC footprint has dwindled considerably in recent years, due in part to the downfall, bankruptcy and ultimate liquidation of the Lord & Taylor business after nearly two centuries in operation. At the time of its liquidation, Lord & Taylor operated 38 stores in the U.S. and Canada. Although HBC didn’t technically own Lord & Taylor upon its liquidation, since it sold the business to Le Tote in 2019, the department store still took responsibility for the real estate’s rent obligations as part of the deal.