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HBC CEO Reveals Hudson’s Bay’s Struggles and Strategy at Saks

Hudson’s Bay Co. CEO Helen Foulkes remained mum on the very real possibility of a Barneys New York reincarnation inside Saks Fifth Avenue stores, maintaining that any plans relating to the bankrupt luxury chain have little impact on HBC’s strategy to elevate its retail game with a focus on making the most of its real estate footprint.

Now that HBC has simplified its overall business—selling off the European joint ventures and awaiting the closure Lord & Taylor‘s sale to Le Tote—Foulkes said the company is “in a position where now we can really focus on Saks and Hudson’s Bay, the real crown jewels of our business.”

HBC owns “a lot of very valuable real estate,” Foulkes said Tuesday at the WWD Apparel + Retail CEO Summit, but the real challenge ahead lies in squeezing the value out of the company’s remaining physical footprint.

The Canada-based department store company has forged a board-approved deal to go private, though a majority of the minority shareholders still need to greenlight the transaction. on Thursday, minority shareholder Catalyst Capital Group and others representing 28.24 percent of HBC’s total outstanding common shares said they intend to vote against the transaction.

Hudson’s Bay

More than half (53 percent) of Canadians live within 10 miles of a Hudson’s Bay store, Foulkes said, describing the brand as beloved by America’s northern neighbors. HBC has managed to foster such loyalty through its community connections, sponsoring the Canadian Olympics team, for example.

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What’s most exciting for Foulkes is Hudson’s Bay’s status as “the only major department store in Canada,” a far cry from the U.S. landscape where there’s “massive competition and people are eating each other up in the center. In Canada, we’re it, and people want us to win.”

While the kids and the home categories have been performing well, women’s and men’s apparel continue to struggle.

Foulkes said Hudson’s Bay added 100 brands and got rid of 300, introducing selections from popular labels like Anthropologie, L.L. Bean and Mango to enliven the assortment with “new, fresh energy” while eliminating what’s “old and tired.”

Hudson’s Bay had made the mistake of not investing in the business and bringing in engaging new product, which was compounded by the success of the stores as Sears Canada was closing down. As Hudson’s Bay gained new customers previously loyal to Sears, it also “started buying more broadly for that Sears customer.”

That strategy brought in merchandise Foulkes described as a down-market departure from what customers were used to seeing at Hudson’s Bay stores.

Saks Fifth Avenue

Saks, however, had its own problems, Foulkes said: the store had become safe and predictable, tantamount to treason in the world of luxury fashion. To right the ship, HBC  spent the past few years revamping the store and updating the merchandise with a more fashion-forward focus and smarter edits, both of which have allowed the company to win share in the marketplace, Foulkes said.

Foulkes doesn’t seem too concerned by the new kids on the block competing with Saks in New York City: Neiman Marcus’ sprawling store at Hudson Yards and the brand-new Nordstrom women’s flagship that opened last week. Though Nordstrom “looks great,” Saks also serves “a different customer,” said Foulkes, who hasn’t seen much of a change since Neiman’s arrival. And bankrupt Barneys exemplifies the turbulence and turmoil in retail today, she said.

Keeping tabs on the competition provides opportunities to learn and grow, although right now Foulkes said she’s “feeling really good about where we are.”

But “feeling good” doesn’t mean HBC is sitting pretty. Foulkes said Saks will renew its focus on digital and personalization. Over the past few years, the luxury retailer has doubled the number of stylists in stores, many of whom sell more than $1 million per year.

“These are people who really know their customer,” Foulkes said.

HBC takes a broad view of digital’s definition and applications. “Digital just doesn’t mean e-commerce,” Foulkes said. Data and digital tools can enhance stylists’ expertise, helping them to close more customer sales.

On the personalization front, Foulkes sees Instagram as an opportunity to increase brand awareness and connect with customers but is grappling with how to leverage customers’ Instagram postings as if they were stylists, which could buoy Saks’ business.

The typical Saks customer spends $25,000 in stores, said Foulkes, who sees a significant opportunity to court lower-spending shoppers with a similar high-touch experience that consumers find very attractive today. But the challenge, she said, is figuring out how to “create that in a environment that’s digital.”