The current state of retail has prompted big changes at Hudson’s Bay Company.
The retailer today announced a Transformation Plan for North America with three goals: make the company more agile, evolve its cost base and deliver a superior all-channel model. HBC said the changes are necessitated by the well-known and widespread difficulties at retail now.
The retailer anticipates the developments will result in $350 million in annual savings by the end of FY 2018, $75 million of which was announced in February. The actions necessary to realize $125 million of those savings have already been completed. The Plan will result in $95 million in one-time expenses over the next 12 months related, in part, to severance charges.
“We are reallocating resources to accelerate the opportunity we see online, as we run our brick and mortar operations more efficiently. Our team is taking the right steps to optimize our North American business and create efficiencies by leveraging the scale of our company,” Richard Baker, governor and executive chairman of HBC, said in a statement.
After six months of operational review, the company has identified key areas in which it can become reduce expenses, increase synergies and sharpen capabilities. These changes span its Canadian businesses as well as Lord & Taylor in the U.S.
The retailer is creating two different leadership teams, one focused on the Hudson’s Bay transformation in Canada and the other will focus on efficiency and digital opportunities at Lord & Taylor. As a part of this development, Alison Coville has been promoted from SVP and GMM of the department store group to president of Hudson’s Bay. Liz Rodbell will continue in the role of president of Lord & Taylor.
HBC is positioning itself to create a seamless connection between in store and online by integrating digital functions organization-wide. The company will also pool resources across IT and digital, store operations and visual merchandising, buying and planning and marketing to become more efficient and leverage scale, while maintaining the brand identities.
To do so, the digital technology team will join the company’s overall IT department to HBC Technology, which will eliminate overlap in responsibilities. Similarly, digital marketing will be folded into the company’s marketing center and it has been centralized, allowing it to function like an in-house agency. Digital operations will now be part of the logistics and supply chain group.
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To offer better in-store services and a better trained sales force, store operations will be centralized to allow best practices to be shared across stores.
HBC is also reducing employee count by 2,000, including those positions already announced in February, to produce a flatter, more nimble structure. For instance, the merchandising team has been restructured with fewer layers that have more responsibility to facilitate quicker decision making.
The company will also leverage scale to get better pricing and additional savings, which will include decreasing the number of vendors and consolidating media and supply chain purchases.
Additional leadership changes include, the promotion of Janis Leigh to chief human resources officer, the appointment of Janet Schalk to the newly created role of chief technology officer and the expansion of Ian Putnam’s role as chief corporate development officer to include chief operating officer of HBC’s joint ventures.