Is it Deja Vu all over again or just a continuation of the saga of the Hudson’s Bay Company (HBC)?
No one’s really sure. Although it certainly makes me think of the movie “Groundhog Day”: Wealthy American purchases Canadian iconic retailer and names a senior American retail executive to run the show. Repeat. Again.
It hasn’t worked before so why does anyone think it will work again?
They really should change the script.
I happen to understand that things were at least more profitable these days under the late American Jerry Zucker’s reign. But no one really knows for sure as it is a private entity. One thing is for certain, the dilemma of what to do with an out-of-date department store concept and a second fiddle of a discount chain (whose stores come in so many different shapes and sizes) is still not resolved. Everyone wants to talk about real estate values, but they only actually own one location in downtown Toronto. There may be some favourable terms negotiated on some of their leases but the landlords won’t just let them sub-lease at the drop of a hat.
The Bay department stores haven’t really changed that much. Their exclusive apparel licensing arrangement with U.S. department store giant Federated (or Macy’s I forget which) may be terminated seeing as Lord and Taylor is now stepping into HBC’s deerskin slippers. The aisles are still crowded, the merchandising is a bit boring and every other retailer, specialty and big box alike, has taken market share from them. There is no compelling reason to shop at The Bay.
Zellers is another story. Wal Mart has absolutely decimated all retailers that deemed to play even remotely in their arena. Now they are coming after another Canadian icon, in groceries this time. G-d help Loblaws.
Zellers, with about 380 doors, caters to that same audience and has been unable to gain any traction like Target has been able to glean south of the border. Their stores are still uninspiring, their mix is eclectic at best and a lot of their stores are way too large for their markets.
If anyone has a shot, I guess a real estate expert and his already burgeoning retail empire might be all that’s left to try and salvage this beast. They were quoted as saying that this is not a real estate play (although everyone who has looked at this seems to claim that’s where all the value is) and that they can probably open 12-15 Lord and Taylor stores in Canada. Where, pray tell, other than maybe 2 in Toronto, 1 in Vancouver, 1 in Calgary and 1 in Montreal (if it’s even worth it to translate everything for one store).
I certainly wish them luck but I have thought for a long time that Zellers needs extra cool factor and wow merchandising and The Bay should look at the Japanese department store model which actually rents out space in their stories high stores to the best, hippest and most productive specialty retailers and makes a very tidy profit doing so. If you aren’t productive (and we are talking close to $2000/sq.ft. minimum) they terminate your lease and replace you with someone who is more so.
Maybe that is what we should do with the new owners…they should have 12-24 months to become productive or their time in Canada should be terminated…