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Hudson’s Bay New Move Is Another Painful Split

By News Creatives Authors , in Business , at August 13, 2021

Richard Baker and his Hudson’s Bay Company continue to show they know how to run a business…it just may not be the retail business.

With the announcement this week that HBC would split its physical store operations from its e-commerce side — following the lead of sister company Saks Fifth Avenue — the parent company continues to focus on maximizing the value of its stock price while minimizing the effectiveness of its retailing business.

The Hudson’s Bay split will play along the same lines as what the company did with Saks: separate corporate entities but at least theoretically continued coordination of the two sides of the business when it comes to merchandising and customer service.

“Establishing e-commerce and stores as distinct businesses is a pivotal next step in the future of Hudson’s Bay,” Baker, officially HBC governor, executive chairman and CEO, said. “This move enables each team to make unencumbered strategic investments into their respective businesses to deliver an incomparable customer experience for Canadians.”

It may indeed be an incomparable customer experience but that doesn’t necessarily mean it’s a good one. Nearly every other major retailing company in North America has been working hard to integrate its in-store and online sides to make the shopping process easier, both for customers and their own employees. Omnichannel, format neutral, platform agnostic: whatever you want to call it, the ability to service consumers seamlessly has become perhaps the defining characteristic of a successful retailer right now.

HBC seems to believe otherwise. Besides the SFA split and now The Bay move it is also doing the same deal with its off-price Saks Off Fifth brand.

And taking steps to change the company doesn’t stop here. It just announced it will set up WeWork stations inside former Lord & Taylor store locations as a way to utilize that now-empty space. In doing so it is not alone in trying to repurpose excess store space but one could question whether offering office space in what is one of the worst commercial real estate markets in recent U.S. history is the best use of that space. Other property owners who are converting dead retail space into residential, hospitality or health services uses may be on a better track for success.

Here’s the thing: HBC isn’t wrong trying to make its company more valuable and boost its share price. Those are good things. But nothing it is doing is in support of its core business, which is retailing. Splitting up unified brands into separate operating units and repurposing real estate may help the balance sheet but where are the initiatives to build a better retailer? The retailing industry has a long list of companies and the executives running them that have gone this route before, focused on assets and not merchandising. It stretches from the Bob Campeau-era at Federated to the ongoing tragic deconstruction of Sears and Kmart by Eddie Lampert. It’s hard to believe Richard Baker isn’t a candidate to join them.

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