Introduction

This report aims to give a brief introduction, specifically Hudson’s Bay, by briefly

looking into industry, competition and strategy accordingly. Our goal is to

demonstrate a basic approach to case study instead of real-world analysis, so the

statistics and references used in this report might be inaccurate.

Industry

Originated in the 19th century, department store has been a major business form in

urban area and an entertainment for middle class people since. Different countries

have developed various ways of running department stores and built their own

famous brands. After almost two centuries of operation, however, giants in the

business are encountering new difficulties, key factors like digital commerce,

location, target and branding are putting more stress on the competition. Hudson’s

Bay, or previously referred as the Bay, Canadian’s iconic and most time- honored

department store, is also challenged by domestic and overseas competitors.

HBC (the Hudson’s Bay Company) was founded on May 6 th, 1670 in Britain, and

expanded its business to Canada in the late 18 th century, primarily focused on fur

trading and stepped into retail later on. Now HBC runs department stores through

Canada, Germany, Belgium and US, owns a serious of brands including Galeria

Kaufhof, Gilt, Hudson's Bay, Home Outfitters, Lord & Taylor, Saks Fifth Avenue and
Saks Fifth Avenue OFF 5TH, whereas Hudson’s Bay is the oldest one.

Competition

The department store Hudson’s Bay is facing several challenges, in the next part four

major factors are demonstrated, they are location, target market, brand positioning

and digital commerce investment. Among its many competitors, Nordstrom serves

as a contrast.

Location

Due to its long history, Hudson’ Bay had occupancies in Canadian largest provinces

including Ontario (35), British Columbia (12), Alberta (14) and Quebec (15), covering

major areas across Canada. More than 90 percent of the stores follow “store in

store” pattern, sharing prime locations with other large scale shopping centers or

shopping malls, while the rest are located downtown near CBD or scenic spots like

Banff National Park.

Hudson’s Bay likely benefited from the location strategy. First, brands are slightly
differed in terms of geographic and customer segments. Second, the cooperation with
other large shopping centers and complementary stores make the Hudson’s Bay a
compelling shopping destination. Compared with Hudson’s Bay, the competitor,
Nordstrom, only opened four stores in Toronto, Vancouver, Ottawa and Calgary
separately and planning four new ones in Toronto and another one in Calgary. As is
mentioned, Hudson’s Bay spread more widely all over the country, which is an
advantage in market while a short slab in finance. In the depression period, the scale
in some places like Alberta is considerably to be cut down in order to save budget.
Target market
According to a CBRE report, among 35 million Canadian people, 68% falls into the

bracket with an income between $150,000 to $249,000, while the remaining

32% have an income over $ 250,000. This most wealthy group of people have

become the target audience of every high-end retail, Hudson’s Bay too fall in the line.

But it seems not easy for Hudson’s Bay to face several powerful components such as

Saks 5th Avenue and Nordstrom at the same time.

Brand positioning

Hudson’s Bay operates as a full-line department store, providing merchandise from

outfit to home appliance. Brands including Tommy Hilfiger, Calvin Klein, Ralph

Lauren, Guess, Nike, Adidas and many more can be found in Hudson’s Bay. Although

needed goods can be found in Hudson’s Bay, the upper-end sales is not strong

enough. On the Contrary, Nordstrom features on world’s first and second line luxury

brands such as Luis Vuitton, Prada, Burberry, Celine, Saint Laurent, Valentino, Chloe,

etc. Besides, Nordstrom also introduced large number of stylish brands like

Alexander Wang, Dolce&Gabbana, Kenzo, Moschino and so on. Those are fascinated

by fashion icons and welcomed by the market.

E-commerce investment

Online shopping has been the trend for many years, Hudson’s Bay also intended to

make a profit through this channel. By continuously investing in digital commerce,

the company enjoyed a growth in its online store. From 2012 to 2015, the

investment in digital commerce was substantial ($46 million in 2015, $26 million in

2014). This investment led to an increase in sales. E.g. The digital sales growth was

66% during 2013-2014 (calculated in DSG as a whole).

However, Nordstrom is much more aggressive on e-commerce where they spent

$750 million in 2014, and plans to spend $ 1.2 billion in 2015. Compared in this way

Hudson’s Bay is no match with Nordstrom.

Strategy

1. The current location strategy for Hudson’s Bay has its pros and cons. For the

opposite side, locations of different brands are diverse in terms of geography and

customer segment, combined with other large shopping center and complementary

stores make the Hudson’s Bay a compelling shopping destination. But in the

depression period, the scale in some places like Alberta is considerably to be cut

down in order to save budget.

2. “There are not enough high-end consumers (in Canada)” (Hasen, 2014). Hudson’s

Bay may have to look into the future, keeping and leading the market in a long run.

Bring on the completion with Nordstrom and more retailers, maintain the market

ecology, could bring more attention to Hudson’s Bay. Meanwhile, the customer can

be led to buy, and the major customers of luxury market is getting younger, these

people are happy to spend on luxury items than before.

3. To fill the gap of Luxury Brand, Hudson’s Bay incorporated with Saks Fifth Avenue

(one of the world’s significant luxury store of America) in 2013. To differ the

assortment in the industry, Hudson Bay focus on acquiring brand components like

Private Brands, Captive Brands, National Brand Exclusives, National Brands. Now

Hudson’s Bay enriched its product brand from outfit, home appliances to luxury

goods.

4. Developing their own website is definitely one approach, but a more efficient way

has proven practical in China. With the help of influential e-commerce plat form like

Amazon, eBay and even Taobao in China, a department store can broad its sales
channel.

Conclusion

Unlike its new coming competitors, open up new stores is not a smart option for

Hudson’s Bay, but improve profitability is practicable. Better brands, precise

positioning, better service, cooperate with larger platform will be possible options

for this North America’s oldest company to fight its way through in the coming

future.