Executive Summary

Hudson’s Bay Company (HBC) is a Canadian retail business group whose roots trace back to
1670, when it was incorporated to manage English trading activities in North America. Over
the centuries, it evolved into a mercantile business, and later retail. HBC was acquired by
American NRDC Equity Partners in 2008 and now oversees multiple divisions in Canada,
the US, and Europe. Expansion has primarily been achieved by acquisition of companies
that are well-established but experiencing difficulties. The company employs 66,000 people
and operates more than 480 stores.
HBC targets a higher-end demographic, but has positioned its banners well for market
segmentation that prevents each brand from being diluted. HBC has invested heavily to
capture the growing E-commerce market, including building the first fully automated
distribution centre in Canada, and creating a central team to work on digital innovations
across HBC’s banners.
The Canadian retail industry is in an interesting transition phase, with many major
companies failing in recent years. There are also many established foreign companies
entering Canada from other markets, many of which are targeted towards a similar
luxury/premium market as HBC. HBC’s challenge lies in staying competitive in a saturated
market, generating sustainable growth, and being innovative enough to capitalize on
industry trends.
While there are no imminent political threats, the main issues of concern are international
trade negotiations. With the US government making conflicting statements on potential
changes to NAFTA, and the expansion of the Trans-Pacific Partnership, costs for imported
goods may change. Global instability and workers’ rights are also areas for observation.
Some social trends that impact the retail market include shifting demographics, such as an
aging population and the increase in two-income families. The two largest market segments
in Canada currently are 25 to 40 (35 per cent) and 41 to 65 (30 per cent), groups that
typically have larger disposable incomes and lifestyles that require more retail purchases.
Some technological trends that may impact HBC include a preference for online shopping,
fast fashion options, embracing mobile technology, and pop-up store formats.
There are currently opportunities that will be beneficial for HBC, including the growth of
high-net worth individuals in Canada, a lower Canadian dollar attracting tourists, the trend
of malls becoming entertainment venues, and the growth of luxury retail demand in Asia.
Threats include the influx of competitors, economic downturns, changes to trade
regulations, demographic shifts, and the growth of suppliers selling direct to consumer.
HBC experiences a high level of rivalry with its competitors, and has to face the increase of
foreign companies entering the market. It faces a high level of competition for suppliers and
consumers as well.
Strengths include diversification of products, popular brands, profitable property ventures,
expansion into diverse markets, and being the official supplier of the Canadian Olympic
team. Weaknesses include low price margins, little control over pricing, and a weak online
sales platform.
HBC currently lacks significant financial resources, as its net earnings were at a loss in both
2016 and 2017. The company will need to be cautious about large investments. HBC
currently has 66,000 employees in 5,000 different roles, across 480 stores. The company
has a fully automated distribution centre, and a dedicated digital team.

HBC updated its mission statement.

Hudson’s Bay Company is committed to providing quality products to customers, and
providing a quality working environment to employees. As North America’s oldest
company, it is our responsibility to operate sustainably and set a high standard of
excellence in how we treat all of our stakeholders.
Hudson’s Bay Company’s strategic profile is differentiation. Because cost leadership is in
conflict with HBC’s established brand (high-quality/luxury), and it operates in a saturated
market, the company needs to stand out from competitors by offering unique products and
enjoyable experiences.
Our goals, as determined through the strategic planning process are:

 Grow revenue across banners by 20 per cent by 2021

 Add 20 additional suppliers by 2020
 Expand retail and real estate ventures into Asia by 2025
 Increase customer satisfaction by 2021

HBC is on track for several metrics, including revenues, number of stores, and number of
suppliers. Areas that require immediate focus on are net income and customer satisfaction,
in order to meet targets.