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Marketing Magazine
Can the venerable retail icon return to relevance? RON TELPNER asks some tough questions I first became aware of the Hudson’s Bay Company in grade four, in my history class at Seven Oaks Elementary School in Winnipeg. I imagined the coureurs de bois, with furs piled high in their canoes, reaching the HBC trading posts. What an exciting part of our history. The company even had its own huge section at the Manitoba Museum of Man and Nature. The Bay was part of our culture, our heritage and in Winnipeg it had a great restaurant on the top floor... with a paddle wheel. There was nothing better than going to the Bay! Imagine my excitement to get my very first job selling in the toy department at the Bay. I remember showing off the road race sets and selling as many as I could. I also remember the department manager waving a $5 bill, promising it to the individual with the highest Saturday sales. Considering I was making $1.25 per hour, I was all over those five bucks! I maintained my loyalty even though Eaton’s was “Uncrating the Sun” and telling everyone about its Trans Canada Sale. I remember seeing the competing trucks delivering on our street and thinking, “the Bay is better.” I worked there throughout high school and was proud of having my Bay name tag. Years later, in the early 1980s when I was managing McKim Advertising in Winnipeg, Frank Palmer tried to lure me to Palmer Jarvis with the promise of working on the Bay account. He didn’t have it at the time and I was already growing McKim’s Winnipeg office with retail accounts like McLeod’s Hardware and Ben Moss Jewellers. He did eventually win the Bay’s advertising business away from Foster Advertising. The account was later transferred to Toronto. As I moved up in the world of advertising, taking on greater responsibility and working with some great brands, the retail world got tougher for department stores. Famous names like Woodward’s, Creeds, Brettons, and eventually Eaton’s, all disappeared. And when Eaton’s finally went down, the Bay missed a major opportunity. Instead of selling a wider mix of brands, the Bay chose to promote its private-label portfolio. The effort was made to create in-house brands like Mantles and ToGo and build a meaningful relationship with Bay customers. In hindsight, it may have been a better time to court exciting new brands and convince them that the Bay should be their flagship headquarters.
So why did this strategy fail? In my view the Bay management focused too much energy on Sears and in so doing failed to secure the Bay’s rightful place in Canadian retail. Instead of honing the Bay’s strategy, management sought to ink exclusivity deals with their vendors and penalized those who didn’t conform. I gained insight into this policy when I presented the case for Kenneth Cole. It seemed odd to me at the time that the Bay was so concerned with comparisons to Sears. I asked myself, “would Bloomingdales compare itself to JC Penney or would Macy’s compare itself to Sears?” Again, in my opinion, this is a course that should be rethought and reversed. The Bay remained the Bay. But the press was tough and the sales were tougher. Putting house brands on sale at 40% off was not the answer. It seems the corporate culture was on a cadence of promotion. Like a drug, it is hard to kick the habit. Let’s talk about the changing market for a moment. Since I first worked at the Bay in 1966, the baby boomers, who aged right along with me, started to frequent specialty stores and all the new American-owned retailers in the market. They also shopped at big-box stores while the loyalty to “Canadian-owned” meant very little. They wanted price or they wanted brands. Other Canadians of greater affluence continued to frequent Holt Renfrew and other specialty stores. They abandoned the Bay. New Canadians didn’t learn about the Hudson’s Bay Company
in school, knew nothing of the heritage and needed a reason to shop
there. They were happy with Wal-Mart. What happened to the days when there was real pride in offering superb service at the Bay? What happened to the days when the Bay had the best cosmetics department, the best intimates department and the best selection of outerwear, tailored clothing, appliances, hard goods and more? What happened to the time when one could always find the best of the brands at the Bay? The world changed and the Bay didn’t. Well, that’s not quite true. The Bay did change but the consumer’s perception of the Bay has not. They know the Bay, but they haven’t been given any compelling reasons to shop there lately. Hopefully the great new Olympics program will get attention and create traffic. With such a long and colourful history, I would expect the Bay to adapt to change. It is important for the Bay to see when a strategy is not working and be prepared to change the approach. I will not forget lessons learned, working with Stephen Bebis to launch the new Aikenheads hardware store, which later was acquired by Home Depot. We would always start our morning meetings on the selling floor, reciting the company pledge with all the associates. Even before that, in McLeod’s meetings in Winnipeg, then president Murray Bozniak would work his guys into a frenzy competing for space in their flyers, with the best offers they and their vendors could come up with. If you ask today’s vendors what they think of the Bay, there is often more criticism than praise. For the most part they do not feel a win-win situation exists in which rewards and responsibility are shared. By coincidence, Bebis and Bozniak are working together as principals in the successful Golf Town, Canada’s largest golf retailer. Why would the Bay listen to BrainStorm? Is the Bay prepared to think differently? After leaving McKim/BBDO in 1992 and started the BrainStorm Group, we attracted numerous fashion accounts that valued our thinking and ability to execute in the Canadian market. Many sold to the Bay–powerhouse brands like Jones New York, Calvin Klein, Polo Ralph Lauren and Polo Jeans. We got to meet many people at the Bay and observe that not all buyers were in sync with a single strategy. We always thought we could help. When I watched the introduction of labels like Mantles and ToGo, I thought that if the Bay did it right, the brands could become what Alfani is to Federated Department Stores: brands that would connect with the market. Sadly, I don’t believe people are seeking out the Bay for those brands. They never had the budgets or commitment behind them to build them as we have had for Kenneth Cole or some of the other three brands we work with. And while the Bay was trying to build these private brands, it was losing the aura of being a great destination that department stores should be. That always puzzled me–shouldn’t a department store have everything I want? When I speak with some of the Bay’s key vendors, everyone has an opinion. Most have glum predictions. Most don’t hold out much hope for a return to the glory days of the Bay. Few are without worry. One actually described the Bay as in-laws that aren’t your friends. “You don’t really like them but you have to sit down to dinner from time to time.” That brings me to the present, when we received a call from Lisa Cardoza at Hbc who asked if we were interested in being the AOR. Of course we are interested, I said. But in addition to, and beyond advertising, there are other pressing issues that need to be addressed. It is about the merchandise mix, the relationship with vendors, the DNA of the brand and about the role of department stores in the lives of Canadians. Is the Bay willing to get it right? Just what are Canadian shoppers looking for? Can they find it all at the Bay? How does the Bay treat its vendors? Is there a shared responsibility for sales and marketing? How can the Bay build on the Olympic program and have it “halo” the store? If advertising is the icing on the cake, then the Bay first needs to make sure that the ingredients for the cake are right. If the vendors aren’t the Bay’s biggest supporters
and best partners, then who is? If the Bay can get back to doing what great department stores do and clearly communicate what it stands for, then there is a chance. No trip to New York City is complete without a visit to Bloomingdales or to Macy’s Herald Square store. The Bay should be just as magnetic, just as compelling, because it’s Canada’s great retail destination. There are five simple questions the Bay must answer in order to gain market share and win back the heads and hearts of Canadian shoppers:
After more than 300 years in business, can the old dog learn some new tricks? Ron Telpner is Chairman and CEO of The BrainStorm Group in Toronto and Denver. This article is adapted from BrainStorm’s pitch document for the $60-million Hbc account which is currently in review. It was written prior to the purchase of The Bay by Jerry Zucker. The agency did not make the final round. |
It’s
Hard To Be the Bay