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When Hudson’s Bay Company started re-opening its stores across the country last week, the Manitoba locations were first, not because there is more pent up demand here but because provincial regulations made it possible.
On Thursday, stores in the rest of Western Canada and Nova Scotia were opened.
As one would expect of a brand that’s 350 years old, the company is trying to put on a brave face in the midst of a tectonic shift away from department store shopping that was well under way before COVID-19 threw off everyone’s strategic plans.
Or maybe that’s not what happened. Maybe it’s allowed some to speed up those plans, especially if those plans include closing stores.
In fact, that is exactly the rationale Hudson’s Bay Co. used in justifying closing its downtown Edmonton store this fall, which it announced on Thursday.
The company said, "As Hudson’s Bay has worked to adjust operations in response to the COVID-19 pandemic, it has also accelerated its strategy to elevate the brand and improve performance."
Craig Patterson, Director of Applied Research at the University of Alberta School of Retailing and the editor-in-chief of Retail-Insider, noticed that would make Edmonton the first city in the country without a downtown department store.
He believes Winnipeg will be next.
"I’m surprised it hasn’t happened yet," he said. "It’s a miracle (that the downtown store is still open)."
Patterson said the two month shut down of the bricks and mortar retail industry may be giving some department store companies the opportunity to cull the herd, as it were.
The fact that the 675,000-square-foot Portage and Memorial landmark now has heritage status, means it can’t be torn down. The Hudson’s Bay Co.’s own real estate advisors recently valued the property at $0.00, so it’s not like potential buyers are experiencing sticker shock.
In an understatement, Sandy Shindleman, whose real estate company, Shindico, did extensive research on the possibility of retrofitting the building when Manitoba Hydro was looking for a new head office, said, "The store is not in great shape. To put it into first class shape — or third class shape — it would cost more than the building is worth."
Most Winnipeggers are aware of various re-development schemes that have been floated over the years for that building. There was talk that about a decade ago The Bay tried to gift the building to the University of Winnipeg.
There is some revived hope that the proposed $400 million investment that Starlight Investments is planning to make in redeveloping Portage Place will somehow create renewed value in the big department store across the street.
Starlight’s closing of its acquisition of Portage Place has been extended into August, but there are plenty of positive noises about that deal going forward, including what sounds like an imminent announcement from the province about some sort of additional support for that project.
But retail industry veterans like Shindleman and Patterson do not see a future for department stores downtown.
"Polo Park is the downtown shopping district of Winnipeg," Shindleman said. "There is no two ways about it."
Patterson said The Bay has wanted to close the downtown store for years.
"They have downsized it to two floors. You don’t do that if you have a successful store," he said.
Now that COVID-19 has pushed many department stores to the brink, with a number of chains, especially in the U.S., filing for creditor protection, including Nieman Marcus, J. Crew, Pier 1 and late Friday, JC Penney; it may embolden others to do to the same.
Hudson’s Bay company was recently taken private which means there is a sizable debt management issue that will have to be dealt with.
The company told the Free Press on Friday that it has no new information to share about its downtown Winnipeg store.
And while no one believes there is anything imminent afoot, Patterson figures that The Bay will downsize its 89 stores in Canada – 88 after the closure of Edmonton City Centre — over the course of the next two or three years.
"My expectation is there will be something happening, like some sort of creditor protection filing in order to close many, many stores," he said.
His thinking is that would definitely include Winnipeg’s downtown store, as well as the store in St. Vital Centre. He believes Edmonton will go from six to two stores. Same thing in Calgary.
"I would predict in a few years, not in three months, there will be 30-40 exceptional Hudson’s Bay store across the country featuring exceptional, great shopping experiences," he said.
It may not be hard to understand why The Bay might close that store. The big question remains — what will replace it at the corner of Portage and Memorial.
Martin Cash has been writing a column and business news at the Free Press since 1989. Over those years he’s written through a number of business cycles and the rise and fall (and rise) in fortunes of many local businesses.
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