Dawning of a new Bay

July 18, 2008
Winnipeg Free Press
Written by: Murray McNeill and Martin Cash

The Hudson's Bay Company's downtown Winnipeg store could see a return to its glory days as a retail powerhouse as the company's new U.S. owners look at ways to revitalize the struggling chain.

An HBC spokeswoman said Thursday the company's new owners -- New York-based NRDC Equity Partners -- are keen to introduce their other retail brands to the Canadian market, including their upscale American department store chain Lord & Taylor, their Fortunoff jewelry store chain, and their Creative Design Studios home-decor chain.

The Hudson’s Bay Co. store in downtown Winnipeg at the corner of Portage Avenue and Memorial Boulevard has seen a huge drop in business in recent years. (Mike Deal / Winnipeg Free Press )

And one way of doing that could be to devote space within the Bay's large flagship stores to these other brands, Hillary Marshall said.

"What could happen with the large-format stores is we could configure them. That space could potentially be home to a Lord & Taylor store, as well as a Zellers or Fortunoff store."

For example, there could be Zellers on the lower level, Lord & Taylor on the main and second floors, and The Bay and Fortunoff on the upper levels, Marshall said.

"The whole idea is to put stores to better use and to make them more productive."

Marshall emphasized "it's early days," and it could be months before any decisions are made about what to do with specific stores.

She said HBC's new president, former Bloomingdale's CEO Jeffrey Sherman, will also have a say in what happens with the company's stores.

She said the only thing for certain is that the downtown Winnipeg store will not be closed.

"They (the new owners) have no interest in closing stores."

Most observers believe retail is essential to the health of the downtown.

"All the downtown development concepts need retail for the downtown," said Rob Warren, director of the Stu Clark Centre for Entrepreneurship at the I.H. Asper School of Business at the University of Manitoba. "You need retail to keep people downtown and that store helps provide that retail infrastructure."

Marshall also wouldn't rule out the possibility of the upper floors of the store being converted to office, classroom or residential space. HBC's previous owners and local developers had been exploring a number of alternate uses for the upper three or four floors in the six-storey building. They included having offices or University of Winnipeg classrooms on some of the floors, and residential units on the top floor.

Sandy Shindleman, president of the real estate company Shindico has been trying to attract potential tenants to the upper floors for about six years.

"We got some encouraging words from them today," Shindleman said of the new owners' interest in redeveloping the building. "We continue to seek users for the top four floors. We're very excited about the potential to keep the Bay downtown."

Since the change of ownership was just announced Wednesday, no one knows for certain what might happen to the building.

"Everything is on the table," Marshall said. "I don't want to speculate too far out what might happen to the downtown store."

Jim August, CEO of the The Forks/North Portage Partnership, said his organization has had several meetings with officials from the Bay over the years.

He said before former owner Jerry Zucker passed away the company seemed to believe the Portage Avenue and Memorial Boulevard store held great potential, although there has been some uncertainty since Zucker's death in April.

"Our interest is encouraging something happening there," August said. "The building is underutilized and probably doesn't work as a six-storey retail. But the people I talked to (before the new owners bought the company) thought they could do something interesting in the basement and first and second floors."

The Forks put together some concept drawings for former Bay officials to show the building could be reconfigured with mixed-use tenants on the top four floors.

Marshall said it's also too soon to say if there will be any upgrades made to HBC's other retail outlets in Winnipeg, which include smaller Bay stores in the Polo Park and St. Vital shopping centres, as well as seven Zellers outlets and two Home Outfitters stores.

However, she did rule out any chance of the other Bay outlets being converted to Lord & Taylor stores.
"The intent isn't to close Bay stores to open up Lord & Taylor stores."

As for the company's Zellers operations, Marshall said HBC has found it's most successful Zellers stores are the ones that are more than 100,000 square feet in size.

So, one option might be to convert some of its smaller stores to big-box outlets, or to rebrand them as a different type of HBC format.

"Again, everything is on the table," she said.

"And again, his (NRDC principal Richard Baker) intention is not to close stores."

murray.mcneill@freepress.mb.ca

martin.cash@freepress.mb.ca