The Bay closures threaten relationships with customers: Expert

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As some Hudson’s Bay stores started to reopen in Metro Vancouver this week, one retail expert said the earlier widespread closures related to problems with air-conditioning systems threatened to further jeopardize the relationship between the Canadian retail giant and its waning customer base.

“Hudson’s Bay has an older customer base. For them, the retail experience is the most important thing,” said Darrell Kopke, a business professor at the University of B.C. “So, if your customers come in and it’s prohibitively hot, that’s a negative experience associated with your brand. This means some customers will decide not to return.”

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On Thursday, shoppers were able to return to several Hudson’s Bay stores, including those in Burnaby, Richmond and West Vancouver. But stores in downtown Vancouver, Coquitlam and Surrey remained closed due to what the company said was a strain on the stores’ heating, ventilation and air conditioning systems.

And in some stores that had reopened it appeared the HVAC issues remained unresolved. For instance, at The Bay store at Park Royal shopping centre in West Vancouver, numerous portable fans whirred throughout the display floor and all the doors leading in and out of the store were propped open to promote air circulation.

“It’s very warm in there. The fan doesn’t do anything. It just pushes the warm air around,” said one customer who declined to provide her name but identified herself as a longtime former Zellers employee. “I don’t think it’s the way it used to be. I think it’s come downhill.”

Emerging from the store with her daughter and a bag of purchases, loyal customer Jocelyne Sutherland said she was willing to put up with the “minor inconvenience” of a lack of air conditioning.

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The store still represents “great deals,” quality products and good customer service, she said.

“We were both sweating but it didn’t stop us from buying stuff,” she said.

Portable fans were also in use at The Bay’s Sevenoaks Shopping Centre store in Abbotsford when it reopened Wednesday, according to The Abbotsford News.

The closures came less than a week after HBC’s parent company, HBC LP, announced its plans to buy luxury department store chain Neiman Marcus for US$2.65 billion. It also follows the layoff of hundreds of employees and reportedly falling behind on payments to suppliers in the last year.

“It’s a compelling argument to say that there’s a profit agenda behind what’s going on as the operating profit on any given day in this store is likely less than the cost of repair for an HVAC system,” said Kopke, former CEO of clothing retailer Kit and Ace Designs. “For top retailers like Lululemon or Apple, you’re looking at sales in the $1,500 to $2,500 range per square foot (per year), but for department stores like The Bay that number is more like $100.”

As part of HBC LP’s new deal, it will merge with online retailer Amazon, software company Salesforce and other U.S. investors to create Saks Global to target shoppers buying luxury products online.

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Hudson’s Bay will be left out of the Saks Global conglomerate but see the Canadian retailer “recapitalized as a standalone entity” with significantly reduced leverage and enhanced liquidity,” a news release said.

Kopke said events point to an overall issue with the department store’s relevance and its lack of an emerging customer base.

“Store locations chosen 50 years ago in malls were supported by families who lived nearby in suburbs,” he said. “Now, generations of demographics have shifted to cities as families are unable to afford living in traditional suburbs near malls.”

Meanwhile, WorkSafeBC confirmed this week that it had carried out an inspection related to a report of heat stress at the Hudson’s Bay store at Coquitlam Centre mall, which has been closed for several days.

An inspector reported no heat-stress-related incidents.

“The employer is working on repairing the HVAC, however a completion date was not available during the inspection,” the report said.

WorksafeBC guidelines indicate that indoor workplaces must close if they exceed the range of between 23 and 27 C.

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Vancouver-based retail analyst David Ian Gray was at the Cherry Lane Hudson’s Bay location in Penticton on Tuesday. While outdoor temperatures were near 40 C, the store was initially open with staff using plug-in fans, “the kind you might buy at Home Depot,” he said.

But by about 2 p.m., Gray said the store had to close as it became too hot.

At the downtown Vancouver location Wednesday, dozens of Hudson’s Bay retail and backroom staff were going in and out of a door designated for associates on Seymour Street.

Some workers declined to answer questions about how information on the store closure was being communicated to them each day. One gave their colleague a friendly wave and they shared a collective sigh, but most rushed off with their heads down, looking exasperated.

One employee, who declined to give their name, said that a call was being made each day on whether to open the store based on the temperature inside the building.

Hudson’s Bay said it’s continuing to pay full-time associates, but gave no details.

When asked about the continiuing closures, HBC spokeswoman Tiffany Bourre said no executive was available to comment.

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Bourre said Wednesday that the company hadn’t discussed what the issue is or why the HVAC systems were strained at so many locations all at once.

With files from Douglas Quan

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