When it comes to the blurring of on and offline sales, HBC continues to buck the tide. After making similar moves at Saks Fifth Avenue and Saks Off 5th, the company on Thursday said that its Canadian Hudson's Bay department store "will separate its store fleet and e-commerce business into two separate businesses, accelerating its digital-first transformation."
The online business will operate as "The Bay," while the 86-store fleet will operate as "Hudson's Bay." The Bay is responsible for brand direction, marketing, buying, planning and technology for both businesses, however.
Iain Nairn, Hudson's Bay's president since last year, will lead the e-commerce business as president and CEO. Wayne Drummond, Hudson's Bay's chief merchant, has been appointed president of the stores business, according to the press release.
Parting is not sweet sorrow at HBC.
The company is now making a habit of it. While retailers like Target, Macy's, Nordstrom and even Walmart increasingly merge their customer-facing and back-end physical and digital operations to achieve economies of scale and improve the customer experience, HBC's retailers see value in widening their splits.
The two will still "work collaboratively" in certain areas. For example, the company said that returns, exchanges, Hudson's Bay Rewards and store credit cards will continue to be accepted online and in stores. Some observers, including Mark Cohen, director of retail studies at Columbia University's Graduate School of Business, have warned that the inevitable silos will ultimately pit teams against each other and confuse customers.
But operating the two entities "as distinct businesses is a pivotal next step in the future of Hudson's Bay," HBC CEO Richard Baker said in a statement, pointing to the recent establishment of a Hudson's Bay marketplace as a way to gain market share in Canada. "Furthermore, this move enables each team to make unencumbered strategic investments into their respective businesses to deliver an incomparable customer experience for Canadians."
It's not clear why such investments would be hindered with the Canadian department store operating as a cohesive unit. It's possible that the separate entities might attract varying levels of funding. The newly created e-commerce pure-plays at Saks Fifth Avenue and the off-price Saks Off 5th each enticed hundreds of millions of dollars from private equity investors, for example.
Cohen has also surmised that the move could enable Baker, who is also a real estate mogul, to more easily leverage the company's property holdings.