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Posted Dec 8, 2006, 11:27 PM
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samsonyuen
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Join Date: Apr 2005
Location: Canary Wharf->CityPlace
Posts: 4,241
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From: http://www.canada.com/nationalpost/f...a63401&k=22258
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Quote:
Piece by piece makeover
Working to revive venerable but tired brand, as U.S. chains have done
Hollie Shaw, Financial Post
Published: Saturday, November 25, 2006
On a recent weekday, a voice blared across the PA system of The Bay department store in suburban Toronto, urging lunch-hour shoppers to pick up a gift at the bottom of the store's escalator.
Karen, a comely pitchwoman from U.S. Jesco International Ltd., stood at a makeshift podium littered with a batch of orange plastic gadgets. Eagerly beckoning onlookers toward her while holding the tiny devices -- apple corers that double as "the world's smallest juicer!" -- she drew customers into her spiel. Those who took the freebie were treated to Karen's whirlwind presentation about knives: U.S. Jesco is the conglomerate that owns the rights to Ginsu knives, an oft-parodied staple of late-night infomercials from a quarter-century ago. Karen's powers of persuasion are remarkable.
"This is the last knife you'll ever buy," she breathes, theatrically sliding a carving knife from the company's Master Cut 2 line back and forth across the head of a steel hammer, shavings spraying across her podium.
One could never have imagined such a bald display of hucksterism inside The Bay a year ago, when its tired management team was fending off a takeover bid from South Carolina businessman Jerry Zucker and a palpable atmosphere of desperation pervaded its stores, where sales had been on the decline for five years.
But it's precisely that entrepreneurial zest which Mr. Zucker, a frustrated investor who ended up buying the whole company when his entreaties for management changes were ignored, hopes will lure consumers back to Hudson's Bay Co.'s 550 stores across Canada, which include the Zellers and Home Outfitters chains.
He points to a rebirth in the U.S. department store industry in the last year, where sales at outlets open for more than a year have climbed 4.1%, compared with a 1.3% rise at specialty clothes stores, according to the U..S. industry association International Council of Shopping Centers.
After years of bankruptcies and rapid consolidation, remaining players such as Kohl's, Macy's, and J.C. Penney have made strides by giving facelifts to tired stores, revamping old change rooms, bringing in hot brands and developing a stronger lineup of stylish and affordable house-branded goods.
Mr. Zucker, who has invested in textiles, manufacturing and entertainment companies but has never owned a retail business, hopes to work a similar magic at The Bay and Zellers, which hemorrhaged market share after Wal-Mart entered Canada in the 1990s.
Industry rumours persist that he is fixing up the chains in order to sell them to companies such as U.S. discounter Target Corp. or the home goods giant Bed Bath and Beyond, which closely resembles Home Outfitters.
So it's a surprise that changes, some sweeping and some minor, have already made a tangible impact on many stores just eight months after the takeover.
On a recent week in the lead-up to Christmas, there was a renewed sense of pageantry and bustle at The Bay's flagship outlet on Queen St. in Toronto.
The aisles were cleaner, the racks were no longer filled to bursting with merchandise, and the assortment was more fashion-forward, featuring a mix of staples, trendy styles and new higher-end brands, such as Dooney and Bourke.
The stores have eschewed the striped plastic Bay bags for a sturdier and more formal yellow bag made of paper and embossed with a white B.
Merchandising was savvier: a display of high-end kitchenware sat alongside a pillar featuring "As-Seen on TV!" stackable plastic containers and an artfully arranged tower of canned tomatoes. There are items in a greater range of prices, ethnicities, and sizes, thanks to new software that tracks consumer purchases.
The company has also been unafraid to scrap its dogs, with plans to discontinue its prosaic private label clothing line, To Go, and its housewares brand, Market Square. It will introduce new private labels in 2007.
The Bay has also addressed one of the big sticking points with consumers, making sure its key change rooms are staffed.
Across town at Zellers, a similarly surprising shift has taken place. One store, which in the past resembled the haphazard clutter of a teenager's bedroom, looked shockingly ordered at the end of two busy November weekends. Merchandise had been strategically thinned out and displayed neatly on racks and palettes. Even more striking was a change in the sales force which, in a sharp contrast to the era of former CEO George Heller, were deployed throughout the store and repeatedly approached customers to ask whether they were in need of help.
Mr. Zucker says he has increased staff levels and tried to inspire employees by making store visits to outline his vision in person. While employees were not given raises, according to industry sources, new incentive and feedback programs were implemented to encourage them to interact more frequently with customers.
"It's as though what we were saying for years and years about what would make things better is finally being heard and respected," said one employee who spoke on condition of anonymity.
But will the efforts work? Is it too late to regain the trust of customers burned by one too many bad retail experiences in the company's former incarnation?
More importantly, how will Hudson's Bay Co. be able to appeal to those in its target market, a generation of twenty to forty-something women whose shopping temperament has been strongly influenced by the rise of specialty stores and big-box giants?
"When you've lost a customer it's very hard to get them back again," said Wendy Evans, president of retail consultancy Evans & Co. "It would take a lot of creative advertising to draw people back again because a lot of people had crossed [the Bay and Zellers] off of their list of places to go. I don't think anything's ever too late. We've seen it work in the States. so I don't think the format or the concept is dead, but it's a very steep hill."
Specialty stores have taken a significant bite out of the businesses that department stores used to dominate, most notably apparel and so-called soft goods, such as towels. Department stores' share of apparel sank to 18.6% in the year ending June, 2006, from 23.5% five years ago, according to market researcher Trendex North America. During the same period, specialty stores' share had spiked to 51% from 46.6%.
One advantage the company has, Ms. Evans agreed, is the state of uncertainty at Sears Canada Inc., whose U.S. majority owner was recently stymied by minority shareholders in its attempt to take over the retailer. Sears cut its workforce last year and has been trying to improve operating performance by taking costs out of the business -- something that analysts say can help profits in the short-term, but could hurt sales over time.
It's too early to tell how successful Mr. Zucker will be in his efforts to put Canada's oldest retailer on the comeback trail, and the transformation is far from over. Service, selection and presentation were all subpar at a Bay outlet a few blocks north of the flagship on a recent visit, a location just steps from the tony Bloor St. shopping strip.
But if the response to Karen from Jesco was any indication, customers like the frills. At the end of her energetic presentation, which lasted about 20 minutes, all but two of the 25 or so observers bought the kit for the "low, low price of $29.95." A set of four Ginsu steak knives were thrown in for good measure.
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