Nordstrom also tends to put on few sales, while Mr. Baker’s customer “wants a bargain,” he notes. “What do Canadians love about Nordstrom? They love all that [staff]help, there’s someone to help you everywhere. But the labour costs in Canada are 35-per-cent more than they are in the U.S. That’s a real issue for everybody.”
Mr. Baker recently streamlined buying and other functions at the Bay and Lord & Taylor, letting go 10 senior executives and promoting the high-profile Bonnie Brooks to head both chains. “Part of our job is to figure out how to have a cost structure and a business that can give our customer a great deal. That’s everyone’s challenge, and it’s a balancing act.”
The balancing act could also smooth the way for Mr. Baker to eventually take HBC public again, something that he would have done last year if it were not for rocky markets.
He has another weapon in his pocket to help take on Nordstrom: the Bay’s mall leases often give it the right to essentially shut out a new department-store retailer entering a shopping centre where it operates. The clause could become a headache for a new U.S. player.
For now, as full-time “governor” (chairman) and CEO of parent HBC, he plans to invest $1-billion over the next five years to upgrade his existing retailers, while he looks for buyers for his remaining Zellers and small discount Fields store leases.
And he is attempting to spread a can-do attitude at HBC.
“I want our team to be bold and to take risks and to be adventurers,” he says above the din of the bustling lunchtime crowd. “The type of people that we want to attract to the Hudson’s Bay Co., and the type of people that we want to reward, are people who are willing to think outside the box, to push the envelope – be willing to take some risk.
“All of us need to understand that sometimes you fail,” he adds. “Failure is okay. I want to encourage people to fail because if they don’t fail they’re not trying hard enough. When they fail it should be small and it should be hedged and they should learn a lot from when they fail.”
He feels he has learned from his own missteps. The Fortunoff bankruptcy taught him harsh recessionary realities, but also gave him an inspiration – to take a new retail concept and place it in his bigger department stores (something he’s now doing with British cheap-chic Topshop boutiques). His design incubator brainchild has morphed into private-label production for his own chains and, already, another U.S. department-store retailer.
His approach to business and life is one he and his wife Lisa, contemporary art collectors, try to instill in their three children, aged 17, 15 and 12. He openly discusses the company’s affairs with his offspring and encourages each of them to participate in a charitable foundation. “They see the sales reports and they wear the clothes and they visit the stores,” he says.
The Bakers aren’t lacking in material comforts. They live on a 10-acre property in Greenwich, Conn., with two swimming pools, an outdoor and an indoor one designed by artist James Turrell. They also have houses in Telluride, Colo., and on the North Fork of Long Island.
He travels in the family’s Gulfstream jet and often works from his chauffeured Cadillac Escalade which serves as a mobile office with wireless Internet, flat screen television, fax and printer.
He developed his entrepreneurial bent at an early age. While his teenage peers played football, he ran a catering business. He attended the Cornell School of Hotel Administration and then cooking school in Paris. But his father persuaded him to join the family business rather than start a restaurant.
The son took one of his first big gambles in the business when he paid a visit to Wal-Mart Stores Inc., then a fast-growing chain, to persuade it to set up its first store on the U.S. East Coast at one of his father’s malls. Today the family business houses about 35 Wal-Marts.Report Typo/Error