Empty shelves. Lineups at the cashier. Missed sales.
Those are the problems Jeff Sherman struggled with when he took the helm of a fatigued Hudson's Bay Co. 18 months ago. Today, the CEO of the venerable retailer, which owns the Bay and Zellers, faces similar snags. But for a good reason this time.
As official outfitter of the Canadian Olympics team, HBC has struck gold with its Games merchandise. Its stores have been selling out of Olympics-branded red mittens, black hoodies and buffalo-plaid scarves.
Mr. Sherman didn't count on inventory shortages, but scarcity is creating a buzz. Consumers are using Twitter to ask others about HBC product sightings; the $10 wool mittens go for three times that price on eBay. This is not the sort of excitement that HBC is known for.
“Scarcity can create a perception of coolness,” said Chris Staples, president of Rethink Communications in Vancouver. “This is the first instance of cool stuff at the Bay that I can remember.”
The 49-year-old ad executive said people like himself who haven't headed to the Bay in decades are now making the trek; he's kicking himself for not having bought an Olympic hoodie or sweater before stores ran out of them.
Now, Mr. Sherman needs to build on this momentum in his mission to transform the country's oldest retailer into a destination for Canadian chic.
“To have sold all of your product and have nothing remaining – it is not a bad thing,” he said in a telephone interview this week from Vancouver, before heading off to see Canada beat Switzerland in women's curling. “We're not going to let people forget what we accomplished.”
Mr. Sherman, a U.S. retailing veteran, has a lot riding on the Olympics. The Bay and Zellers have been losing customers to fast-growing rivals for more than a decade. U.S. real estate magnate Richard Baker, who snapped up HBC in July of 2008, has vowed to breathe new life into the firm and take it public by early next year.
To lure consumers back, Mr. Sherman intends to develop a permanent line of fashions modelled on the popular Games styles. He's mining the retailer's heritage advantage by bolstering its Signature Shop with about 120 new items (canoes, trapper hats, maple sugar cubes) alongside its signature striped “point” blankets and throws.
HBC's other initiatives range from last fall's $5-million relaunch of The Room as a high-end fashion statement at the Bay, to price cuts at discounter Zellers to take on titan Wal-Mart Canada Corp.
But it's too early to say whether these efforts will be enough to make HBC a go-to retailer.
“It's a start and a good start,” said Howard Davidowitz, chairman of retail consultancy and investment bank Davidowitz & Associates in New York. “Now the question is, how do they capitalize on the Olympics for the long term and make their store a headquarters for unique merchandise?”
Canadian Olympic attire fashioned by HBC
Hoping for a halo effect
Already there are signs that HBC's $100-million Olympics investment, spanning seven years to 2012, will have a long-term impact. Consumer awareness of the retailer's sponsorship has surged at a faster rate – by 43 per cent – than that of other key sponsors, according to a survey by researcher Angus Reid Public Opinion to be released on Monday.
More importantly, people who bought Olympics merchandise said they would now be more likely to consider making a purchase at HBC, a report by Charlton Strategic Research reveals.
It found that 29 per cent of people who snapped up the goods last October would “definitely” think of shopping at the stores again and another 30 per cent would “probably” consider buying something there.
Some 21 per cent of Canadians visited HBC stores, picking up Olympic products in October, although those numbers have swelled since the Olympics began, said Gordon Hendren, president of Charlton.
