Craig sits down with Mark Cohen, Director of Retail Studies at Columbia Business School and CEO of Sears Canada between 2001 and 2004. They discuss why Nordstrom failed in Canada, what might happen with the spaces as well as a revelation that HBC attempted to get Sears to acquire it twice during Cohen’s tenure, among other things.
A transcript of the conversation can be found below.
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Featured during this interview:
- Mark Cohen, Director of Retail Studies at Columbia Business School
Craig Patterson 0:03
Welcome to the Retail Insider Video Interview Series. I’m your host here today, Craig Patterson, and we’re joined with a special guest. This is Mark Cohen. He’s the director of Retail Studies at Columbia Business School. And he was also the CEO of Sears Canada from 2001 and 2004. Welcome, Mark.
Mark Cohen 0:21
Thanks for having me.
Craig Patterson 0:23
Let’s talk a little bit about Nordstrom and its exit from the Canadian market. This did surprise me a little bit. I was aware of it a few weeks before it was going to happen. And we had kept it quiet. I was still in a state of disbelief. But tell me about why Nordstrom left Canada? And was it a surprise for you when you found out the news?
Mark Cohen 0:43
Well, I was not surprised at all.
Mark Cohen 0:46
Their business in the United States has been flagging, if not downright struggling. And having done business at Sears Canada in the six Nordstrom locations that they opened. Having some familiarity with those boxes, those neighborhoods, those markets, the competition, albiet some years ago, but I think my impression of the circumstances they put themselves in are certainly valid today as they might have been, when I was there. They opened six doors, I thought three of them had potential viability and three were absolutely not going to be successful. I was leery of their ability at the outset to jump into Canada. And I must say that this isn’t an American-Canadian or Canadian-American phenomenon, because in my view most retailers whether they’re North American, Asian or European, who have jumped a national border have failed. They’ve either failed outright, or they’ve eventually succeeded at some in some sub-optimal way. Because there’s an insidiousness, about the complications that you face that you’re seemingly never fully prepared for. When you do jump that border and, and so Nordstrom got sucked into a real estate deal and involving six high profile Sears Canada stores, that at face value had them all jazzed about the opportunity. Having failed to realize that Canada is a real challenge. It’s it’s landmass is the same as the US plus or minus a few 100,000 square feet. But there are only 38 million Canadians. That’s not to diminish the importance of Canada and Canadians but that’s in contrast to 325 million Americans. So the market size is fundamentally different. And then of course, they’re the vagaries of currency equivalence. When I was in Canada, at one point, the US and Canadian dollar were pretty much at parity for a while. Now, of course, there’s a tremendous differential. Then there is the the logistics of servicing a business across this enormous landmass without an enormous number of customers. Like it or not, your success or failure is based on your productivity. And the uberus that the Nordstroms exhibited in presuming that Canadians would be forced to walk around without clothes, until they arrived is just foolishness personified. Sophisticated and affluent Canadians certainly have a variety of very successful Canadian based retailers with which to shop, notably Holt Renfrew on the specialty store side and Harry Rosen. And so what does Nordstrom bring to the table? You know, what do they really offer? I’m sure they opened with much fanfare, a tremendous grand opening surged with lots of enthusiasm that petered out and has disappeared. Certainly COVID was not helpful, but that is what it is.
Craig Patterson 4:23
There are three locations that had potential for success and three didn’t and I can probably guess which ones you’re going to say but tell me about some of the individual store locations that Nordstrom had chosen in Canada for its full line larger store locations. We don’t really have to go into Nordstrom Rack that’s a bit of a different type of retail model.
Mark Cohen 4:50
Well, Vancouver is a sister city to Seattle. And so I know there are lots of Canadians who regularly crush shop into the US into the Seattle marketplace. And so the idea that Nordstrom brand equity at brand equity be would be well known in British Columbia, specifically in the Vancouver market, is kind of obvious. But but did Canadians in the rest of Canada have tremendous insight and sensitivity to Nordstrom? I’m sure lots of folks were aware of them as a brand, but not intimately enough to support them as maybe they would have done in Vancouver. The next location that I think would be a potential success would be the Yorkdale Mall in suburban Toronto, which is the upmarket bull’s eye for affluence and fashion in the Toronto marketplace in a suburban setting. The third, which I cited in some things that I’ve written about, would be Ottawa. Nordstrom does extraordinarily well in the Washington DC metro area, which is obviously the capital of the US and it’s an enormous government hub. Ottawa is an enormous government hub, little different than Washington in that it has a wrench flavor to it by way of population and culture. But nonetheless, a government center has lots of career folks who tend to be more focused on their apparel, then they would in an otherwise suburban location. So I thought if any location was going to be successful, it would be those three. As far as the three that I thought were off the mark; one was Sherway Gardens (another suburban location west of Toronto. A nice looking mall and a nice community, but certainly not distinctive enough), the CF Toronto Eatons Center (as beautiful as it is, it’s a dud as a retail centre because the Eaton Center is a transit hub with folks moving through the center, but you don’t see a lot of folks shopping. Nor does it have a residential core that surrounds it of any consequence, unlike, for example, Yorkdale or even Sherway), and Calgary (the energy capital of Canada like Houston is in the US and the Chinook Centre is a nice looking mall doesn’t have the kind of population density that would suggest that Nordstrom could be successful).
Mark Cohen 8:26
And oh, by the way, I shared this view with Pete Nordstrom some years ago, after he had complained that I was critical. He complained about some things I had written that were critical of his West 57th Street store in New York, and the Nordstrom Rack strategy. So we got into an email exchange, gentlemanly and upfront, but we definitely were on different sides of the issues. And I said, “Oh, by the way, Pete, I think these three you might make a go of it. And the other three, not so much.” and he didn’t give me any numbers. He did acknowledge that I was right on in the experience that Nordstrom was seeing and those first year or two of operation. I say it’s it’s it’s it’s not a surprise that they folded their tent and packed up and left.
Craig Patterson 9:23
No, I actually do agree. Now, the New York City store you mentioned Nordstrom built a large flagship store, not just south of Central Park. Basically, I’ve been told I don’t have the exact sales numbers, but that sales had have seen a reduction to the point that that stores volume might be somewhat similar now to say a suburban Nordstrom unit, as opposed to being the top unit that had been predicted originally when that store opened.
Mark Cohen 9:48
Well, when I criticize the selection of that location and Pete Nordstrom reached out to explain to me how wrong I was. He cited the fact that it’s in close proximity to Central Park, which has 10 million unique visitors a year. To which I said, Pete, I’m a lifelong New Yorker, I grew up in New York City, and I’ve lived off and on my entire life in New York City. And I’m here to tell you the two blocks, as the crow flies between the southern border of Central Park and West 57th Street, might as well be two miles. It’s not, it’s not a path that people will traverse, if at all. And Central Park has an enormous footprint, which has literally well over a dozen portals from north-to-south and east-to-west. Central Park South the southern boundary which he was touting as this portal into Nordstrom is not the primary entry or exit point for visitors to Central Park. So right out of the gate, I politely said, I think you’ve been misled. I think you’ve parked yourself in a place that’s not going to see the kind of traffic that you expect or will need to make sense of the store. And then I went on to criticize the men’s store across the street, and I went on and on and on.
Mark Cohen 11:19
So to make a very long story short, this is a business that has been remarkably successful. But not so much. For quite a few years before COVID, The Rack was keeping the lights on at Nordstrom in terms of growth and profitability. Curiously coming out of COVID, The Rack is now acting as an albatross and holding them down. What I said at the time was, The Rack was a brilliant idea 30-some years ago when it was conceived as a place to put markdowns that were unsightly, that had run the table in terms of their appeal from the store into someplace else and it was very successful. Like all of the outlet stores, whether they’re US and Canada, they can’t live on markdowns and the leavings of a season they need fresh goods. So of course, Nordstrom started to feed The Rack with purpose built merchandise, or opportunistic merchandise. That’s a big business and for others like Mar Maxx, TJ Maxx, Marshalls, Winners… very successful but Nordstrom started to move these Racks closer and closer to the store betting a young, less than affluent customer would fall in love with Nordstrom through The Rack. As they got a little older, a little more sophisticated and a little more capable financially, they would graduate into Nordstrom, except that when I visit a Rack in the United States, I see very sophisticated, seemingly well-heeled customers feasting on the values at The Rack. When I asked my students (who are all late 20s to early 30s, masters/mistresses of the universe, their graduates/students at Columbia), “How many of you have shopped the rack?”, then they all raise their hands. “How many of you have shopped in Nordstrom store?”, then they all raise their hands. “Well, how do you feel about one versus the other?”, they always say something like, “Well, the store is beautiful and it’s elegant and it’s really marvelous. But The Rack is 40% off. So I really don’t need the ambiance and the atmosphere if I can get a much better deal, which is why I shop at The Rack”. End of story. They opened in Canada with six department stores and seven Racks, as if whatever they felt was the basis of their success below the 49th parallel would translate and clearly did not.
Craig Patterson 14:09
Do you think now Nordstrom has twice a year sales these anniversary sales. Whereas you go into a Hudson’s Bay store and it seems like you can always get a clearance rack. Do you think that the way that Nordstrom holds sales – now I am thinking, remember Eton’s in Canada years ago with its ‘Everyday Pricing’, do you have any perspective into the Canadian consumer and whether or not Nordstroms discounting in its full line stores helped lead to the demise specifically of those full price locations versus people maybe not going to a rack location?
Mark Cohen 14:38
Well, they’re practicing old style retail, not unlike what Harrods practices in the UK where they have that fortnight where at the end of each season, they run a two-week event where they sweep all of their seasonal goods in and lots of other values as well. But the world of retail has become ruthlessly value-oriented. And so the customer does expect a deal all the time, which Nordstrom’s format does not support. Now, Hudson Bay is the other end of the spectrum where nothing is on sale is sold at regular price. Or almost nothing. You know, the ubiquitous ‘scratch off’ back in the day when I was in Canada was an every two week event to the point where a customer wouldn’t think of shopping without having one of those coupons in hand. So that’s that’s not sustainable in its own right. You have to have a differentiated offer, which in Nordstroms case has always been very well crafted assortments with tremendous with consistency and taste level and pricing, a hand in glove with enormously consistent customer service. And that’s their watchword. Well, there are other retailers who practice high levels of customer service. And of course, they’ve lost their ability to have truly differentiated somewhat unique assortments. And the customer doesn’t have to shop at Nordstrom to find goods they’re looking for, they can go online, and they can shop from anywhere in the world. Whether they’re living in the US or Canada or anywhere else, for that matter. So the uniqueness that Nordstrom has arrived on, has lost quite a bit of its luster. And I’ll say one of the thing, in the US pre-COVID, Nordstrom was doing almost 40% of its business through its online portal, which had rendered some of their biggest stores nothing more than very fancy distribution centers. Lots of excess square footage being devoted to customer fulfillment and customer pickup, which is not a winning formula because you’re paying rent and occupancy costs on all that space. So they’ve been on a slippery slope for quite a few years. And how could they ever have made a go in Canada, unless they could be something that Canadians couldn’t live without? Or find elsewhere? And speaking of customer service, I mean, Nordstroms customer service is legendary. But then so is Harry Rosen’s customer service. You couldn’t ask for a more customer-centric culture. And I would say that’s pretty much the case for Holt Renfrew. And for some other specialists or luxury retailers in Canada. So what did they come to the table with? “Hey, where’d Nordstrom! Come to shop!” and what did Canadians do? They ignored it.
Craig Patterson 18:01
I found I found as a customer myself living in Toronto and visiting all the stores in Canada. I didn’t always have positive customer service experience with Nordstrom. I know that there was a lot of turnover in terms of staff. I know this firsthand, working with the University of Alberta. We went down to the Calgary store, this is before oil prices had tanked in around 2015, was struggling to hire people. I know that I think there was an 88% turnover the first year that the CF Toronto Eaton Centre opened to 88% turnover in terms of staff. I had an experience in the store where, and this did surprise me quite a bit, a young gentleman working in the store, don’t think he’s there recently, I pointed out as a bit of a bit of a joke, I said, “Oh, there’s a Harry Rosen poster that’s looking into the menswear department of Nordstrom at CF Toronto Eaton Centre”. And he says, “Oh, don’t go there. Harry Rosen sucks”. And I just thought, oh my god, I can’t believe you said that about a competitor. Anyways, I didn’t find that we had the same customer service experience here at Nordstrom, at least me being a man of my age, compared to what I’ve seen in the in the United States where no one would ever say anything like that, as far as my experiences south of the border.
Mark Cohen 19:16
Well, transplanting that culture and that practice is not something you can do overnight. It takes years to build that legacy. And to presume you can transplant it literally overnight and sustained it is a fool’s effort. So I always thought from day one, it would take years for them to establish themselves with any kind of a long range platform for success. At the end of the day, I’ve heard the same kind of experience that you just recounted. I forgive them for the fact that they’re new and it’s a struggle to build in a workforce that’s got some staying power. But you see, it’s unacceptable. Especially if your point of differentiation is your customer centricity. It’s unacceptable. And I must tell you, I say that with with quite alacrity because Sears Canada had an enormously powerful customer service point of view. It certainly was there before I got there and I did everything I could to enhance and enable it to continue. When Sears Canada was scorecarded against this competition, which is something that company paid for all the time, we were always head-and-shoulders above virtually everyone else, certainly The Bay and Canadian Tire. We pay a price for that. You don’t provide excellent customer service just because you say you do. So I forgive Nordstrom for the fact that they struggled. But at the end of the day, I don’t think they had anything to sell that Canadians had to buy from them that they could find somewhere else. Customers revert to the brands they’re most familiar with. And the uberous to think that they didn’t have alternatives that were local and firmly established as kind of stupid and silly. When you break into a marketplace, you have to earn your stripes from day one for quite a while before you’re given the momentum necessary to continue to carry on. And they just didn’t have it. Which is, by the way, one of the reasons why Target failed and failed fast.
Craig Patterson 21:59
Oh, we’ll be talking about that.
Mark Cohen 22:00
Target thought, “Hey, we’re Target” and they bought a portfolio of stores. Half of which were terrible. They were the old Zeller stores. Half of which were the original Zellers locations which 30-40 years ago were on the right side of the tracks. Opposite a crappy Kmart Canada, which Walmart acquired. At some point, Walmart moved from one side of a suburban community to another and built a new Walmart superstore. Zellers stayed in the shadow of their original location and became a place customers really didn’t find appealing to say nothing of the fact that their assortments were nothing to speak of. So Target moved in and half of the locations they acquired were dead on arrival, but they felt “Because we’re Target, we’re going to be so powerful that customers will still seek us out.” and of course, not only did they not, they made a whole host of terrible mistakes, shocking that they made those mistakes. And of course, they folded up their tent almost immediately. Was there something about Canada? Well, Canada is a tough place to do business because of its size and complexity. At least Nordstrom didn’t try to open a store in Quebec.
Craig Patterson 23:31
It was going to.
Mark Cohen 23:33
I know. I don’t say this in any kind of a pejorative way because Sears Canada did almost a third of its business in Quebec which was very profitable and successful in Quebec. Quebec is another country. Like it or not, there’s a little more going on than just the language requirements of doing business in Quebec. It’s got a different customer profile, with different taste level and different points of view. At least they didn’t have seven store in Quebec.
Craig Patterson 24:07
Let’s get back to Nordstrom in terms of its real estate. Do you have any insight into what could be done with the full size boxes in terms of the full price stores for Nordstrom, those six locations in Canada? What could you see coming in? Could we see another international retailer like say Galleries Lafayette come in from Paris? Or do you think that could be subdivided? Or do you have any sort of guesses what could happen there? And at this point, they’re just going to be guesses, of course, because we don’t have anything confirmed yet from any of the landlords.
Mark Cohen 24:32
Some years ago, Galleries Lafayette opened up a store in New York on East 57th Street, and it was a dud. Much fanfare much publicity. After the first six months, no business. So what would appeal to a Galleries Lafayette or a Pron Tom, or Harrods to jump the ocean in light of historic failure? I can’t imagine, even if someone were to give them the space. There’s nothing but failure. With regard to retailers who’ve attempted to cross an ocean across the border, the probability of success is de minimis, even where some very, very powerful global players have eventually succeeded. So for example, Zara opened several dozen stores in the US and immediately failed. And they close them all. And they took a year to figure out why they failed. And then they reopened and now they’re wildly successful. Why did they fail, they hadn’t figured out the logistics of doing business in the United States. It’s a landmass that’s substantially bigger than Europe. And so the time to distance, the cost per unit from a node to a customer’s shopping bag was entirely different than what they had expected. And so they they packed up their tent and then they restarted the clock, and they eventually had become really successful, but it cost them a lot of money. Uniqlo had delusional views of 100+ stores in the US, they now have after years of doing business something like 50 in they struggle because the dynamic of the extraordinarily successful Asian fashion retailer doesn’t work in North America the way they assumed it would, on every level, you can imagine from color preference to sizing.
Mark Cohen 26:44
To your original question, what happens to these boxes? Well, there’s some investment analysts, at least in the United States, yapping about experiential retail and maybe someone will open a sporting goods organization with driving ranges and basketball courts and a way to utilize the space to which I say yeah, right, in your dreams. These are large boxes. I don’t think there’s any likelihood that someone will take them out. Because I can’t imagine anyone having a strategy which would be productive enough, even if the real estate was given to them. Can the spaces be broken up? Yeah, that’s usually available to the landlords, but it’s always very expensive. There’s been a variety of reconfigurations that have taken place at the Eaton Centre. When Eton’s opened in the Eaton Centre, it occupied something like nine floors and then eventually it gave up two floors which Sears Canada took over. Ae their specialty tenants who would consume new specialty space? Maybe in Yorkdale. I can’t imagine. I think there’s a world of hurt out there in terms of what to do with this space. It really is a blight on the mall because it’s a parking field if it’s Sherway or Chinook that’s vacant and empty and it’s a blight on downtown Vancouver and the Rideau Centre in Ottawa. I don’t know what they’re going to do there. So what can I say the real estate business is as ruthlessly challenging as retail, because it is retail, and I’m anxiously awaiting what kind of ideas surfaced as to what to do next.
Craig Patterson 29:01
Now three of the six malls were Nordstrom is located in Canada also have Saks Fifth Avenue stores which is owned by the Hudson Bay Company. It’s no secret that these stores are struggling here in Canada, the Saks Fifth Avenue stores, do you have any insight into the future save those malls of Saks Fifth Avenue was to exit the Canadian market and just how Saks is doing generally in its entry into Canada?
Mark Cohen 29:24
Well, Richard Baker had delusions of grandeur when he decided to move Saks into Canada. The most egregious decision they made was to move Saks into The Bay on Queen Street in Toronto, which happens to be across the street from the Eaton Centre, which is completely wrong from a location point of view. You could probably plant a Saks Fifth Avenue on Bloor Street and possibly be successful. Queen Street? Forget about it. These other locations which are struggling; I think there’s no future. Saks, by the way, you should know has historically been wildly successful in their flagship store in New York on Fifth Avenue. And half of their suburban stores throughout the United States have eventually failed after their original lease agreements, which were basically free, expired. So there’s all sorts of Saks Fifth Avenue in the United States that existed because a developer paid for Saks’ presence. And when those leases ran out, Saks couldn’t make sense of re-upping the lease because they never made any money in those locations. How could they possibly insinuate they would make money in Canada? Once again? Do they have anything to sell that Canadians can’t find somewhere else? I don’t think so.
Craig Patterson 31:03
Makes sense. Now, let’s talk about American brands. Generally, in Canada, we’ve seen a few fail any insights into why I’d say some American retailers have failed when they come into Canada? And is the Canadian consumer that much different than Americans? Do you think?
Mark Cohen 31:17
Well, the biggest issue, of course, is there’s much fewer Canadian consumers. I mean, the numbers are strikingly different. So the population density, the available disposable income by virtue of population size is fundamentally different. The cities across the 49th parallel optically look just like American cities. But the population densities are far less, the distance between cities is far greater. So the logistics of servicing Canadians across the 49th parallel, let alone moving north into the country are fundamentally more challenging than in the US. And that’s not because there’s anything wrong with Canada, that just because it’s all about the cost of diesel and the number of miles you have to travel from point to point. There is also a tremendous amount of cross border duty and other expense involving the movement of goods, which is expensive. No matter how you look at it, it’s expensive. And of course, Canadians don’t have any tolerance, understandably, for differential pricing. So, I can remember Canadians sharing with me how irritating they found dual pricing on things like magazines. Time Magazine was $6.99 in the US and $7.99 in Canada. It pissed them off even though they knew damn well there was a difference in the currency value. They’re sophisticated shoppers and they don’t like it. When Sears Canada had to provide opening price appliances, refrigerators, washing machines, dishwashers, we had to offer those things at pretty much the same price as they were offered in the US because there was visibility into US pricing, even though there were a whole lot of reasons why those goods should be more expensive. We just had to fight harder to be able to provide them at comparable retail prices. A lot of US retailers have just tacked on that added expense to the retail price thinking “Well, it is what it is.” and the Canadian consumer rejects the idea of it. That was a big issue that Target never saw the memo with regard to differential pricing. So you know, is there something about Canadians that’s different? Well, their incomes are a little different, their tax burdens are higher. They they pay more income tax, but then they have nationalized health care – good for Canada. The sales taxes are less in some respects. At the end of the day, there is no doubt more value-oriented to some degree than their American counterpart because they have to be. It’s not because their sensibility is any different. My view is their their their sensitivity to fashion is identical, depending on where you’re talking about in Canada. Vancouver and Montreal are a whole lot more fashion sensitive than Winnipeg. Just like San Francisco, Los Angeles and New York is a whole lot more fashion sensitive than Memphis, Tennessee, or Dallas, Texas. There are vagaries that exist from market to market to market. Canada has a whole lot of weather that speaks to adjustments in assortment. So, I mean Canada has a real honest to God, no fooling winter. There are markets as you know better than I in Canada where it starts snowing in September and the snow is still there in June. And so, you got to be thoughtful about how you adjust your assortments from a seasonal point of view. And yeah, the US has cold weather places like Minneapolis, but it’s not like Winnipeg, I’m telling you. So there you are.
Craig Patterson 35:37
Having been to both cities, I completely agree. Do you have any suggestions for American brands? Or if they’re looking to come to Canada how to be successful? Or what do American brands need to do to be successful in Canada?
Mark Cohen 35:48
Well, you have to understand your your your your gun sight has to be pointed at a an outcome, that’s reasonable. You can’t use American math in Canada. You have to adjust it for market size and logistics complications. Certainly with regard to Quebec, the enormous burden of language, there’s a lot of American retailers who have said, “Hey, they do business in French. So we’ll hire some French speakers to provide us with guidance as to how to proceed.” and what they do is they hire a bunch of people who speak Parisian French, and immediately discover that that is not acceptable in Quebec. Because Quebecois language is a little different and it’s nuanced, and it’s pronounced. And so my Sears Canada team, based in and heavily involved in doing business in Quebec were perfectly compliant with the province’s rules, never had an issue because we were an original enterprise. When all these rules were struck years and years and years ago, we had call centers with bilingual voices. In Ottawa, we had a call center and half the call center was English and the other half was French. Depending on the customer engagement, they were speaking to someone in their language and it wasn’t someone in the Philippines or someone in India. It was someone who was completely conversed comfortable and familiar. Because in Canada, language is a point of sensitivity. Like it or not, it is what it is. And so there’s a lot of American retailers who’ve lost or never known the sensitivity you have to bring to the to the table. And and the allure is, “Hey, it’s right across the border. It’s you know, bingo. 50 miles north or 25 miles north. What’s the big deal? We’ve got a lot of customers who buy goods from us from Canada. It’s a slam dunk.” except it’s not.
Craig Patterson 38:09
This is fascinating stuff. One more question for you here. It’s back to a Canadian retailer. Nordstrom obviously is announced is leaving the Canadian market. I feel like my foundations have been shaken a bit. Do you have any predictions on the future, say of Hudson’s Bay stores in Canada?
Mark Cohen 38:27
Well, Hudson Bay, I’m a tremendous critic of Hudson Bay. And I go back to my four years in Canada, where Hudson’s Bay before Richard Baker essentially took control of the business, there was an American who bought the business and then died suddenly and Richard Baker was a minority shareholder who took over the whole thing. But pre “all of that”, while I was at Sears Canada, Hudson Bay tried to convince us to buy them on two occasions. They had actually been in conversation with Sears Canada before I arrived. So there were three attempts to sell themselves or merge in some way with Sears Canada. While I was there, we spent a lot of time standing on their throat. Because in apparel and accessories, they were our principal competitor. We had to deal with a whole array of competition. Everybody under the sun, including Canadian Tire, etc, etc. but we were standing on Hudson’s Bay’s throat and being very successful doing so I might add because they were looking to throw the towel into our ring, if you will. Baker is an extraordinarily aggressive real estate deal maker who has been manipulating the daylights out of the brand and the equity in the enterprise since the day he took over. And most of the decisions that he’s made, if not all of them from my vantage point, have failed. Maybe not so much for him personally, but certainly for the organization. So he moved The Bay into the Netherlands and Belgium, which was a catastrophically stupid idea. It was part of a real estate deal that he did with Karstadt in Germany. He screwed around with an extraordinarily aggressive expansion of Saks Off Fifth, which is now retrenched. He’s moved Saks into Canada, he was gonna move sacks into Europe, but that didn’t play out. He’s hived off the .com business in the US in the form of Saks.com and HBC.com in Canada, which is counterintuitive to the way customers want to shop and expect to shop. But he’s managed to suck an investor into the mix who’s put money into these new equities. And I suspect he’ll try to do that with Zellers. What do I think the future of The Bay is? I don’t think there’s a future I think Richard Baker will fritter away whatever equity is left which enables him to monetize the asset as best he can. And there’s not going to be much left when all is said and done. That’s a very hostile critical view that I have, but it is what it is.
Craig Patterson 41:25
I’m not sure if anything would surprise me at this point after the Nordstrom announcement and whatever else is to come. I’ve got some insights as well. So hopefully, we see that Hudson Bay stores around here in in Canada. So I want to say thank you so much. Mark Cohen, you’re the director of Retail Studies at the Columbia Business School at Columbia University in New York City. You were also the CEO of Sears Canada from 2001 to 2004, thank you so much for joining us here today with your wonderful insights. I hope to have you back again soon.
Mark Cohen 41:52
You bet. Thanks for welcoming me.
Craig Patterson 41:56
Thank you for being here. I’m Craig Patterson. I’m the founder and publisher of Retail Insider Media Ltd. This is the Retail Insider Interview Series on video. Thank you so much everyone for joining us here today. Whether or not you’re watching this or listening to this as a podcast as we also have that as a channel. Take care and bye for now.
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I really enjoyed this video interview. I loved hearing Mark’s insight. I also want to say I really miss Sears.
Mark makes some salient points, no doubt. His knowledge and opinions are quite interesting to hear. A little too bearish on what LL’s can do with the Boxes left, IMO, but maybe that’s the reality……..
I remember well when I visited the Nordstrom at Chinook Centre in Calgary, several months after it open. A friend and I drove from Edmonton, where we live, specifically to visit Nordstrom. We were familiar with Nordstrom, as both of us had been to numerous Nordstrom locations in the USA, between the two of us. We both thought the store was beautiful. Much nicer than the Nordstrom stores, in general, that I had seen in the USA. However, we both left without a Nordstrom bag in our hands. The only thing we bought, was lunch, at the Nordstrom restaurant. As a last resort we thought we might buy [men’s] socks, or underwear, but nothing Nordstrom had in stock, compared to the array we could buy at the men’s underwear and socks department at Simons in West Edmonton Mall [WEM]. We truly had the sense that nothing at Nordstrom was particularly special. The designer brands were not anything, at that time, we could not get at Edmonton’s Holt Renfrew [Holt’s Edmonton is now sadly just a memory] and Simons at WEM. Simons had, and still has, more fashion-forward, exciting stuff, than I saw at Nordstrom. [There is always something I want at Simons!]
Mark Cohen does fall on the pessimist side of the equation as far as his projections about crossing international borders for U. S. retailers. And he certainly doesn’t mince any words as far as the fate of Hudson’s Bay Company. As far as he’s concerned, Saks’ days in Canada are numbered and The Bay itself will soon join its late competitor Eaton’s in retail history. Looks like a sea change in Canadian commerce is on the way.
I sure hope Mark is incorrect regarding Hudson’s Bay. Saks on the other hand, I’ve been alluding to things for quite a while in my articles if people have been paying attention.
Cohen is an interesting guy — incredibly sharp-minded and focused. I was surprised by a couple of points where he got the history wrong — particularly as it related to the history of T. Eaton Co. and its relationship to Sears Canada. TECO never gave up space in Toronto to Sears — the Eaton’s flagship had lost a few floors of sales space (including 3 below and space on the upper floors) during its lifetime between opening and the eventual CCAA and BIA processes between 1997 and 1999 — ultimately leading to TECO being bought by Sears at which time the Sears HQ relocated to the upper floors of the store. That’s a significant factual error from someone whose company occupied the space.
The Bay has significant issues — Cohen doesn’t hide his animus towards HBC. A couple of those “many CEOs” have done well at HBC (certainly not all) — and while Sears may have stood on The Bay’s neck, we all know how the story played out for Sears in the end…the final chapter has been written for Sears Canada, not yet so for The Bay.