Canada’s oldest corporation is on the verge of liquidation, following years of financial turmoil.
Following a highly publicized court process, a judge has now granted permission for the Hudson’s Bay Company (HBC, or The Bay) to begin liquidating its assets in an effort to pay off its debts—totalling around one billion dollars.
“I think one of the big issues with the Hudson’s Bay Company is that there’s just not enough shoppers in the stores buying things,” said David Soberman, a professor of marketing at the University of Toronto. “And this has been the case for a number of years now, but I think the chickens have come home to roost.”
The Hudson’s Bay Company store in Toronto, ON (credit: bargainmoose.ca)
Soberman said the decline of HBC, as well as other department stores which met their demise earlier, is due to the rise in online retailers and big box stores.
“Both of these things happened simultaneously,” he explained. “So there were many things you could get in a department store, and now you can get these in a big box retailer like a Best Buy…but most importantly it’s the growth of online shopping which has created a terrible problem for this store format.”
He said that HBC was unable to move into the online shopping market as successfully as other retailers, like Canadian Tire, Walmart and Costco.
“(HBC’s) online store left a lot to be desired, and I think if people are going that way, you have to basically go with the flow—and if you don’t…you pay the price, and that’s what happened.”
Canada’s oldest corporation
The original charter of the Hudson’s Bay Company, 1670 (credit: Hudson’s Bay Company archives).
The Hudson’s Bay Company was established in 1670 by a royal decree from King Charles II, and was granted monopoly rights over 3.9 million square kilometres of land, stretching all the way from northern Ontario across the prairies, and from the arctic down into what is now the northern United States. This was known as Rupert’s Land, and HBC acted as the de facto government there for two centuries.
Michael Dove, a history professor at Western University, stressed the geopolitical situation in North America at that time was very different than it is today. The English and French were battling for control of the continent, and the Hudson’s Bay Company played a big role.
“They actually battled,” he said. “Land battles, naval battles with the French right on through. So it was a heavily contested territory.”
An old photo of a Hudson’s Bay store (credit: Wikipedia Commons).
Dove explained that wealthy corporations often exerted control over territory like this during this time period, and chartered trading companies were a way for European powers to minimize their risk when colonizing new lands.
The Hudson’s Bay point blanket with its iconic coloured stripes (credit: Wikipedia Commons).
The East India Company was another notable example, he said.
“Money counts…and it’s not just something we talk about today, it’s something that was really changing several hundred years ago.”
In terms of the business, HBC’s trading model was simple: indigenous trappers would bring beaver pelts and other animal furs to a nearby outpost where they could trade them for essential goods like tools, cookware, weapons and eventually the iconic point blanket, which has since become one of the most recognizable symbols of Canada’s heritage—a staple in cottages and cabins across the country.
There was a large indigenous population already living in what would become known as Rupert’s Land. Relations with the company were at times complicated, but it was also not uncommon for HBC employees to marry indigenous women, which contributed to the beginnings of a distinct Metis culture, particularly in areas like the Red River Colony.
Many indigenous people already lived in the area that would become known as Rupert’s Land (credit: The Manitoba Indian Treaty/Peter Winkworth Collection of Canadiana).
Rupert’s Land was eventually bought by the Dominion of Canada around 1870, and in the early 20th century HBC emerged as the retail giant that Canadians know today. Opening major flagship stores in Winnipeg and Toronto, years of success followed. Eventually, HBC began to take over other department stores like Kmart, allowing them to carve out a sizable segment of the department store landscape.
As Canada entered the 21st century, the success of department stores began to decline. Simpsons, Eatons, and Sears had all gone under but The Bay, as it became known at that point, managed to stick it out until today. Dove explained that HBC is now owned by an American holdings company, which also owns Saks Fifth Avenue, and previously Home Outfitters and Lord & Taylor.
HBC’s flagship store in Winnipeg (credit: Rob McInnes, Manitoba Historical Society Archives).
“Unfortunately I see this as the end of the Hudson’s Bay Company,” said Dove. “And I think one of the things we don’t necessarily know about or think about is that (they) also operate charities.”
He said that HBC has brought in millions of dollars through their charities, and also spent a lot of money on Canadian history education, including famous publications like The Beaver and The Kayak—something he believes will be sorely missed.
“It’s hard not to feel a little sad about this…I guess what is lost—hopefully won’t be lost—is the knowledge of the role and responsibility that the Hudson’s Bay Company had in opening up the west…and also in many ways for keeping it Canadian.”
I think these blankets would continue to sell
Both Dove and Soberman said that this may not be the end of iconic products like the point blanket and the HBC Stripes brand, predicting that these could be picked up by other companies.
“I think this brand can sell, I think these blankets would continue to sell,” said Dove. “It may not be by the Hudson’s Bay Company anymore…I don’t think we’ve seen the demise of the point blanket altogether.
Assorted products bearing the signature HBC stripes (credit: Flickr/canpacswire).,
Soberman’s reasoning was more focused on the company’s debt issue.
“The brand itself, as a standalone entity with the symbols and logos and designs that are associated with it, is of value and it’s something that is owned by The Bay right now,” he said. “So part of selling that off would be an effort by the liquidator to try to give people that are owed money as much as possible.”
“The issue here isn’t ‘let’s try to save The Bay’,” he continued. “The issue here is there’s a whole bunch of companies, suppliers to The Bay, that are now owed a billion dollars—and they’re not happy campers, let me tell you.”
The judge overseeing the Hudson’s Bay Company’s fate authorized the liquidation to begin on Monday, March 24, and Canadians are gearing up for the big clearance sales that are expected to follow.
