HBC is named after Hudson's Bay Company, a venerable Canadian department store that evolved from a 17th century fur trading business. The company expanded into a conglomerate in the 21st century, but, recently, has fractured. The company — for years led in some capacity or other by U. After several dismal years of falling sales and investor rebellion, HBC went private early last year. Now, the company is breaking down further.
In a series of moves that run counter to retail's current omnichannel ideal, HBC is chopping up its crown jewel, luxury department store Saks Fifth Avenue, with the help of cash infusions from private equity investors. Saks' stores will stay at HBC, while its e-commerce business spins off.
The same goes for the off-price Saks Off Fifth business, which will be separate not just from the full-line business, but also split into digital and brick-and-mortar entities. It's a bewildering set of circumstances, though the company promises that it won't interfere with the customer's smooth interaction with the "Saks" brand. Several analysts have taken note over the years of Baker's real estate focus, maintaining that it has at times interfered with the business of retailing.
The fragmentation of Saks is another way to monetize its assets and yet another example of Baker's priorities, according to Mark Cohen, director of retail studies at Columbia University's Graduate School of Business.
Still, there's some rationale for the move to operate a stand-alone digital business that does involve retailing, based on the increasing willingness of luxury players to sell online, after years of resistance.
But not even the fat price tags on luxury items guarantee profits when selling online. And Saks and other high-end department stores are now competing with luxury brands themselves, as fashion brands increasingly bypass department stores to sell directly to customers. That makes splitting up its operations a risky move, according to Cohen. They have figured out how to harvest all of that excess, all of that extra margin and run the business with all the risks that it entails.
So Saks' command of the industry is waning, along with their competition. And what does Baker do? He splits the dot-com off from Saks, which means there will be warring tribes between the two groups of merchants.
There will be inconsistent and incompatible pricing and availability, and the customer is going to be confused. Read more about cookies here. By continuing to use our site, you agree to our Terms of Service and Privacy Policy. Register Now. FP CryptoDecoded: Join us at our free crypto and blockchain events.
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