Hudson’s Bay Company has a long and complicated legacy. But does it have a future?

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Jordan Heath Rawlings It is probably the single brand most associated with Canada. It is also the single brand most associated with colonization, with stolen land, and with the genocide of indigenous peoples. Yeah, the Hudson’s Bay Company has a long legacy. But for how much longer? For years now, Bay stores across the country have been shrinking or vanishing entirely. The company went public, then private again. Its online shopping portal has not come close to matching its retail heyday. And, of course, the Pandemic further shrunk already dwindling retail traffic. So what does HPC have? Well, real estate, a lot of real estate. Some of the biggest and most iconic downtown footprints in the country’s biggest cities. It has far more retail space than it has things to sell and people to sell them. And even with the Pandemic hurting the value of downtown space, it is still worth millions upon millions of dollars. So what does the future hold for the Bay? One flagship store has already been given away, either as part of the company’s reconciliation journey or as a tax write off, depending on who you ask. Other buildings may soon follow. Where will this brand exist in ten years? Will it exist? Should it exist at all? I’m Jordan Heath-Rawlings. This is The Big Story. Don Gilmore is an award-winning Canadian novelist, journalist, and children’s book author. He dug into the Bay, its legacy, and its future for the Walrus. Hey, Don.

Don Gilmore Morning.

Jordan Thanks for joining us today.

Don Gilmore My pleasure.

Jordan Why don’t we start with this? Because this is an interesting story that I didn’t know before I read your piece. Can you tell us about the long decline and the eventual offloading of the downtown HBC store in Winnipeg? What happened to that store, and how did it all end?

Don Gilmore Well, the Hudson Bay store, Eaton’s and the Hudson Bay, used to be on Portage Avenue in Winnipeg, and they really dominated the retail landscape. I grew up in Winnipeg, and those were the two stores that virtually everyone went to. And then with the advent of malls in the suburbs, the downtown started to decline, and Eaton’s, as you know, disappeared. And in its place, there’s now the arena for the jets and the Bay just kind of quietly withered over the last I would say probably last 15 years or so. But it got to a point by 2019 where it really looked like this sort of dismal soviet era shopping experience where the half the floor would be boarded up with plywood and some floors were empty. So it really was just kind of dwindling to nothing and then finally shut down.

Jordan And what happened to that store, or should I say the retail space that that store occupied?

Don Gilmore Well, the store itself is a beautiful old Bozart building, and it’s huge. It’s five stories, and each floor is 100,000 sqft. So it’s this massive building. What happened was the governor of Hudson Bay Company gifted the store to the Southern Chiefs Organization, which is an alliance of a number of Indigenous nations in Manitoba. So they essentially received this as a gift.

Jordan Now, we could talk about this part of the story for quite a long time, and I want to make sure that we cover it. But maybe if you could explain just a little bit about how the legacy of the Hudson’s Bay Company is tied so closely to colonization and why something like a gift to the Southern Chiefs is kind of necessary, even if it’s a drop in the bucket.

Don Gilmore Well, I think there’s a lot of Indigenous groups who perceive the Hudson Bay Company as one of the primary forces of colonization. And, you know, it’s it began in 1670. And as I mentioned the piece, it actually was pitched by Radisson and Grosselier to King Charles II in 1650 or 65 when the bubonic plague was happening in London. And so this idea that it started essentially as a land deal in the middle of a plague and may end that way, Charles signed off on this, not knowing, not having a clue how big this land was because it hadn’t been mapped. So you have the Hudson Bay Company coming to the west primarily and setting up all these forts and trading posts and essentially taking advantage of the Indigenous people and making huge profits. And so that continued. I mean, Hudson Bay didn’t get out of furs till the 1990s. So I think there’s a sense of resentment, of centuries of being taken advantage of.

Jordan And, in effect, Hudson Bay Company owned all of the Canadian West?

Don Gilmore Essentially. So that was also, as you would imagine, a sticking point.

Jordan And we’ll come back towards the end of this conversation and kind of talk about how this changes moving forward and what might happen to HBC or some of its retail stores, but maybe to move forward centuries, I guess, in modern times, at its peak, as a retailer, a physical retailer, how large and prestigious has Hudson Bay Company been?

Don Gilmore Well, it had a long run as an incredibly prestigious organization. And, I mean, it was ubiquitous. It was all across the country, everyone in terms of its brand, and long before we used the word brand as much as we do now. But it was an incredibly successful brand. And when Baker bought it richard Baker was a New York developer, bought it in 2008. And at that time, he bought it as a private company, and they were still doing extraordinary business at that point. I think in 2008, they had a little under 2 billion in sales, and he hired Bonnie Brooks to run the operation because Baker himself had no retail background. And he hired Bonnie Brooks. And when she left in 2016, their sales were over 14 billion a year. So it was a huge enterprise, even recently.

Jordan I’m glad that you mentioned sort of the takeover by Baker and HBC going public. When did the decline that we’ve seen, and we’re about to talk about just how much it’s declined. When did that really begin? Can we pinpoint when and why?

Don Gilmore Well, I think there was a number of forces at work. And so when it was at its height in 2016, there was other department stores were essentially declining in both the US. And Canada. So you have eaten’s disappearing as soon there was Sears, Simpsons, Zellers. A lot of these department stores were disappearing from the retail landscape. And in the States, there was essentially a diminished department store presence. So they had this sort of last gasp in 2016. The next year, though, like, within three years, the Hudson Bay was down to 5 billion. So from 14 billion to 5 billion in sales in three years. And I think what you saw was a different kind of retail landscape and also the advent of online shopping. And the Bay wasn’t brilliant at jumping into the online part of it.

Jordan What did Baker do with the company during the 2000 and tenzin? And what did he do when it kind of became obvious that this was in decline?

Don Gilmore What happened was he was under pressure because it was a public company. He was under pressure from the shareholders saying, the share price is going down, we’re losing money. And you need to monetize some of this real estate because the Bay still owned a number of their stores and some beautiful stores, like the Downtown Toronto store on Queen and Young Street, for example. So he sold the Downtown Toronto store to Cadillac Fairview for 650,000,000 and then leased back the space. And so he started the real estate aspect was I mean, it was always there as an underlying idea because Baker himself had said, we’re not a department store, we’re essentially a real estate company. And so that was one of the big dominoes to fall. But he was still under pressure from all these shareholders. So he teamed up with some equity companies and we work and some other people, and then bought it out and it went private again.

Don Gilmore When we talk about the real estate that company owns or owned, can you give us a sense of the expanse of those holdings?

Jordan I mean, you mentioned the Winnipeg store, obviously, where we are in Toronto. Everyone knows the gigantic downtown store. What else do they own?

Don Gilmore Well, they’ve got 86 stores in Canada, and of those, only 14 are either owned or have ground leases. Ground lease is a long lease of between, say, 51 hundred years, and all the rest are on kind of short or shorter term leases at least, and are often in malls. And we’re seeing some of those stores. For example, the one at the corner of Young Bluer, which has now just disappeared recently. I think we’ll see some of those disappear when the leases are up or when they can sublease. And then it’s a question of what do you do with the really valuable real estate? Like the Vancouver building is beautiful, the Calgary building is Montreal, and they have plans to develop some of those buildings where you would be able to build up and put in really nice office space that would be geared towards tech companies, for example. And then you would diminish the real estate component in that building. You’d keep maybe, I don’t know, two floors of the Montreal store or the Calgary store, and then you would have the rest of it as office space.

Jordan Do we have a sense I guess maybe not an explicit sense, because they’re a private company again now, but what the cash value of all that real estate is, and as a caveat to that, is the Bay’s entire value now tied up in real estate? Does their retail operation drive any significant revenue?

Don Gilmore When we talk about the overall value of the company, it’s a good question because they’re very quiet with those figures, as you would guess. There was an estimate in 2020 from a real estate company that suggested that the worth of their holdings was 3.6 billion and they had about 1.5 billion in mortgages. And it’s difficult to say in the two years since the real estate has generally gone down. And you see in cities like Montreal or New York, for example, where they also have he’s got holdings in New York where you have very high vacancy rates for office space.

Jordan So now it’s a question of the retail arm isn’t doing brilliantly, but how well is the office space going to do?

Don Gilmore Yeah, that was my question, because in certainly downtown in every major city right now, there’s reams of empty physical retail space. Right. And I’m not sure how a company can survive by making plans to monetize that space when there doesn’t look to be a ton of opportunities to monetize it. Well, one thing that may happen in their favor is I talked to a developer in Manhattan who owned a lot of office space. And he had said that there has been a flight to quality, as he termed it. Which was if you have newer buildings with much better facilities and things. Like, for example, in older buildings, certainly in Manhattan, I’m sure in Toronto, you have ventilation systems where essentially you’re circulating air throughout the entire building and everyone is breathing everyone else’s air. And no one really gave that much thought until the Pandemic. And now it’s a it’s a big issue. And you do have really sophisticated new buildings that have much better ventilation systems where you’re not circulating the air all through the building. If they do convert, say, the Calgary and Vancouver and Montreal stores and have a kind of beautiful high tech space that’s tailored for those industries, they may draw people away from existing older buildings. It’s a crapshoot, but that’s something that could work out for them.

Jordan Let’s go back to the Winnipeg building since it’s the one they’ve totally given away. What has happened to it since it was given to the Southern chiefs? What has it become or what will it become?

Don Gilmore Well, it hasn’t become anything at this point. The idea is it’s going to become kind of multi use building that will have an indigenous museum, child care. I think there’s going to be elder care as well as apartments. So the challenge is, I mean, architecturally there’s a number of challenges, one of which is who exactly is the client? Because ostensibly it’s the Southern chiefs, but that’s a big group and there’s a lot of different interests that are involved under that umbrella and who has a say in what goes forward in terms of design and use.

Jordan And then, because it’s being largely funded by three levels of government, do they have a voice in this as well?

Don Gilmore So if you’re the architecture firm right now, it’s a group in Winnipeg called Number Ten. And I think there’s a possibility of doing something really extraordinary with that space. It’s a beautiful old building. The idea is that because the floor plans are so vast, you’d have to have an atrium in the center to bring in light. And they’ve got the challenge of there’s asbestos embedded in the floors and that’s another problem. So there’s huge challenges architecturally, but if it does all work out, it could be a fantastic facility and it’s in this great location. So it really is what happens in the design phase, which is going to be and also, whatever they budget for, you can almost bet it’s going to go beyond that. So that’s going to be the next issue.

Jordan Would you go back to the government and say, we need another $40 million?

Don Gilmore When HBC gave that building away, it was done as part of their truth and reconciliation journey.

Jordan How directly did they address the company’s legacy when that happened?

Don Gilmore And I’m just interested in the rest of Canada is coming to terms with this. I’m interested in how directly the company has I mean, they did, I guess, face this head on, in a sense. But I’m approaching this with, I guess, a bit of cynicism in that this is really an extraordinary PR opportunity. And they’re giving away a building that they tried to give away previously to the University of Winnipeg, which is right across the street, and University of Winnipeg turned it down because it just was too expensive to modify and run. So this is sort of plan B and it looks great, but understandably, there’s indigenous groups in Winnipeg who are saying this is essentially just HBC’s offloading a toxic asset. There was property taxes owing of over $300,000. It had died as a retail venue. And even though you could build above there because the foundations actually go down, I think 100ft. You could probably build 30 floor office building or condo building above it if you wanted to, but that area still is in transition, as they say. And so it’s not a place, I think, that a New York developer would want to be investing. So really, he’s kind of got the best of both worlds. He gets rid of this toxic asset. He publicly announces that this is part of a kind of reconciliation. Justin Trudeau shows up at the ceremony where they’re officially giving it to the Southern chiefs and says, this is this wonderful act of reclamation. So I think as a PR stunt, it was brilliant.

Jordan What about the HBC brand itself as its physical retail footprint disappears? Will it survive as an online retailer? I mean, as you mentioned, they were kind of late to that party. They certainly are incessant with their email appeals about the Bay days. But how much cachet, I guess, does this centuries old brand have in the fast fashion, online, instagram type of retail?

Don Gilmore Yeah, I think they’re having a lot of difficulty, and I think if they were to go exclusively online and Baker owns Sacks as well, and as you know, in Toronto, the downtown flagship store is divided vertically into half as Sacks and half as HBC. But Sachs, he’s now spun off the sacks online as a separate company, basically. And so there are observers, retail and real estate observers in New York saying this is just part, this is the beginning of the end, that Sax will become simply an online presence, and they’ll be able to sell whatever real estate they can that Sax is inhabiting. I think it would be tough for the Bay to survive. I know Baker’s original plan was that because they had so many stores and they were spread across the country, and that most of the country’s population is within something like two hour drive of any base store, that they would be able to use the stores themselves as kind of warehouses. And you could send out things and get them there quicker than Amazon could, for example. I don’t know that that has come to pass or not, but I think as an online presence, I’m of a certain age and I have a nostalgic relationship with the Bay, but even I’m not really shopping there. And I think for younger people, it’s not on the radar.

Jordan So that leads to my last question. If and when the company does disappear, the buildings, the brand, everything associated with the retail part of the Bay, how should Canadians feel about that? You know, we’ve talked about a horrific legacy of colonization. At the same time, there are people of generations of Canadians who have grown up with the Bay being the centerpiece of Canadian retail. Really, how do we talk about that legacy if it disappears?

Don Gilmore Well, that’s going to be an interesting discussion because I think we’re going to see at least three sort of distinctive responses. And the first, I think, from many indigenous groups, I would guess they’re going to be if not celebrating, then they won’t be sad to see HBC disappear. Good. Ridiculous. Yeah, exactly. And I think there’s a handful of us who there’s a kind of nostalgic sense of we remember it fondly for completely different reasons, but I think the main response might end up being indifference, that it could quietly slip away and a lot of people wouldn’t notice. And that’s a bit sad in a way, but that could be, in fact, what happens.

Jordan Don, thank you so much for this. It’s a fascinating story about a company with a legacy, whatever else you might say about it.

Don Gilmore Well, thank you for inviting me.

Jordan Don Gilmore writing in the Walrus. That was the big story. For more, head to the big storypodcast. CA. You can always find us on Twitter at the big story. FPN or you can email us hello at the bigstorypodcast CA. You can call us too and leave a voicemail 416-935-5935. Thanks for listening. I’m Jordan Heath Rawlings. Have a safe weekend and we’ll talk Monday.