Hudson?S Bay Company Essay, Research Paper

INTRODUCTION

The Hudson’s Bay Company is the oldest incorporated merchandising company in the world. The Bay has remained in business in North America after its incorporation on May 2, 1670 by the Royal Charter. The official title of the company is, “The Governor and Company of Adventurers of England trading into Hudson’s Bay”. This title is usually shortened to “Hudson’s Bay Company” or, just “the Bay.

I was attracted to the Hudson’s Bay Company because firstly, I am frequently shop at the Bay. As a result of this, I would like to show the pride and respect I have for this successful company and its great history. Secondly, I have easy access to the information required to complete this independent study. Lastly, as I am not an expert when it comes to the operations of the company, this independent study will enable me to achieve a deeper understanding of management, and how it affects me.

I utilized a number of resources in order to create this report. The resources are: Hudson’s Bay Company Annual Repoorts of 1996, 1997, 1998, Employee Training handbook, the Internet, and magazines. I combined these resources to produce a very informative report on the Hudson’s Bayu Company. In addition to this, the resources I used gave me a chance to cover many aspects and areas of this corporation. The topics covered in this report are: Company Profile, Human Resources, Customer Services, Organization, and Community Involvement.

I included these types of information to give you, the reader, a deep interpretation of the Hudson’s Bay Company.

To understand how the Hudson’s Bay Company (HBC) became the corporation it is today, a brief history is needed to gain some background knowledge. In the Bay’s first century of existence, it created forts on the Hudson Bay and traded furs to the Native Peoples. In the Bay’s second century, competition from the North West Company was acknowledged and responded to. This total time period of 200 years assisted in the discovery of Canada. In 1821, the two competitors merged under the name of Hudson’s Bay.

In the twentieth century, HBC began to concentrate on retailing which is it’s primary activity today. Between 1913 and 1968, HBC made downtown department stores in the major cities of western Canada. As time rolled along, the Bay moved into eastern Canada and the suburbs of major Canadian cities.

Between 1959 and 1987, the Hudson’s Bay Company and their primary investments in the oil and gas industries. The names of the organizations were Hudson’s Bay Oil & Gas, Siebens and Roxy Petroleum.

In 1978, HBC obtained Zellars, Simpsons in 1979. Between the years of 1986 and 1991, Simpsons was merged into the Bay. In 1990 and 1991, Zellers acquired Towers and therefore, Rowers merged into Zellers. In 1998, Zellers acquired Kmart Canada.

Today, the Bay and Zellers are the major operating divisions of Hudson’s Bay Company. It allows this corporation to cover the Canadian retail market across all price zones coast to coast. It is responsible for an estimated 37% of Canadian department store sales and almost 8% of all retail sales, accept for food and automobiles.

(HBC Annual Report 1996, pg #45 – The above information is from one resource.)

The company aims to advance its human and material resources and take advantage of its merchandising experience to forecast and satisfy the needs of customers for the goods and services. The HBC looks for these goods at fair prices, which in turn can earn a satisfactory return for it’s shareholders.

When you look at the historic 328 years of the Hudson’s Bay Company, you see the significance of change and the ability to adapt to the external environment as the great success of this Candian company. This is very evident when you view the 1998 fiscal year as a transition year full of critical, painful, and need self-evaluations. As a result, many goals and priorities were made.

1. INVENTORY: As a result of warehousing goods and returning them to the shelves, the stores were over-inventoried. Necessary changes were made to create a more clear and manageable store environment with fresh merchandise.

2. UNPRODUCTIVE STORES: From renovation, to a change in assortment, to the closing of the negative cash flow stores, each store was taken into consideration for appropriate action to create a productive change.

3. CREDIT: Through marketing opportunities, a large growth potential in Credit was concluded. The in-house credit is a big advantage in order to increase the use of Bay credit over bank credit cards.

4. SYSTEMS: A change in direction and an immediate improvement of systems was needed. An overhaul of inventory systems began to refine merchandising and ensure high demand goods were on the shelves for customers.

5. INCREASED COMPETITION/CUSTOMER SERVICE: The development of company strengths and differences was needed to deal with increased competition. As customers are very important in retailing, a centralization of focus on customer services was a great change

(HBC Annual Report 1998, Pg #3 – The above information is form one resource.)

COMPANY PROFILE

THE BAY

The Bay is Canada’s fashion department store with 100 locations east to west. The stores are positioned in the mid-range urban and suburban markets, with a strong franchise in the downtown core of major cities. Soft goods retail concentrating on fashion merchandise and soft home categories is the Bay’s main business aspect. Customers are presented quality merchandise at popular prices with a combination of traditional department store guarantees and services. The Bay promotes its own credit cards and accepts major bank cards. Merchandise selection, arrangement and sales promotion are centralized. Costs are reduced and operating efficiency is increased as a number of service functions are integrated on a corporate basis.

Bay stores are marketed by price level and fashion appeal to fit the location of the communities. The stores vary in size from 21,000 square feet in Banff, Alberta to 890,000 square feet in downtown Toronto. Most suburban stores fall in the 140,000 to 180,000 square feet range.

(HBC Annual Report 1998, Pg #18 – The above information is from one source.)

The Bay’s objective is to be Canada’s bets fashion department store by offering many varieties of goods and services, value and quality, fashion and trend leadership, a high level of customer service and a guarantee of performance satisfaction.

ZELLERS:

Zellers is the leading national chain of discount department stores. Zellers is for the budget minded customer with the guarantee of the lower price. Premium values are offered in both national and private brand merchandise that is communicated aggressively with many forms of advertising. Zellers is further distinguished by their Club Z, and Club Z Gold, which are customer loyalty programs.

Zellers stores are characterized by central checkout and self service. Zellers markets its own credit card and accepts those of major banks. Sales promotion and merchandising are centrally directed. Zellers operates 298 stores across Canada, mostly in shopping malls. The average store is 80,000 square feet, with new stores in the 90,000 to 125,000 square feet range.

(HBC Annual Report 1998, Pg #24 – The above information is from one source.)

Zellers goal is to lower the cost of living for ordinary Canadians by providing its customers with exceptional value.

ACQUISITION OF KMART CANADA CO.:

The acquisition of Kmart Canada Company was completed on February 27, 1998. The 112 Kmart stores were combined with the 298 Zellers stores, enabling the two managements to merge as one.

A review of the 410 stores was done to evaluate the stores based on the location, size, performance, lease arrangements and local market considerations. This review concluded with plans to close 39 of the Kmart stores and turn59 into Zellers stores. These changes will provide Zellers with a much stronger competitive position.

(HBC Annual Report 1997, Pg #7, The above information is from one source)

HUMAN RESOURCES

As the company’s reputation is in the hands of the employee, employee relations, training and development is an important aspect of the Bay’s business. As a customer’s experience is the actual dealings with the employee, the Bay’s reputation is on the line every day.

The Bay has many employee standards, for example, a strict dress code, values that an employee must uphold for the business to maintain success. If these standards are not met, a loss of customers will occur, and therefore, a loss of revenue.

EMPLOYEE VALUES

For more than 300 years, the Bay has demonstrated a long and successful ability to stay above competition. The Bay has done it by adapting to change, and by giving shareholders a fair return on their investments. Even though no other company has the Bay’s history of success, the Bay has earned what they have by working at it. The Bay has made efforts to assume certain beliefs and missions that grow it’s business and it’s company. At the Bay, those beliefs are called CORE VALUES and will make the vision of Satisfaction and Profitability a reality.

COMMITMENT – We are driven by our commitment to deliver the best level of Customer Satisfaction with pride, integrity and enthusiasm.

EXPECTATIONS – We strive to do our best to meet or exceed expectations at all times to ensure Satisfaction and Confidence.

TEAMWORK – We encourage quality and participation in the achievement of common goals, with openness and supportive teamwork.

RESPECT – We show respect in listening, recognizing and sesponding to each individual.

CHANGE – We welcome creativity and innovation that lead to growth and improvement in order to adapt to a changing market.

(Employee handbook, Pg#2, The above information is from one source.)

EMPLOYEE RELATIONS:

In addition to the Bay having it’s own set of Core Values to make the business more profitable , the Bay concentrates on it’s Employee Relations to bridge the gap between employer and employee.

There are many ways that the Bay creates this great relationship. Performance Appraisals are conducted upon every new employee to assess performance and work progress. Communication is very important in a large business like the Bay. As a result of this, daily and weekly meetings are held to exchange vital information and to discuss some issues. In addition to this, the employee is kept well informed with operations by means of Company Newsletters, Store Newsletters, Communication Binders and How To Manuals. Personal Development is considered a very meaningful item when it comes to a job. To improve employee skills, Computer Based Training course are available to increase product knowledge, systems, and merchandise education

(Employee Handbook, Pg #8, The above information is from one source)

EMPLOYEE BENEFITS:

As an employer, the bay provides it’s employee with the essential benefits they require. One illustration of this is the Hudson’s Bay Share Ownership Plan. All HBC employees are entitled to contribute a minimum of $10.00 per month, to a maximum of 10% of annual base salary. The plan’s most important feature is that company contribution is related to success as measured by earnings per share. A minimum of $1.00 will be contributed by the company for each $6.00 contributed by the employee.

The H.B.C. Pension Plan is designed to gives the employee security when he/she retires. All new regular full-time staff must join the plan. Plan members will contribute 3% of annual earnings and is matched by the company, dollar for dollar. Each participating employee showing the amount contributed and the projected pension receives annual pension statements.

The objective of the HBC’s Group RRSP is to provide for a responsible and enjoyable retirement of every employee’s financial planning. Investment opportunities are offered to all employed by SunLife Assurance Company. All tax advantages of RRSP’s are contained in this plan, including spousal membership and the benefit of payroll deduction.

The HBC Insurance Plan provides greater security in three ways: life insurance, additional insurance for accidental death or serious injury, and protection against loss of earnings in the event of a prolonged inability to work.

The Health Plan combines both medical and dental coverage. There are two different plans in which an employee ac choose from. The Basic Plan or the Enahanced Plan. The Basic Plan cover 80% of the cost of basic dental and medical expenses, as well as 100% of the cost out-of-Canada emergency medical treatment. The Enhanced plan covers the Basic Plan’s benefits, plus an additional 50% of eligible major dental expenses including vision care.

HBC’ Employee Assistance Plan is and employee benefit which is designed to assist employees with problems or concerns that may affect their physical or emotional health. These can include: personal and emotional concerns, stress, alcohol/drug related concerns, financial/legal counseling, citizenship/immigration, day/elder care, or family planning.

In addition to all of this, awards are provided to employees through the Long Service Awards Program. All full-time, part-time, and auxiliary employees who have a long service anniversary are eligible for this program.

(HBC Employee Handbook, Pg #21-24, The above information is from one source)

CUSTOMER SERVICE

As a result of the in depth, divers employee standards and values, customer’s satisfaction is common sense when it deals with HBC. The most important guideline in providing customer satisfaction as and employee is “DO WHATEVER IT TAKES TO SATISFY YOUR CUSTOMER.” (HBC Employee Handbook, Pg #4) Customer request are never too difficult or time consuming in the eyes of a HBC employee. This philosophy is a fraction of what this company is doing to ensure customer satisfaction and loyalty.

The bay’s Customer Service Strategy consists of 5 different Customer Service Standards. They are:

1. To offer a pleasant greeting to the customer. This includes acknowledging the customer within 20 seconds and 20 feet through eye contact, a smile or a sincere greeting.

2. Add-on or related-item purchases must be suggested. An example of this is suggesting a belt to match with the dress pants that the customer is about to buy.

3. Ask: “Will this be on your bay Card?” The advantages of using the in-house credit card is that all family members can use that same card, and that customers do not have to carry a lot of cash to shop at the bay. In addition to the Bay card, another promotional event, bay Card Dollars, were made to encourage spending in store. Bay of Simpson’s cardholders who receive Bay Card Dollars are granted $5.00 off their next Bay purchase. In addition to this, the bay is the new, exclusive department store sponsor of the AIR MILES Reward Program. Double Air Miles travel miles can be earned with the use of the customer’s Bay card.

4. To thank the customer by name is a valuable service strategy because the use of the customer’s name makes the transaction much more personal and enjoyable.

5. Inviting the customer to return is an important part in establishing a long-term relationship, a repeat customer.

(HBC Employee handbook, Pg #27, The above information is from one source.)

The Bay’s marketing strategists have created a customer services plan that has worked, and will work in the future as customer relations becomes directly related to a company’s profit or losses.

ORGANIZATION

The organizational purpose is directly related to the high level of customer service the Hudson’s Bay Company has. The organizational purpose of HBC is to produce a good and service that satisfies the needs of their customers. In order for this business firm to do so, HBC operates within a Division Of Labour – the process of breaking upo large tasks and assigning smaller tasks for individuals of groups.

An organizationa chart is a graphic table of duties and responsibilities of officers and departments of an organization. Since the organizational chart of HBC including the Board of Directors and Senior Officials would be very large, I produced a chart that only displays the organizational plan of the ba at Eglinton Square.

ART DAVIDSON

(STORE MANAGER)

VERONICA MONTEVERDE

(HUMAN RESOURCES/OPERATIONS MANGER)

YVONNE ROBIN NANCY ANASTASIA BARB EDITH

THOMPSON PATEL HARRISON MERKOURIS TULK KOZMA

-WOMEN’S -MEN’S -LINGERIE -JEWELRY -SHOES -LINENS

WEAR WEAR -TOYS -HOUSEWEARS

-CHILDRENS’S

WEAR

SALES SUPERVISOR LEVEL

SALES ASSOCIATE LEVEL

COMMUNITY INVOLVEMENT

As Canada’s oldest corporation and its largest department store retailer. Hudson’s Bay Company naturally supports the communities where they operate. Investing in charitable and non-charitable organizations leads to healthy and thriving communities that allow business to flourish. In 1998 alone, HBC contributed over $1.3 million in charity across Canada. The new Imagine’s Caring Company standards, introduced by the Hudson’s Bay Company accounts for 1% of pretax profits to charitable and non-profit organizations.

HBC continues to be a major supporter of the United Way in many ways: by making charitable contributions, loaning professionals to help with campaigns, conducting fundraising campaigns among the employees and making grants to the branches in HBC communities.

Across Canada, Bay and Zellers work closely with the Canadian Red Cross to assist with national disaster ease. The retailers have provided supplies and employee volunteers to help communities in need, for example, during the Manitoba floods and the Eastern Canada ice storm disaster.

Since 1986, Zellers ‘Moonwalk” for Cystic Fibrosis has raised over $12 million. Zellers stores have continued being the sponsor of over 300 children’s soccer and hockey teams. Zellers also participated in Toronto’s 92nd Annual Santa Claus Parade.

The Bay and Zellers both gave proceeds from the ‘Candle in the Wind” sales to the Canadian Red Cross and the Bloorview MacMillan Centre in the name of Diana, Princess of Wales. HBC was one of the proud sponsors of the Women’s College Hospital Foundation’s “Women’s Health matters Expo & Forum”. The HBC is happy to help Canadian communities become better places to live in.

(HBC Annual Report, Pg#13, The above information is from one source.)

FINAL ANALYSIS

I believe that the Hudson’s Bay Company will encounter financial growth as the Canadian economy continues to grow. With HBC continually expanding and investing into it’s own company, I believe this retail giant will become very prosperous in the future. With the acquisition of Kmart, which enhanced both the Bay and Zellers, HBC will enable itself to increase operations across Canada. Furthermore, with low interest and unemployment rates, a moderate increase in personal disposable income will allow customers to purchase items from HBC more regularly. When more opportunity arises, the Hudson’s Bay Company will flourish enormously.

1. Historic HBC. Internet.

http://www.hbc.com/hbchistory/historic-hbc/HistoryHBC.htm.

21/12/99

2. Hudson’s Bay Company Annual Report 1998. Toronto,

Avant Litho Graphics Inc., 1999

3. Hudson’s Bay Company Annual Report 1997. Toronto,

Avant Litho Graphics Inc., 1998

4. Hudson’s Bay Company Annual Report 1996. Toronto,

Avant Litho Graphics Inc., 1997

5. Hutchinson, Brian, “Two Steps Forward, One Back”.

Canadian Business, June 1996