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The article is titled “The collapse of Hudson’s Bay signals a turning point for Canadian legacy retailers.” It was originally published on March 25, 2025 and is authored by Xiaodan Pan, Associate Professor, John Molson School of Business, Concordia University; Martin Dresner, Professor, Logistics, Business and Public Policy, University of Maryland; and Ruifeng Wang, PhD Student in Supply Chain Management, University of Maryland.

Hudson’s Bay Company has begun liquidating all but six of its stores. After the 352-year-old retailer filed for creditor protection amid mounting debt and operational losses in early March, a court gave it permission to start the liquidation process.
Founded in 1670 as a fur-trading enterprise, Hudson’s Bay grew into one of Canada’s most iconic department store chains. But with nearly all locations set to close by June 30 and its loyalty programs suspended, the future of Hudson’s Bay remains uncertain.
The retailer’s financial troubles raise broader questions about the viability of traditional department stores in an increasingly fast-paced, digitally driven retail environment.
Modernization efforts
In recent years, Hudson’s Bay attempted to modernize by blending its physical retail footprint with a growing digital presence. This included launching a revamped e-commerce platform and creating an online marketplace that allowed third-party sellers to broaden its product assortment.
In 2021, Hudson’s Bay split its e-commerce and physical store divisions into separate entities: The Bay Online, focused on digital retail, and Hudson’s Bay, dedicated to in-store shopping experiences.
But despite these efforts, Hudson’s Bay has struggled to differentiate its online platform in an overcrowded and highly competitive digital landscape, all while maintaining its physical presence.
The rise of off-price retailers
In sharp contrast to the struggles of legacy department stores, off-price retailers such as Winners, Marshalls and TJ Maxx continue to thrive. Their success is largely due to their ability to attract consumers across a wide range of income levels by offering brand-name merchandise at large discounts.
In Canada, Winners alone has expanded to more than 300 stores nationwide, while Marshalls has added more than 100 locations. Combined, they significantly outnumber Hudson’s Bay’s approximately 80 stores.
Off-price retailers have also gained a competitive edge through real estate choices, favouring open-air shopping centres and strip malls that provide greater accessibility and ample parking, which are benefits that many Hudson’s Bay urban locations lack.
The off-price model thrives on an ever-changing merchandise mix. Buyers continuously source fashion, designer labels and home goods from a broad spectrum of vendors. This approach keeps assortments fresh and also ensures fast inventory turnover, reducing holding costs and supporting lower prices.
This retail model has demonstrated resilience across economic cycles. In times of inflation or financial uncertainty, foot traffic to off-price stores typically increases as consumers become more price-sensitive — further eroding the market share of traditional department stores.
The pressures from digital retailers
The rapid rise of e-commerce has presented a significant challenge for traditional department stores. Over the past decade, online shopping in Canada has grown substantially, with monthly online retail sales surpassing three billion Canadian dollars.
E-commerce now accounts for 11 to 12 per cent of total retail sales, with categories like fashion, hobby and leisure, electronics and furniture and home goods accounting for around 75 per cent of all retail e-commerce sales in Canada.
In the general merchandise space, Amazon controls more than 40 per cent of Canada’s e-commerce market. Retail giants like Walmart and Costco have also expanded their digital capabilities. These players undercut the traditional value proposition of department stores.
The large investments required in distribution capabilities has made it increasingly difficult for smaller competitors, such as Hudson’s Bay, to match the delivery speeds and product assortments of these retail heavyweights.
In niche merchandise categories, specialized retailers have also chipped away at department stores’ customer bases. Sephora and Shoppers Drug Mart dominate the beauty and personal care market, while Lululemon, Nike and Zara rank among the top online stores in fashion.
Ikea, Wayfair and other direct-to-consumer brands lead the online home goods and furniture market, while Canadian-based Holt Renfrew and France-based LVMH are both leaders in the luxury market.
Adding to the challenge are international digital disruptors such as Shein and Temu, which have have rapidly gained ground in Canada. In 2023, Shein led the country’s online fashion segment with e-commerce net sales of approximately US$1.4 billion.
Temu — an ultra-low-price platform that entered Canada in 2023 — became the country’s most-downloaded iPhone app by the end of 2024. These platforms are challenging legacy retailers by offering aggressive pricing, free shipping and vast product assortments.
Pathways to reinvention
With almost all of its stores closing and its loyalty programs suspended, the future of Hudson’s Bay is in question. While its brand recognition remains strong, it’s unclear whether it will be able to come back from the brink it’s now on.
For any struggling legacy retailer looking to survive in today’s evolving market, reinvention is essential. Department stores and legacy retailers will need to reinvent themselves across five key dimensions:
1. Reposition the brand: Canadian retailers can redefine their core value propositions, emphasizing what makes them unique. Their uniqueness may lie in their Canadian heritage, for instance. Brands like Roots and Canada Goose have been successful with this strategy.
2. Rethink retail formats: The age of downtown retailing continues to fade, especially as remote work reduces foot traffic in urban centres. Large-scale covered malls are also declining, given the demise of anchor department store retailers and the rise of e-commerce. Canadian retailers should explore alternate formats, such as neighbourhood-based, category-specific outlets tailored to community preferences.
3. Optimize physical presence: Strategic location decisions are crucial. Physical retailers must right-size their physical footprints — closing underperforming locations while reinvesting in high-traffic, high-return outlets. Future expansion should favour asset-light, data-informed models based on actual consumer demand.
4. Improve in-store experiences: To draw customers back into stores, shopping must become experiential. Immersive displays, personalized service and community-centric events could make a visit to a physical store more memorable and engaging for customers.
5. Integrating physical and digital channels: A cohesive digital and physical strategy is essential. Technologies such as augmented reality fitting rooms, virtual showrooms, click-and-collect options and AI-powered personalization could bridge the gap between online and in-store shopping.
A defining moment for Canadian retailers
Canadian retailing stands at a pivotal crossroads. The collapse of legacy department stores, the dominance of e-commerce giants and the rise of off-price and digital-first competitors all signal a permanent shift in how consumers shop.
A long legacy alone does not secure survival. As seen with the collapses of Sears, Eaton’s and now Hudson’s Bay, failure to adapt can lead to obsolescence. The retail landscape is now defined by agility, innovation and the ability to meet consumers where they are.
For retailers still standing, the lesson is clear: nostalgia is not a business model. Shoppers are now more price-conscious, convenience-driven and digitally engaged than ever before. Companies unwilling or unable to evolve will likely face the same fate as the retail giants that came before them.

The collapse of Hudson’s Bay signals a turning point for Canadian legacy retailers

March 26, 2025 • My Project Name

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