09 Nov E-Commerce

By Grant T. Smith

I know what I want to be writing about – I want to be writing about the US election results and I want to be analyzing what those results have done to the marketplace. However, as I’m writing this, it is Tuesday and I don’t know the election results. I am anxious. As a political junkie, I’m exhausted. I feel like this election has been going on for far too long, but at the same time, I’m concerned about the withdrawal that I will face Wednesday morning.

And so, in an attempt to soften the blow, I am trying to switch gears now and provide a look at another important business story.

I was reading an article the other day about Hudson’s Bay’s foray into e-commerce. I found myself wondering if they weren’t trying to become the next Canadian version of Blackberry, as the undertaking seems outside the scope of reasonability.

What I read was that the Hudson’s Bay’s CEO Jerry Storch has spent as much as $60 million in an effort to build e-commerce. To achieve this they have created a 750,000 square foot facility in the east end of Toronto. He was quoted as saying: “it takes 15 minutes from the time we get an order till it can be out the door.” This is impressive, no question. It caused me to go on the Internet and take a tour of this facility, a system known as, “Perfect Pick.” Very impressive, I have to say, very impressive.

I love that the robots that gather stock from the shelves – three-story high shelving no less – charge themselves as they go down the wall by creating friction against the walls. It is these robots that allow the company to achieve this target of shipping within 15 minutes of an order. I don’t doubt that this is a necessary expense for a store that’s truly able to compete.

A question I have is how does Hudson’s Bay get us online shopping with them in the first place? I also wonder how Hudson’s Bay competes effectively on price with Walmart or Amazon. One source noted that Canadian Tire’s website gets more traffic than Hudson’s Bay’s and Canadian Tire doesn’t offer delivery.  

Speed of delivery, speed of processing and the like, are bare minimum requirements for high-volume retailers in the Internet world. I suspect Hudson’s Bay’s offerings, while making them competitive on delivery, don’t get them the necessary audience to move the product that’s required to compete.

I do accept Jerry Storch’s point that Hudson’s Bay’s competitive advantage is the bricks and mortar store. Amazon, after all, does not have a bricks and mortar format. I know that I can’t get my head around buying clothing, for example, without trying it on. I know that for me that physical storefront is always going to be a competitive advantage and one for which I will pay. But I worry that I’m the dinosaur in the story.

In Storch words: “our dressing rooms are our number one competitive advantage.”

I wish him luck, as I reach for my BlackBerry.