Hudson’s Bay Co.’s expansion into the Netherlands will be swift, extensive and catering to a population of 17 million that’s large and affluent enough to support a higher grade of department store retailing, according to executives of the Toronto-based group.
On Monday, HBC revealed that up to 17 Hudson’s Bay department stores and three Saks Off 5th outlets will open across the Netherlands over the next two years, beginning summer 2017. It’s possible more stores will be announced in the future for the Netherlands, officials said.
Among the initial stores will be a 170,000-square-foot flagship for Hudson’s Bay in Amsterdam where HBC is combining three buildings to create the new property. HBC also plans to expand to Luxembourg with a Galleria Inno store in 2018.
The Netherlands marks HBC’s second expansion maneuver in Europe. The first involved acquiring the Galeria Kaufhof chain in Germany and its Inno division in Belgium last September, marking the launch of a “global platform,” including expanding Saks Fifth Avenue and Saks Off 5th chains to Europe.
The 17 Hudson’s Bay stores in the Netherlands will be “a contemporary, state-of the art version of Hudson’s Bay with a Dutch flavor to them,” Richard Baker, governor and executive chairman of HBC, told WWD. They will average 120,000 square feet, smaller than HBC stores in Canada which run several hundred square feet in size. Baker said he expects Hudson’s Bay in the Netherlands to be more productive.
“The Netherlands is one of the most affluent markets in the world,” added Jerry Storch, chief executive officer of Hudson’s Bay Co. “There is one [upscale] specialty player and a bunch of discounters. This is a huge opportunity for a better department store. The market is solid, growing at a healthy rate and well-positioned. It’s one of the densest in Europe, among major developed countries. It’s like one giant contiguous metro area… Seventeen stores are not that many for the market. It’s perfect.”
The biggest three cities in the Netherlands are Amsterdam, with a population of about 750,000; Rotterdam, with a population of about 600,000, and The Hague, with a population of about 475,000. The average household income in the Netherlands is 50,000 euros, or about $56,600 at the current exchange rate.
The executives said the Netherlands department stores will be operated by HBC’s Europe infrastructure headquartered in Cologne, Germany and that the stores will be called Hudson’s Bay. HBC Europe is run by ceo Olivier Van den Bossche.
A separate organization is being formed to run Saks Off 5th stores in Europe. Wayne Drummond, formerly senior vice president and general merchandise manager of men’s and ladies’ wear at HBC’s North American department store group, will head up Off 5th in Europe.
The decision to operate stores in the Netherlands reflects HBC’s intention to build a global retail empire and seize a void in the market created last year by the bankruptcy of the 60-unit V&D department store chain. V&D closed its stores and returned the real estate to landlords, much of which caught the eye of the HBC executives. “That created an opportunity for us,” Baker said. “There is a void in the country for premium department stores. We have no competitors other than fine luxury specialty stores.”
Baker also emphasized that 17 Hudson’s Bay stores is not too many. “Remember, in Canada the population is double the size of the Netherlands and we have 90 Hudson Bays there,” Baker said.
The Netherlands marks the first time that Hudson’s Bay department stores will be operating overseas, beyond its domestic market of Canada.
HBC will be taking over former V&D locations, where there will be “complete soup to nuts” renovations. Some locations will be built from the ground up, including the flagship in Amsterdam. “We anticipate 300 million euros [$339 million] in capital investment,” said Storch. “The majority of that is being funded by the landlords.”
The executives did not provide a volume projection on the Netherlands business.
Baker said the mix will include brands found at other HBC-owned department stores — Kaufhof, Inno, Hudson’s Bay and Lord & Taylor.
HBC will use the Hudson’s Bay nameplate for its Netherlands department stores but could have chosen the Kaufhof name considering the HBC-owned Kaufhof chain is in Germany, which borders the Netherlands, and Europeans would be more familiar with Kaufhof. But Baker explained, “When we were trying to figure out an appropriate name we did a lot of analysis and appropriate research. The people of the Netherlands wanted their own unique department stores and they have this great affinity for Canada. The Canadians were the ones who freed the Netherlands from Nazi occupation in World War II.”
The connection runs even deeper. To escape the Nazi invasion in May 1940, Queen Juliana of Netherlands fled first briefly to London, and then to Ottawa, Canada. While in Canada, the Queen gave birth to Princess Margriet in 1943. The Canadian government declared the Ottawa Civic Hospital extraterritorial, so the princess could have Dutch nationality. The Canadian forces, with the help of some Allied forces, liberated the Netherlands from Germany in May 1945.
“The Dutch have warm feelings for Canada,” Baker said, noting that the Netherlands is sprinkled with war monuments saluting the Canadian liberation. “They are aware of Hudson’s Bay,” even if they never shopped the store, Baker said. “This is a very strategic move taking our multibranded businesses and diversifying into a market that has much less competition,” compared to Germany and North America.