Canada’s oldest company could start its liquidation sales soon and go on for up to 12 weeks—but what sorts of deals could shoppers find?
Lawyers for Hudson’s Bay appeared in court on Monday and outlined their plans, proposing a way for the retailer to remove some stores from the liquidation process should it find sufficient financing during those weeks when the company’s lawyer expects to offload its inventory.
Pending that court approval, the liquidation process could start within days—meaning inventory clearance sales at all 80 stores across the country, as well as three Saks Fifth Avenue and 13 Saks Off 5th stores that the company owns through a licensing agreement.
As the retailer winds down, Hudson’s Bay said in a release that it will continue to serve customers both at the store and for a “limited time” online. The company said in a release issued Friday that it will provide updates on closure timelines, customer accommodations, and impacted locations, including final sales events.
Anyone who has a gift card to the historic retailer has until April 6 to use them, but those who hold a Hudson’s Bay Mastercard are no longer able to view, earn or redeem their points.
“Once the liquidation sale begins, all sales will be final,” the Bay said.
What could the liquidation sales look like?
“Hudson’s Bay is trying to get as much money as it can from the sale of its inventory, and that’s in order to pay creditors—those that they owe money to,” Daniel Tsai, adjunct professor of law business at Toronto Metropolitan University told CTV News Toronto in an interview Tuesday.
Tsai adds that the retailer will want to recover as much money back as they can from their sale, so they won’t necessarily go “hog wild” at the start and offer steep discounts.
“Realistically, the way they start with liquidation is usually fairly nominal discounts, like 10 to 20 per cent for the first few weeks,” retail analyst Bruce Winder told CP24.
Then, as the weeks carry on, the sales will likely get steeper the closer to the end date of business, Tsai says, when they have to shut down. In that time, Tsai says the court-appointed trustee will get involved with the liquidation process and start accelerating the sales and discounts—but these higher mark-offs won’t happen right away.
“It’s going to take a bit of time for them to eventually liquidate at the big discounts that people are going to be expecting,” Tsai said.
But, it might not pay off to wait. Heavier discounts typically pop up when shoppers aren’t buying what’s left, Tsai notes.
“Usually by the end—when it gets really nice at like 50, 60 or 70 (per cent)—there is not much left anyways. So it has some impact, but perhaps not as much as you would think,” Winder said.
That said, anyone seeking for some deals on luxury items and designer goods may want to wait.
“You’re going to start small in order to encourage early sales without destroying or damaging and too deeply cutting into your margins,” Jenna Jacobson, an associate professor at the Ted Rogers School of Management at the Toronto Metropolitan University, explained.
Whatever is left over in the sale will likely be sold off to third-party sellers or treated as a complete loss—meaning it is in the Bay’s best interest to sell off as much of their inventory as they can, Tsai said.
There are currently 32 Hudson’s Bay stores in Ontario with the flagship location in downtown Toronto.
Will the sales be different at Saks Fifth Avenue?
It will largely depend on what the liquidation process is.
“It could be that the Saks Fifth Avenue and the (Saks Off) stores might actually be packaged differently, and there might be an effort to try to sell those stores to a different buyer,” David Soberman, professor of marketing at the Rotman School of Management at the University of Toronto, told CTV News Toronto.
But, at present, it is hard to gauge what exactly will happen as Hudson’s Bay waits for court approval.
“What we do know for sure is that in the Bay locations, there will be a liquidation sale,” Soberman said.
Every company has a different approach to the liquidation process, Jacobson says.
But she said that the retailer’s strategists will work to determine what will work best for their existing shoppers.
“I wouldn’t anticipate that you would have the exact same sales across the board, but rather, looking to see how that could—how you could best meet the consumers of the various companies,” Jacobson said.
