Bricks-and-Mortar Retail Here to Stay

CHICAGO—About 500 real estate professionals attended BMO Capital Markets' 10th Annual North American Real Estate Conference, held yesterday and today in Chicago, and many of them were asking the panelists and keynote speakers how they thought e-commerce would impact the retail world. Richard Baker, governor and executive chairman of Toronto-based Hudson's Bay Co., one of the most successful retailers in Canada, Germany and the US, gave a clear answer, one echoed by several experts at the gathering.

“It's the best thing to happen to the department store business,” he said yesterday during a lunchtime question-and-answer session. Although many once thought that an online behemoth like Amazon threatened other retailers, it “still can't be as competitive as a well-run department store.”

That's largely because even though consumers want the convenience of shopping online, most also want a more personal touch that only a bricks-and-mortar store can provide. “They want to be able to shop on their mobile device,” Baker says, perhaps in the morning, and have the option to pick-up their items in-store at lunchtime and have it “all bagged and ready to go.” And if products need to be returned, that can also be done in-store, where they have customer service professionals ready to provide assistance.

As an added bonus, “that is a very profitable transaction for a department store,” since there are no distribution costs. “We've seen tremendous growth in our business primarily because of the internet.”

Therefore, Baker advises retailers to invest in state-of-the-art information technology and build their online capacity even if it does not provide immediate returns. At HBC, which includes such well-known brands as Lord & Taylor, Saks Fifth Ave., Saks Fifth Ave. OFF 5th, Hudson's Bay, and others, the returns were slow to start, but the investment has proven well worth it. In fact, he told the crowd, HBC's online business grew by 30% last quarter.