Greatra Mayana

Career & Employment Opportunities

The Hudson’s Bay Company’s Evolution From Fur Trading to Retail

When you think of department stores, you probably
think of elevator music and holiday sales. You probably don’t think of frontier warfare,
forbidden romance, and the rugged heroes of Manifest Destiny. But maybe you should, because today we’ll
be looking at the Hudson’s Bay Company. This video is brought to you by Tab for a
Cause, a free browser extension that donates money to charity with every new tab open without
costing you a single dime. The Hudson’s Bay Company is best known today
as a Canadian retail conglomerate. It owns department store brands like Lord
& Taylor, Saks Fifth Avenue, and of course Hudson’s Bay. HBC has stores all over Canada, the US, and
parts of Europe, with annual sales of almost $7 billion CAD. But it didn’t start out that way. In fact, it started before department stores
even existed, all the way back in the tail end of the 17th Century. In 1659, two French fur traders got a tip
from the native Cree that Hudson’s Bay was a rich opportunity for fur trading. They sought backing from the French, who controlled
the Canadian fur trade at the time, to set up a fort in the Bay to reduce the cost of
transporting their goods. After being refused, they set out anyway,
and upon their return they were arrested for trading without a license. They were fined, and their furs were confiscated
by the government, not the optimal start. But still, they were convinced the Bay was
the place to be for a fur trader looking to strike it rich. Stonewalled by the French, they approached
a group of Boston businessman, looking for investment, and with the help of their benefactors
set off to England to secure more support. In 1670, King Charles II granted the group
a trading charter, and incorporated their venture as the Governor and Company of Adventurers
of England trading into Hudson’s Bay. George’s cousin, Prince Rupert, was installed
as the company’s first Governor. They were granted nearly 1.5 million square
miles of Canadian territory to explore, including modern-day Ontario and Quebec. The Canadian fur trade was heating up, but
the region was fraught with danger and the constant threat of warfare. The HBC relied on Native trappers to supply
many of their pelts, but various Native tribes were often at war with one another, and expeditions
had a tough time making it to the trading forts, which were concentrated in the Bay,
without being attacked by rival tribes. Henry Kelsey, a Hudson’s Bay apprentice
who would later become company governor, made serious inroads with the local Cree, learning
their language and adopting their customs, in an effort to promote peace among the tribes. In fact, Hudson’s Bay employees integrated
quite often into local Cree culture. Many HBC traders married Cree women and had
children known in local parlance as “Half-Breeds”. This was, of course, considered illegal by
the company, but it happened nonetheless. Eventually the HBC eliminated its regulations
against intermarriage, and the children of these mixed-race couples became employees
of the Company. It wasn’t just the local Native tribes that
presented a problem for the HBC, though. Skirmishes with the French forces looking
to establish dominance in the fur trade were a fact of daily life for much of the HBC’s
first century. In 1759, however, in the middle of the Seven
Years’ War, the British defeated the French at the Battle of Quebec. The French abandoned their nearby forts, but
French-allied Native tribes refused to recognize British authority, burning several forts until
King George III signed a treaty, which established land outside the trapping grounds as protected
territory for the First Nation Peoples. But all this competition only forced HBC to
expand, especially as they strove to outpace their economic rival, the North West Company,
which employed a legendary trapper named Alexander MacKenzie, who once covered a round trip of
3200 miles in just over a hundred days — that’s more than a marathon every 24 hours. Beating a guy like that is pretty good motivation
to expand, and so they did. The next big hurdle for HBC was the gold rush
of 1849. As 40,000 laborers looking to get rich came
west, the massively increased demand made basic goods almost unaffordable. The price of unskilled labor, for example,
doubled. The profits from gold mining offset this enough
to keep things profitable, but new tax and customs laws were a huge inconvenience for
HBC. Their ships, for example, had to sail an extra
350 miles off course just for inspection. In 1881, HBC created its first mail-order
catalogue, the start of what would become its multibillion-dollar department store business. But the 20th Century is when the retail arm
of the Hudson’s Bay Company really started expanding — after all, it was a natural
extension of their experience with trading posts, updated for the modern world. Their trading posts, by the way, were so successful
that now-major Canadian cities sprung up around them, like Winnipeg and Calgary. In 1926 HBC entered the oil and gas business,
which persisted throughout a good chunk of the century, until the crashing oil prices
of the 1980s. But as the urbanization and rising consumerism
of the 20th Century continued to grow, it was HBC’s investment in retail that kept
paying off, and their number of stores and acquisitions increased. By that point its share of the fur trade had
dwindled to almost nothing, and it was the target of consistent attacks by anti-fur advocates,
leading the company to sell off its line of fur auction houses and to abandon the trade
completely. But while the retail division was soaring
above its American rival Sears, in 1994 another American giant entered the Canadian market:
Walmart. An all-out pricing war developed between the
Walton family’s superstores and HBC’s discount arm, Zellers. In just three short years Walmart gained a
45% market share, outpacing Zellers. HBC’s answer was to invest in much larger
Zeller’s locations and they even purchased all the K-Marts in Canada. Zellers was rebranded as a more upscale discount
store, closer to Target than Walmart, and its historically lousy customer service was
actually improved, but low sales persisted. By this time, e-commerce was just starting
to become a viable market, and HBC quickly jumped on board with But the existing competition was just too
much — sales remained stagnant, and the stock price began to plunge. In 2005, South Carolina billionaire and takeover
artist Jerry Zucker launched a hostile bid, eventually winning the company for just over
$15 CAD per share. But he died in 2008, leaving the company in
chaos just in time for the Great Recession. Zellers locations were either sold off or
leased out to Target Canada, which declared bankruptcy in 2015. As you can imagine, with Amazon knocking on
the door, the HBC’s management isn’t very confident. In February 2017 they tried to sell out to
Macy’s, but with decreasing profits and an increasingly uncertain future, it probably
won’t be long before the Hudson’s Bay Company joins the fur business in the history
books. Now, before you click off this video and open
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