The announced closure of Hudson’s Bay stores marks the end of an era for arguably the most emblematic brand in Canada’s retail landscape. While this loss saddens many nostalgic consumers, including myself, it also underscores an inescapable truth: the need to innovate and adapt your business model for the digital era.

Unfortunately the Bay missed its opportunity to effect a full digital transformation, including an omnichannel, personalized experience, as well as the development of a more engaging and higher performance loyalty program. Let’s explore what lessons might be drawn from the collapse of the Bay in terms of the evolving expectations in retail.

A transactional site is good, but not enough  

Today, online business can no longer be a mere complement to a physical store; it must be foundational to the strategy of a business.

If your site isn’t optimized, you’re already falling behind. To offer unique online experiences to your customers, you need to have a digital strategy based on solid foundations and high-performance technological tools.

More and more emerging platforms, like Shopify, are democratizing the digital experience by allowing thousands of small players to compete in retail, and at very low cost.

While the Bay had an e-commerce platform, it did not succeed at making it an engine within its business model for driving growth. Adding a transactional website is not enough to distinguish yourself from the competition. You need an omnichannel strategy that connects mobile, user experience (UX), and logistics with impeccable execution. Successful companies are those that have integrated digital everywhere: from search through to placing orders and extending to after-sales service.

A connected, personalized buying experience

Amazon and the other big digital players have set a high bar: fast delivery, highly personalized recommendations, one-click payment…

Today’s consumers are hyper-connected. They’re no longer satisfied with just habitually visiting a store or shopping on one or two websites. Before buying, they compare prices, examine reviews, interact with communities on social media, watch TikTok videos, and use mobile applications. They want a personalized experience, with targeted recommendations based on their preferences.

In other words, they expect that brands understand them, anticipate their needs, and offer relevant content on their preferred channels. The experience needs to be more and more seamless and increasingly faster. 

Market leaders are the ones who have grasped this fact. To succeed, they’ve equipped themselves with the best allies: data and artificial intelligence. Thanks to behavioural analytics, they send unique, targeted offers; optimize their customer journeys; and make every interaction more relevant.
The Bay, despite its brand recognition, did not understand how to exploit this growth lever to achieve its full potential. The result: a progressive disconnect with its clientele and… well, you know the rest.

Loyalty: An indispensable asset with no guarantee

Time and again, loyalty programs have proven¹ their ability to drive customer purchases as well as increase customer retention and lifetime value (LTV).

Of course, the program needs to be well designed, but it also needs to evolve and continue performing over time!

Once the program is launched, it’s essential to track key performance indicators (KPIs) to ensure that it’s meeting financial objectives. The last thing you want is a program that offers discounts without increasing consumer visits or the value of shopping carts.

The Bay ran a loyalty program which, despite a redesign in 2023, did not perform well. According to the LoyalT 2024 study,² the program ranked near the bottom of the list. While it offered enticing discounts, it had shortcomings that failed to effect change in the behaviours of program members, specifically:

• low engagement;
• an impaired omnichannel experience;
• a lack of gamification;
• low use of data; and
• very little personalization.

Consumers remain loyal to a brand or program for a few fundamental reasons.

1. Exceptional customer experience (CX): a seamless, pleasant experience, whether in-store, online, or via responsive customer service.
2. Values and sustainability: customers are increasingly sensitive to company values, especially when it comes to sustainability, ethics, and social responsibility (ESG).
3. Affection and engagement: loyalty goes beyond the transactional and is influenced by an emotional connection created between the program and its members.
4. Personalization and relevance: tailored service, recommendations adapted to preferences, and personalized communications increase loyalty.

Unfortunately, the Bay struggled to compete with the speed and aggressive pricing of the big online players. Its loyalty program, which had low engagement, couldn’t make up for the shortcomings of its overall customer experience.

Continue reading about loyalty programs in our article 8 Trends in Loyalty for 2025. 

3 lessons for modern businesses

The failure of the Bay serves as a warning for everyone: Modernization and innovation aren’t optional. Investing in digital, offering a seamless omnichannel customer experience, and developing an engaging loyalty program are indispensable.

Brands that successfully differentiate are those that embrace change. They adapt their business models to new market realities and understand that retail business is no longer just a matter of the product offered—it’s an experience. The Bay reminds us that no brand, no matter how iconic, is protected from failure if it doesn’t adapt.

Is your brand at risk?

• Do your marketing technologies and does your transactional site allow you to stay competitive?
• Do you fulfill customer expectations, which are becoming increasingly demanding, with an omnichannel, personalized experience?
• Have you established a high-performance, personalized loyalty program?

If you have any doubts, our business and loyalty specialists would be happy to talk it over with you. Get in touch.

Written by Valérie Bergeron in collaboration with Hans Laroche.

References

¹In addition to several independent studies, every edition of our annual LoyalT Study, published since 2017, has demonstrated the impact of loyalty programs on consumer behaviour.

²LoyalT 2024 Study by adviso: Data collection via web panel conducted by Ad hoc Research from May 22 to June 5, 2024, amongst 10,002 Canadians aged 18 and over who were members of at least one loyalty program.