Will The Bay Close in Winnipeg and Elsewhere?

 

It is hard to believe there are only two Bay stores left in Manitoba, both in Winnipeg's largest malls St. Vital Centre and Polo Park but it is a reflection of how far department stores have sunk. This isn't just true of Canada but all around the world. There are a few strong luxury brands out there but a generalist middle income store has struggled.

The Bay has a line of credit from Cadillac Fairview, owner of Polo Park and other top malls in the country. They have not been receiving rent despite the cutbacks from the store to save money. This week BBC went into creditor protection to stop from being seized by landlords. The rumour is that 40 of 80 stores might be closed and that the licensed Sak's and Off Fifth Sak's may end up shuttered as well.

For some who have not shopped at The Bay in years, it is probably no surprise. In recent years, the Bay was trying to cater to the luxury market. Then they went for some Zellers nostalgia. Will it be enough to save HBC? We have seen store after store collapse recently. The Bay is one of the largest department stores out there still.

Some stores that have gone bankrupt and lived to see another another day with new Canadian ownership. HMV, Toys R Us, Northern Reflections and a few others are seeing new life. American ownership is not always going to be the right ownership for Canadian business now more than ever.

If the Bay ends up closing their locations at Polo Park and St. Vital Centre, expect something more dramatic as a replacement. It could be sub-divided into stores but it could also be turned into hotels, food halls and apartments. Even the big malls like Mall of America have been hurt by closures. Sears closing has left a huge hole in their mall and a long time lease has them trying to sort it all out.

Manitoba has been fortunate to turn around most malls that have had a major anchors leave have coped by filling it with other users. Some malls have converted to box stores instead. The ones that didn't like the Portage la Prairie Mall eventually lose one too many anchors and close.

As the details emerge about the precarious financial situation of the The Bay, it seems impossible that any of the company can survive. It owes $1 billion and credit protection will look to see what, if anything, can be done to emerge from that state. Anything of real value, like the real estate, has been sold off over many years.

It shouldn't be too long to see what the outcome will be. There is no doubt that if the company does come out of this, it will be much smaller. And sadly, that might mean that Winnipeg has no Bay stores.