How a 350-Year Legacy Was Lost: The Fall of Hudson’s Bay and the Cost of Misaligned Leadership

Ryan Rahimi
Jul 22
5 min read

The Bay. Image showcasing the lack of decoration and outdated layout in the last few years.

Introduction

Hudson’s Bay Company (HBC) is more than a retail chain. For centuries, it was a symbol of Canadian identity — an institution older than the country itself. Founded in 1670 as a fur trading company, HBC held a near-mythical status, surviving wars, economic downturns, and massive technological shifts. But in recent years, that legacy has crumbled. Store closures, a weakening brand, and ultimately bankruptcy filings have left many wondering: how does a company with this much history, real estate, and brand recognition collapse?

The answer lies not in competition or consumer trends alone, but in misaligned incentives, financial engineering, and leadership decisions that placed short-term gain above long-term stewardship. This blog post explores the fall of HBC in full detail — and the cautionary lessons it holds for any entrepreneur, founder, or leader trying to build a lasting legacy.

A Company Older Than Canada

Established in 1670 by royal charter from King Charles II, Hudson’s Bay Company originally operated as a fur trading monopoly, controlling vast swaths of land in what would later become Canada. For over a century, HBC effectively functioned as a colonial power — building forts, trading posts, and establishing early economic foundations across northern North America.

By the 19th and 20th centuries, HBC transitioned into a retail powerhouse. It opened department stores across the country, purchased competing chains (like Simpsons and Zellers), and became woven into the fabric of Canadian life. The Bay’s iconic striped blankets, its parade sponsorships, and its holiday windows made it feel like more than a store — it was a piece of national culture.

Yet heritage and history could not save it from what came next.

The Rise of Financialization: When Ownership Changes the Game

The most critical turning point in HBC’s modern decline came not from competition like Amazon or Walmart — but from within. In 2008, U.S. real estate mogul Richard Baker acquired a controlling stake in the company through his firm, NRDC Equity Partners. At the time, Baker wasn’t particularly interested in the operational side of retail. What he did see was a massive and undervalued real estate portfolio: flagship stores in downtown cores, historic buildings, and properties with enormous untapped potential for redevelopment. To Baker and his team, Hudson’s Bay wasn’t just a business — it was an asset portfolio. And it’s here that the misalignment began.

Shortly after taking over, HBC was taken private, then public again, then private once more — all while various spinoffs, sales, and restructuring activities drained operational strength while unlocking real estate value. Properties were sold and leased back. Divisions were offloaded. Stores were shuttered not due to strategic reinvention but to unlock liquidity from underlying land value. The retail business was sacrificed to feed a real estate engine.

Death by a Thousand Cuts: The Operational Collapse

While Hudson’s Bay was being financially optimized, its retail operations were falling behind. Unlike competitors that doubled down on e-commerce, logistics, and product curation, HBC’s brands felt increasingly out of touch.

Zellers, once a popular Canadian discount chain, was allowed to deteriorate and was ultimately sold off in a deal that brought Target to Canada — a fiasco in its own right. Saks Fifth Avenue, acquired with the hope of reviving the luxury segment, failed to resonate with Canadian shoppers. The HBC flagship stores themselves, many in need of modern upgrades, were underfunded and poorly maintained.

Internal morale dropped as stores lost foot traffic and brand identity. Staff were cut. Customer service suffered. Online sales infrastructure was never seriously upgraded. In many ways, it appeared that HBC's retail strategy was to hang on just long enough to monetize its real estate holdings. It wasn’t about turning the business around — it was about extracting remaining value.

By the time bankruptcy filings and closures began appearing in the 2020s, it was already too late to turn things around. The brand had been hollowed out from the inside.

Why Would Anyone Let This Happen?

This question — posed by journalists, consumers, and retail historians — is deceptively simple. Why would anyone let a company this old, with so much brand equity, be driven into the ground?

The answer: because it was more profitable to kill it than to save it.

In modern capitalism, the incentives facing controlling owners, especially private equity or real estate firms, often reward liquidation over preservation. When the real estate beneath your business is worth more than the revenue it generates, and when you can extract that value through asset sales, leasebacks, and debt financing — you don’t need to fix the business. You just need to keep it alive long enough to mine it.

In HBC’s case, the people with power were not retailers, marketers, or brand builders — they were asset managers. And once that mental shift happens, the soul of the business is gone.

A Legacy Betrayed: What HBC’s Fall Teaches Us About Leadership

The collapse of Hudson’s Bay Company isn’t just a retail story. It’s a leadership story. A cautionary tale about legacy, incentives, and what happens when the guardians of a dream no longer believe in its future.

Whether you’re running a startup, a family business, or a global brand, the lesson is the same: who you leave your business to matters. The values and incentives of your successor will determine whether your vision survives or is dismantled for parts.

Founders and leaders must ask:

Are you building a business or building an asset to be stripped?
Have you created a succession plan that protects your vision?
Will your successors care about your legacy, or just your margins?

In HBC’s case, centuries of cultural capital and economic contribution were undone in a decade — not by technological disruption, but by strategic choices.

Conclusion: Even the Oldest Dreams Can Be Lost

Hudson’s Bay Company lasted longer than most countries. It endured monarchs, revolutions, depressions, and globalization. But it could not endure a leadership structure that valued property more than purpose.

For business owners, entrepreneurs, and visionaries, the message is clear: legacy is not self-sustaining. It requires constant, intentional stewardship. And the longer your dream lives, the more vulnerable it becomes to those who see it as nothing more than a line item.

You don’t need to run a 350-year-old company to learn from HBC’s collapse. Whether you’re building something new or safeguarding something old, the question remains:

Will the people you entrust with your dream protect it — or profit from its demise?

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