The Hudson’s Bay Company, Canada’s oldest retailer, has been granted creditor protection as it looks to restructure its cash-strapped business, leaving some shoppers and retail experts concerned about the future of the department giant’s rewards program.
Hudson's Bay has several locations in York Region, including at Upper Canada Mall in Newmarket and Hillcrest Mall in Richmond Hill.
Over 8.2 million Canadians have outstanding Hudson’s Bay rewards points, worth a dollar amount of approximately $58.5 million as of Feb. 1, according to a court filing. The rewards program “will be paused” during the Hudson’s Bay insolvency proceedings, the filing adds.
But a shopper who spoke to TorontoToday at the Bay’s flagship store in Eaton Centre on Tuesday afternoon said that isn’t what she was told.
A corporate lending consultant, who asked that her name not be published, was shopping at the Bay during her lunch break when she tried to use her Hudson’s Bay points towards a purchase. She was told by an employee the system was “down,” suggesting a technical problem.
Hudson’s Bay customers who tried to access their points accounts on Friday were greeted with a message that there was a “temporary issue” with the rewards program, but that all points earned from purchases were still being tracked.
A notice on the Hudson’s Bay site now reads that the rewards program is “paused” and customers are unable to earn or redeem points at this time. The notice does not mention the insolvency proceedings as the reason for the pause.
Tiffany Bourré, vice-president of corporate communications for the Bay, confirmed the program is paused and shoppers will be unable to earn or redeem points at this time.
“Signage in-store should also have this information posted for customers now,” Bourré wrote in an email.
Bourré did not respond to a question about why the Bay is not mentioning the insolvency proceedings as the reason for the pause, or why the Bay initially characterized the situation as a “temporary issue.”
If the Bay is able to successfully restructure and avoid bankruptcy, there’s no guarantee the rewards program will return in its current form, according to retail experts.
“They may trade off the loss of trust and angry shoppers against the current $58 million liability those points represent and shut down the program,” said retail consultant David Ian Gray.
There’s also a chance the Bay might alter the program and reduce the value of points, Gray added.
“I doubt they would protect [the rewards program] fully,” he said.
It’s not uncommon for corporations facing financial strain to restructure their loyalty programs. Starbucks and Macy's did just that in 2023 and 2017, respectively, according to Donna Smith, director of the Toronto Metropolitan University’s School of Retail Management.
Patricia Macdonell, a downtown office worker, said she was shopping at the Bay with her mother last week and had the chance to use about $20 worth of accrued points, but chose not to.
“I wonder if that $20 is lost,” she said.
Two shoppers who went to the Eaton Centre on Tuesday to use Hudson’s Bay gift cards expressed concern that they wouldn’t have the chance to use the money on the gift cards if the Bay went under.
Hudson’s Bay says it is continuing to honour outstanding gift cards, which hold over $24 million in value as of Feb. 1, according to court documents.
Still, Gray recommends customers use their gift cards as soon as possible.
“Use your gift cards now. It is better to get some value out of them. We are not sure this restructuring will succeed, or if your local store will remain open in the future,” he said.
Gray notes that there are reports the Bay is looking to downsize its retail footprint to just 40 out of the 80 existing Hudson’s Bay locations, but there’s no guarantee the department store giant can appease its creditors and reach a restructuring deal.
The situation has been complicated by tariffs imposed on some Canadian goods by the U.S., Smith said. The uncertain economic landscape will make it even more difficult for the Bay to negotiate deals with its suppliers, Smith said, adding the Bay “waited too long” to begin insolvency proceedings.
For the Bay, the writing has been on the wall for a long time, Smith said.
“Department stores are a dying breed due to mediocre customer service, lack of innovation, consumers' dependence on e-commerce, and competition from specialty stores that provide exciting experiences both in-store and online,” she said.
The Bay’s best option might be to liquidate its real estate portfolio and pivot to an ecommerce-first strategy, Smith said.