The Hudson Bay Company’s proposal to change the name of its flagship department store chain from the Bay to HBC is inspiring animated debate – in the media, on the street and within the ranks of the Bay itself.

But there are some industry watchers who view the name change as little more than a diversion – a ginger step forward in what promises to be a major brand overhaul.

‘The Bay has to add value beyond the products it actually sells,’ says John Torella, a retail analyst with the J.C. Williams Group in Toronto. ‘Clearly, their marketing is too price-driven – it lacks emotional appeal, and it certainly is not differentiated.’

Standing out in the cluttered Canadian retail environment is possibly the Bay’s biggest challenge. Sources say the past holiday season was not kind to Canada’s oldest company, as it got sucked into the cost-cutting eddy of Eaton’s, its chief competitor. And with rumours swirling that the troubled Eaton’s chain will soon be swallowed up by an American bidder (the latest scuttlebutt centres on Federated Department Stores of Cincinnati, Ohio), some industry observers suggest that the HBC name might be a preemptive move to buttress the Bay’s links to Canadians.

David Schroeder, an analyst with Dominion Bond Rating Service, says the Bay isn’t the only company that’s invoking nostalgia as a means of forging ties with consumers. He holds out the example of Canadian Airlines, which recently reinstated its original brand image – a flying Canada goose – in a bid to win back customers.

‘The retro thing certainly seems to be a trend,’ he says. ‘It’s probably a pretty good angle – it touches on the Canadianisms and on their tradition, which is something they should try to emphasize.’

But the decision to reclaim the Hudson’s Bay Company name – albeit in its truncated form – was not motivated by impending competition from south of the border, says Barry Agnew, vice-president of marketing with the Bay. Rather, he suggests, it was an attempt to capitalize on the fervour surrounding the turning of the millennium, the point at which the Bay will have been in operation for five centuries.

‘Clearly, anything we can do to leverage the heritage notion we believe is worthwhile. There’s definitely equity in that, but the challenge is, how do you ensure that it’s modern, contemporary, and most importantly, relevant?’

The Bay had intended to launch a campaign called ‘Then and Now,’ which highlighted the venerable retailer’s place in Canadian history. Perennial Design, a Toronto-based agency, was hired to design the new logo and assist with the in-store marketing efforts.

The initiative was postponed, however, in part because of the uncertainty surrounding the name change, and in part because the company was still attempting to hammer out its strategy. Agnew anticipates that the campaign will be launched in the fall, but some analysts are surprised by the perceived lack of urgency.

‘You don’t see as many ads as you’d expect,’ said one source close to the Bay. ‘Especially with Eaton’s hanging in there, in position to be pushed around a bit – frankly, I’m surprised they haven’t done more.’

While notions of heritage and tradition might give some Canadians a case of the warm fuzzies, it hasn’t slowed the steady rush of traffic to Wal-Mart, much less Sears. Nor has it enabled customers to delineate any point of difference between the Bay’s retail locations and those of its adversary, Eaton’s. All the more reason, say analysts, for the Bay to invigorate its marketing efforts and carve a more visible niche for itself.

Exactly how the Bay will do that remains speculative, at best. One source close to the Bay believes there is a void between the conventional department store and high-end fashion retailers like Holt Renfrew. But filling that gap could lead the Bay down the same precarious path traversed by Eaton’s. Industry watchers questioned whether Eaton’s narrow focus would work in 64 locations – so how would the Bay manage when it currently operates 100 stores?

According to Agnew, there are no plans to shift the Bay’s focus, much less close locations. Instead, he says, the plan is to increase the level of service (the Bay has announced that it will hire 1,000 staffers this spring) and to enhance the esthetics and experience of the stores.

Currently, the Bay and Eaton’s overlap on a number of clothing and cosmetic brands. And Agnew concedes that if the product offerings are the same, the shopping experience – and how it’s marketed – will dictate where consumers choose to go.

‘We’re really looking at engineering our stores better, from the perspective of sight lines and things that make it easy for consumers to get their shopping done,’ he says. ‘We’re putting a lot of effort into that right now, and no question, there’s a big, big opportunity for us there.’

This will be especially crucial in the Bay’s smaller stores, which measure a comparatively modest 120,000 square feet. The problem is that these stores can’t simply be miniaturized to reflect the product assortments of the larger stores, many of which exceed 250,000 square feet.

‘If you’ve only got 100 square feet for Tommy Hilfiger, it really doesn’t make you look like a power brand,’ he admits. ‘So you have to make a decision about what you’re going to offer – it’s an edited dominant way of looking at things.’

The Bay is also looking to expand into other markets with its specialty shop, Hudson’s Bay Company Outfitters, which opened in Toronto last fall. Agnew says that there are plans to open a number of new locations, as well as to reproduce the Outfitters concept within some of the Bay’s larger stores.

But some analysts interpret this as placing the cart before the horse. Torella argues that the Bay should be focusing on its own brand before it embarks on any new projects.

‘They’re still too rational, too linear and logical in their thinking – everything they’ve done to date has placed too much emphasis on retail and not enough on the brand,’ he says. ‘I think they have to prioritize the [mother brand], and they don’t have much time. Because you can be sure we’ll have a U.S. department store coming to Canada.’