With the launch in November of its first e-commerce-enabled Web site – a property that consolidates the banners, loyalty programs and products of both its Bay and Zellers stores – Toronto-based Hudson’s Bay Co. (HBC) is hoping its new online retail channel will provide its consumers with yet another reason to shop and buy.

While Canada’s oldest retailer has introduced smaller-scale Internet initiatives, such as its Zellers Club Z rewards site, its Zellers baby site and the HBC Outfitters site, www.HBC.com is the first to be able to leverage information from across the entire retail operation.

‘The ability to be a true cross-channel retailer is crucial in today’s environment, and we believe that customers really will reward retailers who offer them the most choice,’ says Michael LeBlanc, director of customer retention at Hudson’s Bay Co.

‘With HBC.com, we now offer customers the opportunity to shop online, in addition to via catalogue and in-store. We’ve brought it all together here, and the goal is to continue to bring [on and offline] components together.’

The way was at least partially paved last July, when HBC forged a technology alliance with IBM Canada, Microsoft Canada and Oracle Corp. to ‘renovate’ the company’s existing infrastructure by merging the customer databases of its Bay and Zellers stores and tailoring specific products and services to its various customer segments, both online and through traditional channels.

Credit card reciprocity – the ability for consumers to use their Bay card in Zellers stores and vice versa – was one of the first initiatives to evolve from the alliance, says LeBlanc, who adds, ‘We’re [trying] to take all the best [lessons] of the direct marketing business and apply them online.’

The site carries a searchable menu of about 5,000 items, from both Zellers and Bay product assortments, organized by departments such as toys, intimate apparel and gifts. All purchases on the site are eligible for Club Z or Air Miles reward miles, and can be returned by mail to HBC.com or in person to any Bay, Zellers or Zellers Select store – two features that proved key for convenience-driven online shoppers, according to pre-launch tests, LeBlanc says.

HBC, which made no bones about the fact that it had taken a cautious approach to entering the online market, reportedly spent $15 million to create the site and beef up its fulfillment capabilities, which included the construction of a state-of-the-art pick-and-pack distribution facility. The company expects 3-5% of its sales to come from the online environment within the next three to four years, LeBlanc says.

The primary target audience for the site is existing Bay and Zellers shoppers. However, LeBlanc says another key target will be consumers in small communities who don’t have access to either a Bay or Zellers store, but who do have strong awareness of the two store banners.

The company’s primary means of gathering visitor data will come through ‘membership’ in the site. While visitors are not required to register in order to shop, those who do will be offered exclusive benefits such as express check-out, access to one’s order history, an e-mail newsletter, and a personal ‘wish list’ that can be shared with friends and family.

LeBlanc says the company eventually hopes to offer members a more personalized shopping experience. For example, the site could provide Club Z members with a running tally of their points accumulation activity. ‘That’s a very small window that opens up to a very large opportunity for both the customer and us. If they’ve got a Bay or Zellers card, we could offer them a customized site based on their own purchase behaviour and patterns.’

While the technology to allow for personalization is already built into the site, LeBlanc says members probably won’t see a lot of the customization until next year.

‘Understanding what’s going on at our site – who’s shopping and why – is the first goal,’ he says. ‘As we do that, we’re going to be able to build a whole host of best-customer models – determining whether customers are cross-channel shoppers, pure dot-com shoppers, or cross-channel, cross-banner, cross-medium shoppers.’

When that happens, he says, HBC can begin to target individual customer segments with personalized marketing messages. For example, statements will include customized messages based on purchase history, and e-mails and contests will be targeted to those most likely to be interested in what’s on offer.

At first, though, promotional activity will remain relatively subdued, with the site being promoted on a limited basis, using in-store signage and bags printed with the site address.

‘We know we’ve got to build some awareness of HBC.com and we want to build up a fair bit of history and transactional data before we do any targeted promotions,’ LeBlanc explains. ‘We’ll start with some pretty generic offerings and then move to the customized [offers] as we proceed throughout the next year.’

Of all Canadian retailers operating online, HBC.com has pushed the hardest for integration, according to Michael Szego, an online retail consultant with J.C. Williams Group of Toronto. The fact that it has managed to integrate its product selection, loyalty programs and payment options across both the Zellers and Bay banners will go a long way toward helping HBC identify and profile its customers – including those at risk of defecting.

‘Now you can start to see how rich the data can become,’ he says. ‘It really starts to set up a lot of opportunities across the organization.’

A major challenge for HBC, says Szego, will be to build awareness of the HBC.com brand among consumers, who would more easily recognize TheBay.com or Zellers.com.

Richard Talbot, president of Talbot Consultants International, believes the HBC Web site will be used mainly as a catalogue to check prices and products, rather than as a sales vehicle, particularly since HBC has a wide network of bricks-and-mortar stores across the country.

‘It’s an add-on for them,’ says Talbot. ‘Where is it going to be by 2005? Maybe 3% of their sales – maximum. Are they better off to concentrate their time on expanding the sales from the bricks-and-mortar stores? Absolutely. You need to have a Web presence – there’s a growing need from a certain demographic – but it’s not a major channel.’