Lord & Taylor lives in retail’s “middle” ground — and that’s a hard place to survive

Helena Foulkes has been CEO of Hudson’s Bay Company, the nearly 350-year-old retail business that owns luxury brands like Saks Fifth Avenue, for only a year, but she’s already made her mark.

In the past 12 months, Foulkes sold the shopping site Gilt Groupe, which Hudson’s Bay had acquired for $250 million just two years earlier, for much less; she merged Galeria Kaufhof, a popular German department store owned by Hudson’s Bay Company, with a competitor; and she closed the flagship Lord & Taylor store in New York City, which was more than 100 years old. She may sell as many as 10 more stores.

Foulkes said Gilt Group and Galeria Kaufhof were “distractions” — those business moves weren’t difficult for her to make. But Lord & Taylor was suffering from another problem.

“I think it’s in the toughest part of retail: The middle,” Foulkes said Sunday night at Recode’s Code Commerce event in Las Vegas. “It’s neither the high-end luxury where you can really own it, nor is it a low-cost ... discount retailer.

“It is handicapped by its positioning in the marketplace,” she added.

Foulkes essentially described what has become a real problem for retailers in the past decade thanks to the meteoric rise of Amazon and other online shopping: The idea of a brick-and-mortar department store just doesn’t make sense unless you can offer customers something special.

“You have to get personal and local,” she said. “You have to stop saying we’re a chain.”

Saks Fifth Avenue, one of Hudson’s Bay Company’s other big brands, tries to do that. Hudson’s Bay Company has 40 Saks stores, and Foulkes said she expects that to “grow significantly” moving forward.

One of the ways Foulkes hopes to distinguish Saks is through services. You can get your nails done at Saks. You can get a facial. You can have an espresso, and maybe one day you’ll eat full meals there. There’s a fancy escalator. Saks even offers a kind of face massage — what Foulkes called going to the “face gym.”

The future of retail, she says, will require that stores give people a reason to actually get off the couch and walk in the door.

“I think it’s going to feel like theater and entertainment and a place that you’re going to feel this level of excitement to be at,” she said.

As for the personal part, Foulkes believes there will one day be a world where retailers, through the power of technology, will know who you are the minute you walk through the doors. “I think the world will evolve that way,” she said.

This article originally appeared on Recode.net.

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