Hudson's Bay Co. announced Tuesday it is selling Lord & Taylor's flagship New York building to WeWork, as well as leasing other select stores’ space to the gig economy workspace provider.
However, the deal is not just about real estate or HBC getting cash to cut its debt.
Many department stores and other brick-and-mortar retailers have been stymied in their attempts to drive in-store traffic, especially from younger shoppers. The partnership with WeWork is intended to remedy that problem.
WeWork is “filled with young people and activities and an attractive demographic,” Richard Baker, HBC’s executive chairman and interim CEO, said at WWD's Apparel & Retail CEO Summit in New York on Tuesday. “We’ll drive the millennials to those doors. We have 450 locations around the world, and we think there’s a lot of opportunity to go from four [WeWork locations] to a lot more.”
Baker said the deal came about after meeting with Adam Neumann, WeWork's CEO and co-founder. “We spent a lot time talking about the future of retail and millennial behavior. One of the conclusions: The key to retail is to make it an exciting place.”
And this sentiment is indeed crucial, as malls, clothing retailers and department stores in the US continue to shutter their stores or file for bankruptcy protections. The industry is dealing not only with increased consumer spending online, but also shoppers shifting their budgets to experiences over material things.
As an outcome, retailers and malls are inking traditionally unlikely partnerships. For example, malls are featuring spaces that drive more foot traffic, such as gyms, movie theaters, restaurants and grocery stores.