Canadian Tire’s acquisition of Hudson’s Bay intellectual property could mean a major shift for the historic retailer—including the possibility of smaller-format Bay-branded stores in the future, says a leading analyst.

Retail consultant Doug Stephens, founder and CEO of Retail Prophet, told CTV that Canadian Tire’s move has the potential to reshape the Bay’s presence across Canada.

While Stephens doesn’t expect Hudson’s Bay to be revived as the same department store Canadians have known for years, he told his interviewer that the deal could mean the creation of small-format Hudson’s Bay stores in the future.

Canadian Tire announced last week that it will buy Hudson’s Bay’s intellectual property—including its iconic multi-coloured stripes, brand trademarks, and key in-house labels such as Gluckstein, Distinctly Home, and Hudson North—for $30 million. The deal, which still requires court approval, follows the department-store chain’s March filing for creditor protection after it failed to secure new financing. Canadian Tire said it has also bid on “a handful” of leases that, along with other Bay assets being sold as the Bay proceeds through creditor protection.

Stephens, speaking on CTV’s Your Morning, called the transaction “a massive opportunity and, I think, a really smart acquisition.”

“The beauty of this is that you have two Canadian brands coming together, one that’s 350 years old and another that’s over 100 years old, and so they share that sense of Canadiana for one thing,” he added in the CTV interview.

Analysts and other experts say Canadian Tire must tread carefully in handling the Bay’s storied branding.

“You have to use the stripes appropriately,” Toronto-based retail consultant Elisha Ballantyne told the Canadian Press.

“They want to use [the stripes] very preciously and very strategically where it makes sense and where it can really grow brand equity,” Stephens told CTV.

Canadian Tire’s bid for leases appears to indicate that at some Bay-branded stores could be reborn under the potential new formats and a revised ownership structure.

It remains to be seen whether Canadian Tire will choose to operate some big-box Bay stores if, as appears highly possible, the automotive and hardware products retailer is successful in acquiring some of the leases. The Bay’s long-term leases date back decades and contain favourable financial terms that are well below today’s going rates, potentially making a big-box outlet more feasible at a time when tenants are turning away from them and department stores are fading from Canada’s retail landscape due to reduced demand.

Typically, Canadian Tire operates large-format stores.

Stephens concluded that Canadian Tires move comes at an ideal time.

“I think that there’s been so much reinvigoration of this [Hudson’s Bay] brand just over the last year,” he told CTV. “What an opportune time to invest in an iconic Canadian brand that really gives Canadian Tire a massive amount of runway now into other categories.

All 80 existing Hudson’s Bay Company stores and 15 Saks-branded outlets are slated to close in June after the department-store chain completes liquidation sales. Canada’s oldest company is not expected to survive.

Analysts have predicted that many Bay store spaces will be divided into smaller units for other tenants or redeveloped as part of mixed-use projects, including multi-family.

Pictured: Hudson’s Bay store in downtown Montreal.

Photo: Shutterstock.com

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